Question 1

The market demand curve is derived by:

Accepted Answer

A) studying an individual's demand for a product over a year. 
B) comparing the monthly consumption of a group of people. 
C) surveying a set of consumers and ascertaining their preferences. 
D) adding up the quantities that consumers in a market are willing and able to purchase at each price. 
E) calculating the average price a random sample of consumers are willing to pay for a product. 
A) studying an individual's demand for a product over a year. 
B) comparing the monthly consumption of a group of people. 
C) surveying a set of consumers and ascertaining their preferences. 
D) adding up the quantities that consumers in a market are willing and able to purchase at each price. 
E) calculating the average price a random sample of consumers are willing to pay for a product.

Question 2

A supply curve slopes downward because of the law of supply.

Accepted Answer

A) True 
 B)False

Question 3

The below figure shows the demand and supply curves in the market for coffee.S1 and D1 are the original demand and supply curves. Figure 3.5   Based on Figure 3.5, which of the following conditions would most likely move the point of equilibrium from A to D?

Accepted Answer

A) An increase in the income of a coffee buyer. 
B) A decrease in the price of coffee. 
C) A drought in Colombia, a major coffee producer, that affects the coffee harvest. 
D) A decrease in the price of non-dairy creamers that are consumed along with coffee. 
E) An increase in the price of tea, assumed to be a substitute for coffee. 
A) An increase in the income of a coffee buyer. 
B) A decrease in the price of coffee. 
C) A drought in Colombia, a major coffee producer, that affects the coffee harvest. 
D) A decrease in the price of non-dairy creamers that are consumed along with coffee. 
E) An increase in the price of tea, assumed to be a substitute for coffee.

Question 4

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3
  According to Table 3.3, equilibrium in the market for bread occurs at the price of:

Accepted Answer

A) $2 per unit 
B) $3 per unit 
C) $4 per unit 
D) $4.5 per unit 
E) $1.5 per unit 
A) $2 per unit 
B) $3 per unit 
C) $4 per unit 
D) $4.5 per unit 
E) $1.5 per unit

Question 5

Assume that a hurricane in Brazil destroys half of the coffee crop.Considering that Brazil is a major coffee producing country, consumers expect the price of coffee to increase in the near future.How does this reflect on the demand for coffee?

Accepted Answer

A) There is a movement upward along the demand curve for coffee. 
B) The demand curve for coffee shifts inward. 
C) The demand curve for coffee shifts outward. 
D) There is a movement downward along the demand curve for coffee. 
E) The demand for coffee declines. 
A) There is a movement upward along the demand curve for coffee. 
B) The demand curve for coffee shifts inward. 
C) The demand curve for coffee shifts outward. 
D) There is a movement downward along the demand curve for coffee. 
E) The demand for coffee declines.

Question 6

If an increase in the price of good X causes the demand curve for product Y to shift to the right, then X and Y are most likely to be which of the following?

Accepted Answer

A) Shoes and laces 
B) Tennis balls and tennis rackets 
C) Turkey and chicken 
D) Knives and forks 
E) DVD players and DVDs 
A) Shoes and laces 
B) Tennis balls and tennis rackets 
C) Turkey and chicken 
D) Knives and forks 
E) DVD players and DVDs

Question 7

Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89, a greater quantity of tomatoes will be supplied to the market.

Accepted Answer

A) True 
 B)False

Question 8

When a freely functioning market is in disequilibrium:

Accepted Answer

A) the government must set a price ceiling. 
B) the government must set a price floor. 
C) the price and quantities demanded and/or supplied change until equilibrium is established 
D) it will continue to remain in disequilibrium. 
E) it will reach equilibrium at a very high/low price. 
A) the government must set a price ceiling. 
B) the government must set a price floor. 
C) the price and quantities demanded and/or supplied change until equilibrium is established 
D) it will continue to remain in disequilibrium. 
E) it will reach equilibrium at a very high/low price.

Question 9

According to the law of supply, if the price of calculators decrease, the supply of calculators will decrease, everything else held constant.

Accepted Answer

A) True 
 B)False

Question 10

When a market is in surplus, there is pressure for the price to move upward.

Accepted Answer

A) True 
 B)False

Question 11

Ceteris paribus, a change in the quantity supplied along the supply curve of Braun coffee makers is:

Accepted Answer

A) directly related to the price of a Morphy Richards coffee maker. 
B) directly related to the price of milk and cream. 
C) directly related to the prices of inputs used in the production of Braun coffee makers. 
D) directly related to changes in the technology used in producing coffee makers. 
E) directly related to the price of a Braun coffee maker. 
A) directly related to the price of a Morphy Richards coffee maker. 
B) directly related to the price of milk and cream. 
C) directly related to the prices of inputs used in the production of Braun coffee makers. 
D) directly related to changes in the technology used in producing coffee makers. 
E) directly related to the price of a Braun coffee maker.

Question 12

A price control always benefits consumers.

Accepted Answer

A) True 
 B)False

Question 13

When will a shortage occur in a market?

Accepted Answer

A) When the actual price is lower than the equilibrium price 
B) When quantity supplied is greater than the equilibrium quantity 
C) When the quantity that consumers are willing and able to purchase decreases 
D) When the quantity available at zero price is insufficient to meet demand 
E) When a price floor is set in the market 
A) When the actual price is lower than the equilibrium price 
B) When quantity supplied is greater than the equilibrium quantity 
C) When the quantity that consumers are willing and able to purchase decreases 
D) When the quantity available at zero price is insufficient to meet demand 
E) When a price floor is set in the market

Question 14

The output level that occurs in any market that is in equilibrium:

Accepted Answer

A) is the quantity where the supply curve intersects the y-axis. 
B) is the quantity where the demand curve intersects the x-axis. 
C) is the quantity at an output level where buyers will pay more than suppliers require. 
D) is an output level where buyers will not pay as much as suppliers require. 
E) means consumers or producers cannot be made better off by an expansion or contraction of output. 
A) is the quantity where the supply curve intersects the y-axis. 
B) is the quantity where the demand curve intersects the x-axis. 
C) is the quantity at an output level where buyers will pay more than suppliers require. 
D) is an output level where buyers will not pay as much as suppliers require. 
E) means consumers or producers cannot be made better off by an expansion or contraction of output.

Question 15

If a society's scarce resources are allocated by the government, which of the following is most likely to result?

Accepted Answer

A) Only those who circumvent the government's rules will prosper. 
B) Under a government allocation, no one will have to do without. 
C) It provides an incentive to be a member of government and thus help determine the allocation rules. 
D) Under a government allocation, some will have to do without, but the government guarantees that resource allocations are fair. 
E) Government allocation provides incentives to increase production and efficiency and to create value. 
A) Only those who circumvent the government's rules will prosper. 
B) Under a government allocation, no one will have to do without. 
C) It provides an incentive to be a member of government and thus help determine the allocation rules. 
D) Under a government allocation, some will have to do without, but the government guarantees that resource allocations are fair. 
E) Government allocation provides incentives to increase production and efficiency and to create value.

Question 16

Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?

Accepted Answer

A) The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. 
B) The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. 
C) Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient. 
D) There will be no shortages under the first-come first-serve basis of allocation. 
E) A random process of allocation is fair in the sense that everyone gains and there are no losers. 
A) The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. 
B) The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. 
C) Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient. 
D) There will be no shortages under the first-come first-serve basis of allocation. 
E) A random process of allocation is fair in the sense that everyone gains and there are no losers.

Question 17

The demand curve of a commodity slopes downward because of:

Accepted Answer

A) the insatiable nature of human wants. 
B) the presence of double coincidence of wants. 
C) the law of demand. 
D) the scarcity of goods and services in an economy. 
E) the law of diminishing marginal utility. 
A) the insatiable nature of human wants. 
B) the presence of double coincidence of wants. 
C) the law of demand. 
D) the scarcity of goods and services in an economy. 
E) the law of diminishing marginal utility.

Question 18

The table given below reports the quantity demanded of a good by individuals 1, 2, and 3 at different prices. Table 3.1
  Refer to Table 3.1.If Quantity Demanded 1, Quantity Demanded 2, and Quantity Demanded 3 are market demand schedules, then the change from Quantity Demanded 1 to Quantity Demanded 3 may have been due to:

Accepted Answer

A) an increase in price. 
B) an increase in the number of sellers. 
C) a decrease in price. 
D) a decrease in the number of buyers. 
E) a decrease in the price of a substitute good. 
A) an increase in price. 
B) an increase in the number of sellers. 
C) a decrease in price. 
D) a decrease in the number of buyers. 
E) a decrease in the price of a substitute good.

Question 19

Every Friday night Elizabeth either goes bowling or goes to the movies.Because the price of bowling went up, Elizabeth now sees more movies.Elizabeth's behavior would be best described as a change in which determinant of demand?

Accepted Answer

A) Price of complementary goods 
B) Expectations 
C) Income 
D) Number of buyers 
E) Price of substitute goods 
A) Price of complementary goods 
B) Expectations 
C) Income 
D) Number of buyers 
E) Price of substitute goods

Question 20

Margarine and butter can both be used as a spread on toast.This means that they are:

Accepted Answer

A) independent goods. 
B) complementary goods. 
C) substitute goods. 
D) Giffen goods. 
E) inferior goods. 
A) independent goods. 
B) complementary goods. 
C) substitute goods. 
D) Giffen goods. 
E) inferior goods.

Exam 3: Markets, Demand and Supply, and the Price System

The market demand curve is derived by:

A supply curve slopes downward because of the law of supply.

The below figure shows the demand and supply curves in the market for coffee.S1 and D1 are the original demand and supply curves. Figure 3.5 Based on Figure 3.5, which of the following conditions would most likely move the point of equilibrium from A to D?

The table given below reports the quantity of bread loaves demanded and supplied at different per unit prices. Table 3.3 According to Table 3.3, equilibrium in the market for bread occurs at the price of:

Assume that a hurricane in Brazil destroys half of the coffee crop.Considering that Brazil is a major coffee producing country, consumers expect the price of coffee to increase in the near future.How does this reflect on the demand for coffee?

If an increase in the price of good X causes the demand curve for product Y to shift to the right, then X and Y are most likely to be which of the following?

Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89, a greater quantity of tomatoes will be supplied to the market.

When a freely functioning market is in disequilibrium:

According to the law of supply, if the price of calculators decrease, the supply of calculators will decrease, everything else held constant.

When a market is in surplus, there is pressure for the price to move upward.

Ceteris paribus, a change in the quantity supplied along the supply curve of Braun coffee makers is:

A price control always benefits consumers.

When will a shortage occur in a market?

The output level that occurs in any market that is in equilibrium:

If a society's scarce resources are allocated by the government, which of the following is most likely to result?

Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?

The demand curve of a commodity slopes downward because of:

Every Friday night Elizabeth either goes bowling or goes to the movies.Because the price of bowling went up, Elizabeth now sees more movies.Elizabeth's behavior would be best described as a change in which determinant of demand?

Margarine and butter can both be used as a spread on toast.This means that they are:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The below figure shows the demand and supply curves in the market for coffee.S₁ and D₁ are the original demand and supply curves. Figure 3.5 Based on Figure 3.5, which of the following conditions would most likely move the point of equilibrium from A to D?