Question 1

The relationship between prices and the corresponding quantities supplied is shown in a:

Accepted Answer

A) supply schedule. 
B) demand schedule. 
C) price-earnings ratio. 
D) demand curve. 
E) production schedule. 
A) supply schedule. 
B) demand schedule. 
C) price-earnings ratio. 
D) demand curve. 
E) production schedule.

Question 2

If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate.

Accepted Answer

A) True 
 B)False

Question 3

If more firms enter the telecommunications industry, we can expect the equilibrium price of telecom services to decrease and the equilibrium number of services to increase.

Accepted Answer

A) True 
 B)False

Question 4

Money exchanges are more efficient than barter because:

Accepted Answer

A) money exchanges do not require a double coincidence of wants. 
B) the government guarantees the value of money. 
C) money usually has an intrinsic value. 
D) money is backed by a physical commodity. 
E) opportunity costs are higher with barter trades. 
A) money exchanges do not require a double coincidence of wants. 
B) the government guarantees the value of money. 
C) money usually has an intrinsic value. 
D) money is backed by a physical commodity. 
E) opportunity costs are higher with barter trades.

Question 5

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 6

Without money, no transaction can occur.

Accepted Answer

A) True 
 B)False

Question 7

The term barter refers to exchanges made:

Accepted Answer

A) only with the use of money. 
B) without the use of money. 
C) outside the U.S.economy. 
D) only in underdeveloped countries. 
E) within countries in a monetary union. 
A) only with the use of money. 
B) without the use of money. 
C) outside the U.S.economy. 
D) only in underdeveloped countries. 
E) within countries in a monetary union.

Question 8

The downward slope of the demand curve is attributed to:

Accepted Answer

A) the inverse relationship between price and quantity demanded. 
B) the direct relationship between income and quantity demanded. 
C) the direct relationship between price and quantity demanded. 
D) the inverse relationship between income and quantity demanded. 
E) the direct relationship between consumer preferences and quantity demanded. 
A) the inverse relationship between price and quantity demanded. 
B) the direct relationship between income and quantity demanded. 
C) the direct relationship between price and quantity demanded. 
D) the inverse relationship between income and quantity demanded. 
E) the direct relationship between consumer preferences and quantity demanded.

Question 9

A sharp increase in gasoline prices will cause the supply curve for trucking services to shift to the right.

Accepted Answer

A) True 
 B)False

Question 10

Barter requires a double coincidence of wants.This means that:

Accepted Answer

A) at least two traders must demand a commodity. 
B) any two traders involved in a transaction must have money. 
C) each trader must demand at least two commodities. 
D) either of the two trades involved in a transaction must have money. 
E) when two traders are involved in a transaction each trader must want what the other has to offer. 
A) at least two traders must demand a commodity. 
B) any two traders involved in a transaction must have money. 
C) each trader must demand at least two commodities. 
D) either of the two trades involved in a transaction must have money. 
E) when two traders are involved in a transaction each trader must want what the other has to offer.

Question 11

The demand for luxurious goods are usually unaffected by an increase in income.

Accepted Answer

A) True 
 B)False

Question 12

When the price ceiling on eggs is lifted, there is a shortage of eggs in the market.

Accepted Answer

A) True 
 B)False

Question 13

The table given below represents the supply schedules of the only three DVD producers in the market for DVDs. Table 3.2
  According to Table 3.2, if the supply schedules 1, 2, and 3 are the market supply schedules for DVDs in three different time periods, what could explain the change from the Supply 1 schedule to the Supply 2 schedule?

Accepted Answer

A) A decrease in the price of DVDs 
B) A decrease in the cost of DVD players 
C) A change in consumer preferences 
D) A change in the average income of consumers 
E) An increase in the cost of producing DVDs 
A) A decrease in the price of DVDs 
B) A decrease in the cost of DVD players 
C) A change in consumer preferences 
D) A change in the average income of consumers 
E) An increase in the cost of producing DVDs

Question 14

Empirical evidence suggests that more digital cameras are being sold today than one year ago, and the selling price has decreased.The probable reason for this could have been an increase in supply.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true of the law of supply?

Accepted Answer

A) The law of supply is the sole determinant of market prices. 
B) The law of supply states that as the price of a good rises, the quantity supplied rises. 
C) The law of supply holds good only in the long-run. 
D) The law of supply is valid only in a market system of allocation. 
E) The law of supply asserts that as the cost of producing a good rises, the quantity supplied rises. 
A) The law of supply is the sole determinant of market prices. 
B) The law of supply states that as the price of a good rises, the quantity supplied rises. 
C) The law of supply holds good only in the long-run. 
D) The law of supply is valid only in a market system of allocation. 
E) The law of supply asserts that as the cost of producing a good rises, the quantity supplied rises.

Question 16

The below figure shows the demand and supply of DVD rentals in a city.S1 and D1 are the
Original supply and demand curves.The demand curve shifts from D1 to D2.
Figure 3.4   Refer to Figure 3.4 and identify the true statement.

Accepted Answer

A) The supply of DVD rentals has decreased. 
B) The original equilibrium quantity was 57. 
C) The new equilibrium price is $3. 
D) The demand for DVD rentals has decreased. 
E) The new equilibrium quantity is 48. 
A) The supply of DVD rentals has decreased. 
B) The original equilibrium quantity was 57. 
C) The new equilibrium price is $3. 
D) The demand for DVD rentals has decreased. 
E) The new equilibrium quantity is 48.

Question 17

An example of barter is voluntary work at an old-age home.

Accepted Answer

A) True 
 B)False

Question 18

The market supply curve for any product:

Accepted Answer

A) always depends on the market demand for that product. 
B) depends on the general income level of the consumers in the market. 
C) is a summation of individual firms' supply curves. 
D) equals the total revenue generated through sale of the commodity. 
E) is affected by the prices of related products. 
A) always depends on the market demand for that product. 
B) depends on the general income level of the consumers in the market. 
C) is a summation of individual firms' supply curves. 
D) equals the total revenue generated through sale of the commodity. 
E) is affected by the prices of related products.

Question 19

The demand schedule is a price list for a fixed basket of consumer goods following a particular format.

Accepted Answer

A) True 
 B)False

Question 20

Most markets involve the use of money for transactions because:

Accepted Answer

A) goods and services can be exchanged more easily with money than without it. 
B) goods and services cannot be exchanged without money. 
C) using money requires a double coincidence of wants. 
D) the transaction costs of using money are very high. 
E) the value of money remains same across countries over time. 
A) goods and services can be exchanged more easily with money than without it. 
B) goods and services cannot be exchanged without money. 
C) using money requires a double coincidence of wants. 
D) the transaction costs of using money are very high. 
E) the value of money remains same across countries over time.

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

The relationship between prices and the corresponding quantities supplied is shown in a:

If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate.

If more firms enter the telecommunications industry, we can expect the equilibrium price of telecom services to decrease and the equilibrium number of services to increase.

Money exchanges are more efficient than barter because:

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Without money, no transaction can occur.

The term barter refers to exchanges made:

The downward slope of the demand curve is attributed to:

A sharp increase in gasoline prices will cause the supply curve for trucking services to shift to the right.

Barter requires a double coincidence of wants.This means that:

The demand for luxurious goods are usually unaffected by an increase in income.

When the price ceiling on eggs is lifted, there is a shortage of eggs in the market.

Empirical evidence suggests that more digital cameras are being sold today than one year ago, and the selling price has decreased.The probable reason for this could have been an increase in supply.

Which of the following is true of the law of supply?

The below figure shows the demand and supply of DVD rentals in a city.S1 and D1 are the Original supply and demand curves.The demand curve shifts from D1 to D2. Figure 3.4 Refer to Figure 3.4 and identify the true statement.

An example of barter is voluntary work at an old-age home.

The market supply curve for any product:

The demand schedule is a price list for a fixed basket of consumer goods following a particular format.

Most markets involve the use of money for transactions because:

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 of DVD rentals in a city.S₁ and D₁ are the Original supply and demand curves.The demand curve shifts from D₁to D₂. Figure 3.4 Refer to Figure 3.4 and identify the true statement.