Question 1

Graphically, the market supply curve is:

Accepted Answer

A)  steeper than any individual producer's supply curve which comprises it.
B)  greater than the sum of the individual producers' supply curves.
C)  the horizontal sum of individual producers' supply curves.
D)  the vertical sum of individual producers' supply curves.E) A) and B)
F) None of the above

Question 2

Surpluses drive market prices up; shortages drive them down.

Accepted Answer

A) True 
 B)False

Question 3

If the market price is above the equilibrium price:

Accepted Answer

A)  a shortage will occur and producers will produce more and lower prices.
B)  a surplus will occur and producers will produce less and lower prices.
C)  a surplus will result and consumers will bid prices up.
D)  producers will make extremely high profits.E) None of the above
F) All of the above

Question 4

The law of demand states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded of the good.

Accepted Answer

A) True 
 B)False

Question 5

If the price of a product increases, we would expect:

Accepted Answer

A)  demand to decrease.
B)  quantity supplied to increase.
C)  supply to decrease.
D)  quantity demanded to increase.E) C) and D)
F) A) and B)

Question 6

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

Accepted Answer

A)  a decrease in demand.
B)  an increase in demand.
C)  a decrease in supply.
D)  an increase in supply.E) A) and B)
F) None of the above

Question 7

If products A and B are complements and the price of B decreases:

Accepted Answer

A)  the demand curves for both A and B will shift to the left.
B)  the amount of B purchased will increase, but the demand curve for A will not shift.
C)  the demand for A will increase and the quantity demanded of B will increase.
D)  the demand for A will decline and the demand for B will increase.E) A) and C)
F) C) and D)

Question 8

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1)  the demand (D)  for, or supply (S)  of, X, (2)  the equilibrium price (P)  of X and (3)  the equilibrium quantity (Q)  of X.Refer to the above.An increase in the prices of resources used to produce X will:

Accepted Answer

A)  increase S, increase P, and increase Q.
B)  increase D, increase P, and increase Q.
C)  decrease S, decrease P, and decrease Q.
D)  decrease S, increase P, and decrease Q.E) B) and D)
F) A) and C)

Question 9

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Accepted Answer

A)  Poor people will be able to find adequate housing.
B)  Tenants will reduce their use of housing space, making more available for others.
C)  Those whose needs for housing are most urgent will be able to obtain the space they want.
D)  People moving into the community will have difficulty locating residential space to rent.E) B) and C)
F) None of the above

Question 10

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n) :

Accepted Answer

A)  increase in the demand for and the supply of gasoline.
B)  decrease in the demand for and the supply of gasoline.
C)  increase in the supply of gasoline and a decrease in the demand for gasoline.
D)  decrease in the supply of gasoline and an increase in the demand for gasoline.E) A) and B)
F) A) and C)

Question 11

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) .  Refer to the table above.The market demand for wheat is:

Accepted Answer

A)  17 bushels at $6 and 37 bushels at $5.
B)  24 bushels at $5 and 52 bushels at $4.
C)  37 bushels at $4 and 52 bushels at $3.
D)  52 bushels at $5 and 37 bushels at $6.E) B) and C)
F) A) and D)

Question 12

1 to S2? A) an increase in the price of fertilizer B) a change in consumer tastes away from cornbread C) a decrease in consumer incomes D) the development of a more effective insecticide for corn rootworm" class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

Accepted Answer

A)  an increase in the price of fertilizer
B)  a change in consumer tastes away from cornbread
C)  a decrease in consumer incomes
D)  the development of a more effective insecticide for corn rootwormE) C) and D)
F) A) and D)

Question 13

An inferior good is one:

Accepted Answer

A)  that doesn't work.
B)  that costs too much.
C)  that won't be purchased at any price.
D)  for which demand increases as income decreases.E) A) and D)
F) A) and C)

Question 14

The upward slope of the supply curve reflects the:

Accepted Answer

A)  principle of specialization in production.
B)  law of supply.
C)  fact that price and quantity supplied are inversely related.
D)  law of diminishing marginal utility.E) B) and C)
F) A) and D)

Question 15

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) :

Accepted Answer

A)  increase in the price and quantity of new homes.
B)  decrease in the price and quantity of new homes.
C)  increase in the price of new homes and a decrease in the quantity of new homes.
D)  decrease in the price of new homes and an increase in the quantity of new homes.E) None of the above
F) A) and B)

Question 16

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would usually be an inferior good?

Accepted Answer

A)  French wines
B)  generic beer
C)  theatre tickets
D)  steakE) A) and D)
F) A) and B)

Question 18

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 19

If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

Accepted Answer

A)  a decrease in demand.
B)  an increase in demand.
C)  a decrease in supply.
D)  an increase in supply.E) C) and D)
F) B) and D)

Question 20

An effective price floor will:

Accepted Answer

A)  force some firms in this industry to go out of business.
B)  result in a product surplus.
C)  result in a product shortage.
D)  clear the market.E) All of the above
F) A) and D)

Exam 3: B: Demand, Supply, and Market Equilibrium

If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

Correct Answer
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Surpluses drive market prices up; shortages drive them down.

Correct Answer
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If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

Correct Answer
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An effective price floor will:

Correct Answer
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A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) :

Correct Answer
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An increase in the supply of product X, with demand held constant, will increase the price of product X.

Correct Answer
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The law of demand states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded of the good.

Correct Answer
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An inferior good is one:

Correct Answer
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Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct Answer
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If products A and B are complements and the price of B decreases:

Correct Answer
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Which of the following would usually be an inferior good?

Correct Answer
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An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Correct Answer
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Graphically, the market supply curve is:

Correct Answer
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A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n) :

Correct Answer
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Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₂?

Correct Answer
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If the price of a product increases, we would expect:

Correct Answer
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Correct Answer
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The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) . Refer to the table above.The market demand for wheat is:

Correct Answer
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If the market price is above the equilibrium price:

Correct Answer
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The upward slope of the supply curve reflects the:

Correct Answer
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Exam 3: B: Demand, Supply, and Market Equilibrium

If producers must obtain higher prices than previously to produce various levels of output, there has occurred:

Correct AnswerverifiedShow Answer

Surpluses drive market prices up; shortages drive them down.

Correct AnswerverifiedShow Answer

If consumers are willing to pay a higher price than previously for each level of output, we can say that there has occurred:

Correct AnswerverifiedShow Answer

An effective price floor will:

Correct AnswerverifiedShow Answer

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) :

Correct AnswerverifiedShow Answer

An increase in the supply of product X, with demand held constant, will increase the price of product X.

Correct AnswerverifiedShow Answer

The law of demand states that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded of the good.

Correct AnswerverifiedShow Answer

An inferior good is one:

Correct AnswerverifiedShow Answer

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

Correct AnswerverifiedShow Answer

If products A and B are complements and the price of B decreases:

Correct AnswerverifiedShow Answer

Which of the following would usually be an inferior good?

Correct AnswerverifiedShow Answer

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Correct AnswerverifiedShow Answer

Graphically, the market supply curve is:

Correct AnswerverifiedShow Answer

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n) :

Correct AnswerverifiedShow Answer

Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

Correct AnswerverifiedShow Answer

If the price of a product increases, we would expect:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The table below shows three individual buyers' demand for wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) . Refer to the table above.The market demand for wheat is:

Correct AnswerverifiedShow Answer

If the market price is above the equilibrium price:

Correct AnswerverifiedShow Answer

The upward slope of the supply curve reflects the:

Correct AnswerverifiedShow Answer

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Refer to the above diagram, which shows three supply curves for corn.Which of the following would cause the change in the supply of corn illustrated by the shift from S₁ to S₂?

Correct Answer
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