Question 1

A price ceiling means that:

Accepted Answer

A)  there is currently a surplus of the relevant product.
B)  government is imposing a legal price which is below the equilibrium price.
C)  government wants to stop a deflationary spiral.
D)  government is imposing a legal price which is above the equilibrium price.E) A) and B)
F) All of the above

Question 2

If two goods are complements (in consumption), a decline in the price of one will cause an increase in the demand for the other.

Accepted Answer

A) True 
 B)False

Question 3

A television station reports that the price of coffee has increased but the quantity sold in the market has decreased.This situation would be caused by a(n) :

Accepted Answer

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

Question 4

Price ceilings and price floors:

Accepted Answer

A)  cause surpluses and shortages respectively.
B)  make the rationing function of free markets more efficient.
C)  interfere with the rationing function of prices.
D)  shift demand and supply curves and therefore have no effect on the rationing function of prices.E) B) and C)
F) A) and B)

Question 5

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Accepted Answer

A)  inferior goods.
B)  direct goods.
C)  average goods.
D)  normal goods.E) B) and C)
F) A) and D)

Question 6

Which of the following will cause the demand curve for product A to shift to the left?

Accepted Answer

A)  population growth which causes an expansion in the number of persons consuming A
B)  an increase in money income if A is a normal good
C)  a decrease in the price of complementary product C
D)  an increase in money income if A is an inferior goodE) C) and D)
F) A) and C)

Question 7

In competitive markets a surplus or shortage will:

Accepted Answer

A)  never exist.
B)  cause buyer and seller reactions which tend to eliminate the surplus or shortage.
C)  cause shifts in the demand and supply curves.
D)  cause buyer and seller reactions which tend to intensify the surplus or shortage.E) B) and D)
F) C) and D)

Question 8

Because of their scarcity, the efficient use of resources is:

Accepted Answer

A)  an important issue in all economies.
B)  an important issue only in centrally planned economies.
C)  an important issue only in market economies.
D)  not an important issue.E) A) and D)
F) A) and C)

Question 9

The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Accepted Answer

A)  0CFL
B)  0CEJ
C)  0BGK
D)  0BHLE) A) and B)
F) A) and C)

Question 10

Other things equal, an excise tax on a product will:

Accepted Answer

A)  increase its supply.
B)  increase its price.
C)  increase the quantity sold.
D)  increase its demand.E) B) and C)
F) None of the above

Question 11

Which of the following combinations of changes in supply and demand (listed in the same order)  is likely to cause an indeterminate change in price?

Accepted Answer

A)  Increase/Increase
B)  Increase/Decrease
C)  Decrease/Increase
D)  Static/DecreaseE) A) and D)
F) None of the above

Question 12

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

Accepted Answer

A)  increase equilibrium price and quantity if the product is a normal good.
B)  decrease equilibrium price and quantity if the product is a normal good.
C)  have no effect on equilibrium price and quantity.
D)  reduce the quantity demanded, but not shift the demand curve.E) C) and D)
F) A) and C)

Question 13

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.A reduction in the number of firms producing X will:

Accepted Answer

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

Question 14

Which of the following will not cause the demand for product K to change?

Accepted Answer

A)  a change in the price of close-substitute product J
B)  an increase in consumer incomes
C)  a change in the price of K
D)  a change in consumer tastesE) A) and B)
F) B) and C)

Question 15

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 16

An increase in demand and an increase in supply will:

Accepted Answer

A)  affect price in an indeterminate way and decrease the equilibrium quantity.
B)  increase price and increase the equilibrium quantity.
C)  affect price in an indeterminate way and increase the equilibrium quantity.
D)  decrease price and increase the equilibrium quantity.E) C) and D)
F) None of the above

Question 17

Which of the above diagrams illustrate(s)  the effect of a governmental subsidy on the market for AIDS research?

Accepted Answer

A)  A only
B)  B only
C)  C only
D)  D onlyE) B) and D)
F) None of the above

Question 18

The supply curve shows the relationship between:

Accepted Answer

A)  price and quantity supplied.
B)  production costs and the amount demanded.
C)  total business revenues and quantity supplied.
D)  physical inputs of resources and the resulting units of output.E) B) and D)
F) All of the above

Question 19

The table below shows the demand schedule for three individual buyers purchasing bushels of wheat.Assume that there are three buyers in the market for wheat (data are hypothetical) .  Refer to the table above.If there were 1,500 buyers with demand schedules similar to the demand schedules for each of the three buyers in the table above, then the market demand for wheat at $5 will be:

Accepted Answer

A)  8,500 bushels.
B)  12,000 bushels.
C)  18,500 bushels.
D)  26,000 bushels.E) None of the above
F) B) and D)

Question 20

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) None of the above
F) B) and C)

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

Correct Answer
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A price ceiling means that:

Correct Answer
verified

In competitive markets a surplus or shortage will:

Correct Answer
verified

Which of the following will not cause the demand for product K to change?

Correct Answer
verified

An increase in demand and an increase in supply will:

Correct Answer
verified

Correct Answer
verified

The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Correct Answer
verified

A television station reports that the price of coffee has increased but the quantity sold in the market has decreased.This situation would be caused by a(n) :

Correct Answer
verified

Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Correct Answer
verified

Price ceilings and price floors:

Correct Answer
verified

If two goods are complements (in consumption), a decline in the price of one will cause an increase in the demand for the other.

Correct Answer
verified

The supply curve shows the relationship between:

Correct Answer
verified

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Correct Answer
verified

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Correct Answer
verified

Because of their scarcity, the efficient use of resources is:

Correct Answer
verified

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
verified

Other things equal, an excise tax on a product will:

Correct Answer
verified

Which of the following will cause the demand curve for product A to shift to the left?

Correct Answer
verified

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

Correct Answer
verified

Which of the following combinations of changes in supply and demand (listed in the same order) is likely to cause an indeterminate change in price?

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

A price ceiling means that:

Correct AnswerverifiedShow Answer

In competitive markets a surplus or shortage will:

Correct AnswerverifiedShow Answer

Which of the following will not cause the demand for product K to change?

Correct AnswerverifiedShow Answer

An increase in demand and an increase in supply will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Correct AnswerverifiedShow Answer

A television station reports that the price of coffee has increased but the quantity sold in the market has decreased.This situation would be caused by a(n) :

Correct AnswerverifiedShow Answer

Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Correct AnswerverifiedShow Answer

Price ceilings and price floors:

Correct AnswerverifiedShow Answer

If two goods are complements (in consumption), a decline in the price of one will cause an increase in the demand for the other.

Correct AnswerverifiedShow Answer

The supply curve shows the relationship between:

Correct AnswerverifiedShow Answer

Refer to the above graph.X and Y are complementary products.Which one of the lines in the graph best illustrates this relationship?

Correct AnswerverifiedShow Answer

For most commodities, purchases tend to rise with increases in buyers' incomes, and fall with decreases in buyers' incomes.Such commodities are known as:

Correct AnswerverifiedShow Answer

Because of their scarcity, the efficient use of resources is:

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

Other things equal, an excise tax on a product will:

Correct AnswerverifiedShow Answer

Which of the following will cause the demand curve for product A to shift to the left?

Correct AnswerverifiedShow Answer

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

Correct AnswerverifiedShow Answer

Which of the following combinations of changes in supply and demand (listed in the same order) is likely to cause an indeterminate change in price?

Correct AnswerverifiedShow Answer

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