Question 1

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

Accepted Answer

A)  P = 4 + 0.3 Q.
B)  P = 4 + 2 Q.
C)  P = 4 + 0.5 Q.
D)  P = 4 - 3 Q.E) A) and C)
F) C) and D)

Question 2

The term "quantity demanded"

Accepted Answer

A)  refers to the entire series of prices and quantities that comprise the demand schedule.
B)  refers to a situation in which the income and substitution effects do not apply.
C)  refers to the amount of a product that will be purchased at some specific price.
D)  means the same thing as demand.E) C) and D)
F) A) and B)

Question 3

Economists use the term "demand" to refer to

Accepted Answer

A)  a particular price-quantity combination on a stable demand curve.
B)  the total amount spent on a particular commodity over a fixed time period.
C)  an upsloping line on a graph that relates consumer purchases and product price.
D)  a schedule of various combinations of market prices and quantities demanded.E) None of the above
F) All of the above

Question 4

Producing a good in the least costly way is known as allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 5

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. A decrease in the price of X can be expected to

Accepted Answer

A)  decrease the demand for Z.
B)  increase the demand for Z.
C)  have no effect on the demand of product Z.
D)  decrease the supply of Z.
E)  increase the supply of Z.F) A) and E)
G) A) and D)

Question 6

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Accepted Answer

A)  the supply of ethanol, a corn-based product, to increase.
B)  consumer demand for wheat to fall.
C)  the supply to increase as farmers plant more corn.
D)  the supply to fall as farmers plant more of other crops.E) A) and B)
F) A) and C)

Question 7

Markets, viewed from the perspective of the supply and demand model,

Accepted Answer

A)  assume many buyers and many sellers of a standardized product.
B)  assume market power so that buyers and sellers bargain with one another.
C)  do not exist in the real-world economy.
D)  are approximated by markets in which a single seller determines price.E) All of the above
F) B) and D)

Question 8

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 9

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is consistent with the law of demand?

Accepted Answer

A)  A decrease in the price of tacos causes sellers to want to sell less.
B)  An increase in people's craving for pizza causes buyers to buy more pizza.
C)  An increase in the price of hamburgers causes buyers to buy fewer hamburgers.
D)  A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded.E) B) and C)
F) None of the above

Question 11

Uber's dynamic pricing

Accepted Answer

A)  prevents regulated taxi drivers from changing their fares.
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions.
C)  creates long wait times for consumers wanting rides at peak demand times.
D)  results in ride pricing that is unfair to consumers.E) A) and D)
F) A) and B)

Question 12

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Accepted Answer

A) True 
 B)False

Question 13

The law of demand states that, other things equal,

Accepted Answer

A)  price and quantity demanded are inversely related.
B)  the larger the number of buyers in a market, the lower will be product price.
C)  price and quantity demanded are directly related.
D)  consumers will buy more of a product at high prices than at low prices.E) B) and C)
F) None of the above

Question 14

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (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.A decrease in the price of a product that is a complement to X will

Accepted Answer

A)  increase D, increase P, and increase Q.
B)  increase D, decrease P, and increase Q.
C)  increase D, increase P, and decrease Q.
D)  decrease S, decrease P, and increase Q.
E)  shift D left with no change in P and Q.F) A) and B)
G) A) and C)

Question 15

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

Accepted Answer

A)  consumer incomes have fallen.
B)  cattle production has declined.
C)  the price of steak has risen.
D)  the price of cattle feed has gone up.E) None of the above
F) All of the above

Question 16

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 17

Adam Smith's "invisible hand" is now regarded as emergent equilibria as people's uncoordinated interactions are magically guided toward socially beneficial outcomes.

Accepted Answer

A) True 
 B)False

Question 18

Price floors and ceiling prices both

Accepted Answer

A)  cause shortages.
B)  cause surpluses.
C)  cause the supply and demand curves to shift until equilibrium is established.
D)  interfere with the rationing function of prices.E) All of the above
F) A) and D)

Question 19

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

Accepted Answer

A)  cost effect.
B)  inflationary effect.
C)  income effect.
D)  substitution effect.E) A) and D)
F) A) and B)

Question 20

If the price of product L increases, the demand curve for close-substitute product J will

Accepted Answer

A)  shift downward toward the horizontal axis.
B)  shift to the left.
C)  shift to the right.
D)  remain unchanged.E) C) and D)
F) A) and B)

Exam 3: Demand, Supply, and Market Equilibrium

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. A decrease in the price of X can be expected to

Correct Answer
verified

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

Correct Answer
verified

Producing a good in the least costly way is known as allocative efficiency.

Correct Answer
verified

An effective price ceiling will lower the equilibrium price and cause a surplus.

Correct Answer
verified

Adam Smith's "invisible hand" is now regarded as emergent equilibria as people's uncoordinated interactions are magically guided toward socially beneficial outcomes.

Correct Answer
verified

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Correct Answer
verified

Correct Answer
verified

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Correct Answer
verified

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Correct Answer
verified

The law of demand states that, other things equal,

Correct Answer
verified

Uber's dynamic pricing

Correct Answer
verified

The term "quantity demanded"

Correct Answer
verified

Economists use the term "demand" to refer to

Correct Answer
verified

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

Correct Answer
verified

Which of the following is consistent with the law of demand?

Correct Answer
verified

Price floors and ceiling prices both

Correct Answer
verified

If the price of product L increases, the demand curve for close-substitute product J will

Correct Answer
verified

Markets, viewed from the perspective of the supply and demand model,

Correct Answer
verified

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Correct Answer
verified

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. A decrease in the price of X can be expected to

Correct AnswerverifiedShow Answer

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

Correct AnswerverifiedShow Answer

Producing a good in the least costly way is known as allocative efficiency.

Correct AnswerverifiedShow Answer

An effective price ceiling will lower the equilibrium price and cause a surplus.

Correct AnswerverifiedShow Answer

Adam Smith's "invisible hand" is now regarded as emergent equilibria as people's uncoordinated interactions are magically guided toward socially beneficial outcomes.

Correct AnswerverifiedShow Answer

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Correct AnswerverifiedShow Answer

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Correct AnswerverifiedShow Answer

The law of demand states that, other things equal,

Correct AnswerverifiedShow Answer

Uber's dynamic pricing

Correct AnswerverifiedShow Answer

The term "quantity demanded"

Correct AnswerverifiedShow Answer

Economists use the term "demand" to refer to

Correct AnswerverifiedShow Answer

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

Correct AnswerverifiedShow Answer

Which of the following is consistent with the law of demand?

Correct AnswerverifiedShow Answer

Price floors and ceiling prices both

Correct AnswerverifiedShow Answer

If the price of product L increases, the demand curve for close-substitute product J will

Correct AnswerverifiedShow Answer

Markets, viewed from the perspective of the supply and demand model,

Correct AnswerverifiedShow Answer

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect

Correct AnswerverifiedShow Answer

(Advanced analysis) The equation for the supply curve in the diagram shown is approximately

Correct AnswerverifiedShow Answer

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