Question 1

Which of the following is most likely to be an inferior good?

Accepted Answer

A)   Fur coats.
B)   Ocean cruises.
C)   Used clothing.
D)   Steak.E) A) and B)
F) A) and C)

Question 2

If there is a shortage of product X,and the price is free to change:

Accepted Answer

A)   fewer resources will be allocated to the production of this good.
B)   the price of the product will rise.
C)   the price of the product will decline.
D)   the supply curve will shift to the left and the demand curve to the right,eliminating the shortage.E) A) and D)
F) None of the above

Question 3

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) A) and D)
F) B) and C)

Question 4

Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Accepted Answer

A)   suggests that the supply of Blu-ray players has increased.
B)   suggests that the demand for Blu-ray players has increased.
C)   constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve.
D)   constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve.E) A) and B)
F) C) and D)

Question 5

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Accepted Answer

A)   decrease,quantity demanded will decrease,and quantity supplied will increase.
B)   decrease and quantity demanded and quantity supplied will both decrease.
C)   decrease,quantity demanded will increase,and quantity supplied will decrease.
D)   increase,quantity demanded will decrease,and quantity supplied will increase.E) C) and D)
F) A) and C)

Question 6

Increasing marginal cost of production explains:

Accepted Answer

A)   the law of demand.
B)   the income effect.
C)   why the supply curve is upsloping.
D)   why the demand curve is downsloping.E) C) and D)
F) A) and C)

Question 7

In moving along a supply curve,which of the following is not held constant?

Accepted Answer

A)   The number of firms producing this good.
B)   Expectations about the future price of the product.
C)   Techniques used in producing this product.
D)   The price of the product for which the supply curve is relevant.E) A) and B)
F) A) and C)

Question 8

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Accepted Answer

A) True 
 B)False

Question 9

Answer the question on the basis of the given supply and demand data for wheat:   Bushels Demanded  Bushels Supplied Per  Per Month  Price Per Bushel  Month 45$57750473563686126167157\begin{array} { c c c } 	ext { Bushels Demanded }&&	ext { Bushels Supplied Per }\	ext { Per Month } & 	ext { Price Per Bushel } & 	ext { Month } \ \hline45 & \$ 5 & 77 \ 50 & 4 & 73 \ 56 & 3 & 68 \ 61 & 2 & 61 \ 67 & 1 & 57 \end{array} Bushels Demanded  Per Month 4550566167​ Price Per Bushel $54321​ Bushels Supplied Per  Month 7773686157​​  Refer to the data.If price was initially $4 and free to fluctuate,we would expect the:

Accepted Answer

A)   quantity supplied to continue to exceed the quantity demanded.
B)   quantity of wheat supplied to decline as a result of the subsequent price change.
C)   quantity of wheat demanded to fall as a result of the subsequent price change.
D)   price of wheat to rise. E) B) and C)
F) A) and D)

Question 10

If the supply and demand curves for a product both decrease,then equilibrium:

Accepted Answer

A)   quantity must fall and equilibrium price must rise.
B)   price must fall,but equilibrium quantity may rise,fall,or remain unchanged.
C)   quantity must decline,but equilibrium price may rise,fall,or remain unchanged.
D)   quantity and equilibrium price must both decline.E) C) and D)
F) All of the above

Question 11

A market that is achieving allocative efficiency must also be achieving productive efficiency.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Accepted Answer

A)   demand has increased.
B)   demand has decreased.
C)   supply will increase.
D)   supply will decrease.E) All of the above
F) None of the above

Question 14

Black markets are associated with:

Accepted Answer

A)   price floors and the resulting product surpluses.
B)   price floors and the resulting product shortages.
C)   ceiling prices and the resulting product shortages.
D)   ceiling prices and the resulting product surpluses.E) A) and C)
F) B) and C)

Question 15

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. Refer to the given information.A decrease in the number of consumers of product X will:

Accepted Answer

A)   decrease S,decrease P,and decrease Q.
B)   increase D,increase P,and increase Q.
C)   decrease D,decrease P,and decrease Q.
D)   decrease D,decrease P,and increase Q.E) A) and D)
F) All of the above

Question 16

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

Accepted Answer

A)   $50.
B)   $70.
C)   $80.
D)   $130.E) B) and D)
F) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

Accepted Answer

A)   suggest that the demand for Mustangs decreased between 2007 and 2008.
B)   suggest that the supply of Mustangs must have increased between 2007 and 2008.
C)   suggest that the demand for Mustangs increased between 2007 and 2008.
D)   constitute an exception to the law of demand in that they suggest an upsloping demand curve.E) C) and D)
F) B) and C)

Question 19

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. Refer to the given information.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) A) and C)
F) C) and D)

Question 20

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) A) and C)
F) C) and D)

Exam 3: Demand, Supply, and Market Equilibrium

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

Correct Answer
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In moving along a supply curve,which of the following is not held constant?

Correct Answer
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The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Correct Answer
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Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

Correct Answer
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If the supply and demand curves for a product both decrease,then equilibrium:

Correct Answer
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Increasing marginal cost of production explains:

Correct Answer
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The term "quantity demanded":

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

Correct Answer
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Correct Answer
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Correct Answer
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Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Correct Answer
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Black markets are associated with:

Correct Answer
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A market that is achieving allocative efficiency must also be achieving productive efficiency.

Correct Answer
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Which of the following is most likely to be an inferior good?

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

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

Correct Answer
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Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Correct Answer
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(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Correct Answer
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If there is a shortage of product X,and the price is free to change:

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

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.The equilibrium price is:

Correct AnswerverifiedShow Answer

In moving along a supply curve,which of the following is not held constant?

Correct AnswerverifiedShow Answer

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Correct AnswerverifiedShow Answer

Suppose that in 2007,Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2008,600,000 Mustangs were sold at an average price of $19,500 per car.These statements:

Correct AnswerverifiedShow Answer

If the supply and demand curves for a product both decrease,then equilibrium:

Correct AnswerverifiedShow Answer

Increasing marginal cost of production explains:

Correct AnswerverifiedShow Answer

The term "quantity demanded":

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Since their introduction,prices of Blu-ray players have fallen and the quantity purchased has increased.This statement:

Correct AnswerverifiedShow Answer

Black markets are associated with:

Correct AnswerverifiedShow Answer

A market that is achieving allocative efficiency must also be achieving productive efficiency.

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume in a competitive market that price is initially above the equilibrium level.We can predict that price will:

Correct AnswerverifiedShow Answer

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,we can conclude that:

Correct AnswerverifiedShow Answer

If there is a shortage of product X,and the price is free to change:

Correct AnswerverifiedShow Answer

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