Question 1

If the quantity of a good supplied is highly sensitive to the price of the good, economists say the supply of the good is relatively

Accepted Answer

A)   inelastic.
B)   elastic.
C)   robust.
D)   inverse.

Question 2

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Accepted Answer

A)   a reduction in the consumption of gasoline
B)   an increase in demand for solar heating systems
C)   an increase in demand for smaller, more efficient automobiles
D)   a reduction in the demand for home insulation products

Question 3

In his book The Wealth of Nations , this famous economist argued that economic activity was directed by an "invisible hand."

Accepted Answer

A)   Alfred Marshall
B)   Milton Friedman
C)   Adam Smith
D)   David Ricardo

Question 4

If salsa and nacho chips are complements, an increase in the price of nacho chips would

Accepted Answer

A)   increase the price of salsa.
B)   decrease the demand for salsa.
C)   increase the demand for salsa.
D)   have no effect on the demand for salsa.

Question 5

In which statement(s)  are "supply" and "quantity supplied" used correctly? (I)  "An increase in the price of computers will increase the quantity supplied of computers."
(II)  "A technological advance that lowers the cost of producing computers will increase the supply of computers."

Accepted Answer

A)   in both statements I and II
B)   in statement I only
C)   in statement II only
D)   in neither statements I nor II

Question 6

Figure 3-16 2 to P 1, producer surplus A)  decreases by an amount equal to C. B)  decreases by an amount equal to A + B. C)  decreases by an amount equal to A + C. D)  increases by an amount equal to A + B." class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-16. When the price falls from P 2 to P 1, producer surplus

Accepted Answer

A)   decreases by an amount equal to C.
B)   decreases by an amount equal to A + B.
C)   decreases by an amount equal to A + C.
D)   increases by an amount equal to A + B.

Question 7

Economic efficiency requires that

Accepted Answer

A)   individuals take all actions within their power.
B)   only long-lasting, high-quality products be produced.
C)   income be distributed equally among individuals.
D)   all economic activity generating more benefits than costs to individuals in the economy be undertaken.

Question 8

Figure 3-21 3, A)  the market is in equilibrium. B)  consumer surplus is maximized. C)  the sum of consumer surplus and producer surplus is maximized. D)  the value to buyers is less than the cost to sellers." class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-21. At the quantity Q 3,

Accepted Answer

A)   the market is in equilibrium.
B)   consumer surplus is maximized.
C)   the sum of consumer surplus and producer surplus is maximized.
D)   the value to buyers is less than the cost to sellers.

Question 9

Which of the following would most likely decrease the current demand for DVD players?

Accepted Answer

A)   an increase in consumer income
B)   an increase in the prices of television sets, a complement for DVD players
C)   an expectation that the price of DVD players would rise sharply in the near future
D)   an increase in the price of VCRs, a substitute for DVD players

Question 10

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Which of the following is correct about Sam's behavior?

Accepted Answer

A)   Sam's demand has decreased.
B)   Sam's demand has increased.
C)   Sam's quantity demanded has decreased, and his demand has not changed.
D)   Sam's quantity demanded has increased, and his demand has increased.
E)   Sam's demand has increased, and his quantity demanded has decreased.

Question 11

Consumers buy less of a good as its price increases because

Accepted Answer

A)   production costs have risen.
B)   substitute goods are now relatively cheaper.
C)   the income of consumers has effectively risen.
D)   the higher price will make the good more valuable to each consumer.

Question 12

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

Accepted Answer

A)   vertical.
B)   relatively inelastic.
C)   relatively elastic.
D)   robust.

Question 13

Which of the following factors would cause the demand curve for a good to increase (shift to the right) ?

Accepted Answer

A)   a decrease in the price of the good
B)   an increase in the price of the good
C)   an increase in the price of a substitute good
D)   an increase in the price of a complementary good

Question 14

If Susan receives $3,000 of value from a computer that she was able to purchase from Joe's Computer Shop for $1,800, this indicates that

Accepted Answer

A)   Susan's opportunity cost of purchasing the computer was $3,000.
B)   Joe earned a $1,200 profit on the sale of the computer.
C)   Susan reaped a consumer surplus of $1,200 from the purchase of the computer.
D)   Joe incurred a loss a $1,200 on the sale of the computer.

Question 15

According to the law of supply,

Accepted Answer

A)   more of a good is desired by consumers as the price falls.
B)   less of a good is desired by consumers as the price rises.
C)   more of a good will be offered by suppliers as the price rises.
D)   less of a good will be offered by suppliers as the price rises.

Question 16

Figure 3-20 
Refer to Figure 3-20. At the equilibrium price, producer surplus is

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.

Question 17

Which of the following events would increase producer surplus?

Accepted Answer

A)   Sellers' costs stay the same and the price of the good increases.
B)   Sellers' costs increase and the price of the good stays the same.
C)   Sellers' costs increase and the price of the good decreases.
D)   All of the above are correct.

Question 18

Figure 3-19 
Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

Accepted Answer

A)   AC
B)   CE
C)   BC
D)   CD

Question 19

When the "invisible hand" guides economic activity, prices of products reflect

Accepted Answer

A)   only the values that society places on those products.
B)   only the costs to society of producing those products.
C)   both the values that society places on those products and the costs to society of producing those products.
D)   none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a manner that is thought to be "fair."

Question 20

Figure 3-23 
Refer to Figure 3-23. It is apparent from the figure that

Accepted Answer

A)   the good is inferior.
B)   the demand for the good decreases as income increases.
C)   the demand for the good conforms to the law of demand.
D)   All of the above are correct.

Exam 3: Demand, Supply, and the Market Process

Figure 3-20 Refer to Figure 3-20. At the equilibrium price, producer surplus is

Correct AnswerverifiedShow Answer

Which of the following factors would cause the demand curve for a good to increase (shift to the right) ?

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In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of computers will increase the quantity supplied of computers." (II) "A technological advance that lowers the cost of producing computers will increase the supply of computers."

Correct AnswerverifiedShow Answer

Which of the following would most likely decrease the current demand for DVD players?

Correct AnswerverifiedShow Answer

Which of the following events would increase producer surplus?

Correct AnswerverifiedShow Answer

If the quantity of a good supplied is highly sensitive to the price of the good, economists say the supply of the good is relatively

Correct AnswerverifiedShow Answer

When the "invisible hand" guides economic activity, prices of products reflect

Correct AnswerverifiedShow Answer

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

Correct AnswerverifiedShow Answer

Figure 3-21 Refer to Figure 3-21. At the quantity Q 3,

Correct AnswerverifiedShow Answer

If salsa and nacho chips are complements, an increase in the price of nacho chips would

Correct AnswerverifiedShow Answer

If Susan receives $3,000 of value from a computer that she was able to purchase from Joe's Computer Shop for $1,800, this indicates that

Correct AnswerverifiedShow Answer

Consumers buy less of a good as its price increases because

Correct AnswerverifiedShow Answer

Suppose the prices of petroleum products, including gasoline and fuel oil, fell sharply. Which of the following would most likely occur as the result of the lower prices of petroleum products?

Correct AnswerverifiedShow Answer

Figure 3-16 Refer to Figure 3-16. When the price falls from P 2 to P 1, producer surplus

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Figure 3-19 Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

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Figure 3-23 Refer to Figure 3-23. It is apparent from the figure that

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Economic efficiency requires that

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In his book The Wealth of Nations , this famous economist argued that economic activity was directed by an "invisible hand."

Correct AnswerverifiedShow Answer

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Which of the following is correct about Sam's behavior?

Correct AnswerverifiedShow Answer

According to the law of supply,

Correct AnswerverifiedShow Answer

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Figure 3-21 Refer to Figure 3-21. At the quantity Q ₃,

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Figure 3-16 Refer to Figure 3-16. When the price falls from P ₂ to P ₁, producer surplus

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