Question 1

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
1, the result is: A)  deadweight loss. B)  efficiency. C)  overproduction. D)  equilibrium." class="answers-bank-image d-inline" rel="preload" >
As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q1, the result is:

Accepted Answer

A)   deadweight loss.
B)   efficiency.
C)   overproduction.
D)   equilibrium.

Question 2

Suppose seller X is willing to sell one good X for $5, a second good X for $10, a third for $16, a fourth for $25, and the market price is $20. What is seller X's producer surplus?

Accepted Answer

A)   $15
B)   $20
C)   $22
D)   $29 D

Question 3

If both the price level and nominal incomes change by the same percentage:

Accepted Answer

A)   real GDP will remain constant.
B)   the aggregate supply curve will be upward-sloping.
C)   profit margins will change in real terms.
D)   the long-run aggregate supply curve will be horizontal.

Question 4

If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve is: ​

Accepted Answer

A)   ​ vertical.
B)   ​ horizontal.
C)   ​negatively sloped.
D)   ​positively sloped.

Question 5

Exhibit 6A-2 Consumer Equilibrium
​

Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Accepted Answer

A)   more total utility than point B.
B)   more total utility than points B and F.
C)   less total utility than points B and C.
D)   equal total utility to points B, F, and C.

Question 6

Consumer surplus:

Accepted Answer

A)   does not exist in equilibrium.
B)   is illustrated by the area under the demand curve and above the market price.
C)   is illustrated by the area under the demand curve and below the market price.
D)   is illustrated by the area above the supply curve and under the demand curve.

Question 7

Exhibit 1A-4 Straight line

In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:

Accepted Answer

A)   direct.
B)   inverse.
C)   independent.
D)   undefined.

Question 8

At the unique point of consumer equilibrium, the:

Accepted Answer

A)   distance between indifference curves is maximum.
B)   distance between the budget line and the indifference curve is maximum.
C)   marginal utility ratio of the two goods is equal.
D)   marginal rate of substitution (MRS)  equals the slope of the budget line. D

Question 9

​ Along the short-run aggregate supply curve (SRAS) , an increase (rightward shift)  in the aggregate demand curve will increase:

Accepted Answer

A)   ​both the price level and real GDP.
B)   real GDP without raising the price level.
C)   the price level without affecting real GDP.
D)   ​the price level but reduce real GDP.

Question 10

​ A decrease in nominal incomes cause a:

Accepted Answer

A)   ​rightward shift in the short-run aggregate supply curve.
B)   ​leftward shift in the short-run aggregate supply curve.
C)   ​rightward shift in the long-run aggregate supply curve.
D)   ​leftward shift in the long-run aggregate supply curve.

Question 11

Distinguish a direct and an inverse relationship. Provide an example of each type of relationship.

Accepted Answer

A direct relationship between two variab...

Question 12

Exhibit 6A-3 Consumer equilibrium
​

Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Accepted Answer

A)   purchase more of good Y and less of good X.
B)   remain at point W.
C)   move to point X and then point Y.
D)   purchase more of good X and less of good Y.

Question 13

A shift in a curve represents a change in:

Accepted Answer

A)   the variable on the horizontal axis.
B)   the variable on the vertical axis.
C)   a third variable that is not on either axis.
D)   any variable that is relevant to the relationship being graphed.

Question 14

In the self-correcting AD-AS model, the economy's short-run equilibrium position is indicated by the intersection of which two curves?

Accepted Answer

A)   short-run aggregate supply and long-run aggregate supply
B)   short-run aggregate supply and aggregate demand
C)   long-run aggregate supply and aggregate demand
D)   long-run aggregate demand and short-run personal consumption expenditures curve

Question 15

Exhibit 6A-2 Consumer Equilibrium
​

Given the budget lines and indifference curves shown in Exhibit 6A-2, point B yields:

Accepted Answer

A)   more total utility than point F.
B)   more total utility than points A and C.
C)   less total utility than point F.
D)   equal total utility to point F.

Question 16

Producer surplus measures the value between the actual selling price and the:

Accepted Answer

A)   price at which sellers are willing to sell the product.
B)   deadweight loss price.
C)   lowest price sellers are willing to sell the product.
D)   profit-maximization price.

Question 17

​ Exhibit 10A-1 Aggregate demand and supply model
1 in Exhibit 10A-1, the aggregate demand curve shifts to AD2 . The real GDP and price level (CPI)  in short-run equilibrium will be: A)  $12 billion and 200. B)  $8 billion and 250. C)  $8 billion and 150. D)  $12 billion and 250." class="answers-bank-image d-inline" rel="preload" >
Beginning from long-run equilibrium at point E1 in Exhibit 10A-1, the aggregate demand curve shifts to AD2 . The real GDP and price level (CPI)  in short-run equilibrium will be:

Accepted Answer

A)   $12 billion and 200.
B)   $8 billion and 250.
C)   $8 billion and 150.
D)   $12 billion and 250.

Question 18

​ ​ Exhibit 16A-2 Macro AD/AS Models
​
1 and price level P2. Classical theory argues that: A)  SRAS will shift to leftward and establish full employment at P 3 Y p  without government intervention. B)  higher wages will result in a rightward shift of SRAS. C)  long-run equilibrium will be established at Y p  and P 1 . D)  lower wages will result in a leftward shift of SRAS." class="answers-bank-image d-inline" rel="preload" >
In Panel (b)  of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. Classical theory argues that:

Accepted Answer

A)   SRAS will shift to leftward and establish full employment at P 3 Y p  without government intervention.
B)   higher wages will result in a rightward shift of SRAS.
C)   long-run equilibrium will be established at Y p  and P 1 .
D)   lower wages will result in a leftward shift of SRAS.

Question 19

In an efficient market, deadweight loss is ____.

Accepted Answer

A)   maximum.
B)   minimum.
C)   constant.
D)   zero.

Question 20

Using supply and demand curve analysis, the triangular area below the equilibrium price and above the supply curve is:

Accepted Answer

A)   ​consumer surplus.
B)   ​producer surplus.
C)   ​ marginal cost.
D)   ​deadweight loss. ​ B

Exam 31: Understanding Direct and Inverse Relationships between Variables

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q1, the result is:

Correct AnswerverifiedShow Answer

Suppose seller X is willing to sell one good X for $5, a second good X for $10, a third for $16, a fourth for $25, and the market price is $20. What is seller X's producer surplus?

Correct AnswerverifiedD

If both the price level and nominal incomes change by the same percentage:

Correct AnswerverifiedShow Answer

If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve is: ​

Correct AnswerverifiedShow Answer

Exhibit 6A-2 Consumer Equilibrium ​ Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Correct AnswerverifiedShow Answer

Consumer surplus:

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Exhibit 1A-4 Straight line In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:

Correct AnswerverifiedShow Answer

At the unique point of consumer equilibrium, the:

Correct AnswerverifiedD

​ Along the short-run aggregate supply curve (SRAS) , an increase (rightward shift) in the aggregate demand curve will increase:

Correct AnswerverifiedShow Answer

​ A decrease in nominal incomes cause a:

Correct AnswerverifiedShow Answer

Distinguish a direct and an inverse relationship. Provide an example of each type of relationship.

Correct AnswerverifiedA direct relationship between two variab...View AnswerShow Answer

Exhibit 6A-3 Consumer equilibrium ​ Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Correct AnswerverifiedShow Answer

A shift in a curve represents a change in:

Correct AnswerverifiedShow Answer

In the self-correcting AD-AS model, the economy's short-run equilibrium position is indicated by the intersection of which two curves?

Correct AnswerverifiedShow Answer

Exhibit 6A-2 Consumer Equilibrium ​ Given the budget lines and indifference curves shown in Exhibit 6A-2, point B yields:

Correct AnswerverifiedShow Answer

Producer surplus measures the value between the actual selling price and the:

Correct AnswerverifiedShow Answer

​ Exhibit 10A-1 Aggregate demand and supply model Beginning from long-run equilibrium at point E1 in Exhibit 10A-1, the aggregate demand curve shifts to AD2 . The real GDP and price level (CPI) in short-run equilibrium will be:

Correct AnswerverifiedShow Answer

​ ​ Exhibit 16A-2 Macro AD/AS Models ​ In Panel (b) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. Classical theory argues that:

Correct AnswerverifiedShow Answer

In an efficient market, deadweight loss is ____.

Correct AnswerverifiedShow Answer

Using supply and demand curve analysis, the triangular area below the equilibrium price and above the supply curve is:

Correct AnswerverifiedB

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q₁, the result is:

Correct Answer
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D

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If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve is:

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Exhibit 6A-2 Consumer Equilibrium Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

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D

Along the short-run aggregate supply curve (SRAS) , an increase (rightward shift) in the aggregate demand curve will increase:

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A decrease in nominal incomes cause a:

Correct Answer
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A direct relationship between two variab...
View Answer

Exhibit 6A-3 Consumer equilibrium Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Correct Answer
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Exhibit 6A-2 Consumer Equilibrium Given the budget lines and indifference curves shown in Exhibit 6A-2, point B yields:

Correct Answer
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Exhibit 10A-1 Aggregate demand and supply model Beginning from long-run equilibrium at point E₁ in Exhibit 10A-1, the aggregate demand curve shifts to AD₂ . The real GDP and price level (CPI) in short-run equilibrium will be:

Correct Answer
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Exhibit 16A-2 Macro AD/AS Models In Panel (b) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. Classical theory argues that:

Correct Answer
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B