Question 1

Refer to the accompanying figure. If the current market price were $20:

Accepted Answer

A)  the market would be in equilibrium.
B)  there would be an excess supply of 25 units.
C)  there would be an excess demand of 25 units.
D)  there would be an excess demand of 35 units.

Question 2

Refer to the accompanying figure. If demand shifts from D1 to D2, and at the same time, supply shifts from S1 to S2, then according to the figure:

Accepted Answer

A)  the equilibrium quantity will increase and the equilibrium price will decrease.
B)  the equilibrium quantity will increase and the equilibrium price will increase.
C)  the equilibrium quantity will decrease and the equilibrium price will increase.
D)  the equilibrium quantity will decrease and the equilibrium price will decrease.

Question 3

Suppose you drive a car that gets good gas mileage, and you notice that more and more people are driving gas-guzzling cars. Their increased demand for gas:

Accepted Answer

A)  does not affect you.
B)  is likely to cause the price you pay for gas to decrease.
C)  is likely to cause the price you pay for gas to increase.
D)  does not change the price you pay, but it reduces the quantity of gas supplied.

Question 4

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:

Accepted Answer

A)  normal goods.
B)  complements.
C)  substitutes.
D)  inferior goods.

Question 5

Refer to the accompanying figure. At a price of $9, there will be:

Accepted Answer

A)  an excess demand of 5 units.
B)  an excess supply of 6 units.
C)  an excess demand of 1 unit.
D)  an excess supply of 5 units.

Question 6

When a market is not in equilibrium:

Accepted Answer

A)  government intervention is required to achieve equilibrium.
B)  there is neither excess supply nor excess demand.
C)  the economic motives of sellers and buyers will move the market to its equilibrium.
D)  a change in either supply or demand is required to reestablish equilibrium.

Question 7

Suppose that both the supply of iPads and the demand for iPads decrease. One can predict that the:

Accepted Answer

A)  equilibrium price will rise, but the change in equilibrium quantity is uncertain.
B)  equilibrium price and quantity will fall.
C)  equilibrium price and quantity will rise.
D)  equilibrium quantity will fall, but the change in equilibrium price is uncertain.

Question 8

Equilibrium price and quantity are determined by:

Accepted Answer

A)  demand.
B)  supply.
C)  government regulations.
D)  both supply and demand.

Question 9

In a market in which the government has set a price ceiling below the equilibrium price:

Accepted Answer

A)  the quantity demanded will equal quantity supplied.
B)  there will be excess supply.
C)  a black market might develop.
D)  quantity supplied will exceed quantity demanded.

Question 10

If the equilibrium quantity of a good is also the socially optimal quantity, then:

Accepted Answer

A)  total economic surplus has been maximized.
B)  the marginal benefit to consumers of another unit of the good is zero.
C)  the marginal cost to producers of another unit of the good is zero.
D)  it's possible to make at least one person better off without hurting anyone else.

Question 11

Suppose sport utility vehicles get poor gas mileage compared to other available cars. If the price of gasoline increases, then one would expect:

Accepted Answer

A)  the demand for gasoline to decrease.
B)  the demand for sport utility vehicles to decrease.
C)  the demand for sport utility vehicles to increase.
D)  the quantity demanded of sport utility vehicles to decrease.

Question 12

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

Accepted Answer

A)  excess demand will lead the price to rise.
B)  excess supply will lead the price to rise.
C)  excess demand will lead the price to fall.
D)  excess supply will lead the price to fall.

Question 13

Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:

Accepted Answer

A)  a decrease in demand for french fries.
B)  an increase in demand for french fries
C)  an increase in the supply of french fries.
D)  a decrease in the supply of french fries.

Question 14

When the supply of a good decreases, there will be a(n) :

Accepted Answer

A)  decrease in demand.
B)  decrease in buyers' reservation prices for the good.
C)  decrease in the quantity demanded.
D)  increase in the quantity demanded.

Question 15

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

Accepted Answer

A)  centralized economy.
B)  free-market economy.
C)  capitalist economy.
D)  open economy.

Question 16

Which of the following is NOT a determinant of the demand for gasoline?

Accepted Answer

A)  Consumers' incomes
B)  The price of diesel
C)  The price of automobiles
D)  The supply of gasoline

Question 17

An outcome is socially optimal if it:

Accepted Answer

A)  is an equilibrium outcome.
B)  leaves no unexploited opportunities for individuals.
C)  is determined by the government.
D)  maximizes total economic surplus.

Question 18

Suppose that recent studies conclude that high-fiber diets do not reduce the risk of developing colon cancer as was previously thought. The likely result will be that the:

Accepted Answer

A)  quantity demanded of high-fiber foods will fall.
B)  demand for high-fiber foods will decrease.
C)  supply of high-fiber foods will increase.
D)  price of high-fiber foods will rise.

Question 19

Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as:

Accepted Answer

A)  the normal effect of a price change.
B)  the income effect of a price change.
C)  a decrease in the demand for apples.
D)  the substitution effect of a price change.

Question 20

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:

Accepted Answer

A)  price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity.
B)  price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity.
C)  quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price.
D)  quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price.

Exam 3: Supply and Demand

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:

Correct AnswerverifiedShow Answer

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:

Correct AnswerverifiedShow Answer

When a market is not in equilibrium:

Correct AnswerverifiedShow Answer

Equilibrium price and quantity are determined by:

Correct AnswerverifiedShow Answer

In a market in which the government has set a price ceiling below the equilibrium price:

Correct AnswerverifiedShow Answer

When the supply of a good decreases, there will be a(n) :

Correct AnswerverifiedShow Answer

An outcome is socially optimal if it:

Correct AnswerverifiedShow Answer

Suppose you drive a car that gets good gas mileage, and you notice that more and more people are driving gas-guzzling cars. Their increased demand for gas:

Correct AnswerverifiedShow Answer

Suppose that both the supply of iPads and the demand for iPads decrease. One can predict that the:

Correct AnswerverifiedShow Answer

Refer to the accompanying figure. At a price of $9, there will be:

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:

Correct AnswerverifiedShow Answer

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

Correct AnswerverifiedShow Answer

Refer to the accompanying figure. If the current market price were $20:

Correct AnswerverifiedShow Answer

Suppose sport utility vehicles get poor gas mileage compared to other available cars. If the price of gasoline increases, then one would expect:

Correct AnswerverifiedShow Answer

Suppose that recent studies conclude that high-fiber diets do not reduce the risk of developing colon cancer as was previously thought. The likely result will be that the:

Correct AnswerverifiedShow Answer

Which of the following is NOT a determinant of the demand for gasoline?

Correct AnswerverifiedShow Answer

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

Correct AnswerverifiedShow Answer

Refer to the accompanying figure. If demand shifts from D1 to D2, and at the same time, supply shifts from S1 to S2, then according to the figure:

Correct AnswerverifiedShow Answer

If the equilibrium quantity of a good is also the socially optimal quantity, then:

Correct AnswerverifiedShow Answer

Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified