Question 1

Assume that the graphs show a competitive market for the product stated in the question.  Select the graph above that best shows the change in the market speciﬁed in the following
Situation: the market for houses, when consumers experience a substantial fall in income due to a
Serious economic recession.

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) A) and B)
F) A) and C)

Question 2

Which of the following will not cause the demand for product K to change?

Accepted Answer

A)   a change in the price of close-substitute product J
B)   an increase in incomes of buyers of product K
C)   a change in the price of product K
D)   a change in consumer tastes for product KE) B) and C)
F) A) and D)

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

Question 4

A product market is in equilibrium

Accepted Answer

A)   whenever there is no surplus of the product.
B)   whenever there is no shortage of the product.
C)   when consumers want to buy more of the product than producers offer for sale.
D)   where the demand and supply curves intersect.E) A) and B)
F) None of the above

Question 5

"Price" in the statement of the Law of Supply refers to

Accepted Answer

A)   the dollar amount necessary to induce a change in the quantity of a good supplied to the market.
B)   the cost of producing each unit of the product.
C)   the total revenues that sellers receive for selling a given quantity of the product.
D)   the total amount that buyers pay in order to acquire a given quantity of the product.E) A) and C)
F) All of the above

Question 6

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

Accepted Answer

A)   increase equilibrium price and quantity if the product is a normal good.
B)   decrease equilibrium price and quantity if the product is a normal good.
C)   have no effect on equilibrium price and quantity.
D)   reduce the quantity demanded but not shift the demand curve.E) None of the above
F) C) and D)

Question 7

Quantity Demanded  Price  Quantity Supplied 5$7966875784693510241113\begin{array} { | c | c | c | } \hline 	ext { Quantity Demanded } & 	ext { Price } & 	ext { Quantity Supplied } \\hline 5 & \$ 7 & 9 \\hline 6 & 6 & 8 \\hline 7 & 5 & 7 \\hline 8 & 4 & 6 \\hline 9 & 3 & 5 \\hline 10 & 2 & 4 \\hline 11 & 1 & 3 \\hline\end{array} Quantity Demanded 567891011​ Price $7654321​ Quantity Supplied 9876543​​  Refer to the above table. If supply decreased by 2 units at each price, what would the new equilibrium price and quantity be?

Accepted Answer

A)   $3 and 5 units
B)   $4 and 4 units
C)   $5 and 5 units
D)   $6 and 6 units E) A) and B)
F) B) and D)

Question 8

A government subsidy per unit of output increases supply.

Accepted Answer

A) True 
 B)False

Question 9

In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit will result in

Accepted Answer

A)   a shortage of 200 units.
B)   a surplus of 200 units.
C)   a surplus of 250 units.
D)   a shortage of 250 units.E) B) and C)
F) A) and D)

Question 10

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Accepted Answer

A)   Less rental housing is available, as prospective landlords ﬁnd it unproﬁtable to rent at restricted prices.
B)   The quality of rental housing declines as landlords lack the funds and incentive to maintain properties.
C)   Apartment buildings are torn down in favor of oﬃce buildings, shopping malls, and other buildings where rents are not controlled.
D)   All of these choices are correct.E) A) and B)
F) A) and C)

Question 11

A recent study found that an increase in the federal tax on beer (which would increase the price of beer)  would reduce the demand for marijuana. Based on this information we can conclude that

Accepted Answer

A)   beer and marijuana are substitute goods.
B)   beer and marijuana are complementary goods.
C)   beer is an inferior good.
D)   marijuana is an inferior good.E) None of the above
F) A) and C)

Question 12

Which of the following pairs are not considered to be complementary goods?

Accepted Answer

A)   steel and cars
B)   digital cameras and memory cards
C)   gasoline and motor oil
D)   fertilizer and irrigation systemsE) None of the above
F) All of the above

Question 13

The upward slope of the supply curve reﬂects the

Accepted Answer

A)   principle of specialization in production.
B)   law of supply.
C)   fact that price and quantity supplied are inversely related.
D)   law of diminishing marginal utility.E) B) and D)
F) All of the above

Question 14

Which statement best illustrates the concept of diminishing marginal utility?

Accepted Answer

A)   As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers.
B)   Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken.
C)   A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week.
D)   A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more.E) C) and D)
F) All of the above

Question 15

Price Per Unit  Quantity Supplied  Quantity Demanded $101002951115027512190250132202201424518015265135\begin{array} { | c | c | c | } \hline 	ext { Price Per Unit } & 	ext { Quantity Supplied } & 	ext { Quantity Demanded } \\hline \$ 10 & 100 & 295 \\hline 11 & 150 & 275 \\hline 12 & 190 & 250 \\hline 13 & 220 & 220 \\hline 14 & 245 & 180 \\hline 15 & 265 & 135 \\hline\end{array} Price Per Unit $101112131415​ Quantity Supplied 100150190220245265​ Quantity Demanded 295275250220180135​​  Refer to the above table. A technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price. As a result of this technological change,
Equilibrium output in this market

Accepted Answer

A)   decreased by 60 units.
B)   increased by 60 units.
C)   increased by 30 units.
D)   decreased by 30 units. E) B) and C)
F) B) and D)

Question 16

The table below shows the weekly demand for hamburgers in a market where there are just three buyers.
  Price  Buyer 1Qd 1  Buyer 2 Qd 2  Buyer 3 Qd 3 $6746597841510123211516\begin{array} { | c | c | c | c | } \hline 	ext { Price } & 	ext { Buyer 1Qd 1 } & 	ext { Buyer 2 Qd 2 } & 	ext { Buyer 3 Qd 3 } \\hline \$ 6 & 7 & 4 & 6 \\hline 5 & 9 & 7 & 8 \\hline 4 & 15 & 10 & 12 \\hline 3 & 21 & 15 & 16 \\hline\end{array} Price $6543​ Buyer 1Qd 1 791521​ Buyer 2 Qd 2 471015​ Buyer 3 Qd 3 681216​​  Suppose now that there are 200 buyers in a market, each with a demand schedule identical to
Buyer 2 in the table above (no one is similar to either Buyer 1 or Buyer 3) . What would the weekly
Quantity of hamburgers demanded in the market at a price of $4 be?

Accepted Answer

A)   8,000
B)   2,000
C)   7,400
D)   4,000 E) C) and D)
F) B) and D)

Question 17

Which of the following is a determinant of supply?

Accepted Answer

A)   tastes and preferences of buyers
B)   price of a complementary good
C)   consumer income
D)   product taxes and subsidiesE) A) and D)
F) B) and C)

Question 18

Which of the following will not cause the supply curve to shift?

Accepted Answer

A)   a change in the costs of resources needed to produce the good
B)   a technological change in the production of the good
C)   a change in the price of the good
D)   a change in the prices of other goods that producers could be producingE) A) and D)
F) All of the above

Question 19

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?

Accepted Answer

A)   a decrease in the cost of equipment used in corn farming
B)   an increase in the price of soybeans
C)   a decrease in the price of corn
D)   an increase in the number of acres of farmland allocated to cornE) B) and C)
F) B) and D)

Question 20

The equilibrium price and quantity in a market usually produce allocative eﬃciency because

Accepted Answer

A)   all consumers who want the good are satisﬁed.
B)   marginal beneﬁt and marginal cost are equal at that point.
C)   equilibrium ensures an equitable distribution of output.
D)   the excess of goods produced at equilibrium guarantees that all will have enough.E) None of the above
F) A) and B)

Exam 3: Demand, Supply, and Market Equilibrium

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?

Correct Answer
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Which of the following will not cause the supply curve to shift?

Correct Answer
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Which statement best illustrates the concept of diminishing marginal utility?

Correct Answer
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Which of the following pairs are not considered to be complementary goods?

Correct Answer
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The upward slope of the supply curve reﬂects the

Correct Answer
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A government subsidy per unit of output increases supply.

Correct Answer
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With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

Correct Answer
verified

The equilibrium price and quantity in a market usually produce allocative eﬃciency because

Correct Answer
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Correct Answer
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Correct Answer
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A recent study found that an increase in the federal tax on beer (which would increase the price of beer) would reduce the demand for marijuana. Based on this information we can conclude that

Correct Answer
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Correct Answer
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Which of the following is a determinant of supply?

Correct Answer
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"Price" in the statement of the Law of Supply refers to

Correct Answer
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The term "quantity demanded"

Correct Answer
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Which of the following will not cause the demand for product K to change?

Correct Answer
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Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Correct Answer
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Correct Answer
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A product market is in equilibrium

Correct Answer
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In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit will result in

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Refer to the diagram above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3?

Correct AnswerverifiedShow Answer

Which of the following will not cause the supply curve to shift?

Correct AnswerverifiedShow Answer

Which statement best illustrates the concept of diminishing marginal utility?

Correct AnswerverifiedShow Answer

Which of the following pairs are not considered to be complementary goods?

Correct AnswerverifiedShow Answer

The upward slope of the supply curve reﬂects the

Correct AnswerverifiedShow Answer

A government subsidy per unit of output increases supply.

Correct AnswerverifiedShow Answer

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

Correct AnswerverifiedShow Answer

The equilibrium price and quantity in a market usually produce allocative eﬃciency because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A recent study found that an increase in the federal tax on beer (which would increase the price of beer) would reduce the demand for marijuana. Based on this information we can conclude that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a determinant of supply?

Correct AnswerverifiedShow Answer

"Price" in the statement of the Law of Supply refers to

Correct AnswerverifiedShow Answer

The term "quantity demanded"

Correct AnswerverifiedShow Answer

Which of the following will not cause the demand for product K to change?

Correct AnswerverifiedShow Answer

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A product market is in equilibrium

Correct AnswerverifiedShow Answer

In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit will result in

Correct AnswerverifiedShow Answer

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