Question 1

A market that achieves productive efficiency is necessarily producing the quantity of goods most desired by society.

Accepted Answer

A) True 
 B)False

Question 2

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are

Accepted Answer

A)   inferior goods.
B)   normal goods.
C)   complementary goods.
D)   substitute goods.E) A) and D)
F) None of the above

Question 3

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

Question 4

A decrease in the price of digital cameras will

Accepted Answer

A)   cause the demand curve for memory cards to become vertical.
B)   shift the demand curve for memory cards to the right.
C)   shift the demand curve for memory cards to the left.
D)   not affect the demand for memory cards.E) B) and D)
F) All of the above

Question 5

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 6

In competitive markets, a surplus or shortage will

Accepted Answer

A)   never exist because the markets are always at equilibrium.
B)   cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.
C)   cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage.
D)   cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.E) None of the above
F) All of the above

Question 7

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 8

A decrease in demand and an increase in supply will

Accepted Answer

A)   affect price in an indeterminate way and decrease the equilibrium quantity.
B)   increase price and affect the equilibrium quantity in an indeterminate way.
C)   decrease price and affect the equilibrium quantity in an indeterminate way.
D)   increase price and increase the equilibrium quantity.E) B) and C)
F) A) and C)

Question 9

The supply curve shows the relationship between

Accepted Answer

A)   price and quantity supplied.
B)   production costs and the amount demanded.
C)   total business revenues and quantity supplied.
D)   physical inputs of resources and the resulting units of output.E) C) and D)
F) B) and C)

Question 10

(Advanced analysis)  The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium quantity is

Accepted Answer

A)   10.
B)   20.
C)   15.
D)   30.E) A) and D)
F) None of the above

Question 11

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.  The supply curve in this event-ticket market is vertical because

Accepted Answer

A)   the organizers are selling a fixed number of tickets.
B)   the organizers are charging a fixed price for the tickets.
C)   there are a fixed number of buyers in the market.
D)   the government has regulated the selling of the tickets.E) A) and D)
F) A) and C)

Question 12

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to

Accepted Answer

A)   shift to the right.
B)   shift to the left.
C)   become upward-sloping.
D)   not shift, but there will be a movement along that demand curve.E) All of the above
F) B) and C)

Question 13

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Accepted Answer

A)   substitutes are relatively more expensive.
B)   consumers' real income has increased.
C)   the marginal benefit of additional units of the good now outweigh the marginal cost.
D)   the good is now perceived as having higher quality.E) B) and C)
F) A) and B)

Question 14

If an economy is being "productively efficient," then that means the economy is

Accepted Answer

A)   producing the products most wanted by society.
B)   fully employing all economic resources.
C)   maximizing the returns to factors of production.
D)   using the least costly production techniques.E) All of the above
F) C) and D)

Question 15

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Accepted Answer

A)   the substitution effect
B)   the income effect
C)   an increase in the demand for Nike soccer balls
D)   the price effectE) A) and C)
F) B) and C)

Question 16

Suppose that in each of four successive years, producers sell more of their product and at lower prices. This could be explained

Accepted Answer

A)   by small annual increases in supply accompanied by large annual increases in demand.
B)   in terms of a stable supply curve and increasing demand.
C)   in terms of a stable demand curve and increasing supply.
D)   as an exception to the law of supply.E) All of the above
F) B) and C)

Question 17

When economists speak of "demand" in a particular market, they refer to

Accepted Answer

A)   the whole demand curve or schedule.
B)   one point on the demand curve.
C)   one price-quantity combination on the demand schedule.
D)   how much of an item buyers want to buy at a given price.E) All of the above
F) B) and C)

Question 18

What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased?

Accepted Answer

A)   The increase in demand was greater than the decrease in supply.
B)   The decrease in demand was greater than the decrease in supply.
C)   The increase in supply was greater than the decrease in demand.
D)   The decrease in supply was greater than the increase in demand.E) All of the above
F) A) and C)

Question 19

The development of a new production technique that lowers the cost of producing 3-D movies will shift the supply curve of 3-D movies to the right.

Accepted Answer

A) True 
 B)False

Question 20

Answer the question on the basis of the given supply and demand data for wheat.  If the price in this market was $4,

Accepted Answer

A)   the market would clear; quantity demanded would equal quantity supplied.
B)   buyers would want to purchase more wheat than is currently being supplied.
C)   farmers would not be able to sell all their wheat.
D)   there would be a shortage of wheat.E) A) and D)
F) A) and C)

Exam 3: Demand, Supply, and Market Equilibrium

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are

Correct AnswerverifiedShow Answer

A market that achieves productive efficiency is necessarily producing the quantity of goods most desired by society.

Correct AnswerverifiedShow Answer

In competitive markets, a surplus or shortage will

Correct AnswerverifiedShow Answer

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Correct AnswerverifiedShow Answer

A decrease in the price of digital cameras will

Correct AnswerverifiedShow Answer

If an economy is being "productively efficient," then that means the economy is

Correct AnswerverifiedShow Answer

When economists speak of "demand" in a particular market, they refer to

Correct AnswerverifiedShow Answer

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Correct AnswerverifiedShow Answer

A decrease in demand and an increase in supply will

Correct AnswerverifiedShow Answer

Answer the question on the basis of the given supply and demand data for wheat. If the price in this market was $4,

Correct AnswerverifiedShow Answer

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. The supply curve in this event-ticket market is vertical because

Correct AnswerverifiedShow Answer

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

Correct AnswerverifiedShow Answer

The development of a new production technique that lowers the cost of producing 3-D movies will shift the supply curve of 3-D movies to the right.

Correct AnswerverifiedShow Answer

What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased?

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium quantity is

Correct AnswerverifiedShow Answer

The supply curve shows the relationship between

Correct AnswerverifiedShow Answer

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to

Correct AnswerverifiedShow Answer

Other things equal, an excise tax on a product will

Correct AnswerverifiedShow Answer

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Correct AnswerverifiedShow Answer

Suppose that in each of four successive years, producers sell more of their product and at lower prices. This could be explained

Correct AnswerverifiedShow Answer

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