Question 1

(Advanced analysis)  The equation for the demand curve in the below diagram

Accepted Answer

A)   is P = 70 - Q.
B)   is P = 35 - 2Q.
C)   is P = 35 - .5Q.
D)   cannot be determined from the information given.E) A) and B)
F) A) and C)

Question 2

Which of the following would cause a leftward shift in the supply curve for car washes?

Accepted Answer

A)   an increase in the number of cars in the city
B)   a decrease in taxes on car washes
C)   an increase in the price of car washing equipment
D)   a decrease in the price of waterE) A) and D)
F) B) and C)

Question 3

An increase in the demand for online streaming music indicates that more is

Accepted Answer

A)   purchased even if prices of online streaming music stayed the same.
B)   demanded because online streaming music prices decreased.
C)   demanded because sellers are selling more online streaming music.
D)   purchased because sellers are putting online streaming music on sale.E) A) and B)
F) A) and C)

Question 4

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.  A scalpers' market will exist if the event organizers set the official ticket price at

Accepted Answer

A)   $50.
B)   $20.
C)   $40.
D)   $60.E) B) and C)
F) C) and D)

Question 5

An effective price ceiling will

Accepted Answer

A)   induce new firms to enter the industry.
B)   result in a product surplus.
C)   result in a product shortage.
D)   clear the market.E) B) and C)
F) A) and D)

Question 6

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Accepted Answer

A) True 
 B)False

Question 7

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Accepted Answer

A) True 
 B)False

Question 8

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

Accepted Answer

A) True 
 B)False

Question 9

(Last Word)  In examining the relationship between student loans and college tuition, the New York Federal Reserve Bank found that

Accepted Answer

A)   increases in tuition costs caused an increase in student borrowing.
B)   increases in student borrowing caused tuition costs to rise.
C)   while student borrowing and tuition costs have both risen over time, there is no causal relationship between the two.
D)   subsidizing the supply of higher education has increased both tuition costs and student borrowing.E) B) and D)
F) None of the above

Question 10

There is a shortage in a market for a product when

Accepted Answer

A)   the current price is higher than the equilibrium price.
B)   supply is less than demand.
C)   quantity demanded is less than quantity supplied.
D)   quantity demanded is greater than quantity supplied.E) B) and D)
F) B) and C)

Question 11

An increase in the quantity demanded means that

Accepted Answer

A)   given supply, the price of the product can be expected to decline.
B)   price has declined and consumers therefore want to purchase more of the product.
C)   the demand curve has shifted to the right.
D)   the demand curve has shifted to the left.E) A) and B)
F) A) and C)

Question 12

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

Question 13

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective)  will

Accepted Answer

A)   increase equilibrium price and quantity.
B)   decrease equilibrium price and quantity.
C)   increase equilibrium price and decrease equilibrium quantity.
D)   decrease equilibrium price and increase equilibrium quantity.E) B) and C)
F) A) and D)

Question 14

The scalping of tickets for an event is a sign that the stated price on the ticket is

Accepted Answer

A)   equal to the quantity demanded.
B)   equal to the market clearing price.
C)   below the market clearing price.
D)   above the market clearing price.E) A) and B)
F) All of the above

Question 15

Government-subsidized student loans tend to

Accepted Answer

A)   increase demand for higher education, causing the price of education to rise.
B)   reduce the price of higher education, because supply increases.
C)   raise the price of higher education, because supply decreases.
D)   reduce demand for higher education, causing the price of education to fall.E) A) and B)
F) None of the above

Question 16

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Accepted Answer

A) True 
 B)False

Question 17

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result, the equilibrium price will

Accepted Answer

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

Question 18

Which of the following is an example of a price ceiling?

Accepted Answer

A)   limits on interest rates charged by credit card companies
B)   subsidies for apartment rent in major cities
C)   minimum-wage laws for unskilled workers
D)   price supports for agricultural productsE) C) and D)
F) A) and B)

Question 19

(Last Word)  Based on economic theory and research on tuition costs and student borrowing, the best way to reduce tuition costs for students would be to

Accepted Answer

A)   increase subsidies for student loans.
B)   impose price floors on tuition.
C)   subsidize higher education to increase the supply.
D)   increase grants to students (such as Pell Grants)  that do not need to be repaid.E) A) and B)
F) None of the above

Question 20

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that

Accepted Answer

A)   higher education is an exception to the law of demand.
B)   the supply of education provided by GSU has also increased over the 20-year period.
C)   factors such as school-age population, incomes, and preferences for education have increased over the 20-year period.
D)   GSU's supply curve of education is downsloping.E) A) and D)
F) None of the above

Exam 3: Demand, Supply, and Market Equilibrium

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Correct AnswerverifiedShow Answer

(Last Word) Based on economic theory and research on tuition costs and student borrowing, the best way to reduce tuition costs for students would be to

Correct AnswerverifiedShow Answer

(Last Word) In examining the relationship between student loans and college tuition, the New York Federal Reserve Bank found that

Correct AnswerverifiedShow Answer

Government-subsidized student loans tend to

Correct AnswerverifiedShow Answer

An increase in the quantity demanded means that

Correct AnswerverifiedShow Answer

There is a shortage in a market for a product when

Correct AnswerverifiedShow Answer

The upward slope of the supply curve reflects the

Correct AnswerverifiedShow Answer

If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

Correct AnswerverifiedShow Answer

An increase in the demand for online streaming music indicates that more is

Correct AnswerverifiedShow Answer

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

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. A scalpers' market will exist if the event organizers set the official ticket price at

Correct AnswerverifiedShow Answer

A large increase in the supply of HD-TV sets occurs simultaneously with a smaller decrease in its demand. As a result, the equilibrium price will

Correct AnswerverifiedShow Answer

(Advanced analysis) The equation for the demand curve in the below diagram

Correct AnswerverifiedShow Answer

An effective price ceiling will

Correct AnswerverifiedShow Answer

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Correct AnswerverifiedShow Answer

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Correct AnswerverifiedShow Answer

The scalping of tickets for an event is a sign that the stated price on the ticket is

Correct AnswerverifiedShow Answer

Which of the following would cause a leftward shift in the supply curve for car washes?

Correct AnswerverifiedShow Answer

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that

Correct AnswerverifiedShow Answer

Which of the following is an example of a price ceiling?

Correct AnswerverifiedShow Answer

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