Question 1

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) A) and C)

Question 2

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)  a widely publicized study that indicates beef consumption increases one's cholesterol
B)  a reduction in the price of cattle feed
C)  an effective advertising campaign by pork producers
D)  a change in the incomes of beef consumersE) B) and C)
F) A) and D)

Question 3

An effective price ceiling will lower the equilibrium price and cause a surplus.

Accepted Answer

A) True 
 B)False

Question 4

(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 price is

Accepted Answer

A)  $50.
B)  $70.
C)  $80.
D)  $130.E) A) and D)
F) A) and C)

Question 5

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 6

A decrease in supply, holding demand constant, will cause

Accepted Answer

A)  higher prices and a larger quantity sold.
B)  higher prices and a smaller quantity sold.
C)  lower prices and a smaller quantity sold.
D)  lower prices and a larger quantity sold.E) C) and D)
F) A) and B)

Question 7

If the market price is above the equilibrium price,

Accepted Answer

A)  a shortage will occur and producers will produce more and lower prices.
B)  a surplus will occur and producers will produce less and lower prices.
C)  a surplus will result and consumers will bid prices up.
D)  producers will make extremely high profits.E) A) and B)
F) B) and D)

Question 8

Which would cause an increase in the supply curve of cell-phone services?

Accepted Answer

A)  a decrease in the wages of cell-phone company workers
B)  an increase in the price of cell-phone services
C)  an increase in the taxes paid by cell-phone service providers
D)  a decrease in a subsidy given to cell-phone service providersE) A) and B)
F) A) and C)

Question 9

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 D)
F) A) and C)

Question 10

The market system automatically corrects a surplus condition in a competitive market by

Accepted Answer

A)  raising the price of the commodity in question while increasing the quantity demanded.
B)  raising the price of the commodity in question while decreasing the quantity demanded.
C)  reducing the price of the commodity in question while increasing the quantity demanded.
D)  reducing the price of the commodity in question while decreasing the quantity demanded.E) A) and C)
F) A) and D)

Question 11

A leftward shift of the supply curve for oil in the United States is most likely to result from

Accepted Answer

A)  a decrease in the fees that oil companies must pay for drilling licenses.
B)  an increase in the subsidy for oil exploration and drilling.
C)  a decrease in the world price of oil.
D)  an increase in the costs of exploration and drilling for oil.E) A) and B)
F) A) and C)

Question 12

Attaining "allocative efficiency" means that

Accepted Answer

A)  the law of increasing opportunity costs has reached a maximum.
B)  the least costly methods are being used to produce a product.
C)  resources are being devoted to the production of products most desired by society.
D)  the gap between marginal benefits and marginal costs of the product is biggest.E) C) and D)
F) A) and B)

Question 13

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will

Accepted Answer

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

Question 14

(Consider This)  A primary advantage of Uber to government-regulated taxis is that

Accepted Answer

A)  Uber riders are guaranteed lower fares.
B)  Uber drivers are required to meet more stringent safety standards.
C)  Uberâ€™s dynamic pricing avoids the inefficiencies caused by regulated taxi fares.
D)  the greater monopoly for rides increases profits for both Uber and regular taxi drivers.E) A) and B)
F) A) and C)

Question 15

An increase in the demand for corn is more than offset by an increase in its supply.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) C) and D)
F) B) and D)

Question 16

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Accepted Answer

A)  Equilibrium quantity and price will both increase.
B)  Equilibrium quantity and price will both decrease.
C)  Equilibrium quantity will decrease and equilibrium price will stay the same.
D)  Equilibrium quantity will stay the same and equilibrium price will increase.E) None of the above
F) A) and D)

Question 17

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

Accepted Answer

A)  increase in the price and the quantity sold of DVDs.
B)  decrease in the price and the quantity sold of DVDs.
C)  increase in the price and a decrease in the quantity sold of DVDs.
D)  decrease in the price and an increase in the quantity sold of DVDs.E) None of the above
F) All of the above

Question 18

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

Accepted Answer

A) True 
 B)False

Question 19

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 20

A market that is achieving allocative efficiency must also be achieving productive efficiency.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

An effective price ceiling will lower the equilibrium price and cause a surplus.

Correct AnswerverifiedShow Answer

Which of the following is a determinant of supply?

Correct AnswerverifiedShow Answer

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n)

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 price is

Correct AnswerverifiedShow Answer

Which of the following would not shift the demand curve for beef?

Correct AnswerverifiedShow Answer

A decrease in demand and an increase in supply will

Correct AnswerverifiedShow Answer

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

If the market price is above the equilibrium price,

Correct AnswerverifiedShow Answer

Attaining "allocative efficiency" means that

Correct AnswerverifiedShow Answer

An increase in the demand for corn is more than offset by an increase in its supply.As a result, the equilibrium price will

Correct AnswerverifiedShow Answer

A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct AnswerverifiedShow Answer

A leftward shift of the supply curve for oil in the United States is most likely to result from

Correct AnswerverifiedShow Answer

If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

Correct AnswerverifiedShow Answer

The market system automatically corrects a surplus condition in a competitive market by

Correct AnswerverifiedShow Answer

A decrease in supply, holding demand constant, will cause

Correct AnswerverifiedShow Answer

Which would cause an increase in the supply curve of cell-phone services?

Correct AnswerverifiedShow Answer

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will

Correct AnswerverifiedShow Answer

A market that is achieving allocative efficiency must also be achieving productive efficiency.

Correct AnswerverifiedShow Answer

(Consider This) A primary advantage of Uber to government-regulated taxis is that

Correct AnswerverifiedShow Answer

What will happen to the equilibrium quantity and price of salmon in a competitive market when there is an equal decrease in demand and supply?

Correct AnswerverifiedShow Answer

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