Question 1

If an economy produces its most wanted goods but uses outdated production methods, it is

Accepted Answer

A)   achieving productive efficiency but not allocative efficiency.
B)   not achieving productive efficiency.
C)   achieving both productive and allocative efficiency.
D)   engaged in roundabout production.E) A) and D)
F) C) and D)

Question 2

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1)  the demand (D)  for, or supply (S)  of, X; (2)  the equilibrium price (P)  of X; and (3)  the equilibrium quantity (Q)  of X. Consumer expectations that the price of X will rise sharply in the future will

Accepted Answer

A)   increase S, increase P, and increase Q.
B)   increase D, increase P, and increase Q.
C)   decrease S, increase P, and increase Q.
D)   increase D, decrease P, and increase Q.E) C) and D)
F) All of the above

Question 3

Answer the question based on the following supply and demand schedules in units per week for a product.  Refer to the above table. If demand increased by 100 units at each price level and the government set a price ceiling of $40, then there would be

Accepted Answer

A)   a shortage.
B)   a surplus.
C)   no shortage or surplus.
D)   a decrease in supply.E) C) and D)
F) All of the above

Question 4

If price is above the equilibrium level, competition among sellers to reduce the resulting

Accepted Answer

A)   surplus will increase quantity demanded and decrease quantity supplied.
B)   shortage will decrease quantity demanded and increase quantity supplied.
C)   surplus will decrease quantity demanded and increase quantity supplied.
D)   shortage will increase quantity demanded and decrease quantity supplied.E) None of the above
F) B) and D)

Question 5

A television station reports that the price of coffee has increased and the quantity traded in the market has decreased. This situation would be caused by a(n)

Accepted Answer

A)   increase in demand.
B)   increase in supply.
C)   decrease in demand.
D)   decrease in supply.E) None of the above
F) A) and C)

Question 6

Allocative efficiency involves determining

Accepted Answer

A)   which output mix will result in the most rapid rate of economic growth.
B)   which production possibilities curve reflects the lowest opportunity costs.
C)   the mix of output that will maximize society's satisfaction.
D)   the optimal rate of technological progress.E) A) and D)
F) None of the above

Question 7

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Accepted Answer

A) True 
 B)False

Question 8

All markets involve the following elements, except

Accepted Answer

A)   demand or buyers.
B)   face-to-face negotiation.
C)   prices of goods and services.
D)   supply or sellers.E) A) and C)
F) None of the above

Question 9

The price of pork may increase as a result of

Accepted Answer

A)   a decrease in the cost of feed for pigs.
B)   decreased advertising of pork.
C)   an increase in the cost of producing beef.
D)   a subsidy to pork producers.E) A) and B)
F) A) and C)

Question 10

If Z is an inferior good, an increase in money income will shift the

Accepted Answer

A)   supply curve for Z to the left.
B)   supply curve for Z to the right.
C)   demand curve for Z to the left.
D)   demand curve for Z to the right.E) All of the above
F) B) and C)

Question 11

The table below shows the weekly demand for hamburger in a market where there are just three buyers.  If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Accepted Answer

A)   increase from 24 to 52.
B)   decrease from 52 to 24.
C)   increase from 120 to 156.
D)   increase from 29 to 55.E) B) and D)
F) C) and D)

Question 12

Digital cameras and memory cards are

Accepted Answer

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

Question 13

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Accepted Answer

A)   improved technology for producing Z
B)   an increase in the prices of the resources used to make Z
C)   an increase in the excise tax on product Z
D)   increases in the incomes of the buyers of ZE) B) and C)
F) A) and C)

Question 14

Other things equal, if the price of a key resource used to produce product X falls, the

Accepted Answer

A)   supply curve of product X will shift to the right.
B)   demand curve of product X will shift to the right.
C)   supply curve of product X will shift to the left.
D)   supply curve of product X will not shift.E) A) and D)
F) A) and C)

Question 15

Which of the following statements is true about price ceilings?

Accepted Answer

A)   price ceilings create surpluses for goods but shortages for services.
B)   Price ceilings cause goods to be rationed by some other means than legally determined market prices.
C)   Ration coupons are the only way to ration goods when price ceilings are in place.
D)   All of the other statements are correct.E) C) and D)
F) B) and D)

Question 16

Graphically, the market demand curve is

Accepted Answer

A)   steeper than any individual demand curve that is part of it.
B)   greater than the sum of the individual demand curves.
C)   the horizontal sum of individual demand curves.
D)   the vertical sum of individual demand curves.E) None of the above
F) B) and C)

Question 17

The location of the product supply curve depends on

Accepted Answer

A)   production technology.
B)   the number of buyers in the market.
C)   the tastes of buyers.
D)   the location of the demand curve.E) C) and D)
F) A) and B)

Question 18

The demand curve shows the relationship between

Accepted Answer

A)   money income and quantity demanded.
B)   price and production costs.
C)   price and quantity demanded.
D)   consumer tastes and quantity demanded.E) B) and C)
F) None of the above

Question 19

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 for wheat, when the cost of fertilizer decreases.

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) All of the above
F) A) and B)

Question 20

The following are explanations of the Law of Demand, except

Accepted Answer

A)   expectations effect.
B)   diminishing marginal utility.
C)   income effect.
D)   substitution effect.E) A) and B)
F) None of the above

Exam 3: Demand, Supply, and Market Equilibrium

If Z is an inferior good, an increase in money income will shift the

Correct Answer
verified

Other things equal, if the price of a key resource used to produce product X falls, the

Correct Answer
verified

Which of the following statements is true about price ceilings?

Correct Answer
verified

All markets involve the following elements, except

Correct Answer
verified

The following are explanations of the Law of Demand, except

Correct Answer
verified

A television station reports that the price of coffee has increased and the quantity traded in the market has decreased. This situation would be caused by a(n)

Correct Answer
verified

The price of pork may increase as a result of

Correct Answer
verified

Answer the question based on the following supply and demand schedules in units per week for a product. Refer to the above table. If demand increased by 100 units at each price level and the government set a price ceiling of $40, then there would be

Correct Answer
verified

The table below shows the weekly demand for hamburger in a market where there are just three buyers. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Correct Answer
verified

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Correct Answer
verified

If price is above the equilibrium level, competition among sellers to reduce the resulting

Correct Answer
verified

If an economy produces its most wanted goods but uses outdated production methods, it is

Correct Answer
verified

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 for wheat, when the cost of fertilizer decreases.

Correct Answer
verified

Correct Answer
verified

Graphically, the market demand curve is

Correct Answer
verified

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Correct Answer
verified

The demand curve shows the relationship between

Correct Answer
verified

Allocative efficiency involves determining

Correct Answer
verified

The location of the product supply curve depends on

Correct Answer
verified

Digital cameras and memory cards are

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

If Z is an inferior good, an increase in money income will shift the

Correct AnswerverifiedShow Answer

Other things equal, if the price of a key resource used to produce product X falls, the

Correct AnswerverifiedShow Answer

Which of the following statements is true about price ceilings?

Correct AnswerverifiedShow Answer

All markets involve the following elements, except

Correct AnswerverifiedShow Answer

The following are explanations of the Law of Demand, except

Correct AnswerverifiedShow Answer

A television station reports that the price of coffee has increased and the quantity traded in the market has decreased. This situation would be caused by a(n)

Correct AnswerverifiedShow Answer

The price of pork may increase as a result of

Correct AnswerverifiedShow Answer

Answer the question based on the following supply and demand schedules in units per week for a product. Refer to the above table. If demand increased by 100 units at each price level and the government set a price ceiling of $40, then there would be

Correct AnswerverifiedShow Answer

The table below shows the weekly demand for hamburger in a market where there are just three buyers. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Correct AnswerverifiedShow Answer

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Correct AnswerverifiedShow Answer

If price is above the equilibrium level, competition among sellers to reduce the resulting

Correct AnswerverifiedShow Answer

If an economy produces its most wanted goods but uses outdated production methods, it is

Correct AnswerverifiedShow Answer

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 for wheat, when the cost of fertilizer decreases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Graphically, the market demand curve is

Correct AnswerverifiedShow Answer

An increase in consumer incomes will cause a decrease in the demand for an inferior good.

Correct AnswerverifiedShow Answer

The demand curve shows the relationship between

Correct AnswerverifiedShow Answer

Allocative efficiency involves determining

Correct AnswerverifiedShow Answer

The location of the product supply curve depends on

Correct AnswerverifiedShow Answer

Digital cameras and memory cards are

Correct AnswerverifiedShow Answer

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