Question 1

When an economy achieves both allocative and productive efficiency, it implies that there is:

Accepted Answer

A)  income equality.
B)  price stability.
C)  full production.
D)  fixed technology.E) A) and D)
F) All of the above

Question 2

All of the following are held to be constant when the supply curve for a product is drawn, except the:

Accepted Answer

A)  price of the product.
B)  state of technology.
C)  number of producers.
D)  price of inputs used to make the product.E) B) and D)
F) C) and D)

Question 3

A market supply schedule for a product indicates that:

Accepted Answer

A)  as the product's price falls, producers produce more.
B)  there is an inverse relationship between price and quantity supplied.
C)  as a product's price rises, producers produce less.
D)  there is a direct relationship between price and quantity supplied.E) All of the above
F) B) and C)

Question 4

Which will not cause a shift in the demand for product A?

Accepted Answer

A)  a change in consumer preferences
B)  a change in the price of A
C)  a decline in consumer incomes
D)  a decrease in the price of close-substitute product BE) A) and D)
F) A) and C)

Question 5

Which of the following would most likely cause a decrease in current consumer demand for normal good X?

Accepted Answer

A)  a decline in the price of product X
B)  an increase in consumer income
C)  a decrease in the prices of goods which are close substitutes for X
D)  an increase in the price which consumers expect will prevail for product X in the futureE) A) and B)
F) A) and C)

Question 6

Refer to the diagram given below. 0 and S0 respectively, the initial equilibrium price and quantity will be: A) 0F and 0C respectively. B) 0G and 0B respectively. C) 0F and 0A respectively. D) 0E and 0B respectively." class="answers-bank-image d-inline" rel="preload" > The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D0 and S0 respectively, the initial equilibrium price and quantity will be:

Accepted Answer

A)  0F and 0C respectively.
B)  0G and 0B respectively.
C)  0F and 0A respectively.
D)  0E and 0B respectively.E) All of the above
F) A) and B)

Question 7

Which is a determinant of supply?

Accepted Answer

A)  tastes and preferences
B)  technology
C)  consumer income
D)  number of consumersE) C) and D)
F) B) and C)

Question 8

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) None of the above
F) All of the above

Question 9

Refer to the diagram.The equilibrium price and quantity for milk in this market are:

Accepted Answer

A)  $1.50 and 28 million gallons.
B)  $1.50 and 30 million gallons.
C)  $2.00 and 20 million gallons.
D)  $1.00 and 35 million gallons.E) A) and C)
F) B) and C)

Question 10

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A)  consumer incomes have declined and they now want to buy less of A at each possible price.
B)  the price of A has increased and, as a result, consumers want to purchase less of it.
C)  consumer preferences have changed in favour of A so that they now want to buy more at each possible price.
D)  the price of A has declined and, as a result, consumers want to purchase more of it.E) B) and C)
F) B) and D)

Question 11

If consumer incomes increase, the demand for product X:

Accepted Answer

A)  will necessarily remain unchanged.
B)  may shift either to the right or left.
C)  will necessarily shift to the right.
D)  will necessarily shift to the left.E) All of the above
F) A) and B)

Question 12

A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

Accepted Answer

A)  quantity supplied.
B)  quantity demanded.
C)  supply.
D)  demand.E) A) and B)
F) A) and C)

Question 13

If an effective legal ceiling is imposed on credit card interest rates:

Accepted Answer

A)  such credit would be less readily available.
B)  annual credit card fees would fall.
C)  the product prices charged by merchants who issue credit cards would fall.
D)  more credit cards will be issued.E) A) and B)
F) A) and C)

Question 14

An improvement in production technology will:

Accepted Answer

A)  increase equilibrium price.
B)  shift the supply curve to the left.
C)  shift the supply curve to the right.
D)  shift the demand curve to the left.E) A) and D)
F) A) and C)

Question 15

A television station reports that the price of orange juice has declined but the quantity sold has increased.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) All of the above
F) B) and C)

Question 16

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)  demand rises and supply rises
B)  supply falls and demand remains constant
C)  demand rises and supply falls
D)  supply rises and demand fallsE) A) and D)
F) B) and C)

Question 17

If demand for a good decreases and supply remains constant, equilibrium price:

Accepted Answer

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

Question 18

There will be a surplus of a product when:

Accepted Answer

A)  price is below the equilibrium level.
B)  the supply curve is downward sloping and the demand curve is upward sloping.
C)  the demand and supply curves fail to intersect.
D)  consumers want to buy less than producers offer for sale.E) B) and D)
F) B) and C)

Question 19

1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from: A) an increase in expectations of higher future prices for chicken. B) an increase in the cost of chicken feed to produce chickens. C) a decrease in the price of beef products. D) an increase in consumer incomes." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

Accepted Answer

A)  an increase in expectations of higher future prices for chicken.
B)  an increase in the cost of chicken feed to produce chickens.
C)  a decrease in the price of beef products.
D)  an increase in consumer incomes.E) A) and C)
F) C) and D)

Question 20

For some commodities, purchases tend to decrease as the buyer's income increases.Such commodities are known as:

Accepted Answer

A)  common goods.
B)  inferior goods.
C)  inverse goods.
D)  normal goods.E) B) and C)
F) C) and D)

Exam 3: Part B: Demand, Supply, and Market Equilibrium

A market supply schedule for a product indicates that:

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An improvement in production technology will:

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A television station reports that the price of orange juice has declined but the quantity sold has increased.This situation would be caused by a(n) :

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When an economy achieves both allocative and productive efficiency, it implies that there is:

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If consumer incomes increase, the demand for product X:

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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D0 and S0 respectively, the initial equilibrium price and quantity will be:

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Refer to the diagram.The equilibrium price and quantity for milk in this market are:

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For some commodities, purchases tend to decrease as the buyer's income increases.Such commodities are known as:

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In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

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All of the following are held to be constant when the supply curve for a product is drawn, except the:

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If an effective legal ceiling is imposed on credit card interest rates:

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Which will not cause a shift in the demand for product A?

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There will be a surplus of a product when:

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A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

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A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

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Refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

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Which is a determinant of supply?

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If the market price is above the equilibrium price:

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Which of the following would most likely cause a decrease in current consumer demand for normal good X?

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If demand for a good decreases and supply remains constant, equilibrium price:

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Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the initial demand and supply curves are D₀ and S₀ respectively, the initial equilibrium price and quantity will be:

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Refer to the above graph, which shows the market for chicken where D₁ and D₂ represent different demand curves.A change from E₁ to E₂ is most likely to result from:

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