Question 1

The market for used cars is not considered perfectly competitive because:

Accepted Answer

A)   there is complete information.
B)   the buyers are not price takers.
C)   the good is standardized.
D)   there are always very low transaction costs.E) B) and D)
F) A) and D)

Question 2

If producers incorrectly set the price of their product too low:

Accepted Answer

A)   a shortage will result.
B)   a surplus will result.
C)   equilibrium will result.
D)   the industry will die out soon.E) A) and D)
F) C) and D)

Question 3

Equilibrium takes place where:

Accepted Answer

A)   supply and demand intersect.
B)   supply is highest.
C)   demand is highest.
D)   prices are maximized.E) All of the above
F) A) and B)

Question 4

Consider a market that is in equilibrium.If it experiences a decrease in demand,what will happen? The demand curve will shift to the:

Accepted Answer

A)   left, and the equilibrium price and quantity will rise.
B)   left, and the equilibrium price will increase and the equilibrium quantity will decrease.
C)   left, and the equilibrium price and quantity will fall.
D)   right, and the equilibrium price and quantity will fall.E) A) and D)
F) A) and C)

Question 5

We say that goods are complements when they:

Accepted Answer

A)   serve similar-enough purposes that a consumer might purchase one in place of the other.
B)   are consumed together, so that purchasing one will make a consumer more likely to purchase the other.
C)   can replace something consumers typically purchase at a significantly lower price.
D)   change a consumer's preferences for a good or service.E) A) and B)
F) A) and C)

Question 6

Supply describes how much of something producers:

Accepted Answer

A)   are willing and able to buy under certain circumstances.
B)   want to sell under certain circumstances, although they may not be able to.
C)   are willing and able to offer for sale at varies prices under given circumstances.
D)   want to offer for sale under certain circumstances, although they may not be willing to.E) A) and C)
F) None of the above

Question 7

After getting a raise at work,Jennie now regularly buys steak instead of hamburger.Based on this behavior,we can assume:

Accepted Answer

A)   steak is a normal good, and hamburger is an inferior good for Jennie.
B)   steak is an inferior good, and hamburger is a normal good for Jennie.
C)   steak and hamburger are complementary goods for Jennie.
D)   steak and hamburger are normal goods for Jennie.E) A) and B)
F) A) and C)

Question 8

Consider the market for ride-on lawn mowers and the recent increases in the price of oil.The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers.An increase in the price of oil also makes it more expensive to run a ride-on mower.If the price of oil increases,the demand for ride-on mowers will ______ and the supply will _______.

Accepted Answer

A)   increase; increase
B)   decrease; decrease
C)   increase; decrease
D)   decrease; increaseE) C) and D)
F) A) and C)

Question 9

Assume the graph shown represents the market for pizzas sold in an hour.If the original equilibrium was D and S1.Which of the following is true when S1 shifted to S2?

Accepted Answer

A)   Equilibrium price decreased by $5.
B)   Equilibrium quantity increased by 20.
C)   Equilibrium price increased by $5.
D)   Equilibrium quantity increased by 30.E) B) and C)
F) None of the above

Question 10

A decrease in the price of spaghetti noodles is likely to cause:

Accepted Answer

A)   an increase in the demand for penne pasta due to a change in the price of a complementary good.
B)   an increase in the demand for penne pasta due to a change in the price of a substitute good.
C)   a decrease in the demand for penne pasta due to a change in the price of a complementary good.
D)   a decrease in the demand for penne pasta due to a change in the price of a substitute good.E) None of the above
F) A) and D)

Question 11

The price of dog collars has gone down,and all other variables have remained constant.This change can be shown graphically as a:

Accepted Answer

A)   shift in the demand curve to the right.
B)   shift in the demand curve to the left.
C)   movement along the demand curve to the right.
D)   movement along the demand curve to the left.E) A) and B)
F) A) and C)

Question 12

An increase in the price of butter is likely to cause the demand for:

Accepted Answer

A)   olive oil to increase.
B)   olive oilto decrease.
C)   butter to increase.
D)   butter to d.E) A) and B)
F) C) and D)

Question 13

Apple just announced it will be coming out with the newest model iPhone in the next six months.One could reasonably expect demand for the current model of iPhone to:

Accepted Answer

A)   decrease due to a change in expectations of future prices.
B)   increase due to a change in expectations of future prices.
C)   increase due to limited supply of the current model.
D)   decrease due to the change in price of a substitute good.E) A) and B)
F) B) and C)

Question 14

In economic terminology,a buyer or seller who cannot affect the market price is called a:

Accepted Answer

A)   price taker.
B)   price maker.
C)   price setter.
D)   price signaler.E) C) and D)
F) A) and C)

Question 15

The best example of a standardized good would be:

Accepted Answer

A)   corn.
B)   a handbag.
C)   an autographed baseball.
D)   breakfast cerealE) C) and D)
F) B) and C)

Question 16

Suppose there is an unusually large crop of apples this year.How might this affect the market for apples?

Accepted Answer

A)   The demand would increase, increasing both equilibrium price and quantity.
B)   The supply would increase, decreasing equilibrium price and increasing equilibrium quantity.
C)   The demand would decrease, decreasing both equilibrium price and quantity.
D)   The supply would decrease, increasing equilibrium price and decreasing equilibrium quantity.E) C) and D)
F) B) and D)

Question 17

Ray's company just announced that everyone will be getting their pay cut by 5% in order to avoid having to close down.Ray's demand for coffee,a normal good,will likely:

Accepted Answer

A)   decrease, and his demand curve will shift to the right.
B)   decrease, and his demand curve will shift to the left.
C)   increase, and his demand curve will shift to the right.
D)   increase, and his demand curve will shift to the left.E) None of the above
F) All of the above

Question 18

According to the graph shown,at a price of $15,there is a:

Accepted Answer

A)   shortage of 10.
B)   shortage of 20.
C)   shortage of 30.
D)   surplus of 20.E) A) and C)
F) A) and B)

Question 19

Jan heads to the store to buy burgers for dinner.Seeing a sale on hot dogs,she buys those instead.The change in her demand for burgers is due to which factor?

Accepted Answer

A)   Preferences
B)   Income
C)   Prices of related goods
D)   Number of buyersE) None of the above
F) A) and C)

Question 20

Transaction costs can be defined as the costs:

Accepted Answer

A)   incurred by buyer and seller in agreeing to and executing a sale of goods or services.
B)   the government must pay to allow for an exchange.
C)   incurred by the buyer and seller in agreeing to and executing a purchase of goods or services, excluding transportation costs.
D)   the government incur to create a structured market for the exchange of buyers and sellers.E) B) and D)
F) A) and C)

Exam 3: Markets

A decrease in the price of spaghetti noodles is likely to cause:

Correct Answer
verified

Supply describes how much of something producers:

Correct Answer
verified

Jan heads to the store to buy burgers for dinner.Seeing a sale on hot dogs,she buys those instead.The change in her demand for burgers is due to which factor?

Correct Answer
verified

An increase in the price of butter is likely to cause the demand for:

Correct Answer
verified

Ray's company just announced that everyone will be getting their pay cut by 5% in order to avoid having to close down.Ray's demand for coffee,a normal good,will likely:

Correct Answer
verified

Equilibrium takes place where:

Correct Answer
verified

The best example of a standardized good would be:

Correct Answer
verified

Consider a market that is in equilibrium.If it experiences a decrease in demand,what will happen? The demand curve will shift to the:

Correct Answer
verified

The price of dog collars has gone down,and all other variables have remained constant.This change can be shown graphically as a:

Correct Answer
verified

After getting a raise at work,Jennie now regularly buys steak instead of hamburger.Based on this behavior,we can assume:

Correct Answer
verified

According to the graph shown,at a price of $15,there is a:

Correct Answer
verified

In economic terminology,a buyer or seller who cannot affect the market price is called a:

Correct Answer
verified

Apple just announced it will be coming out with the newest model iPhone in the next six months.One could reasonably expect demand for the current model of iPhone to:

Correct Answer
verified

Assume the graph shown represents the market for pizzas sold in an hour.If the original equilibrium was D and S1.Which of the following is true when S1 shifted to S2?

Correct Answer
verified

We say that goods are complements when they:

Correct Answer
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Transaction costs can be defined as the costs:

Correct Answer
verified

Suppose there is an unusually large crop of apples this year.How might this affect the market for apples?

Correct Answer
verified

The market for used cars is not considered perfectly competitive because:

Correct Answer
verified

Correct Answer
verified

If producers incorrectly set the price of their product too low:

Correct Answer
verified

Exam 3: Markets

A decrease in the price of spaghetti noodles is likely to cause:

Correct AnswerverifiedShow Answer

Supply describes how much of something producers:

Correct AnswerverifiedShow Answer

Jan heads to the store to buy burgers for dinner.Seeing a sale on hot dogs,she buys those instead.The change in her demand for burgers is due to which factor?

Correct AnswerverifiedShow Answer

An increase in the price of butter is likely to cause the demand for:

Correct AnswerverifiedShow Answer

Ray's company just announced that everyone will be getting their pay cut by 5% in order to avoid having to close down.Ray's demand for coffee,a normal good,will likely:

Correct AnswerverifiedShow Answer

Equilibrium takes place where:

Correct AnswerverifiedShow Answer

The best example of a standardized good would be:

Correct AnswerverifiedShow Answer

Consider a market that is in equilibrium.If it experiences a decrease in demand,what will happen? The demand curve will shift to the:

Correct AnswerverifiedShow Answer

The price of dog collars has gone down,and all other variables have remained constant.This change can be shown graphically as a:

Correct AnswerverifiedShow Answer

After getting a raise at work,Jennie now regularly buys steak instead of hamburger.Based on this behavior,we can assume:

Correct AnswerverifiedShow Answer

According to the graph shown,at a price of $15,there is a:

Correct AnswerverifiedShow Answer

In economic terminology,a buyer or seller who cannot affect the market price is called a:

Correct AnswerverifiedShow Answer

Apple just announced it will be coming out with the newest model iPhone in the next six months.One could reasonably expect demand for the current model of iPhone to:

Correct AnswerverifiedShow Answer

Assume the graph shown represents the market for pizzas sold in an hour.If the original equilibrium was D and S1.Which of the following is true when S1 shifted to S2?

Correct AnswerverifiedShow Answer

We say that goods are complements when they:

Correct AnswerverifiedShow Answer

Transaction costs can be defined as the costs:

Correct AnswerverifiedShow Answer

Suppose there is an unusually large crop of apples this year.How might this affect the market for apples?

Correct AnswerverifiedShow Answer

The market for used cars is not considered perfectly competitive because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If producers incorrectly set the price of their product too low:

Correct AnswerverifiedShow Answer

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