Question 1

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the

Accepted Answer

A)   Law of Demand.
B)   Law of Supply.
C)   allocative efficiency rule.
D)   ceteris paribus assumption.E) A) and D)
F) B) and D)

Question 2

An inferior good is

Accepted Answer

A)   one whose demand curve will shift rightward as incomes rise.
B)   one whose price and quantity demanded vary directly.
C)   one that has not been approved by the Federal Food and Drug Administration.
D)   not accurately defined by any of these statements.E) None of the above
F) A) and B)

Question 3

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts.  Which diagram illustrates the effect on the natural-gas market of the widespread use of "fracking," or hydraulic fracturing, by gas-drilling companies?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and D)
F) B) and C)

Question 4

Productive efficiency refers to

Accepted Answer

A)   the use of the least-cost method of production.
B)   the production of the product mix most wanted by society.
C)   the full employment of all available resources.
D)   production at some point inside of the production possibilities curve.E) C) and D)
F) A) and B)

Question 5

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium price is

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $7.E) A) and C)
F) A) and D)

Question 6

A recent study found that an increase in the federal tax on beer (which would increase the price of beer)  would reduce the demand for marijuana. Based on this information we can conclude that

Accepted Answer

A)   beer and marijuana are substitute goods.
B)   beer and marijuana are complementary goods.
C)   beer is an inferior good.
D)   marijuana is an inferior good.E) A) and B)
F) A) and C)

Question 7

(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) All of the above
F) B) and C)

Question 8

If two goods are complements,

Accepted Answer

A)   they are consumed independently.
B)   an increase in the price of one will increase the demand for the other.
C)   a decrease in the price of one will increase the demand for the other.
D)   they are necessarily inferior goods.E) A) and B)
F) B) and C)

Question 9

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will increase.

Accepted Answer

A) True 
 B)False

Question 10

An increase in product price will cause

Accepted Answer

A)   quantity demanded to decrease.
B)   quantity supplied to decrease.
C)   quantity demanded to increase.
D)   the supply curve to shift to the left.E) C) and D)
F) B) and D) A

Question 11

Black markets are associated with

Accepted Answer

A)   price floors and the resulting product surpluses.
B)   price floors and the resulting product shortages.
C)   ceiling prices and the resulting product shortages.
D)   ceiling prices and the resulting product surpluses.E) B) and C)
F) All of the above C

Question 12

An increase in the price of product B leads to an increase in the demand for product C This indicates that products B and C are

Accepted Answer

A)   complementary goods.
B)   substitute goods.
C)   inferior goods.
D)   normal goods.E) B) and D)
F) B) and C)

Question 13

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.  Given this market, if the event organizers pre-set the price at $20, then this action would result in a

Accepted Answer

A)   shortage of 5,000 units.
B)   shortage of 55,000 units.
C)   surplus of 5,000 units.
D)   surplus of 50,000 units.E) A) and B)
F) All of the above

Question 14

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 15

One reason that the quantity demanded of a good increases when its price falls is that the

Accepted Answer

A)   price decline shifts the supply curve to the left.
B)   lower price shifts the demand curve to the left.
C)   lower price shifts the demand curve to the right.
D)   lower price increases the real incomes of buyers, enabling them to buy more.E) B) and C)
F) A) and C)

Question 16

The law of demand states that, other things equal,

Accepted Answer

A)   price and quantity demanded are inversely related.
B)   the larger the number of buyers in a market, the lower will be product price.
C)   price and quantity demanded are directly related.
D)   consumers will buy more of a product at high prices than at low prices.E) A) and D)
F) B) and D) A

Question 17

Allocative efficiency refers to

Accepted Answer

A)   the use of the least-cost method of production.
B)   the production of the product mix most wanted by society.
C)   the full employment of all available resources.
D)   production at some point inside of the production possibilities curve.E) None of the above
F) A) and C)

Question 18

A government subsidy per unit of output increases supply.

Accepted Answer

A) True 
 B)False

Question 19

When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n)

Accepted Answer

A)   increase in the demand for gasoline.
B)   decrease in the demand for gasoline.
C)   increase in the supply of gasoline.
D)   decrease in the supply of gasoline.E) C) and D)
F) A) and B)

Question 20

If the price of product L increases, the demand curve for close-substitute product J will

Accepted Answer

A)   shift downward toward the horizontal axis.
B)   shift to the left.
C)   shift to the right.
D)   remain unchanged.E) A) and B)
F) A) and D)

Exam 3: Demand, Supply, and Market Equilibrium

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the

Correct Answer
verified

An inferior good is

Correct Answer
verified

Correct Answer
verified

Productive efficiency refers to

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium price is

Correct Answer
verified

A recent study found that an increase in the federal tax on beer (which would increase the price of beer) would reduce the demand for marijuana. Based on this information we can conclude that

Correct Answer
verified

(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 Answer
verified

If two goods are complements,

Correct Answer
verified

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will increase.

Correct Answer
verified

An increase in product price will cause

Correct Answer
verified
A

Black markets are associated with

Correct Answer
verified
C

An increase in the price of product B leads to an increase in the demand for product C This indicates that products B and C are

Correct Answer
verified

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. Given this market, if the event organizers pre-set the price at $20, then this action would result in a

Correct Answer
verified

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Correct Answer
verified

One reason that the quantity demanded of a good increases when its price falls is that the

Correct Answer
verified

The law of demand states that, other things equal,

Correct Answer
verified
A

Allocative efficiency refers to

Correct Answer
verified

A government subsidy per unit of output increases supply.

Correct Answer
verified

When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n)

Correct Answer
verified

If the price of product L increases, the demand curve for close-substitute product J will

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the

Correct AnswerverifiedShow Answer

An inferior good is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Productive efficiency refers to

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - .2Q to P = 7 - .3Q, the new equilibrium price is

Correct AnswerverifiedShow Answer

A recent study found that an increase in the federal tax on beer (which would increase the price of beer) would reduce the demand for marijuana. Based on this information we can conclude that

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

If two goods are complements,

Correct AnswerverifiedShow Answer

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will increase.

Correct AnswerverifiedShow Answer

An increase in product price will cause

Correct AnswerverifiedA

Black markets are associated with

Correct AnswerverifiedC

An increase in the price of product B leads to an increase in the demand for product C This indicates that products B and C are

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. Given this market, if the event organizers pre-set the price at $20, then this action would result in a

Correct AnswerverifiedShow Answer

If we observe the price of a good in a competitive market rising, then we can conclude that there had been a shortage in the market.

Correct AnswerverifiedShow Answer

One reason that the quantity demanded of a good increases when its price falls is that the

Correct AnswerverifiedShow Answer

The law of demand states that, other things equal,

Correct AnswerverifiedA

Allocative efficiency refers to

Correct AnswerverifiedShow Answer

A government subsidy per unit of output increases supply.

Correct AnswerverifiedShow Answer

When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n)

Correct AnswerverifiedShow Answer

If the price of product L increases, the demand curve for close-substitute product J will

Correct AnswerverifiedShow Answer

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A

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C

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A

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