Question 1

Camille's Creations and Julia's Jewels both sell beads in a competitive market.If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) ,then we would expect both Camille's and Julia's to:

Accepted Answer

A)   raise their price and reduce their quantity supplied.
B)   raise their price and increase their quantity supplied.
C)   lower their price and reduce their quantity supplied.
D)   lower their price and increase their quantity supplied.E) B) and D)
F) A) and D)

Question 2

In constructing a demand curve for product X:

Accepted Answer

A)   consumer preferences are allowed to vary.
B)   the prices of other goods are assumed constant.
C)   money incomes are allowed to vary.
D)   the supply curve of product X is assumed constant.E) All of the above
F) C) and D)

Question 3

In moving along a demand curve,which of the following is not held constant?

Accepted Answer

A)   The price of the product for which the demand curve is relevant.
B)   Price expectations.
C)   Consumer incomes.
D)   Prices of complementary goods.E) All of the above
F) None of the above

Question 4

An effective price floor will:

Accepted Answer

A)   force some firms in this industry to go out of business.
B)   result in a product surplus.
C)   result in a product shortage.
D)   clear the market.E) All of the above
F) C) and D)

Question 5

If the demand and supply curves for product X are stable,a government-mandated increase in the price of X will:

Accepted Answer

A)   increase the supply of X and decrease the demand for X.
B)   increase the demand for X and decrease the supply of X.
C)   increase the quantity supplied of X and decrease the quantity demanded of X.
D)   decrease the quantity supplied of X and increase the quantity demanded of X.E) A) and B)
F) A) and C)

Question 6

If products C and D are close substitutes,an increase in the price of C will:

Accepted Answer

A)   tend to cause the price of D to fall.
B)   shift the demand curve of C to the left and the demand curve of D to the right.
C)   shift the demand curve of D to the right.
D)   shift the demand curves of both products to the right.E) A) and B)
F) A) and C)

Question 7

(Consider This) Ticket scalping is likely to:

Accepted Answer

A)   produce a less interested audience.
B)   reduce the well-being of ticket sellers.
C)   reduce the well-being of ticket buyers.
D)   produce a more interested audience.E) B) and C)
F) A) and D)

Question 8

By an "increase in demand," economists mean that:

Accepted Answer

A)   product price has fallen so consumers move down to a new point on the demand curve.
B)   the quantity demanded at each price in a set of prices is greater.
C)   the quantity demanded at each price in a set of prices is smaller.
D)   a leftward shift of the demand curve has occurred.E) B) and C)
F) All of the above

Question 9

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. Refer to the given information.An increase in income,if X is a normal good,will:

Accepted Answer

A)   increase D,increase P,and increase Q.
B)   increase D,increase P,and decrease Q.
C)   increase S,increase P,and increase Q.
D)   decrease D,increase P,and increase Q.E) A) and D)
F) C) and D)

Question 10

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

Question 11

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

Question 12

Markets,viewed from the perspective of the supply and demand model:

Accepted Answer

A)   assume many buyers and many sellers of a standardized product.
B)   assume market power so that buyers and sellers bargain with one another.
C)   do not exist in the real-world economy.
D)   are approximated by markets in which a single seller determines price.E) A) and B)
F) None of the above

Question 13

When the price of a product falls,the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes:

Accepted Answer

A)   an inferior good.
B)   the rationing function of prices.
C)   the substitution effect.
D)   the income effect.E) A) and B)
F) A) and C)

Question 14

Digital cameras and memory cards are:

Accepted Answer

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

Question 15

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) B) and D)
F) None of the above

Question 16

Economists use the term "demand" to refer to:

Accepted Answer

A)   a particular price-quantity combination on a stable demand curve.
B)   the total amount spent on a particular commodity over a fixed time period.
C)   an upsloping line on a graph that relates consumer purchases and product price.
D)   a schedule of various combinations of market prices and amounts/quantities demanded.E) A) and B)
F) A) and C)

Question 17

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 C)
F) A) and C)

Question 18

A price floor means that:

Accepted Answer

A)   inflation is severe in this particular market.
B)   sellers are artificially restricting supply to raise price.
C)   government is imposing a maximum legal price that is typically below the equilibrium price.
D)   government is imposing a minimum legal price that is typically above the equilibrium price.E) A) and C)
F) A) and B)

Question 19

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. Refer to the given information.If demand changed from P = 100 - 2Q to P = 130 - Q,the new equilibrium price is:

Accepted Answer

A)   $90.
B)   $110.
C)   $96.
D)   $106.E) A) and B)
F) All of the above

Question 20

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Accepted Answer

A)   An increase in supply with a decrease in demand will result in an increase in price.
B)   An increase in supply with no change in demand will result in an increase in price.
C)   An increase in supply with no change in demand will result in a decline in sales.
D)   An increase in demand with no change in supply will result in an increase in sales.E) A) and B)
F) All of the above

Exam 3: Demand, Supply, and Market Equilibrium

Correct Answer
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Allocative efficiency refers to:

Correct Answer
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There will be a surplus of a product when:

Correct Answer
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An effective price floor will:

Correct Answer
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Markets,viewed from the perspective of the supply and demand model:

Correct Answer
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Camille's Creations and Julia's Jewels both sell beads in a competitive market.If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) ,then we would expect both Camille's and Julia's to:

Correct Answer
verified

A price floor means that:

Correct Answer
verified

If products C and D are close substitutes,an increase in the price of C will:

Correct Answer
verified

Digital cameras and memory cards are:

Correct Answer
verified

(Consider This) Ticket scalping is likely to:

Correct Answer
verified

An increase in product price will cause:

Correct Answer
verified

Economists use the term "demand" to refer to:

Correct Answer
verified

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

Correct Answer
verified

In moving along a demand curve,which of the following is not held constant?

Correct Answer
verified

By an "increase in demand," economists mean that:

Correct Answer
verified

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Correct Answer
verified

When the price of a product falls,the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes:

Correct Answer
verified

Correct Answer
verified

In constructing a demand curve for product X:

Correct Answer
verified

If the demand and supply curves for product X are stable,a government-mandated increase in the price of X will:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Correct AnswerverifiedShow Answer

Allocative efficiency refers to:

Correct AnswerverifiedShow Answer

There will be a surplus of a product when:

Correct AnswerverifiedShow Answer

An effective price floor will:

Correct AnswerverifiedShow Answer

Markets,viewed from the perspective of the supply and demand model:

Correct AnswerverifiedShow Answer

Camille's Creations and Julia's Jewels both sell beads in a competitive market.If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) ,then we would expect both Camille's and Julia's to:

Correct AnswerverifiedShow Answer

A price floor means that:

Correct AnswerverifiedShow Answer

If products C and D are close substitutes,an increase in the price of C will:

Correct AnswerverifiedShow Answer

Digital cameras and memory cards are:

Correct AnswerverifiedShow Answer

(Consider This) Ticket scalping is likely to:

Correct AnswerverifiedShow Answer

An increase in product price will cause:

Correct AnswerverifiedShow Answer

Economists use the term "demand" to refer to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In moving along a demand curve,which of the following is not held constant?

Correct AnswerverifiedShow Answer

By an "increase in demand," economists mean that:

Correct AnswerverifiedShow Answer

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Correct AnswerverifiedShow Answer

When the price of a product falls,the purchasing power of our money income rises and thus permits consumers to purchase more of the product.This statement describes:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In constructing a demand curve for product X:

Correct AnswerverifiedShow Answer

If the demand and supply curves for product X are stable,a government-mandated increase in the price of X will:

Correct AnswerverifiedShow Answer

Correct Answer
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