Question 1

An increase in a per unit production tax ______ supply.

Accepted Answer

A)   increases
B)   decreases
C)   does not change
D)   changes in an indeterminate directionE) A) and B)
F) C) and D)

Question 2

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions: Figure: Good X 
-(Figure: Good X)  From the figure, which statement is TRUE?

Accepted Answer

A)   At a price of $12 per unit, consumers are willing and able to purchase between 11 and 26 units of Good X.
B)   36 units of Good X can be purchased by spending a total of $4.
C)   At a price of $6 per unit, consumers are willing and able to purchase 26 units of Good X.
D)   At a price of $4 per unit, consumers are willing and able to purchase 11 units of Good X.E) C) and D)
F) A) and B)

Question 4

A subsidy is a:

Accepted Answer

A)   reverse tax.
B)   means of shifting the supply curve left.
C)   form of tax increase.
D)   movement along the supply curve.E) None of the above
F) All of the above

Question 5

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the demand for spaghetti will:

Accepted Answer

A)   decrease, shifting the demand curve to the left.
B)   decrease, shifting the demand curve to the right.
C)   increase, shifting the demand curve to the left.
D)   increase, shifting the demand curve to the right.E) A) and B)
F) A) and D)

Question 6

Use the following to answer questions: Figure: Supply Shift 2 to S1 as shown in the diagram? A)  a decrease in the opportunity costs of producing the good B)  a decrease in the costs of production C)  an increase in the prices of inputs used in production D)  an expected decrease in the future price of the good" class="answers-bank-image d-inline" rel="preload" >
-(Figure: Supply Shift)  What would cause the supply curve to shift from S2 to S1 as shown in the diagram?

Accepted Answer

A)   a decrease in the opportunity costs of producing the good
B)   a decrease in the costs of production
C)   an increase in the prices of inputs used in production
D)   an expected decrease in the future price of the goodE) All of the above
F) A) and B)

Question 7

An increase in the use of labor-saving technologies will shift a product's supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the future expected price of a storable good ________ supply.

Accepted Answer

A)   increases
B)   decreases
C)   does not change
D)   changes in an indeterminate directionE) All of the above
F) B) and C)

Question 9

Michael graduates from college and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

Accepted Answer

A)   an inferior good.
B)   a complement.
C)   a substitute.
D)   a normal good.E) B) and C)
F) A) and D)

Question 10

Use the following to answer questions: Figure: Supply Shift 2 1 to S2? A)  a $20 tax on each unit of output B)  a $40 tax on each unit of output C)  a $40 subsidy on each unit of output D)  a $20 subsidy on each unit of output" class="answers-bank-image d-inline" rel="preload" >
-(Figure: Supply Shift 2)  Refer to the figure. What would cause the supply curve to shift from S1 to S2?

Accepted Answer

A)   a $20 tax on each unit of output
B)   a $40 tax on each unit of output
C)   a $40 subsidy on each unit of output
D)   a $20 subsidy on each unit of outputE) C) and D)
F) A) and B)

Question 11

Which variable does NOT shift the demand curve?

Accepted Answer

A)   population
B)   price of complement goods
C)   income
D)   price of the good itselfE) All of the above
F) B) and C)

Question 12

The law of supply states that there is a _____ relationship between price and quantity ______.

Accepted Answer

A)   positive; demanded
B)   positive; supplied
C)   negative; demanded
D)   negative; suppliedE) None of the above
F) A) and C)

Question 13

Figure: Generic Market Producer Surplus  Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

Accepted Answer

A)   $800
B)   $1,600
C)   $2,400
D)   $1,200E) None of the above
F) B) and C)

Question 14

Nigeria receives $53 of producer surplus from each barrel of oil sold at $60. At that level of production, Nigeria's cost to produce a barrel of oil is:

Accepted Answer

A)   $1.13.
B)   $7.
C)   $53.
D)   $113.E) None of the above
F) A) and B)

Question 15

What does the law of supply state?

Accepted Answer

A)   There is a positive relationship between price and quantity supplied.
B)   There is a negative relationship between price and quantity supplied.
C)   When prices rise, suppliers sell more.
D)   When prices rise, buyers buy less of the product.E) All of the above
F) A) and B)

Question 16

There are more substitutes for oil as a jet fuel than for oil as a lubricant.

Accepted Answer

A) True 
 B)False

Question 17

A tax of $4 shifts the supply curve down and to the right by $4.

Accepted Answer

A) True 
 B)False

Question 18

Which variable is NOT a demand shifter?

Accepted Answer

A)   price of complements
B)   price of substitutes
C)   price of raw materials
D)   tastes and preferencesE) C) and D)
F) B) and C)

Question 19

Total producer surplus equals:

Accepted Answer

A)   the supply curve.
B)   the area above the supply curve and beneath the market price.
C)   the area beneath the supply curve and above the demand curve.
D)   the market price.E) B) and D)
F) None of the above

Question 20

Which of the following would cause the demand for hot dog buns to increase?

Accepted Answer

A)   a fall in the price of hot dog buns
B)   a fall in the price of hot dogs
C)   a rise in the price of hot dogs
D)   a rise in the price of hot dog bunsE) B) and C)
F) A) and B)

Exam 3: Supply and Demand

Which of the following would cause the demand for hot dog buns to increase?

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What does the law of supply state?

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Use the following to answer questions: Figure: Supply Shift 2 -(Figure: Supply Shift 2) Refer to the figure. What would cause the supply curve to shift from S1 to S2?

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Michael graduates from college and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

Correct AnswerverifiedShow Answer

An increase in a per unit production tax ______ supply.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S2 to S1 as shown in the diagram?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Good X -(Figure: Good X) From the figure, which statement is TRUE?

Correct AnswerverifiedShow Answer

Which variable does NOT shift the demand curve?

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An increase in the future expected price of a storable good ________ supply.

Correct AnswerverifiedShow Answer

The law of supply states that there is a _____ relationship between price and quantity ______.

Correct AnswerverifiedShow Answer

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve.

Correct AnswerverifiedShow Answer

There are more substitutes for oil as a jet fuel than for oil as a lubricant.

Correct AnswerverifiedShow Answer

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the demand for spaghetti will:

Correct AnswerverifiedShow Answer

Which variable is NOT a demand shifter?

Correct AnswerverifiedShow Answer

An increase in the use of labor-saving technologies will shift a product's supply curve to the right.

Correct AnswerverifiedShow Answer

Total producer surplus equals:

Correct AnswerverifiedShow Answer

Nigeria receives $53 of producer surplus from each barrel of oil sold at $60. At that level of production, Nigeria's cost to produce a barrel of oil is:

Correct AnswerverifiedShow Answer

A subsidy is a:

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Figure: Generic Market Producer Surplus Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

Correct AnswerverifiedShow Answer

A tax of $4 shifts the supply curve down and to the right by $4.

Correct AnswerverifiedShow Answer

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Use the following to answer questions: Figure: Supply Shift 2 -(Figure: Supply Shift 2) Refer to the figure. What would cause the supply curve to shift from S₁ to S₂?

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Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S₂ to S₁ as shown in the diagram?

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The law of supply states that there is a _ relationship between price and quantity __.

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