Question 1

The Invisible Hand Principle suggests that

Accepted Answer

A)   market prices direct individuals to produce more goods.
B)   individuals pursuing their own interests detract from the economic well-being of society.
C)   there should be stronger governmental initiatives to ensure cooperation for the betterment of society.
D)   market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society.E) None of the above
F) B) and C)

Question 2

Which of the following is most likely to shift the demand curve for electricity to the left?

Accepted Answer

A)   consumers becoming more energy conscious
B)   an increase in income
C)   a decrease in the price of electricity
D)   an increase in the price of natural gas, a substitute source of energyE) B) and D)
F) B) and C)

Question 3

Suppose a major civil war broke out in an important oil-producing nation. What impact would this have on the market for oil?

Accepted Answer

A)   The supply of oil would fall.
B)   The supply of oil would rise.
C)   The demand for oil would fall.
D)   The demand for oil would rise.E) C) and D)
F) All of the above

Question 4

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Accepted Answer

A)   Equilibrium price will fall and equilibrium quantity will rise.
B)   Equilibrium price will rise and equilibrium quantity will fall.
C)   Equilibrium price will rise and equilibrium quantity will rise.
D)   Equilibrium price will fall and equilibrium quantity will fall.
E)   Neither equilibrium price nor equilibrium quantity will change.F) B) and E)
G) A) and C)

Question 5

If the supply of a good increased, what would be the effect on the equilibrium price and quantity?

Accepted Answer

A)   Price would increase and quantity would decrease.
B)   Price would decrease and quantity would decrease.
C)   Price would increase and quantity would increase.
D)   Price would decrease and quantity would increase.E) B) and C)
F) A) and D)

Question 6

Which of the following occurs when a shortage occurs in the market for a good?

Accepted Answer

A)   Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption.
B)   Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption.
C)   Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption.
D)   Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.E) None of the above
F) A) and D)

Question 7

If Georgia experiences a late frost that damages the peach crop, we should expect the

Accepted Answer

A)   supply curve for peaches to shift to the right and the price of peaches to fall.
B)   supply curve for peaches to shift to the left and the price of peaches to rise.
C)   demand curve for peaches to shift to the left and the price of peaches to fall.
D)   demand curve for peaches to shift to the right and the price of peaches to rise.E) A) and B)
F) A) and C)

Question 8

Figure 3-19 
Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

Accepted Answer

A)   AC
B)   CE
C)   BC
D)   CDE) B) and C)
F) C) and D)

Question 9

Just before Valentine's Day, the price of roses increases dramatically. This is because

Accepted Answer

A)   self-interested individuals try to charge more for a good than consumers are willing to pay.
B)   demand increases while the supply of roses remains relatively constant.
C)   the supply curve of roses is highly elastic.
D)   the demand for roses is relatively inelastic most of the year, but becomes more elastic as demand increases.E) B) and D)
F) B) and C)

Question 10

Which one of the following would most likely increase the demand for wheat?

Accepted Answer

A)   an increase in the price of soybeans, a substitute product
B)   a decrease in the price of corn, a substitute product
C)   the development of a hybrid seed that doubles wheat yields per acre
D)   a decrease in the price of wheatE) B) and C)
F) A) and D)

Question 11

Which of the following would lead to an increase in the demand for rental apartments in your area?

Accepted Answer

A)   a reduction in the rental price of apartments
B)   a sharp increase in the number of out-of-town students attending the local college
C)   an increase in the cost of the materials used to construct apartment units.
D)   an increase in unemployment and reduction in the income of people in your areaE) A) and D)
F) A) and C)

Question 12

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

Accepted Answer

A)   Equilibrium price will fall and equilibrium quantity will rise.
B)   Equilibrium price will rise and equilibrium quantity will fall.
C)   Equilibrium price will rise and equilibrium quantity will rise.
D)   Equilibrium price will fall and equilibrium quantity will fall.
E)   Neither equilibrium price nor equilibrium quantity will change.F) A) and D)
G) A) and B)

Question 13

Figure 3-22

Refer to Figure 3-22. Graph C shows which of the following?

Accepted Answer

A)   An increase in demand and an increase in quantity supplied.
B)   An increase in demand and an increase in supply.
C)   An increase in quantity demanded and an increase in quantity supplied.
D)   An increase in supply and an increase in quantity demanded.E) A) and C)
F) A) and B)

Question 14

Which of the following is true of the interaction of supply and demand?

Accepted Answer

A)   As the price increases, the quantity demanded and the quantity supplied will increase.
B)   As the price increases, the quantity demanded and the quantity supplied will decrease.
C)   As the price increases, the quantity demanded increases and the quantity supplied will decrease.
D)   As the price increases, the quantity demanded will decrease and the quantity supplied will increase.
E)   As the price increases, neither the quantity demanded nor quantity supplied will change.F) A) and E)
G) A) and D)

Question 15

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Accepted Answer

A)   The price of beef will increase, and the quantity purchased will fall.
B)   The price of beef will fall, and the quantity purchased will increase.
C)   The price of beef will increase, and the quantity purchased will increase.
D)   The price of beef will fall, and the quantity purchased will fall.E) B) and C)
F) A) and C)

Question 16

Figure 3-21 2, A)  the value to buyers and the cost to sellers are both P 2. B)  the value to buyers is P 2 and the cost to sellers is P 3. C)  the value to buyers and the cost to sellers are both P 3. D)  the value to buyers is P 3 and the cost to sellers is P 2." class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-21. At the quantity Q 2,

Accepted Answer

A)   the value to buyers and the cost to sellers are both P 2.
B)   the value to buyers is P 2 and the cost to sellers is P 3.
C)   the value to buyers and the cost to sellers are both P 3.
D)   the value to buyers is P 3 and the cost to sellers is P 2.E) A) and B)
F) A) and D)

Question 17

Market prices generally promote social cooperation because they

Accepted Answer

A)   clarify the options available to people and encourage individuals to help others in exchange for income.
B)   encourage government officials to levy taxes to provide people with the necessities of life.
C)   eliminate scarcity by allowing prices to rise.
D)   reward only altruistic actions, whereby, people seek to help others without the expectation of personal gain.E) A) and C)
F) B) and D)

Question 18

Figure 3-15 1 to P 2 due to new producers entering the market? A)  BCE B)  ACF C)  DEF D)  AFEB" class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P 1 to P 2 due to new producers entering the market?

Accepted Answer

A)   BCE
B)   ACF
C)   DEF
D)   AFEBE) A) and B)
F) A) and D)

Question 19

Profits and losses play an important role in helping

Accepted Answer

A)   to signal to government which businesses are suffering losses so that they can be subsidized.
B)   consumers decide which products they value the most by looking at each firm's profit.
C)   to allocate scarce resources in a manner that maximizes the value created to society.
D)   ensure that the total profits in the economy exactly equal the total losses.E) A) and D)
F) All of the above

Question 20

When economists say the supply of a product has increased, they mean the

Accepted Answer

A)   supply curve has shifted to the right.
B)   price of the product has risen, and consequently, suppliers are producing more of it.
C)   supply curve has shifted to the left.
D)   amount of the product that consumers are willing to purchase at various prices has increased.E) B) and C)
F) All of the above

Exam 3: Demand, Supply, and the Market Process

Which of the following is true of the interaction of supply and demand?

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If Georgia experiences a late frost that damages the peach crop, we should expect the

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Figure 3-22 Refer to Figure 3-22. Graph C shows which of the following?

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Which of the following would lead to an increase in the demand for rental apartments in your area?

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If the supply of a good increased, what would be the effect on the equilibrium price and quantity?

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Suppose a major civil war broke out in an important oil-producing nation. What impact would this have on the market for oil?

Correct AnswerverifiedShow Answer

The Invisible Hand Principle suggests that

Correct AnswerverifiedShow Answer

Profits and losses play an important role in helping

Correct AnswerverifiedShow Answer

Just before Valentine's Day, the price of roses increases dramatically. This is because

Correct AnswerverifiedShow Answer

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Correct AnswerverifiedShow Answer

Which of the following occurs when a shortage occurs in the market for a good?

Correct AnswerverifiedShow Answer

Assume that supply decreases slightly and demand decreases greatly. Which of the following will happen?

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Which one of the following would most likely increase the demand for wheat?

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Which of the following is most likely to shift the demand curve for electricity to the left?

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When economists say the supply of a product has increased, they mean the

Correct AnswerverifiedShow Answer

Figure 3-21 Refer to Figure 3-21. At the quantity Q 2,

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Figure 3-15 Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P 1 to P 2 due to new producers entering the market?

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Market prices generally promote social cooperation because they

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Figure 3-19 Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

Correct AnswerverifiedShow Answer

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Correct AnswerverifiedShow Answer

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Figure 3-21 Refer to Figure 3-21. At the quantity Q ₂,

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Figure 3-15 Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P ₁ to P ₂ due to new producers entering the market?

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