Question 1

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

Question 2

A decrease in supply will cause

Accepted Answer

A)  an increase in demand.
B)  a decrease in demand.
C)  an increase in quantity demanded.
D)  a decrease in quantity demanded.
E)  a decrease in equilibrium price.F) All of the above
G) D) and E)

Question 3

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Accepted Answer

A)  An upward movement along the demand curve for tomato juice.
B)  A downward movement along the demand curve for tomato juice.
C)  A rightward shift in the demand curve for tomato juice.
D)  A leftward shift in the demand curve for tomato juice.E) None of the above
F) All of the above

Question 4

Each point on the demand curve indicates

Accepted Answer

A)  the demand for the product.
B)  the quantity demanded at that price.
C)  the amount that people need.
D)  the amount people want to buy at different income levels.E) All of the above
F) A) and B)

Question 5

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) All of the above
F) A) and D)

Question 6

When economists say the demand for a product has decreased, they mean

Accepted Answer

A)  the demand curve has shifted to the left.
B)  the product price has increased, and as a consequence, consumers are buying less of the product.
C)  consumers are now willing and able to buy more of this product at each possible price.
D)  the demand curve has shifted to the right.E) A) and C)
F) All of the above

Question 7

Which of the following is true?

Accepted Answer

A)  The height of the demand curve for a product at a given quantity represents the marginal value derived by the consumption of that unit.
B)  The height of the demand curve for a product at a given quantity reflects the total value consumers derive from all units of the good consumed.
C)  The total area above the demand curve for a product is equal to consumer surplus.
D)  At every quantity, the height of the demand curve for a product represents the cost of producing that unit.E) A) and D)
F) C) and D)

Question 8

When economists say the demand for a product has increased, they mean the

Accepted Answer

A)  demand curve has shifted to the right.
B)  price of the product has fallen, and consequently, consumers are buying more of it.
C)  cost of producing the product has risen.
D)  amount of the product that consumers are willing to purchase at various prices has decreased.E) B) and C)
F) All of the above

Question 9

A technological breakthrough lowers the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of

Accepted Answer

A)  an upward movement along the demand curve for VCRs.
B)  a rightward shift in the demand curve for VCRs.
C)  a rightward shift in the supply curve for VCRs.
D)  a shortage of VCRs.E) A) and D)
F) All of the above

Question 10

In which statement(s)  is "demand" used correctly? (I)  "An increase in the price of hot dogs will reduce the demand for hot dogs."
(II)  "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Accepted Answer

A)  in both statements I and II
B)  in statement I only
C)  in statement II only
D)  in neither statements I nor IIE) A) and D)
F) A) and C)

Question 11

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats)  available. This is evidence that the price of the tickets is

Accepted Answer

A)  higher than the equilibrium price.
B)  equal to the equilibrium price since the number of tickets bought equals the number sold.
C)  lower than the equilibrium price.
D)  higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.E) A) and C)
F) None of the above

Question 12

The price of chicken increases as the result of higher beef prices. This indicates that

Accepted Answer

A)  chicken and beef are substitutes.
B)  chicken and beef are complements.
C)  the market demand for beef is inelastic.
D)  the market demand for chicken is elastic.E) A) and B)
F) A) and C)

Question 13

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Accepted Answer

A)  Harry is an irrational consumer.
B)  The seller earned a $10,000 profit on the sale of the car.
C)  Harry reaped $10,000 of consumer surplus from the transaction.
D)  The seller received $10,000 worth of producer surplus on the transaction.E) A) and B)
F) None of the above

Question 14

Consumer surplus

Accepted Answer

A)  is the difference between total willingness to pay and the total amount actually paid.
B)  guarantees that the market value of a good in money is equal to the total economic value of the good.
C)  is always negative because of diminishing marginal utility.
D)  is the total area under a consumer's demand curve.E) B) and C)
F) B) and D)

Question 15

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

Accepted Answer

A)  demand curve that is relatively flat (more horizontal) .
B)  demand curve that is relatively steep (more vertical) .
C)  supply curve that is relatively flat (more horizontal) .
D)  supply curve that is relatively steep (more vertical) .E) A) and B)
F) B) and C)

Question 16

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer. According to economic analysis, how would this information affect the market for alcohol?

Accepted Answer

A)  Demand will increase, placing upward pressure on price.
B)  Supply will decrease, placing downward pressure on price.
C)  Demand will decrease, placing downward pressure on price.
D)  Supply will increase, placing upward pressure on price.E) A) and B)
F) A) and C)

Question 17

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Accepted Answer

A)  $-10.
B)  $-6.
C)  $20.
D)  $30.E) A) and B)
F) None of the above

Question 18

A decrease in the price of a good would

Accepted Answer

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

Question 19

Which of the following best explains the source of consumer surplus for good A?

Accepted Answer

A)  Many consumers pay prices that are greater than the equilibrium price of good A.
B)  Many consumers would be willing to pay more than the market price for good A.
C)  Many consumers think the market price of good A is greater than its cost.
D)  Many consumers think the demand for good A is elastic.E) A) and D)
F) A) and C)

Question 20

The forces of supply and demand assure that

Accepted Answer

A)  demand curves and supply curves tend to shift to the right as time goes by.
B)  the price of a good will eventually rise in response to an excess demand for that good.
C)  when the supply curve for a good shifts, the demand curve for that good shifts in response.
D)  the equilibrium price of a good will be rising more often than it will be falling.E) None of the above
F) A) and B)

Exam 3: A: Supply, Demand, and the Market Process

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Correct Answer
verified

Which of the following best explains the source of consumer surplus for good A?

Correct Answer
verified

Correct Answer
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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 Answer
verified

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs." (II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Correct Answer
verified

The price of chicken increases as the result of higher beef prices. This indicates that

Correct Answer
verified

A decrease in supply will cause

Correct Answer
verified

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Correct Answer
verified

A technological breakthrough lowers the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of

Correct Answer
verified

A decrease in the price of a good would

Correct Answer
verified

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

Correct Answer
verified

Consumer surplus

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Correct Answer
verified

When economists say the demand for a product has increased, they mean the

Correct Answer
verified

The forces of supply and demand assure that

Correct Answer
verified

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

Correct Answer
verified

When economists say the demand for a product has decreased, they mean

Correct Answer
verified

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

Correct Answer
verified

Each point on the demand curve indicates

Correct Answer
verified

Exam 3: A: Supply, Demand, and the Market Process

Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Correct AnswerverifiedShow Answer

Which of the following best explains the source of consumer surplus for good A?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

In which statement(s) is "demand" used correctly? (I) "An increase in the price of hot dogs will reduce the demand for hot dogs." (II) "An increase in the price of hot dogs will reduce the demand for hot dog buns."

Correct AnswerverifiedShow Answer

The price of chicken increases as the result of higher beef prices. This indicates that

Correct AnswerverifiedShow Answer

A decrease in supply will cause

Correct AnswerverifiedShow Answer

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that

Correct AnswerverifiedShow Answer

A technological breakthrough lowers the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of

Correct AnswerverifiedShow Answer

A decrease in the price of a good would

Correct AnswerverifiedShow Answer

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is

Correct AnswerverifiedShow Answer

Consumer surplus

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Correct AnswerverifiedShow Answer

When economists say the demand for a product has increased, they mean the

Correct AnswerverifiedShow Answer

The forces of supply and demand assure that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When economists say the demand for a product has decreased, they mean

Correct AnswerverifiedShow Answer

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

Correct AnswerverifiedShow Answer

Each point on the demand curve indicates

Correct AnswerverifiedShow Answer

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