Question 1

The following data show the supply and demand schedules for a product.  The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between

Accepted Answer

A)   $40 and $50.
B)   $50 and $60.
C)   $60 and $70.
D)   $70 and $80.E) A) and B)
F) B) and C)

Question 2

If there's a huge increase in the number of Americans traveling to Europe (say, for the Olympics) , then the effect on the foreign exchange market is that the

Accepted Answer

A)   demand for euros would increase.
B)   supply of euros would increase.
C)   demand for euros would decrease.
D)   supply of euros would decrease.E) A) and D)
F) A) and B)

Question 3

Assume that the graphs show a competitive market for the product stated in the question.   Select the graph above that best shows the change in the market specified in the following situation: the market for chicken, when the price of a substitute, such as beef, decreases.

Accepted Answer

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

Question 4

When an economist says that the demand for a product has increased, this means that

Accepted Answer

A)   consumers are now willing to purchase more of this product at each possible price.
B)   the product has become particularly scarce for some reason.
C)   product price has fallen and, as a consequence, consumers are buying a larger quantity of the product.
D)   the demand curve has shifted to the left.E) None of the above
F) A) and D)

Question 5

The equilibrium price and quantity in a market usually produce allocative efficiency because

Accepted Answer

A)   all consumers who want the good are satisfied.
B)   marginal benefit and marginal cost are equal at that point.
C)   equilibrium ensures an equitable distribution of output.
D)   the excess of goods produced at equilibrium guarantees that all will have enough.E) A) and B)
F) A) and C)

Question 6

(Consider This)  A primary advantage of Uber to government-regulated taxis is that

Accepted Answer

A)   Uber riders are guaranteed lower fares.
B)   Uber drivers are required to meet more stringent safety standards.
C)   Uberâ€™s dynamic pricing avoids the inefficiencies caused by regulated taxi fares.
D)   the greater monopoly for rides increases profits for both Uber and regular taxi drivers.E) B) and D)
F) B) and C)

Question 7

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate.

Accepted Answer

A) True 
 B)False

Question 8

The rationing function of prices refers to the

Accepted Answer

A)   tendency of supply and demand to shift in opposite directions.
B)   fact that ration coupons are needed to alleviate wartime shortages of goods.
C)   capacity of a competitive market to equalize quantity demanded and quantity supplied.
D)   ability of the market system to generate an equitable distribution of income.E) B) and C)
F) None of the above

Question 9

Answer the question on the basis of the given supply and demand data for wheat.  If price was initially $4 and free to fluctuate, we would expect the

Accepted Answer

A)   quantity supplied to continue to exceed the quantity demanded.
B)   quantity of wheat supplied to decline as a result of the subsequent price change.
C)   quantity of wheat demanded to fall as a result of the subsequent price change.
D)   price of wheat to rise.E) B) and C)
F) All of the above

Question 10

"Price" in the statement of the Law of Supply refers to

Accepted Answer

A)   the dollar amount necessary to induce a change in the quantity of a good supplied to the market.
B)   the cost of producing each unit of the product.
C)   the total revenues that sellers receive for selling a given quantity of the product.
D)   the total amount that buyers pay in order to acquire a given quantity of the product.E) B) and D)
F) All of the above

Question 11

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the

Accepted Answer

A)   demand for oranges will necessarily rise.
B)   equilibrium quantity of oranges will rise.
C)   amount of oranges that will be available at various prices has declined.
D)   price of oranges will fall.E) A) and B)
F) A) and C)

Question 12

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. An increase in the prices of resources used to produce X will

Accepted Answer

A)   increase S, increase P, and increase Q.
B)   increase D, increase P, and increase Q.
C)   decrease S, decrease P, and decrease Q.
D)   decrease S, increase P, and decrease Q.E) All of the above
F) C) and D)

Question 13

In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil) is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Accepted Answer

A) True 
 B)False

Question 14

An "increase in the quantity supplied" suggests a

Accepted Answer

A)   rightward shift of the supply curve.
B)   movement down along the supply curve.
C)   movement up along the supply curve.
D)   leftward shift of the supply curve.E) A) and B)
F) None of the above

Question 15

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n)

Accepted Answer

A)   rightward shift in the current supply of corn.
B)   movement up along the current supply curve of corn.
C)   leftward shift in the current supply of corn.
D)   movement down along the current supply curve of corn.E) A) and B)
F) A) and D)

Question 16

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Accepted Answer

A) True 
 B)False

Question 17

When high-school and college graduates apply for jobs in the labor markets,

Accepted Answer

A)   job applicants are the "buyers" while employers are the "sellers."
B)   job applicants are the "sellers" while employers are the "buyers."
C)   job applicants and employers are both "sellers" in the market.
D)   job applicants and employers are both "buyers" in the market.E) B) and C)
F) A) and B)

Question 18

A television station reports that the price of orange juice has declined but the quantity traded has increased. This situation could be caused by a(n)

Accepted Answer

A)   increased preference for orange juice among buyers.
B)   significant decrease in the harvest of oranges in the nation's orchards.
C)   improvement in the technology of producing orange juice.
D)   decrease in income, and orange juice is a normal good.E) All of the above
F) B) and D)

Question 19

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Accepted Answer

A) True 
 B)False

Question 20

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will

Accepted Answer

A)   decrease, quantity demanded will decrease, and quantity supplied will increase.
B)   decrease and quantity demanded and quantity supplied will both decrease.
C)   decrease, quantity demanded will increase, and quantity supplied will decrease.
D)   increase, quantity demanded will decrease, and quantity supplied will increase.E) A) and D)
F) None of the above

Exam 3: Demand, Supply, and Market Equilibrium

The following data show the supply and demand schedules for a product. The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between

Correct Answer
verified

In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil) is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Correct Answer
verified

An "increase in the quantity supplied" suggests a

Correct Answer
verified

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n)

Correct Answer
verified

"Price" in the statement of the Law of Supply refers to

Correct Answer
verified

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate.

Correct Answer
verified

Correct Answer
verified

When high-school and college graduates apply for jobs in the labor markets,

Correct Answer
verified

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Correct Answer
verified

A television station reports that the price of orange juice has declined but the quantity traded has increased. This situation could be caused by a(n)

Correct Answer
verified

If there's a huge increase in the number of Americans traveling to Europe (say, for the Olympics) , then the effect on the foreign exchange market is that the

Correct Answer
verified

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will

Correct Answer
verified

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Correct Answer
verified

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for chicken, when the price of a substitute, such as beef, decreases.

Correct Answer
verified

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the

Correct Answer
verified

The equilibrium price and quantity in a market usually produce allocative efficiency because

Correct Answer
verified

Answer the question on the basis of the given supply and demand data for wheat. If price was initially $4 and free to fluctuate, we would expect the

Correct Answer
verified

(Consider This) A primary advantage of Uber to government-regulated taxis is that

Correct Answer
verified

The rationing function of prices refers to the

Correct Answer
verified

When an economist says that the demand for a product has increased, this means that

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

The following data show the supply and demand schedules for a product. The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between

Correct AnswerverifiedShow Answer

In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil) is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Correct AnswerverifiedShow Answer

An "increase in the quantity supplied" suggests a

Correct AnswerverifiedShow Answer

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n)

Correct AnswerverifiedShow Answer

"Price" in the statement of the Law of Supply refers to

Correct AnswerverifiedShow Answer

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When high-school and college graduates apply for jobs in the labor markets,

Correct AnswerverifiedShow Answer

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Correct AnswerverifiedShow Answer

A television station reports that the price of orange juice has declined but the quantity traded has increased. This situation could be caused by a(n)

Correct AnswerverifiedShow Answer

If there's a huge increase in the number of Americans traveling to Europe (say, for the Olympics) , then the effect on the foreign exchange market is that the

Correct AnswerverifiedShow Answer

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will

Correct AnswerverifiedShow Answer

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Correct AnswerverifiedShow Answer

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for chicken, when the price of a substitute, such as beef, decreases.

Correct AnswerverifiedShow Answer

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the

Correct AnswerverifiedShow Answer

The equilibrium price and quantity in a market usually produce allocative efficiency because

Correct AnswerverifiedShow Answer

Answer the question on the basis of the given supply and demand data for wheat. If price was initially $4 and free to fluctuate, we would expect the

Correct AnswerverifiedShow Answer

(Consider This) A primary advantage of Uber to government-regulated taxis is that

Correct AnswerverifiedShow Answer

The rationing function of prices refers to the

Correct AnswerverifiedShow Answer

When an economist says that the demand for a product has increased, this means that

Correct AnswerverifiedShow Answer

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