Question 1

If the price of K declines, the demand curve for the complementary product J will:

Accepted Answer

A)  shift to the left.
B)  decrease.
C)  shift to the right.
D)  remain unchanged.E) A) and D)
F) C) and D)

Question 2

When the price of one fruit increases, consumers buy more of another fruit.This situation is an illustration of:

Accepted Answer

A)  the income effect.
B)  the substitution effect.
C)  diminishing marginal utility.
D)  the rationing function of prices.E) C) and D)
F) A) and B)

Question 3

With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Accepted Answer

A)  increase equilibrium price and quantity.
B)  decrease equilibrium price and quantity.
C)  decrease equilibrium price and increase equilibrium quantity.
D)  increase equilibrium price and decrease equilibrium quantity.E) A) and C)
F) A) and B)

Question 4

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Accepted Answer

A)  quantity supplied will decrease, equilibrium price will increase and, demand will decrease.
B)  supply will decrease, equilibrium price will fall and, demand will increase.
C)  supply will decrease, equilibrium price will increase and, quantity demanded will decrease.
D)  cannot be determined from the information given.E) B) and D)
F) A) and C)

Question 5

An increase in the price of corn:

Accepted Answer

A)  will eventually increase the cost of corn-fed beef and, the price of hamburgers.
B)  will eventually decrease the price of corn syrup and, the price of soft drinks.
C)  will eventually reduce the price of corn-tortillas.
D)  will eventually decrease the cost of corn-fed beef and, increase the price of steak.E) B) and C)
F) All of the above

Question 6

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.This statement describes:

Accepted Answer

A)  an inferior good.
B)  complementary goods.
C)  the substitution effect.
D)  the income effect.E) B) and C)
F) A) and B)

Question 7

With allocative efficiency:

Accepted Answer

A)  the state of technology, or methods used to produce output, do not change.
B)  the available supplies of factors of production are fixed in both quantity and quality.
C)  there is production of any particular mix of goods and services in the least costly way.
D)  there is production of that particular mix of goods and services most wanted by society.E) A) and B)
F) A) and C)

Question 8

If product Y is an inferior good, an increase in consumer incomes will:

Accepted Answer

A)  result in a surplus of product Y.
B)  not affect the sales of product Y.
C)  shift the demand curve for product Y to the left.
D)  shift the demand curve for product Y to the right.E) B) and D)
F) A) and B)

Question 9

An increase in the price of a product will reduce the amount of it purchased because:

Accepted Answer

A)  supply curves are upsloping.
B)  the higher price means that real incomes have risen.
C)  consumers will substitute other products for the one whose price has risen.
D)  consumers substitute relatively high-priced for relatively low-priced products.E) B) and D)
F) All of the above

Question 10

Assume that the demand schedule for product C is downsloping.If the price of C falls from $2.00 to $1.75:

Accepted Answer

A)  a smaller quantity of C will be demanded.
B)  a larger quantity of C will be demanded.
C)  the demand for C will increase.
D)  the demand for C will decrease.E) A) and B)
F) C) and D)

Question 11

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (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 above.If X is an inferior good, a decrease in income will:

Accepted Answer

A)  decrease D, decrease P, and decrease Q.
B)  decrease D, decrease P, and increase Q.
C)  increase S, decrease P, and increase Q.
D)  increase D, increase P, and increase Q.E) None of the above
F) A) and C)

Question 12

A government set minimum wage:

Accepted Answer

A)  imposes a legal ceiling above the wage of the least skilled worker.
B)  is one of the reasons why price level falls during recessions.
C)  imposes a legal floor under the wage of the most skilled worker.
D)  imposes a legal floor under the wage of the least skilled worker.E) B) and C)
F) All of the above

Question 13

Which of the following is true of a demand curve?

Accepted Answer

A)  It shows the relationship between price and quantity demanded.
B)  It indicates the quantity demanded at each of a series of possible prices during a specified time period.
C)  It is downward sloping.
D)  All of the choices are correct.E) A) and D)
F) A) and B)

Question 14

An "increase in efficiency" suggests that an economy:

Accepted Answer

A)  has moved from a point outside of, to a point on, its production possibilities curve.
B)  has decided to produce more consumer goods and fewer capital goods.
C)  has moved from a point on, to a point inside, its production possibilities curve.
D)  is able to get more output from a given amount of inputs.E) None of the above
F) All of the above

Question 15

If products A and B are complements and the price of B decreases:

Accepted Answer

A)  the demand curves for both A and B will shift to the left.
B)  the amount of B purchased will increase, but the demand curve for A will not shift.
C)  the demand for A will increase and the quantity demanded of B will increase.
D)  the demand for A will decline and the demand for B will increase.E) All of the above
F) A) and D)

Question 16

When the government sets a price that is above the equilibrium price in a market:

Accepted Answer

A)  new firms will enter the industry.
B)  there will be a surplus in the market.
C)  there will be a shortage in the market.
D)  quantity demanded in the market will equal quantity supplied.E) B) and C)
F) A) and D)

Question 17

The market system corrects a shortage by:

Accepted Answer

A)  lowering the product price to decrease production.
B)  raising the product price to increase production.
C)  lowering the product price to increase production.
D)  raising the product price to decrease production.E) A) and D)
F) B) and C)

Question 18

The location of the supply curve of a product depends on:

Accepted Answer

A)  the technology used to produce it.
B)  the prices of resources used in its production.
C)  the number of sellers in the market.
D)  all of the above.E) C) and D)
F) A) and B)

Question 19

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:

Accepted Answer

A)  decrease the quantity demanded for Z.
B)  increase the quantity demanded for Z.
C)  have no effect on the quantity demanded for Z.
D)  decrease the supply of Z.E) A) and B)
F) A) and C)

Question 20

Refer to the diagram below for the market for corn.The equilibrium price and quantity in this market are:

Accepted Answer

A)  $4 and 10,000 bushels.
B)  $3 and 8,000 bushels.
C)  $2 and 4,000 bushels.
D)  $2 and 11,000 bushels.E) B) and C)
F) A) and B)

Exam 3: Part B: Demand, Supply, and Market Equilibrium

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:

Correct Answer
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Refer to the diagram below for the market for corn.The equilibrium price and quantity in this market are:

Correct Answer
verified

The market system corrects a shortage by:

Correct Answer
verified

Assume that the demand schedule for product C is downsloping.If the price of C falls from $2.00 to $1.75:

Correct Answer
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An "increase in efficiency" suggests that an economy:

Correct Answer
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A government set minimum wage:

Correct Answer
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Correct Answer
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With allocative efficiency:

Correct Answer
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If the price of K declines, the demand curve for the complementary product J will:

Correct Answer
verified

If products A and B are complements and the price of B decreases:

Correct Answer
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When the government sets a price that is above the equilibrium price in a market:

Correct Answer
verified

An increase in the price of corn:

Correct Answer
verified

If product Y is an inferior good, an increase in consumer incomes will:

Correct Answer
verified

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.This statement describes:

Correct Answer
verified

Which of the following is true of a demand curve?

Correct Answer
verified

When the price of one fruit increases, consumers buy more of another fruit.This situation is an illustration of:

Correct Answer
verified

An increase in the price of a product will reduce the amount of it purchased because:

Correct Answer
verified

The location of the supply curve of a product depends on:

Correct Answer
verified

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Correct Answer
verified

With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Correct Answer
verified

Exam 3: Part B: Demand, Supply, and Market Equilibrium

Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:

Correct AnswerverifiedShow Answer

Refer to the diagram below for the market for corn.The equilibrium price and quantity in this market are:

Correct AnswerverifiedShow Answer

The market system corrects a shortage by:

Correct AnswerverifiedShow Answer

Assume that the demand schedule for product C is downsloping.If the price of C falls from $2.00 to $1.75:

Correct AnswerverifiedShow Answer

An "increase in efficiency" suggests that an economy:

Correct AnswerverifiedShow Answer

A government set minimum wage:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

With allocative efficiency:

Correct AnswerverifiedShow Answer

If the price of K declines, the demand curve for the complementary product J will:

Correct AnswerverifiedShow Answer

If products A and B are complements and the price of B decreases:

Correct AnswerverifiedShow Answer

When the government sets a price that is above the equilibrium price in a market:

Correct AnswerverifiedShow Answer

An increase in the price of corn:

Correct AnswerverifiedShow Answer

If product Y is an inferior good, an increase in consumer incomes will:

Correct AnswerverifiedShow Answer

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.This statement describes:

Correct AnswerverifiedShow Answer

Which of the following is true of a demand curve?

Correct AnswerverifiedShow Answer

When the price of one fruit increases, consumers buy more of another fruit.This situation is an illustration of:

Correct AnswerverifiedShow Answer

An increase in the price of a product will reduce the amount of it purchased because:

Correct AnswerverifiedShow Answer

The location of the supply curve of a product depends on:

Correct AnswerverifiedShow Answer

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Correct AnswerverifiedShow Answer

With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Correct AnswerverifiedShow Answer

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