Question 1

What is the difference between a change in demand and a change in quantity demanded?

Accepted Answer

A change in demand is a shift of the dem...

Question 2

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Accepted Answer

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

Question 3

A market

Accepted Answer

A)  reflects upsloping demand and downsloping supply curves.
B)  entails the exchange of goods, but not services.
C)  is an institution that brings together buyers and sellers.
D)  always requires face-to-face contact between buyer and seller.

Question 4

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

Accepted Answer

A) True 
 B)False

Question 5

A price floor in a competitive market will result in persistent shortages of a product.

Accepted Answer

A) True 
 B)False

Question 6

An increase in quantity supplied might be caused by an increase in resource costs.

Accepted Answer

A) True 
 B)False

Question 7

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Accepted Answer

A) True 
 B)False

Question 8

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Accepted Answer

A) True 
 B)False

Question 9

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

Accepted Answer

A)  increase the supply of X and decrease the demand for X.
B)  increase the demand for X and decrease the supply of X.
C)  increase the quantity supplied of X and decrease the quantity demanded of X.
D)  decrease the quantity supplied of X and increase the quantity demanded of X.

Question 10

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that

Accepted Answer

A)  there are many goods that are substitutes for bicycles.
B)  there are many goods that are complementary to bicycles.
C)  there are few goods that are substitutes for bicycles.
D)  bicycles are normal goods.

Question 11

Buyers and sellers do not have to deal face-to-face with one another in markets.

Accepted Answer

A) True 
 B)False

Question 12

If two goods are complements,

Accepted Answer

A)  they are consumed independently.
B)  an increase in the price of one will increase the demand for the other.
C)  a decrease in the price of one will increase the demand for the other.
D)  they are necessarily inferior goods.

Question 13

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.

Question 14

A firm's supply curve is upsloping because

Accepted Answer

A)  the expansion of production necessitates the use of qualitatively inferior inputs.
B)  mass production economies are associated with larger levels of output.
C)  consumers envision a positive relationship between price and quality.
D)  beyond some point, the production costs of additional units of output will rise.

Question 15

The demand curve shows the relationship between

Accepted Answer

A)  money income and quantity demanded.
B)  price and production costs.
C)  price and quantity demanded.
D)  consumer tastes and quantity demanded.

Question 16

Which of the following statements is true about price ceilings?

Accepted Answer

A)  Price ceilings create surpluses for goods but shortages for services.
B)  Price ceilings cause goods to be rationed by some other means than legally determined market prices.
C)  Ration coupons are the only way to ration goods when price ceilings are in place.
D)  All of these choices are correct.

Question 17

Answer the question based on the given supply and demand data for wheat.  Equilibrium price in this market is

Accepted Answer

A)  $5.
B)  $4.
C)  $3.
D)  $2.

Question 18

What is productive efficiency, and how does a market achieve allocative efficiency?

Accepted Answer

Productive efficiency is production of a...

Question 19

A government subsidy to the producers of a product

Accepted Answer

A)  reduces product supply.
B)  increases product supply.
C)  reduces product demand.
D)  increases product demand.

Question 20

The location of the product supply curve depends on

Accepted Answer

A)  production technology.
B)  the number of buyers in the market.
C)  the tastes of buyers.
D)  the location of the demand curve.

Exam 3: Demand, Supply, and Market Equilibrium

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Correct AnswerverifiedShow Answer

A government subsidy to the producers of a product

Correct AnswerverifiedShow Answer

The demand curve shows the relationship between

Correct AnswerverifiedShow Answer

What is productive efficiency, and how does a market achieve allocative efficiency?

Correct AnswerverifiedProductive efficiency is production of a...View AnswerShow Answer

A firm's supply curve is upsloping because

Correct AnswerverifiedShow Answer

Which of the following statements is true about price ceilings?

Correct AnswerverifiedShow Answer

The location of the product supply curve depends on

Correct AnswerverifiedShow Answer

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that

Correct AnswerverifiedShow Answer

A market

Correct AnswerverifiedShow Answer

Answer the question based on the given supply and demand data for wheat. Equilibrium price in this market is

Correct AnswerverifiedShow Answer

A surplus indicates that the quantity demanded is greater than the quantity supplied at that price.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Correct AnswerverifiedShow Answer

An increase in quantity supplied might be caused by an increase in resource costs.

Correct AnswerverifiedShow Answer

If two goods are complements,

Correct AnswerverifiedShow Answer

The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

Correct AnswerverifiedShow Answer

Buyers and sellers do not have to deal face-to-face with one another in markets.

Correct AnswerverifiedShow Answer

What is the difference between a change in demand and a change in quantity demanded?

Correct AnswerverifiedA change in demand is a shift of the dem...View AnswerShow Answer

A price floor in a competitive market will result in persistent shortages of a product.

Correct AnswerverifiedShow Answer

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

Correct AnswerverifiedShow Answer

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Productive efficiency is production of a...
View Answer

Correct Answer
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Correct Answer
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A change in demand is a shift of the dem...
View Answer

Correct Answer
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Correct Answer
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