Question 1

Allocative efficiency involves determining:

Accepted Answer

A)   which output mix will result in the most rapid rate of economic growth.
B)   which production possibilities curve reflects the lowest opportunity costs.
C)   the mix of output that will maximize society's satisfaction.
D)   the optimal rate of technological progress.E) A) and B)
F) A) and C)

Question 2

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A)   consumer incomes have declined,and consumers now want to buy less of A at each possible price.
B)   the price of A has increased and,as a result,consumers want to purchase less of it.
C)   consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
D)   the price of A has declined and,as a result,consumers want to purchase more of it.E) None of the above
F) All of the above

Question 3

If an effective ceiling price is placed on hamburgers,then:

Accepted Answer

A)   the quantity demanded will exceed the quantity supplied.
B)   a black market for hamburgers may evolve.
C)   consumers may want government to ration hamburgers.
D)   All of these are likely outcomes.E) None of the above
F) A) and B)

Question 4

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread,we would expect the price of wheat to:

Accepted Answer

A)   rise,the supply of bread to increase,and the demand for potatoes to increase.
B)   rise,the supply of bread to decrease,and the demand for potatoes to increase.
C)   rise,the supply of bread to decrease,and the demand for potatoes to decrease.
D)   fall,the supply of bread to increase,and the demand for potatoes to increase.E) A) and D)
F) All of the above

Question 5

If consumer incomes increase,the demand for product X:

Accepted Answer

A)   will necessarily remain unchanged.
B)   may shift either to the right or left.
C)   will necessarily shift to the right.
D)   will necessarily shift to the left.E) A) and B)
F) B) and C)

Question 6

With a downsloping demand curve and an upsloping supply curve for a product,a decrease in resource prices 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) B) and D)
F) C) and D)

Question 7

If the demand curve for product B shifts to the right as the price of product A declines,then:

Accepted Answer

A)   both A and B are inferior goods.
B)   A is a superior good and B is an inferior good.
C)   A is an inferior good and B is a superior good.
D)   A and B are complementary goods.E) A) and B)
F) All of the above

Question 8

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.The equilibrium price for X is:

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $7.E) C) and D)
F) B) and D)

Question 9

If X is a normal good,a rise in money income will shift the:

Accepted Answer

A)   supply curve for X to the left.
B)   supply curve for X to the right.
C)   demand curve for X to the left.
D)   demand curve for X to the right.E) All of the above
F) A) and B)

Question 10

Steve went to his favorite hamburger restaurant with $3,expecting to buy a $2 hamburger and a $1 soda.When he arrived he discovered that hamburgers were on sale for $1 each,so Steve bought two hamburgers and a soda.Steve's response to the decrease in the price of hamburgers is best explained by:

Accepted Answer

A)   the substitution effect.
B)   the income effect.
C)   the price effect.
D)   a rightward shift in the demand curve for hamburgers.E) B) and C)
F) C) and D)

Question 11

If a legal ceiling price is set above the equilibrium price:

Accepted Answer

A)   a shortage of the product will occur.
B)   a surplus of the product will occur.
C)   a black market will evolve.
D)   neither the equilibrium price nor the equilibrium quantity will be affected.E) A) and B)
F) A) and C)

Question 12

(Last Word) A market-based system of buying and selling human organs for transplant would:

Accepted Answer

A)   reduce total health care spending.
B)   create a surplus of organs.
C)   increase the quantity of organs available for transplant.
D)   reduce the price of organs.E) All of the above
F) None of the above

Question 13

Blu-ray players and Blu-ray discs are:

Accepted Answer

A)   complementary goods.
B)   substitute goods.
C)   independent goods.
D)   inferior goods.E) A) and C)
F) A) and B)

Question 14

The law of supply indicates that,other things equal:

Accepted Answer

A)   producers will offer more of a product at high prices than at low prices.
B)   the product supply curve is downsloping.
C)   consumers will purchase less of a good at high prices than at low prices.
D)   producers will offer more of a product at low prices than at high prices.E) A) and B)
F) A) and C)

Question 15

"In the corn market,demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Accepted Answer

A)   In neither statement.
B)   In the second statement.
C)   In the first statement.
D)   In both statements.E) B) and C)
F) C) and D)

Question 16

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 17

With a downsloping demand curve and an upsloping supply curve for a product,an increase in consumer income will:

Accepted Answer

A)   increase equilibrium price and quantity if the product is a normal good.
B)   decrease equilibrium price and quantity if the product is a normal good.
C)   have no effect on equilibrium price and quantity.
D)   reduce the quantity demanded but not shift the demand curve.E) A) and C)
F) A) and D)

Question 18

Which of the following would most likely increase the demand for gasoline?

Accepted Answer

A)   The expectation by consumers that gasoline prices will be higher in the future.
B)   The expectation by consumers that gasoline prices will be lower in the future.
C)   A widespread shift in car ownership from SUVs to hybrid sedans.
D)   A decrease in the price of public transportation.E) None of the above
F) C) and D)

Question 19

When the price of a product increases,a consumer is able to buy less of it with a given money income.This describes the:

Accepted Answer

A)   cost effect.
B)   inflationary effect.
C)   income effect.
D)   substitution effect.E) A) and D)
F) C) and D)

Question 20

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.If demand changed from P = 10 - .2Q to P = 7 - .3Q,the new equilibrium price is:

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $7.E) None of the above
F) A) and B)

Exam 3: Demand, Supply, and Market Equilibrium

With a downsloping demand curve and an upsloping supply curve for a product,a decrease in resource prices will:

Correct Answer
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Which of the following would most likely increase the demand for gasoline?

Correct Answer
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Allocative efficiency involves determining:

Correct Answer
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Blu-ray players and Blu-ray discs are:

Correct Answer
verified

If the demand curve for product B shifts to the right as the price of product A declines,then:

Correct Answer
verified

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.The equilibrium price for X is:

Correct Answer
verified

If a legal ceiling price is set above the equilibrium price:

Correct Answer
verified

The law of supply indicates that,other things equal:

Correct Answer
verified

If X is a normal good,a rise in money income will shift the:

Correct Answer
verified

(Last Word) A market-based system of buying and selling human organs for transplant would:

Correct Answer
verified

With a downsloping demand curve and an upsloping supply curve for a product,an increase in consumer income will:

Correct Answer
verified

A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct Answer
verified

If consumer incomes increase,the demand for product X:

Correct Answer
verified

Correct Answer
verified

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread,we would expect the price of wheat to:

Correct Answer
verified

When the price of a product increases,a consumer is able to buy less of it with a given money income.This describes the:

Correct Answer
verified

If an effective ceiling price is placed on hamburgers,then:

Correct Answer
verified

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Correct Answer
verified

"In the corn market,demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Correct Answer
verified

Steve went to his favorite hamburger restaurant with $3,expecting to buy a $2 hamburger and a $1 soda.When he arrived he discovered that hamburgers were on sale for $1 each,so Steve bought two hamburgers and a soda.Steve's response to the decrease in the price of hamburgers is best explained by:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

With a downsloping demand curve and an upsloping supply curve for a product,a decrease in resource prices will:

Correct AnswerverifiedShow Answer

Which of the following would most likely increase the demand for gasoline?

Correct AnswerverifiedShow Answer

Allocative efficiency involves determining:

Correct AnswerverifiedShow Answer

Blu-ray players and Blu-ray discs are:

Correct AnswerverifiedShow Answer

If the demand curve for product B shifts to the right as the price of product A declines,then:

Correct AnswerverifiedShow Answer

(Advanced analysis) Answer the question on the basis of the following information.The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information.The equilibrium price for X is:

Correct AnswerverifiedShow Answer

If a legal ceiling price is set above the equilibrium price:

Correct AnswerverifiedShow Answer

The law of supply indicates that,other things equal:

Correct AnswerverifiedShow Answer

If X is a normal good,a rise in money income will shift the:

Correct AnswerverifiedShow Answer

(Last Word) A market-based system of buying and selling human organs for transplant would:

Correct AnswerverifiedShow Answer

With a downsloping demand curve and an upsloping supply curve for a product,an increase in consumer income will:

Correct AnswerverifiedShow Answer

A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct AnswerverifiedShow Answer

If consumer incomes increase,the demand for product X:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread,we would expect the price of wheat to:

Correct AnswerverifiedShow Answer

When the price of a product increases,a consumer is able to buy less of it with a given money income.This describes the:

Correct AnswerverifiedShow Answer

If an effective ceiling price is placed on hamburgers,then:

Correct AnswerverifiedShow Answer

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Correct AnswerverifiedShow Answer

"In the corn market,demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Correct AnswerverifiedShow Answer

Steve went to his favorite hamburger restaurant with $3,expecting to buy a $2 hamburger and a $1 soda.When he arrived he discovered that hamburgers were on sale for $1 each,so Steve bought two hamburgers and a soda.Steve's response to the decrease in the price of hamburgers is best explained by:

Correct AnswerverifiedShow Answer

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