Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

If the supply and demand curves for a product both decrease,we can say that equilibrium:

Accepted Answer

A)   quantity must fall and equilibrium price must rise.
B)   price must fall,but equilibrium quantity may either rise,fall,or remain unchanged.
C)   quantity must decline,but equilibrium price may either rise,fall,or remain unchanged.
D)   quantity and equilibrium price must both decline.E) A) and B)
F) A) and C)

Question 3

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

Question 4

A fall in the price of milk,used in the production of ice cream,will:

Accepted Answer

A)   decrease the supply of ice cream,causing the supply curve of ice cream to shift to the left.
B)   increase the supply of ice cream,causing the supply curve of ice cream to shift to the right.
C)   cause a downward movement along the supply curve of ice cream.
D)   have no effect on the supply of ice cream.E) All of the above
F) A) and B)

Question 5

People demand more of product X when the price of product Y decreases.This means X and Y are:

Accepted Answer

A)   complements.
B)   substitutes.
C)   not related.
D)   both inexpensive.E) B) and D)
F) A) and B)

Question 6

In a competitive market,if the existing price is below the equilibrium price,market forces will drive the price:

Accepted Answer

A)   up and quantity supplied up.
B)   up and quantity supplied down.
C)   up and supply up.
D)   down and demand down.E) All of the above
F) B) and C)

Question 7

To realize "full production" a society must achieve:

Accepted Answer

A)   income inequality.
B)   productive efficiency only.
C)   both allocative and productive efficiency.
D)   any output lying inside of its production possibilities curve.E) None of the above
F) B) and C)

Question 8

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.
-Refer to the above.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) A) and D)
F) A) and C)

Question 9

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 the quantity demanded.E) B) and D)
F) None of the above

Question 10

-Refer to the above graph.X and Y are substitute products.Which one of the lines in the graph best illustrates this relationship?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) B) and D)

Question 11

If producers must obtain higher prices than previously to produce various levels of output,there has occurred:

Accepted Answer

A)   a decrease in demand.
B)   an increase in demand.
C)   a decrease in supply.
D)   an increase in supply.E) None of the above
F) B) and C)

Question 12

When the price of a product falls,the purchasing power of our money income rises and thus permits us to purchase more of the product.This statement describes:

Accepted Answer

A)   an inferior good.
B)   the rationing function of prices.
C)   the substitution effect.
D)   the income effect.E) A) and B)
F) B) and C)

Question 13

-Refer to the above diagram.A shortage of 160 units would be encountered if price was:

Accepted Answer

A)   $1.10,that is,$1.60 minus $.50.
B)   $1.60.
C)   $1.00.
D)   $.50.E) B) and C)
F) All of the above

Question 14

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Accepted Answer

A)   An increase in supply with a decrease in demand will result in an increase in price.
B)   An increase in supply with no change in demand will result in an increase in price.
C)   An increase in supply with no change in demand will result in a decline in sales.
D)   An increase in demand with no change in supply will result in an increase in sales.E) None of the above
F) All of the above

Question 15

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Accepted Answer

A)   demand rises and supply rises
B)   supply falls and demand remains constant
C)   demand rises and supply falls
D)   supply rises and demand fallsE) A) and B)
F) A) and C)

Question 16

The upward slope of the supply curve reflects the:

Accepted Answer

A)   principle of specialization in production.
B)   law of supply.
C)   fact that price and quantity supplied are inversely related.
D)   law of diminishing marginal utility.E) A) and B)
F) All of the above

Question 17

An effective price floor on wheat will:

Accepted Answer

A)   force otherwise profitable farmers out of business.
B)   result in a shortage of wheat.
C)   result in a surplus of wheat.
D)   clear the market for wheat.E) A) and D)
F) C) and D)

Question 18

An effective price floor will:

Accepted Answer

A)   force some firms in this industry to go out of business.
B)   result in a product surplus.
C)   result in a product shortage.
D)   clear the market.E) A) and D)
F) C) and D)

Question 19

In moving along a stable supply curve which of the following is not held constant?

Accepted Answer

A)   the number of firms producing this good
B)   expectations about the future price of the product
C)   techniques used in producing this product
D)   the price of the product for which the supply curve is relevantE) B) and D)
F) A) and B)

Question 20

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) All of the above

Exam 3: 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
verified

People demand more of product X when the price of product Y decreases.This means X and Y are:

Correct Answer
verified

To realize "full production" a society must achieve:

Correct Answer
verified

If the supply and demand curves for a product both decrease,we can say that equilibrium:

Correct Answer
verified

The upward slope of the supply curve reflects the:

Correct Answer
verified

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Correct Answer
verified

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

Correct Answer
verified

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

Correct Answer
verified

If producers must obtain higher prices than previously to produce various levels of output,there has occurred:

Correct Answer
verified

A fall in the price of milk,used in the production of ice cream,will:

Correct Answer
verified

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

Correct Answer
verified

-Refer to the above graph.X and Y are substitute products.Which one of the lines in the graph best illustrates this relationship?

Correct Answer
verified

An effective price floor on wheat will:

Correct Answer
verified

The demand curve shows the relationship between:

Correct Answer
verified

In a competitive market,if the existing price is below the equilibrium price,market forces will drive the price:

Correct Answer
verified

In moving along a stable supply curve which of the following is not held constant?

Correct Answer
verified

An effective price floor will:

Correct Answer
verified

When the price of a product falls,the purchasing power of our money income rises and thus permits us to purchase more of the product.This statement describes:

Correct Answer
verified

-Refer to the above diagram.A shortage of 160 units would be encountered if price was:

Correct Answer
verified

Correct Answer
verified

Exam 3: 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

People demand more of product X when the price of product Y decreases.This means X and Y are:

Correct AnswerverifiedShow Answer

To realize "full production" a society must achieve:

Correct AnswerverifiedShow Answer

If the supply and demand curves for a product both decrease,we can say that equilibrium:

Correct AnswerverifiedShow Answer

The upward slope of the supply curve reflects the:

Correct AnswerverifiedShow Answer

Assuming competitive markets with typical supply and demand curves,which of the following statements is correct?

Correct AnswerverifiedShow Answer

In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?

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

If producers must obtain higher prices than previously to produce various levels of output,there has occurred:

Correct AnswerverifiedShow Answer

A fall in the price of milk,used in the production of ice cream,will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Refer to the above graph.X and Y are substitute products.Which one of the lines in the graph best illustrates this relationship?

Correct AnswerverifiedShow Answer

An effective price floor on wheat will:

Correct AnswerverifiedShow Answer

The demand curve shows the relationship between:

Correct AnswerverifiedShow Answer

In a competitive market,if the existing price is below the equilibrium price,market forces will drive the price:

Correct AnswerverifiedShow Answer

In moving along a stable supply curve which of the following is not held constant?

Correct AnswerverifiedShow Answer

An effective price floor will:

Correct AnswerverifiedShow Answer

When the price of a product falls,the purchasing power of our money income rises and thus permits us to purchase more of the product.This statement describes:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.A shortage of 160 units would be encountered if price was:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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