Question 1

The law of demand can be stated as all else equal:

Accepted Answer

A)   quantity demanded rises as price falls.
B)   quantity demanded rises as price rises.
C)   quantity demanded rises as income rises.
D)   demand rises as price falls.E) A) and B)
F) C) and D)

Question 2

A perfectly competitive market is one in which:

Accepted Answer

A)   fully informed, price-taking buyers and sellers easily trade a standardized good or service.
B)   fully informed, price-making buyers and seller easily trade a standardized good or service.
C)   uninformed, price-taking buyers and sellers easily trade a standardized good or service.
D)   uninformed, price-making buyers and seller easily trade a standardized good or service.E) All of the above
F) B) and C)

Question 3

A recent epidemic of mad cow disease caused the government to mandate that thousands of cows be completely destroyed. This will likely cause:

Accepted Answer

A)   the demand for leather shoes to increase.
B)   the supply of leather shoes to decrease.
C)   the demand and the supply of leather shoes to increase.
D)   It will not affect the market for leather shoes.E) None of the above
F) B) and D)

Question 4

Suppose there is a tornado that levels a city. As rebuilding begins, how might you analyze this effect in the market for lumber?

Accepted Answer

A)   The demand for lumber would increase, increasing both the equilibrium price and quantity.
B)   The supply of lumber would increase, decreasing the equilibrium price and increasing the equilibrium quantity.
C)   The demand for lumber would increase, decreasing the equilibrium price and increasing the equilibrium quantity.
D)   The supply of lumber would decrease, increasing the equilibrium price and decreasing the equilibrium quantity.E) All of the above
F) B) and C)

Question 5

Last year due to the increased rainfall there was a plentiful supply of blueberries which caused their price to drop. Bakeries regularly produce and sell blueberry pie. Considering the market for blueberry pies, what factor of supply has been affected, and what was the overall effect on the supply?

Accepted Answer

A)   The price of an input has been affected; supply will increase.
B)   The price of an input has been affected; supply will decrease.
C)   The new technology has been affected; supply will increase.
D)   The number of sellers has been affected; supply will increase.E) C) and D)
F) All of the above

Question 6

The supply curve is a __________ line that reflects the _______ relationship between price and quantity supplied.

Accepted Answer

A)   downward-sloping; inverse
B)   upward-sloping; inverse
C)   downward-sloping; direct
D)   upward-sloping; directE) C) and D)
F) A) and B)

Question 7

This table shows the demand and supply schedule of a good.  According to the table shown, the equilibrium in this market will occur at:

Accepted Answer

A)   a price of $1.50 and a quantity of 62.
B)   a price of $1.50 and a quantity of 31.
C)   a price of $0.00 and a quantity of 75.
D)   Cannot be determined without more informationE) B) and C)
F) A) and C)

Question 8

The supply schedule assumes that factors other than:

Accepted Answer

A)   price remain the same.
B)   price must change.
C)   supply remain the same.
D)   supply must change.E) None of the above
F) B) and D)

Question 9

Some nonprice determinants of demand are:

Accepted Answer

A)   consumer preferences, expectations of future prices, and the number of buyers in the market.
B)   consumer preferences, the price of the good, and incomes.
C)   incomes, expectations of future prices, and the number of sellers in the market.
D)   prices of related goods, knowledge of past prices, and the number of buyers in the market.E) C) and D)
F) B) and C)

Question 10

The amount of a particular good or service that buyers in a market will purchase at a given price during a specified period is called:

Accepted Answer

A)   quantity demanded.
B)   quantity supplied.
C)   demand.
D)   supply.E) A) and C)
F) A) and D)

Question 11

This graph depicts the demand for a normal good.  A movement from A to C in the graph shown might be caused by:

Accepted Answer

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

Question 12

An increase in the price of butter is likely to cause the demand for:

Accepted Answer

A)   olive oil to increase.
B)   olive oilto decrease.
C)   butter to increase.
D)   butter to d.E) A) and C)
F) A) and B)

Question 13

The best example of a perfectly competitive market would be the market for:

Accepted Answer

A)   grain.
B)   shoes.
C)   computers.
D)   cameras.E) C) and D)
F) B) and C)

Question 14

Darren loves to go to the movies, and he just learned that he can buy a ticket at a discounted price using his student ID. Darren now attends movies even more often. The change in Darren's behavior would be shown graphically by a:

Accepted Answer

A)   rightward shift in his demand curve.
B)   leftward shift in his demand curve.
C)   movement down along his demand curve.
D)   movement up along his demand curve.E) A) and C)
F) A) and B)

Question 15

The buyers and sellers who trade a particular good or service make up what we call a:

Accepted Answer

A)   market.
B)   store.
C)   mall.
D)   negotiators.E) None of the above
F) A) and B)

Question 16

An article about how coffee boosts critical thinking is likely to affect which determinant of demand?

Accepted Answer

A)   Incomes
B)   Preferences
C)   Number of sellers in the market
D)   PriceE) B) and C)
F) A) and D)

Question 17

We study the simple model of competitive markets because it helps to:

Accepted Answer

A)   provide useful insights to markets that are not perfectly competitive.
B)   show how the government controls the economy.
C)   indicate whether buyers or sellers matter more.
D)   show how poorly the economy actually functions.E) C) and D)
F) None of the above

Question 18

Bob just got laid off and now has no income. We can assume that his demand for all:

Accepted Answer

A)   all normal goods will increase.
B)   all inferior goods will increase.
C)   all inferior goods will decrease.
D)   all normal goods will stay the same.E) C) and D)
F) All of the above

Question 19

According to the graph shown, if the price were $15, a:

Accepted Answer

A)   shortage would exist, signaling sellers to raise their price.
B)   shortage would exist, signaling buyers to leave the market.
C)   surplus would exist, signaling sellers to drop their price.
D)   surplus would exist, signaling buyers to bid up the price.E) A) and D)
F) B) and C)

Question 20

Shopping at a warehouse, such as Sam's Club or Costco, allows its members to pay very low prices on the goods and services they buy. Customers who shop at such a store incur:

Accepted Answer

A)   transaction costs because they must be members to shop there.
B)   no transaction costs because they pay prices that are lower than any other location.
C)   transaction costs because they must buy a product in bulk.
D)   no transaction costs because members can return any item purchased for any reason.E) C) and D)
F) A) and D)

Exam 3: Markets

An article about how coffee boosts critical thinking is likely to affect which determinant of demand?

Correct AnswerverifiedShow Answer

The amount of a particular good or service that buyers in a market will purchase at a given price during a specified period is called:

Correct AnswerverifiedShow Answer

The best example of a perfectly competitive market would be the market for:

Correct AnswerverifiedShow Answer

A recent epidemic of mad cow disease caused the government to mandate that thousands of cows be completely destroyed. This will likely cause:

Correct AnswerverifiedShow Answer

Some nonprice determinants of demand are:

Correct AnswerverifiedShow Answer

Suppose there is a tornado that levels a city. As rebuilding begins, how might you analyze this effect in the market for lumber?

Correct AnswerverifiedShow Answer

The supply curve is a __________ line that reflects the _______ relationship between price and quantity supplied.

Correct AnswerverifiedShow Answer

According to the graph shown, if the price were $15, a:

Correct AnswerverifiedShow Answer

Last year due to the increased rainfall there was a plentiful supply of blueberries which caused their price to drop. Bakeries regularly produce and sell blueberry pie. Considering the market for blueberry pies, what factor of supply has been affected, and what was the overall effect on the supply?

Correct AnswerverifiedShow Answer

Shopping at a warehouse, such as Sam's Club or Costco, allows its members to pay very low prices on the goods and services they buy. Customers who shop at such a store incur:

Correct AnswerverifiedShow Answer

Darren loves to go to the movies, and he just learned that he can buy a ticket at a discounted price using his student ID. Darren now attends movies even more often. The change in Darren's behavior would be shown graphically by a:

Correct AnswerverifiedShow Answer

An increase in the price of butter is likely to cause the demand for:

Correct AnswerverifiedShow Answer

A perfectly competitive market is one in which:

Correct AnswerverifiedShow Answer

This graph depicts the demand for a normal good. A movement from A to C in the graph shown might be caused by:

Correct AnswerverifiedShow Answer

The supply schedule assumes that factors other than:

Correct AnswerverifiedShow Answer

The buyers and sellers who trade a particular good or service make up what we call a:

Correct AnswerverifiedShow Answer

We study the simple model of competitive markets because it helps to:

Correct AnswerverifiedShow Answer

Bob just got laid off and now has no income. We can assume that his demand for all:

Correct AnswerverifiedShow Answer

This table shows the demand and supply schedule of a good. According to the table shown, the equilibrium in this market will occur at:

Correct AnswerverifiedShow Answer

The law of demand can be stated as all else equal:

Correct AnswerverifiedShow Answer

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The supply curve is a ____ line that reflects the _ relationship between price and quantity supplied.

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