Question 1

The price system ultimately determines the allocation of resources among producers.

Accepted Answer

A) True 
 B)False  True

Question 2

Consumer surplus describes a situation in which there is excess quantity supplied.

Accepted Answer

A) True 
 B)False  False

Question 3

A shortage will occur if a ________ is set ________ the equilibrium price.

Accepted Answer

A)  price floor; below 
B)  price floor; above 
C)  price ceiling; above 
D)  price ceiling; below 
A)  price floor; below 
B)  price floor; above 
C)  price ceiling; above 
D)  price ceiling; below D

Question 4

Refer to the information provided in Figure 4.1 below to answer the question(s) that follow.   Figure 4.1
-Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United States will

Accepted Answer

A)  import 2 million apples per day. 
B)  import 4 million apples per day. 
C)  import 6 million apples per day. 
D)  import 8 million apples per day. 
A)  import 2 million apples per day. 
B)  import 4 million apples per day. 
C)  import 6 million apples per day. 
D)  import 8 million apples per day.

Question 5

Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.
Equilibrium in this market occurs at the intersection of curves S and D.   Figure 4.6
-Refer to Figure 4.6. At equilibrium, producer surplus is area

Accepted Answer

A)  A. 
B)  A + B + C. 
C)  G. 
D)  E + F + G. 
A)  A. 
B)  A + B + C. 
C)  G. 
D)  E + F + G.

Question 6

A situation where illegal trading at market prices takes place is known in economics as a

Accepted Answer

A)  smuggler's market. 
B)  pirate market. 
C)  black market. 
D)  command market. 
A)  smuggler's market. 
B)  pirate market. 
C)  black market. 
D)  command market.

Question 7

Consumer surplus is

Accepted Answer

A)  the difference between the maximum a person is willing to pay and current market price. 
B)  the difference between current market price and full costs of production for the firm. 
C)  the difference between the maximum a person is willing to pay and full costs of productions for the firm. 
D)  current market price. 
A)  the difference between the maximum a person is willing to pay and current market price. 
B)  the difference between current market price and full costs of production for the firm. 
C)  the difference between the maximum a person is willing to pay and full costs of productions for the firm. 
D)  current market price.

Question 8

Related to the Economics in Practice on p. 81: The true cost of the Shakespeare in the Park tickets is

Accepted Answer

A)  zero. 
B)  $0 plus the opportunity cost of the time spent in line. 
C)  the cost to put on the performance. 
D)  the additional cost to the city of extra security. 
A)  zero. 
B)  $0 plus the opportunity cost of the time spent in line. 
C)  the cost to put on the performance. 
D)  the additional cost to the city of extra security.

Question 9

Queuing means

Accepted Answer

A)  waiting in line. 
B)  price rationing. 
C)  favoring customers. 
D)  issuing ration coupons. 
A)  waiting in line. 
B)  price rationing. 
C)  favoring customers. 
D)  issuing ration coupons.

Question 10

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow.   Figure 4.3
-Refer to Figure 4.3. At an effective price ceiling for pencils

Accepted Answer

A)  quantity demanded is greater than quantity supplied. 
B)  quantity demanded is less than quantity supplied. 
C)  quantity demanded is equal to quantity supplied. 
D)  price is above equilibrium. 
A)  quantity demanded is greater than quantity supplied. 
B)  quantity demanded is less than quantity supplied. 
C)  quantity demanded is equal to quantity supplied. 
D)  price is above equilibrium.

Question 11

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow.   Figure 4.3
-Refer to Figure 4.3. An example of an effective price floor would be the government setting the price of pencils at

Accepted Answer

A)  $0.00. 
B)  $0.40. 
C)  $0.45. 
D)  $0.50. 
A)  $0.00. 
B)  $0.40. 
C)  $0.45. 
D)  $0.50.

Question 12

People scalping tickets for the Super Bowl will be successful at selling the tickets for a profit

Accepted Answer

A)  any time the Super Bowl is popular. 
B)  when prices are too high. 
C)  when the price set by the National Football League is less than the market equilibrium price. 
D)  only when there is excess supply. 
A)  any time the Super Bowl is popular. 
B)  when prices are too high. 
C)  when the price set by the National Football League is less than the market equilibrium price. 
D)  only when there is excess supply.

Question 13

If a price is demand determined, then

Accepted Answer

A)  the supply curve must be horizontal. 
B)  the supply curve must be vertical. 
C)  the demand curve must be vertical. 
D)  the demand curve must be upward sloping. 
A)  the supply curve must be horizontal. 
B)  the supply curve must be vertical. 
C)  the demand curve must be vertical. 
D)  the demand curve must be upward sloping.

Question 14

When supply is fixed or the product is unique, then price is

Accepted Answer

A)  supply determined. 
B)  demand determined. 
C)  government determined. 
D)  indeterminate. 
A)  supply determined. 
B)  demand determined. 
C)  government determined. 
D)  indeterminate.

Question 15

A firm that sells a car for $30,000 gets producer surplus of $30,000.

Accepted Answer

A) True 
 B)False

Question 16

Attempts to bypass price rationing in the market

Accepted Answer

A)  are efficient. 
B)  are easily administered. 
C)  are costly. 
D)  always fail. 
A)  are efficient. 
B)  are easily administered. 
C)  are costly. 
D)  always fail.

Question 17

Related to the Economics in Practice on page 77: If a hurricane results in the supply of hotel rooms decreasing and the demand for hotel rooms increases, the equilibrium price for hotel rooms ________ and the equilibrium quantity of hotel rooms ________.

Accepted Answer

A)  will increase; will decrease 
B)  will increase; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; will decrease 
D)  may increase, decrease, or stay the same; may increase, decrease, or stay the same 
A)  will increase; will decrease 
B)  will increase; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; will decrease 
D)  may increase, decrease, or stay the same; may increase, decrease, or stay the same

Question 18

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Accepted Answer

A)  using rationing coupons that cannot be resold. 
B)  using rationing on a first-come, first-served basis. 
C)  using rationing coupons that can be resold. 
D)  that no rationing system will be necessary. 
A)  using rationing coupons that cannot be resold. 
B)  using rationing on a first-come, first-served basis. 
C)  using rationing coupons that can be resold. 
D)  that no rationing system will be necessary.

Question 19

Refer to the information provided in Figure 4.2 below to answer the question(s) that follow.   Figure 4.2
-Refer to Figure 4.2. The market is initially in equilibrium at the intersection of SS1U1B12S1U1B0and D, and supply shifts from SS1U1B12S1U1B0 toSS1U1B11S1U1B0,Which of the following statements is true?

Accepted Answer

A)  Price will still serve as a rationing device causing quantity demanded to rise from 8 to 11 soft pretzels. 
B)  There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is lower than the original equilibrium quantity. 
C)  Price will still serve as a rationing device causing quantity supplied to fall from 8 to 4 soft pretzels. 
D)  The market cannot move to a new equilibrium until there is also a change in supply. 
A)  Price will still serve as a rationing device causing quantity demanded to rise from 8 to 11 soft pretzels. 
B)  There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is lower than the original equilibrium quantity. 
C)  Price will still serve as a rationing device causing quantity supplied to fall from 8 to 4 soft pretzels. 
D)  The market cannot move to a new equilibrium until there is also a change in supply.

Question 20

For a particular product, an effective price floor results in

Accepted Answer

A)  quantity demanded greater than quantity supplied. 
B)  quantity supplied greater than quantity demanded. 
C)  quantity demanded equal to quantity supplied. 
D)  demand equal to supply. 
A)  quantity demanded greater than quantity supplied. 
B)  quantity supplied greater than quantity demanded. 
C)  quantity demanded equal to quantity supplied. 
D)  demand equal to supply.

Exam 4: Demand and Supply Applications

The price system ultimately determines the allocation of resources among producers.

Consumer surplus describes a situation in which there is excess quantity supplied.

A shortage will occur if a ________ is set ________ the equilibrium price.

Refer to the information provided in Figure 4.1 below to answer the question(s) that follow. Figure 4.1 -Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United States will

Refer to the information provided in Figure 4.6 below to answer the question(s) that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. At equilibrium, producer surplus is area

A situation where illegal trading at market prices takes place is known in economics as a

Consumer surplus is

Related to the Economics in Practice on p. 81: The true cost of the Shakespeare in the Park tickets is

Queuing means

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3 -Refer to Figure 4.3. At an effective price ceiling for pencils

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3 -Refer to Figure 4.3. An example of an effective price floor would be the government setting the price of pencils at

People scalping tickets for the Super Bowl will be successful at selling the tickets for a profit

If a price is demand determined, then

When supply is fixed or the product is unique, then price is

A firm that sells a car for $30,000 gets producer surplus of $30,000.

Attempts to bypass price rationing in the market

Related to the Economics in Practice on page 77: If a hurricane results in the supply of hotel rooms decreasing and the demand for hotel rooms increases, the equilibrium price for hotel rooms ________ and the equilibrium quantity of hotel rooms ________.

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Refer to the information provided in Figure 4.2 below to answer the question(s) that follow. Figure 4.2 -Refer to Figure 4.2. The market is initially in equilibrium at the intersection of S2and D, and supply shifts from S2 toS1,Which of the following statements is true?

For a particular product, an effective price floor results in

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: The Labor and Land Markets

Input Demand: The Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

A shortage will occur if a is set the equilibrium price.

Related to the Economics in Practice on page 77: If a hurricane results in the supply of hotel rooms decreasing and the demand for hotel rooms increases, the equilibrium price for hotel rooms and the equilibrium quantity of hotel rooms .

Refer to the information provided in Figure 4.2 below to answer the question(s) that follow. Figure 4.2 -Refer to Figure 4.2. The market is initially in equilibrium at the intersection of S₂and D, and supply shifts from S₂ toS₁,Which of the following statements is true?