Question 1

A surplus of a good could possibly be eliminated by:

Accepted Answer

A)  the removal of a price floor. 
B)  the removal of a price ceiling. 
C)  a sufficient decrease in demand keeping price constant. 
D)  a sufficient increase in supply keeping price constant. 
A)  the removal of a price floor. 
B)  the removal of a price ceiling. 
C)  a sufficient decrease in demand keeping price constant. 
D)  a sufficient increase in supply keeping price constant.

Question 2

Fishing for king crabs for a living is risky business. Their migration habits along the Bering Strait are just not understood. The king crabs seem to disappear one year but return mysteriously a few years later, wreaking havoc on the income of crabbers. When crabs disappear, consumers buy lobster instead. What best describes this situation in the king crab market?

Accepted Answer

A)  The supply curve shifts to the left when crabs disappear (their price rises) and shift to the right when they reappear (their price declines). 
B)  The supply curve shifts to the left when crabs disappear, (their price rises) and the demand curve shifts to the left when consumers substitute lobster for crab (lowering their price). The supply curve then shifts to the right when crabs reappear (their price declines). 
C)  The price of crab rises when crabs are scarce creating excess demand. The price of crab falls when crabs are abundant creating excess supply. 
D)  The quantity of crab falls and then rises as crabs disappear and reappear in response to shifts in demand. Demand shifts to the left as consumers substitute toward lobster when crab is scarce and shift to the right when crab is abundant. 
A)  The supply curve shifts to the left when crabs disappear (their price rises) and shift to the right when they reappear (their price declines). 
B)  The supply curve shifts to the left when crabs disappear, (their price rises) and the demand curve shifts to the left when consumers substitute lobster for crab (lowering their price). The supply curve then shifts to the right when crabs reappear (their price declines). 
C)  The price of crab rises when crabs are scarce creating excess demand. The price of crab falls when crabs are abundant creating excess supply. 
D)  The quantity of crab falls and then rises as crabs disappear and reappear in response to shifts in demand. Demand shifts to the left as consumers substitute toward lobster when crab is scarce and shift to the right when crab is abundant.

Question 3

Tariffs increase equilibrium price and quantity.

Accepted Answer

A) True 
 B)False

Question 4

More and more devices are being introduced into the market that perform tasks similar to that of PCs, such as tablets and smartphones. At the same time, the price of computer chips to make high-end PCs continues to fall. What is the effect of the events on equilibrium price and quantity of high-end PCs?

Accepted Answer

A)  Price falls continuously as does quantity sold. 
B)  Price rises then falls while quantity sold falls continuously. 
C)  Price falls continuously while quantity falls initially but then rises, recouping earlier losses. 
D)  Price falls continuously and quantity rises continuously. 
A)  Price falls continuously as does quantity sold. 
B)  Price rises then falls while quantity sold falls continuously. 
C)  Price falls continuously while quantity falls initially but then rises, recouping earlier losses. 
D)  Price falls continuously and quantity rises continuously.

Question 5

To keep the price of gas from rising quickly after a hurricane, the government sometimes institutes price ceilings on the price of gasoline. These price ceilings cause ________ in the gasoline market.

Accepted Answer

A)  surpluses 
B)  movement of the demand curve 
C)  movement along the demand curve 
D)  shortages 
A)  surpluses 
B)  movement of the demand curve 
C)  movement along the demand curve 
D)  shortages

Question 6

An increase in quantity and an indeterminate change in price are consistent with a:

Accepted Answer

A)  leftward shift in demand and supply. 
B)  rightward shift in supply and demand. 
C)  rightward shift in supply, keeping demand constant. 
D)  rightward shift in demand, keeping supply constant. 
A)  leftward shift in demand and supply. 
B)  rightward shift in supply and demand. 
C)  rightward shift in supply, keeping demand constant. 
D)  rightward shift in demand, keeping supply constant.

Question 7

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The equilibrium price and quantity is:

Accepted Answer

A)  $40 and 200, respectively. 
B)  $80 and 100, respectively. 
C)  $100 and 80, respectively. 
D)  $100 and 130, respectively. 
A)  $40 and 200, respectively. 
B)  $80 and 100, respectively. 
C)  $100 and 80, respectively. 
D)  $100 and 130, respectively.

Question 8

Refer to the table shown that depicts a third-party payer market. What is the quantity demanded if a $1 co-pay is established? $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 1,200 & 0 \
\hline \$ 1 & 600 & 150 \
\hline \$ 2 & 300 & 300 \
\hline \$ 3 & 0 & 450 \
\hline \$ 4 & 0 & 600 \
\hline \$ 5 & 0 & 750 \
\hline \$ 6 & 0 & 900 \
\hline \$ 7 & 0 & 1,050 \
\hline
\end{array}$$

Accepted Answer

A)  0 
B)  300 
C)  600 
D)  900 
A)  0 
B)  300 
C)  600 
D)  900

Question 9

In a third-party payer system:

Accepted Answer

A)  total expenditures generally fall. 
B)  total expenditures generally rise. 
C)  quantity demanded generally falls. 
D)  quantity supplied generally falls. 
A)  total expenditures generally fall. 
B)  total expenditures generally rise. 
C)  quantity demanded generally falls. 
D)  quantity supplied generally falls.

Question 10

Refer to the following graph.   In New York City, the rent on many apartments is set below market rates. As a result, many people find that the only way to obtain an apartment is to make illegal payments to landlords. If Pc is the controlled rent, a best estimate of such "key" money is shown as:

Accepted Answer

A)  Pf. 
B)  Pe. 
C)  Pe minus Pc. 
D)  Pf minus Pc. 
A)  Pf. 
B)  Pe. 
C)  Pe minus Pc. 
D)  Pf minus Pc.

Question 11

Refer to the graph shown. Which of the following wage rates would be an effective price floor?

Accepted Answer

A)  $3.50 
B)  $4.50 
C)  $6.50 
D)  $7.25 
A)  $3.50 
B)  $4.50 
C)  $6.50 
D)  $7.25

Question 12

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Accepted Answer

A)  30 
B)  20 
C)  10 
D)  0 
A)  30 
B)  20 
C)  10 
D)  0

Question 13

Which price ceiling will cause the greatest excess demand?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 14

Suppose that initially, supply is given by the equation Qs = 4P − 16. If, as a result of higher production costs, the quantity supplied decreases by 4 at every price, the new supply equation would be:

Accepted Answer

A)  Qs = 8P − 16. 
B)  Qs = P − 16. 
C)  Qs = 4P − 20. 
D)  Qs = 4P − 12. 
A)  Qs = 8P − 16. 
B)  Qs = P − 16. 
C)  Qs = 4P − 20. 
D)  Qs = 4P − 12.

Question 15

If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will:

Accepted Answer

A)  shift upward and the price will increase by $0.25 per gallon. 
B)  shift upward and the price will increase by less than $0.25 per gallon. 
C)  shift downward and the price will decrease by $0.25 per gallon. 
D)  shift downward and the price will decrease by less than $0.25 per gallon. 
A)  shift upward and the price will increase by $0.25 per gallon. 
B)  shift upward and the price will increase by less than $0.25 per gallon. 
C)  shift downward and the price will decrease by $0.25 per gallon. 
D)  shift downward and the price will decrease by less than $0.25 per gallon.

Question 16

Refer to the following graphs.   A recent report indicated that 50 intensive-care unit patients die for every 1,000 who are managed with a heart device known as the right heart catheter. Suppose as a result, the FDA limited supply of the heart catheters. The effect of the report and subsequent action by the FDA on the market for right heart catheters is best shown by which of the graphs?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

A surplus of a good could possibly be eliminated by:

Tariffs increase equilibrium price and quantity.

To keep the price of gas from rising quickly after a hurricane, the government sometimes institutes price ceilings on the price of gasoline. These price ceilings cause ________ in the gasoline market.

An increase in quantity and an indeterminate change in price are consistent with a:

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The equilibrium price and quantity is:

Refer to the table shown that depicts a third-party payer market. What is the quantity demanded if a $1 co-pay is established? Price Quantity Demanded Quantity Supplied \ 0 1,200 0 \ 1 600 150 \ 2 300 300 \ 3 0 450 \ 4 0 600 \ 5 0 750 \ 6 0 900 \ 7 0 1,050

In a third-party payer system:

Refer to the following graph. In New York City, the rent on many apartments is set below market rates. As a result, many people find that the only way to obtain an apartment is to make illegal payments to landlords. If Pc is the controlled rent, a best estimate of such "key" money is shown as:

Refer to the graph shown. Which of the following wage rates would be an effective price floor?

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Which price ceiling will cause the greatest excess demand?

Suppose that initially, supply is given by the equation Qs = 4P − 16. If, as a result of higher production costs, the quantity supplied decreases by 4 at every price, the new supply equation would be:

If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Exam 5: Using Supply and Demand

A surplus of a good could possibly be eliminated by:

Tariffs increase equilibrium price and quantity.

To keep the price of gas from rising quickly after a hurricane, the government sometimes institutes price ceilings on the price of gasoline. These price ceilings cause ________ in the gasoline market.

An increase in quantity and an indeterminate change in price are consistent with a:

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The equilibrium price and quantity is:

Refer to the table shown that depicts a third-party payer market. What is the quantity demanded if a $1 co-pay is established? Price Quantity Demanded Quantity Supplied \ 0 1,200 0 \ 1 600 150 \ 2 300 300 \ 3 0 450 \ 4 0 600 \ 5 0 750 \ 6 0 900 \ 7 0 1,050

In a third-party payer system:

Refer to the following graph. In New York City, the rent on many apartments is set below market rates. As a result, many people find that the only way to obtain an apartment is to make illegal payments to landlords. If Pc is the controlled rent, a best estimate of such "key" money is shown as:

Refer to the graph shown. Which of the following wage rates would be an effective price floor?

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Which price ceiling will cause the greatest excess demand?

Suppose that initially, supply is given by the equation Qs = 4P − 16. If, as a result of higher production costs, the quantity supplied decreases by 4 at every price, the new supply equation would be:

If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters