Question 1

Suppose the price of tomatoes dramatically increases. Which of the following could cause this change?

Accepted Answer

A) Hurricanes during the late summer damage the Florida crop, shifting supply left 
B) A reduction in tariffs of tomatoes from Central American, shifting supply right 
C) A news report stating that a pesticide used on tomatoes might cause cancer, shifting the demand to the right 
D) Advertising for ketchup increases demand for ketchup, shifting the demand curve to the left 
A) Hurricanes during the late summer damage the Florida crop, shifting supply left 
B) A reduction in tariffs of tomatoes from Central American, shifting supply right 
C) A news report stating that a pesticide used on tomatoes might cause cancer, shifting the demand to the right 
D) Advertising for ketchup increases demand for ketchup, shifting the demand curve to the left

Question 2

Refer to the graph shown. A quantity restriction of QR will:

Accepted Answer

A) raise market price to P0. 
B) maintain a market price of P1. 
C) lower market price to P2. 
D) have no effect in the market depicted. 
A) raise market price to P0. 
B) maintain a market price of P1. 
C) lower market price to P2. 
D) have no effect in the market depicted.

Question 3

Analyze the impact of a firm entering an existing market on the equilibrium quantity and price in that market using a supply and demand diagram.

Accepted Answer

The likely impact of a firm entering the

Question 4

Refer to the following graph.   A price ceiling would be binding, resulting in a market shortage if it is set at:

Accepted Answer

A) $3.00. 
B) $2.25. 
C) $1.50. 
D) either $3.00 or $1.50. 
A) $3.00. 
B) $2.25. 
C) $1.50. 
D) either $3.00 or $1.50.

Question 5

When gasoline prices rose in the early 2000s, the demand for SUVs fell. An economist would predict that SUV prices would decline or at least not rise as quickly.

Accepted Answer

A) True 
 B)False

Question 6

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. The possible black market price after the ceiling is:

Accepted Answer

A) $140. 
B) $110. 
C) $80. 
D) $40. 
A) $140. 
B) $110. 
C) $80. 
D) $40.

Question 7

A company switches from a medical plan that covered all medical costs to a medical plan with a high deductible, making employees responsible for the first $1,500 of health care costs. Other things the same, a higher deductible is expected to:

Accepted Answer

A) reduce both medical claims and hospital admissions. 
B) increase both medical claims and hospital admissions. 
C) reduce medical claims and increase hospital admissions. 
D) increase medical claims and reduce hospital admissions. 
A) reduce both medical claims and hospital admissions. 
B) increase both medical claims and hospital admissions. 
C) reduce medical claims and increase hospital admissions. 
D) increase medical claims and reduce hospital admissions.

Question 8

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 9

When a country imposes a tariff:

Accepted Answer

A) the domestic price of the imported good falls. 
B) domestic consumption of the imported good falls. 
C) domestic production of the good falls. 
D) domestic production of the good is unchanged. 
A) the domestic price of the imported good falls. 
B) domestic consumption of the imported good falls. 
C) domestic production of the good falls. 
D) domestic production of the good is unchanged.

Question 10

What are quantity restrictions? Use a supply/demand diagram to demonstrate the effect of quantity restrictions on equilibrium price and quantity of a good when there is an increase in demand.

Accepted Answer

Quantity restrictions are a method the g

Question 11

Honus Wagner, a major league baseball player from 1897 to 1917 and one of the first five men inducted into the Baseball Hall of Fame, had his baseball card pulled from cigarette packs because he wasn't being paid for their distribution. What best describes the effect of his action on the market for his baseball card?

Accepted Answer

A) Supply shifted to the left, price rose, and quantity demanded fell. 
B) Supply shifted to the left, price rose, and demand shifted to the left. 
C) Demand shifted to the left, price fell, and quantity supplied fell. 
D) Demand shifted to the left, price fell, and supply fell. 
A) Supply shifted to the left, price rose, and quantity demanded fell. 
B) Supply shifted to the left, price rose, and demand shifted to the left. 
C) Demand shifted to the left, price fell, and quantity supplied fell. 
D) Demand shifted to the left, price fell, and supply fell.

Question 12

A Wall Street Journal headline reads: "Cigar Shortage Draws New Brands into Market." The shortage resulted from a renewed interest in smoking cigars. What best describes facts behind the headline?

Accepted Answer

A) Supply has shifted to the right. Price has fallen somewhat, but not enough to equilibrate supply and demand. 
B) Demand has shifted to the right. Price has risen somewhat, increasing quantity supplied, but not enough to equal quantity demanded. 
C) Demand has shifted to the right and price has risen to equilibrate supply and demand. 
D) Supply has shifted to the left. Price has risen somewhat, but not enough to equilibrate supply and demand. 
A) Supply has shifted to the right. Price has fallen somewhat, but not enough to equilibrate supply and demand. 
B) Demand has shifted to the right. Price has risen somewhat, increasing quantity supplied, but not enough to equal quantity demanded. 
C) Demand has shifted to the right and price has risen to equilibrate supply and demand. 
D) Supply has shifted to the left. Price has risen somewhat, but not enough to equilibrate supply and demand.

Question 13

If the United States imposes tariffs on steel imports the:

Accepted Answer

A) demand for steel shifts to the left and lowers its market price. 
B) supply of steel shifts to the right and lowers its market price. 
C) supply of the imported steel shifts to the left and raises its market price. 
D) demand for steel shifts to the left and raises its market price. 
A) demand for steel shifts to the left and lowers its market price. 
B) supply of steel shifts to the right and lowers its market price. 
C) supply of the imported steel shifts to the left and raises its market price. 
D) demand for steel shifts to the left and raises its market price.

Question 14

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 15

Refer to the following graphs.   Americans nationwide have been complying with recycling regulations with unexpected zeal. The effect on the market for recycled paper is best shown by which graph?

Accepted Answer

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

Question 16

Define an excise tax and give three examples.Explain the relationship between a tariff and an excise tax.Use supply and demand analysis to explain why the equilibrium price of apples will rise and the equilibrium quantity will fall if an excise tax is levied on apples.Explain why the price of apples will not rise by the full amount of the tax.

Accepted Answer

Excise taxes are taxes levied on a speci

Question 17

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. The government has passed a law that subsidizes wages by $1 per hour. The equilibrium wage and quantity of labor with the subsidy is:

Accepted Answer

A) $4 and 15 workers, respectively. 
B) $2.5 and 12.5 workers, respectively. 
C) $3.5 and 17.5 workers, respectively. 
D) $3.5 and 10 workers, respectively. 
A) $4 and 15 workers, respectively. 
B) $2.5 and 12.5 workers, respectively. 
C) $3.5 and 17.5 workers, respectively. 
D) $3.5 and 10 workers, respectively.

Question 18

Helped by desktop publishing, the number of vintage baseball card forgeries has flooded the market for vintage baseball cards. Dealers left the market for fear of purchasing a phony. What was the effect on the market for vintage baseball cards assuming phonies could not be detected?

Accepted Answer

A) Demand shifted to the left, supply did not change, price declined, and quantity traded declined. 
B) Supply shifted to the right, demand did not change, price declined, and quantity traded rose. 
C) Supply shifted to the right, demand shifted to the left, and price rose. 
D) Supply shifted to the right, demand shifted to the left, and price declined. 
A) Demand shifted to the left, supply did not change, price declined, and quantity traded declined. 
B) Supply shifted to the right, demand did not change, price declined, and quantity traded rose. 
C) Supply shifted to the right, demand shifted to the left, and price rose. 
D) Supply shifted to the right, demand shifted to the left, and price declined.

Question 19

Which of the following is the best example of an excise tax?

Accepted Answer

A) A tax on all capital gains (the amount by which the value of an asset has risen between the time it was purchased and the time it was sold) 
B) A tax paid by employers on income paid to workers 
C) A tax collected on each gallon of gasoline sold 
D) A tax that is levied on the value of land and buildings 
A) A tax on all capital gains (the amount by which the value of an asset has risen between the time it was purchased and the time it was sold) 
B) A tax paid by employers on income paid to workers 
C) A tax collected on each gallon of gasoline sold 
D) A tax that is levied on the value of land and buildings

Question 20

What is a living wage? Why did many states find it necessary to establish a living wage?

Accepted Answer

A living wage is defined by the living w

Exam 5: Using Supply and Demand

Suppose the price of tomatoes dramatically increases. Which of the following could cause this change?

Refer to the graph shown. A quantity restriction of QR will:

Analyze the impact of a firm entering an existing market on the equilibrium quantity and price in that market using a supply and demand diagram.

Refer to the following graph. A price ceiling would be binding, resulting in a market shortage if it is set at:

When gasoline prices rose in the early 2000s, the demand for SUVs fell. An economist would predict that SUV prices would decline or at least not rise as quickly.

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. The possible black market price after the ceiling is:

A company switches from a medical plan that covered all medical costs to a medical plan with a high deductible, making employees responsible for the first $1,500 of health care costs. Other things the same, a higher deductible is expected to:

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:

When a country imposes a tariff:

What are quantity restrictions? Use a supply/demand diagram to demonstrate the effect of quantity restrictions on equilibrium price and quantity of a good when there is an increase in demand.

A Wall Street Journal headline reads: "Cigar Shortage Draws New Brands into Market." The shortage resulted from a renewed interest in smoking cigars. What best describes facts behind the headline?

If the United States imposes tariffs on steel imports the:

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.

Refer to the following graphs. Americans nationwide have been complying with recycling regulations with unexpected zeal. The effect on the market for recycled paper is best shown by which graph?

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. The government has passed a law that subsidizes wages by $1 per hour. The equilibrium wage and quantity of labor with the subsidy is:

Helped by desktop publishing, the number of vintage baseball card forgeries has flooded the market for vintage baseball cards. Dealers left the market for fear of purchasing a phony. What was the effect on the market for vintage baseball cards assuming phonies could not be detected?

Which of the following is the best example of an excise tax?

What is a living wage? Why did many states find it necessary to establish a living wage?

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

Refer to the graph shown. A quantity restriction of Q_R will: