Question 1

Imagine a free market in equilibrium. After a sudden decrease in demand (but before the price can adjust), the market experiences a:

Accepted Answer

A)  shortage. 
B)  surplus. 
C)  no change. 
D)  new equilibrium. 
A)  shortage. 
B)  surplus. 
C)  no change. 
D)  new equilibrium.

Question 2

Use the following to answer questions: Figure: Price and Quantity 3  
-(Figure: Price and Quantity 3) The value of wasted resources at a quantity of 80 units in the diagram is:

Accepted Answer

A)  $800. 
B)  $900. 
C)  $600. 
D)  $200. 
A)  $800. 
B)  $900. 
C)  $600. 
D)  $200.

Question 3

Use the following to answer questions: Figure: Price and Quantity 1  
-(Figure: Price and Quantity 1) In the diagram, at a price of $80, the quantity demanded is ______, the quantity supplied is ______, and there is ______.

Accepted Answer

A)  20; 80; a surplus of 60 units 
B)  80; 20, a surplus of 60 units 
C)  80; 20, a shortage of 60 units 
D)  20; 20; no surplus or shortage 
A)  20; 80; a surplus of 60 units 
B)  80; 20, a surplus of 60 units 
C)  80; 20, a shortage of 60 units 
D)  20; 20; no surplus or shortage

Question 4

Use the following to answer questions: Figure: Market Equilibrium  
-(Figure: Market Equilibrium) Refer to the figure. At a price of $1, the market is characterized by a(n):

Accepted Answer

A)  excess supply of 2 units. 
B)  excess demand of 4 units. 
C)  surplus of 4 units. 
D)  shortage of 6 units. 
A)  excess supply of 2 units. 
B)  excess demand of 4 units. 
C)  surplus of 4 units. 
D)  shortage of 6 units.

Question 5

Figure: Supply and Demand 1   At a market quantity of 5, the shaded region in the figure represents:

Accepted Answer

A)  satisfied wants. 
B)  unexploited gains from trade. 
C)  the value of wasted resources. 
D)  willingness to pay. 
A)  satisfied wants. 
B)  unexploited gains from trade. 
C)  the value of wasted resources. 
D)  willingness to pay.

Question 6

Figure: Price and Quantity 4   If the figure depicts a market for an inferior good, which of the following statements describes what could have happened?

Accepted Answer

A)  Consumer income increased, causing an increase in demand and an increase in supply. 
B)  Consumer income decreased, causing an increase in demand and an increase in quantity supplied. 
C)  The price of a substitute good increased, causing an increase in quantity demanded and an increase in quantity supplied. 
D)  Consumers expect lower future prices, causing an increase in demand and an increase in supply. 
A)  Consumer income increased, causing an increase in demand and an increase in supply. 
B)  Consumer income decreased, causing an increase in demand and an increase in quantity supplied. 
C)  The price of a substitute good increased, causing an increase in quantity demanded and an increase in quantity supplied. 
D)  Consumers expect lower future prices, causing an increase in demand and an increase in supply.

Question 7

Use the following to answer questions: Table: Equilibrium Adjustment $$\begin{array} { c c c } 
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 10 & 100 & 160 \
8 & 120 & 145 \
6 & 130 & 130 \
4 & 140 & 115 \
2 & 150 & 100 \
\hline
\end{array}$$
-(Table: Equilibrium Adjustment) Refer to the table. If the price in the free market is $8, then a:

Accepted Answer

A)  surplus of 25 units would exist, and price would tend to fall. 
B)  surplus of 25 units would exist, and price would tend to rise. 
C)  shortage of 25 units would exist, and price would tend to rise. 
D)  shortage of 25 units would exist, and price would tend to fall. 
A)  surplus of 25 units would exist, and price would tend to fall. 
B)  surplus of 25 units would exist, and price would tend to rise. 
C)  shortage of 25 units would exist, and price would tend to rise. 
D)  shortage of 25 units would exist, and price would tend to fall.

Question 8

The government must subsidize firms to ensure that there are no unexploited gains from trade.

Accepted Answer

A) True 
 B)False

Question 9

The growing economies of China and India have increased the demand for:

Accepted Answer

A)  oil, leading to higher oil prices in the early part of the twenty-first century. 
B)  automobiles, leading to rising oil supplies and falling prices. 
C)  automobiles, leading to a decrease in the supply of oil and rising oil prices. 
D)  oil, leading to lower oil prices in the early part of the twenty-first century. 
A)  oil, leading to higher oil prices in the early part of the twenty-first century. 
B)  automobiles, leading to rising oil supplies and falling prices. 
C)  automobiles, leading to a decrease in the supply of oil and rising oil prices. 
D)  oil, leading to lower oil prices in the early part of the twenty-first century.

Question 10

Use the following to answer questions: Figure: Demand, Supply Shifts  
-(Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. If this depicts the equilibrium in the market for computer printers, what will happen when the price of computers increases?

Accepted Answer

A)  There is not enough information to determine what will happen. 
B)  D1 will shift to D2. 
C)  D1 will shift to D3. 
D)  S1 will shift to S3. 
A)  There is not enough information to determine what will happen. 
B)  D1 will shift to D2. 
C)  D1 will shift to D3. 
D)  S1 will shift to S3.

Question 11

An increase in supply raises the equilibrium price and increases the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 12

A free market achieves an equilibrium price and quantity due to:

Accepted Answer

A)  the combined actions of buyers and sellers. 
B)  increased competition among sellers. 
C)  government regulations placed on market participants. 
D)  buyers' ability to affect market outcomes. 
A)  the combined actions of buyers and sellers. 
B)  increased competition among sellers. 
C)  government regulations placed on market participants. 
D)  buyers' ability to affect market outcomes.

Question 13

Use the following to answer questions: Figure: Price and Quantity 2  
-(Figure: Price and Quantity 2) At a cost of $20 per unit in the diagram, the value of the unexploited gains from trade is:

Accepted Answer

A)  $200. 
B)  $500. 
C)  $600. 
D)  $900. 
A)  $200. 
B)  $500. 
C)  $600. 
D)  $900.

Question 14

Which of the following events will cause a decrease in the equilibrium price?

Accepted Answer

A)  a government tax on output 
B)  a decrease in income for an inferior good 
C)  an increase in the price of a substitute good 
D)  lower input prices 
A)  a government tax on output 
B)  a decrease in income for an inferior good 
C)  an increase in the price of a substitute good 
D)  lower input prices

Question 15

Which of the following might explain why the price of DVD players has been falling?

Accepted Answer

A)  an increase in consumer income 
B)  a decrease in the price of high-definition Blu-ray players 
C)  a decrease in the price of DVDs 
D)  an increase in the price of gasoline 
A)  an increase in consumer income 
B)  a decrease in the price of high-definition Blu-ray players 
C)  a decrease in the price of DVDs 
D)  an increase in the price of gasoline

Question 16

Use the following to answer questions: Figure: Price and Quantity 1  
-(Figure: Price and Quantity 1) In the diagram, at which price is there a surplus?

Accepted Answer

A)  $80 
B)  $50 
C)  $40 
D)  $0 
A)  $80 
B)  $50 
C)  $40 
D)  $0

Question 17

When the quantity supplied of a good exceeds the quantity demanded, there is a(n):

Accepted Answer

A)  shortage. 
B)  surplus. 
C)  equilibrium. 
D)  opportunity cost. 
A)  shortage. 
B)  surplus. 
C)  equilibrium. 
D)  opportunity cost.

Question 18

At a free market equilibrium there are no unexploited gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price.

Accepted Answer

A) True 
 B)False

Question 20

There is a positive relationship between price and quantity supplied.

Accepted Answer

A) True 
 B)False

Imagine a free market in equilibrium. After a sudden decrease in demand (but before the price can adjust), the market experiences a:

Use the following to answer questions: Figure: Price and Quantity 3 -(Figure: Price and Quantity 3) The value of wasted resources at a quantity of 80 units in the diagram is:

Use the following to answer questions: Figure: Price and Quantity 1 -(Figure: Price and Quantity 1) In the diagram, at a price of $80, the quantity demanded is , the quantity supplied is , and there is __.

Use the following to answer questions: Figure: Market Equilibrium -(Figure: Market Equilibrium) Refer to the figure. At a price of $1, the market is characterized by a(n):

Figure: Supply and Demand 1 At a market quantity of 5, the shaded region in the figure represents:

Figure: Price and Quantity 4 If the figure depicts a market for an inferior good, which of the following statements describes what could have happened?

Use the following to answer questions: Table: Equilibrium Adjustment Price Quantity Demanded Quantity Supplied \ 10 100 160 8 120 145 6 130 130 4 140 115 2 150 100 -(Table: Equilibrium Adjustment) Refer to the table. If the price in the free market is $8, then a:

The government must subsidize firms to ensure that there are no unexploited gains from trade.

The growing economies of China and India have increased the demand for:

An increase in supply raises the equilibrium price and increases the equilibrium quantity.

A free market achieves an equilibrium price and quantity due to:

Use the following to answer questions: Figure: Price and Quantity 2 -(Figure: Price and Quantity 2) At a cost of $20 per unit in the diagram, the value of the unexploited gains from trade is:

Which of the following events will cause a decrease in the equilibrium price?

Which of the following might explain why the price of DVD players has been falling?

Use the following to answer questions: Figure: Price and Quantity 1 -(Figure: Price and Quantity 1) In the diagram, at which price is there a surplus?

When the quantity supplied of a good exceeds the quantity demanded, there is a(n):

At a free market equilibrium there are no unexploited gains from trade.

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price.

There is a positive relationship between price and quantity supplied.

The Big Ideas

The Power of Trade and Comparative Advantage

Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations: Aggregate Demand and Supply

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 4: Equilibrium: How Supply and Demand Determine Prices

Imagine a free market in equilibrium. After a sudden decrease in demand (but before the price can adjust), the market experiences a:

Use the following to answer questions: Figure: Price and Quantity 3 -(Figure: Price and Quantity 3) The value of wasted resources at a quantity of 80 units in the diagram is:

Use the following to answer questions: Figure: Price and Quantity 1 -(Figure: Price and Quantity 1) In the diagram, at a price of $80, the quantity demanded is ______, the quantity supplied is ______, and there is ______.

Use the following to answer questions: Figure: Market Equilibrium -(Figure: Market Equilibrium) Refer to the figure. At a price of $1, the market is characterized by a(n):

Figure: Supply and Demand 1 At a market quantity of 5, the shaded region in the figure represents:

Figure: Price and Quantity 4 If the figure depicts a market for an inferior good, which of the following statements describes what could have happened?

Use the following to answer questions: Table: Equilibrium Adjustment Price Quantity Demanded Quantity Supplied \ 10 100 160 8 120 145 6 130 130 4 140 115 2 150 100 -(Table: Equilibrium Adjustment) Refer to the table. If the price in the free market is $8, then a:

The government must subsidize firms to ensure that there are no unexploited gains from trade.

The growing economies of China and India have increased the demand for:

An increase in supply raises the equilibrium price and increases the equilibrium quantity.

A free market achieves an equilibrium price and quantity due to:

Use the following to answer questions: Figure: Price and Quantity 2 -(Figure: Price and Quantity 2) At a cost of $20 per unit in the diagram, the value of the unexploited gains from trade is:

Which of the following events will cause a decrease in the equilibrium price?

Which of the following might explain why the price of DVD players has been falling?

Use the following to answer questions: Figure: Price and Quantity 1 -(Figure: Price and Quantity 1) In the diagram, at which price is there a surplus?

When the quantity supplied of a good exceeds the quantity demanded, there is a(n):

At a free market equilibrium there are no unexploited gains from trade.

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price.

There is a positive relationship between price and quantity supplied.

The Big Ideas

The Power of Trade and Comparative Advantage

Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations: Aggregate Demand and Supply

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Use the following to answer questions: Figure: Price and Quantity 1 -(Figure: Price and Quantity 1) In the diagram, at a price of $80, the quantity demanded is , the quantity supplied is , and there is __.