Question 1

-Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is true?

Accepted Answer

A) Only quantity supplied has increased. 
B) Only quantity demanded has decreased. 
C) Supply has increased. 
D) Supply has decreased. 
A) Only quantity supplied has increased. 
B) Only quantity demanded has decreased. 
C) Supply has increased. 
D) Supply has decreased.

Question 2

Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that

Accepted Answer

A) both the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase, and the equilibrium quantity will increase. 
C) the equilibrium quantity will increase. 
D) the equilibrium price will increase. 
A) both the equilibrium price and the equilibrium quantity will increase. 
B) the equilibrium price will increase, and the equilibrium quantity will increase. 
C) the equilibrium quantity will increase. 
D) the equilibrium price will increase.

Question 3

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will

Accepted Answer

A) increase the market clearing price and the equilibrium quantity of good X. 
B) decrease the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price of good X but lower the equilibrium quantity of X. 
D) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X. 
A) increase the market clearing price and the equilibrium quantity of good X. 
B) decrease the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price of good X but lower the equilibrium quantity of X. 
D) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.

Question 4

If demand and supply both decrease,

Accepted Answer

A) the equilibrium quantity definitely will decrease, and the market clearing price definitely will decrease. 
B) the equilibrium quantity definitely will decrease, and the market clearing price definitely will increase. 
C) the market clearing price definitely will decrease, but the change in the equilibrium quantity cannot be determined without more information. 
D) the equilibrium quantity definitely will decrease, but the change in market clearing price cannot be determined without more information. 
A) the equilibrium quantity definitely will decrease, and the market clearing price definitely will decrease. 
B) the equilibrium quantity definitely will decrease, and the market clearing price definitely will increase. 
C) the market clearing price definitely will decrease, but the change in the equilibrium quantity cannot be determined without more information. 
D) the equilibrium quantity definitely will decrease, but the change in market clearing price cannot be determined without more information.

Question 5

A price floor set above a market equilibrium price causes

Accepted Answer

A) a surplus. 
B) a shortage. 
C) producers to receive lower prices. 
D) consumers to pay lower prices. 
A) a surplus. 
B) a shortage. 
C) producers to receive lower prices. 
D) consumers to pay lower prices.

Question 6

An increase in supply, other things being equal, will cause which of the following to occur?

Accepted Answer

A) quantity supplied to decrease. 
B) quantity demanded to increase. 
C) a rightward shift in the demand curve as the price falls. 
D) a leftward shift in the demand curves as the price increases. 
A) quantity supplied to decrease. 
B) quantity demanded to increase. 
C) a rightward shift in the demand curve as the price falls. 
D) a leftward shift in the demand curves as the price increases.

Question 7

A price ceiling is

Accepted Answer

A) the lowest price a seller can charge without losing all of its customers. 
B) a legal minimum price below which a good or service cannot be sold. 
C) a legal price above which a good or service cannot be sold. 
D) a nonprice rationing device. 
A) the lowest price a seller can charge without losing all of its customers. 
B) a legal minimum price below which a good or service cannot be sold. 
C) a legal price above which a good or service cannot be sold. 
D) a nonprice rationing device.

Question 8

-Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

Accepted Answer

A) Market clearing price will rise, and equilibrium quantity will rise. 
B) Market clearing price will fall, and equilibrium quantity will fall. 
C) Market clearing price will rise, and equilibrium quantity will fall. 
D) Market clearing price will fall, and equilibrium quantity will rise. 
A) Market clearing price will rise, and equilibrium quantity will rise. 
B) Market clearing price will fall, and equilibrium quantity will fall. 
C) Market clearing price will rise, and equilibrium quantity will fall. 
D) Market clearing price will fall, and equilibrium quantity will rise.

Question 9

In a market, the rationing function of prices results in

Accepted Answer

A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus. 
A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus.

Question 10

An increase in the minimum wage will tend to cause which of the following to occur?

Accepted Answer

A) an increase in the size of the surplus of labor 
B) a leftward shift in the demand for labor 
C) a rightward shift in the supply of labor 
D) a reduction in the unemployment rate 
A) an increase in the size of the surplus of labor 
B) a leftward shift in the demand for labor 
C) a rightward shift in the supply of labor 
D) a reduction in the unemployment rate

Question 11

Which of the following is one of the functions of rental prices?

Accepted Answer

A) To redistribute income from landlords to renters 
B) To redistribute income from renters to landlords 
C) To signal to the local government when taxes on rental units should be increased 
D) To ration the use of existing housing for current consumers 
A) To redistribute income from landlords to renters 
B) To redistribute income from renters to landlords 
C) To signal to the local government when taxes on rental units should be increased 
D) To ration the use of existing housing for current consumers

Question 12

The price of labor in the agricultural industry has just increased. For agricultural products, this will lead to

Accepted Answer

A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity. 
A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity.

Question 13

Who ultimately benefits from price supports in agriculture?

Accepted Answer

A) consumers 
B) grocery store owners 
C) farmers 
D) exporters 
A) consumers 
B) grocery store owners 
C) farmers 
D) exporters

Question 14

Which of the following is NOT a device to reduce transaction costs?

Accepted Answer

A) Shopping centers 
B) Auto dealers located close together 
C) Government prohibitions on advertising 
D) Banks that direct funds from savers to borrowers 
A) Shopping centers 
B) Auto dealers located close together 
C) Government prohibitions on advertising 
D) Banks that direct funds from savers to borrowers

Question 15

Another term for intermediaries who specialize in reducing transaction costs is

Accepted Answer

A) service providers. 
B) consultants. 
C) middlemen. 
D) revenue agents. 
A) service providers. 
B) consultants. 
C) middlemen. 
D) revenue agents.

Question 16

Under rent controls,

Accepted Answer

A) there is a shortage of rental units. 
B) the quantity supplied of rental units is greater than it would be under freely competitive markets. 
C) there is less government involvement in rental markets overall because there is a better supply of low-income housing. 
D) all renters are better off than under freely competitive markets. 
A) there is a shortage of rental units. 
B) the quantity supplied of rental units is greater than it would be under freely competitive markets. 
C) there is less government involvement in rental markets overall because there is a better supply of low-income housing. 
D) all renters are better off than under freely competitive markets.

Question 17

Rationing occurs for goods

Accepted Answer

A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured. 
A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured.

Question 18

-Refer to the above figure. A price ceiling has been set at   , and a black market has opened. The equilibrium black market price will be

Accepted Answer

A) below   
B) between   and   
C) above   
D)    
A) below   
B) between   and   
C) above   
D)

Question 19

Suppose the market clearing price is $1.25 and the price ceiling is $1.50. The price that prevails in the market will be

Accepted Answer

A) $1.50. 
B) $1.25. 
C) less than $1.25. 
D) more than $1.50. 
A) $1.50. 
B) $1.25. 
C) less than $1.25. 
D) more than $1.50.

-Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is true?

Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will

If demand and supply both decrease,

A price floor set above a market equilibrium price causes

An increase in supply, other things being equal, will cause which of the following to occur?

A price ceiling is

-Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

In a market, the rationing function of prices results in

An increase in the minimum wage will tend to cause which of the following to occur?

Which of the following is one of the functions of rental prices?

The price of labor in the agricultural industry has just increased. For agricultural products, this will lead to

Who ultimately benefits from price supports in agriculture?

Which of the following is NOT a device to reduce transaction costs?

Another term for intermediaries who specialize in reducing transaction costs is

Under rent controls,

Rationing occurs for goods

-Refer to the above figure. A price ceiling has been set at , and a black market has opened. The equilibrium black market price will be

Suppose the market clearing price is $1.25 and the price ceiling is $1.50. The price that prevails in the market will be

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 4: Extensions of Demand and Supply Analysis

-Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is true?

Suppose there is a simultaneous increase in demand and increase in supply. Given this information, we know with certainty that

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will

If demand and supply both decrease,

A price floor set above a market equilibrium price causes

An increase in supply, other things being equal, will cause which of the following to occur?

A price ceiling is

-Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

In a market, the rationing function of prices results in

An increase in the minimum wage will tend to cause which of the following to occur?

Which of the following is one of the functions of rental prices?

The price of labor in the agricultural industry has just increased. For agricultural products, this will lead to

Who ultimately benefits from price supports in agriculture?

Which of the following is NOT a device to reduce transaction costs?

Another term for intermediaries who specialize in reducing transaction costs is

Under rent controls,

Rationing occurs for goods

-Refer to the above figure. A price ceiling has been set at , and a black market has opened. The equilibrium black market price will be

Suppose the market clearing price is $1.25 and the price ceiling is $1.50. The price that prevails in the market will be

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters