Question 1

Which of the following would cause the demand for hot dog buns to increase?

Accepted Answer

A)  a fall in the price of hot dog buns 
B)  a fall in the price of hot dogs 
C)  a rise in the price of hot dogs 
D)  a rise in the price of hot dog buns 
A)  a fall in the price of hot dog buns 
B)  a fall in the price of hot dogs 
C)  a rise in the price of hot dogs 
D)  a rise in the price of hot dog buns B

Question 2

What does the law of demand state?

Accepted Answer

A)  As incomes increase, people consume more of all goods. 
B)  The demand for a good increases with the number of consumers in the market. 
C)  As the price of a good declines, consumers purchase more of that good. 
D)  The supply of a good increases in proportion to the demand for it. 
A)  As incomes increase, people consume more of all goods. 
B)  The demand for a good increases with the number of consumers in the market. 
C)  As the price of a good declines, consumers purchase more of that good. 
D)  The supply of a good increases in proportion to the demand for it. C

Question 3

Figure: Supply Shifts   Reference: Ref 3-4 (Figure: Supply Shifts) In the figure, the initial supply curve is S1. Producers engage in market speculation with the belief that the price of the good will increase in the near future. This would be represented in the figure by shifting the:

Accepted Answer

A)  supply curve to S2, resulting in a lower quantity supplied at each price. 
B)  supply curve to S2, resulting in a higher quantity supplied at each price. 
C)  supply curve to S3, resulting in a lower quantity supplied at each price. 
D)  supply curve to S3, resulting in a higher quantity supplied at each price. 
A)  supply curve to S2, resulting in a lower quantity supplied at each price. 
B)  supply curve to S2, resulting in a higher quantity supplied at each price. 
C)  supply curve to S3, resulting in a lower quantity supplied at each price. 
D)  supply curve to S3, resulting in a higher quantity supplied at each price. A

Question 4

In the oil market, an increase in the wage of oil workers will:

Accepted Answer

A)  shift the supply curve of oil to the right. 
B)  shift the supply curve of oil to the left. 
C)  shift the demand curve for oil to the left. 
D)  shift the demand curve for oil to the right. 
A)  shift the supply curve of oil to the right. 
B)  shift the supply curve of oil to the left. 
C)  shift the demand curve for oil to the left. 
D)  shift the demand curve for oil to the right.

Question 5

The quantity demanded of a good or service is the amount that:

Accepted Answer

A)  consumers are willing and able to buy at a given price. 
B)  firms are willing to sell during a given time period at a given price. 
C)  a consumer would like to buy but might not be able to afford. 
D)  a consumer needs to consume during a given time period. 
A)  consumers are willing and able to buy at a given price. 
B)  firms are willing to sell during a given time period at a given price. 
C)  a consumer would like to buy but might not be able to afford. 
D)  a consumer needs to consume during a given time period.

Question 6

Which one of the following choices would cause the demand curve for an inferior good to shift to the left?

Accepted Answer

A)  a fall in incomes 
B)  a fall in the price of the inferior good 
C)  a rise in incomes 
D)  a rise in the price of the inferior good 
A)  a fall in incomes 
B)  a fall in the price of the inferior good 
C)  a rise in incomes 
D)  a rise in the price of the inferior good

Question 7

Figure: Producer Surplus   Reference: Ref 3-2 (Figure: Producer Surplus) Refer to the figure. What is the producer surplus at a price of $2 per unit?

Accepted Answer

A)  $5 
B)  $6 
C)  $10 
D)  $20 
A)  $5 
B)  $6 
C)  $10 
D)  $20

Question 8

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve.

Accepted Answer

A) True 
 B)False

Question 9

The price of coffee has increased, yet evidence suggests the demand for coffee has been stable. A possible explanation is that:

Accepted Answer

A)  there has been no change in the supply of coffee. 
B)  there has been increased use of subsidies in coffee production. 
C)  wages of workers in coffee production might have decreased. 
D)  wages of workers in coffee production might have increased. 
A)  there has been no change in the supply of coffee. 
B)  there has been increased use of subsidies in coffee production. 
C)  wages of workers in coffee production might have decreased. 
D)  wages of workers in coffee production might have increased.

Question 10

(Figure A: Supply Right Shift) (Figure B: Supply Left Shift) Refer to the two figures. Which of the following statements is TRUE?   I. Figure A depicts the expectation that the future price will decrease. II. Figure A depicts the entry of foreign producers because of a reduction in trade barriers. III. Figure B depicts falling input prices. IV. Figure B depicts technological innovations. V. Figure B depicts a decrease in taxes.

Accepted Answer

A)  I and II only 
B)  II and IV only 
C)  I, III, and V only 
D)  II, IV, and V only 
A)  I and II only 
B)  II and IV only 
C)  I, III, and V only 
D)  II, IV, and V only

Question 11

A tax of $4 shifts the supply curve down and to the right by $4.

Accepted Answer

A) True 
 B)False

Question 12

Advertising, fads, and fashion are examples of influences on demand that are generally referred to as altering expectations about products.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following might happen as a result of an aging population?

Accepted Answer

A)  An increase in the demand for healthcare. 
B)  Advertisers target young people in order to offset the demands of the growing elderly. 
C)  Prescription drug demand will become more horizontal. 
D)  An aging population will move us along age sensitive demand curves. 
A)  An increase in the demand for healthcare. 
B)  Advertisers target young people in order to offset the demands of the growing elderly. 
C)  Prescription drug demand will become more horizontal. 
D)  An aging population will move us along age sensitive demand curves.

Question 14

If Romaine lettuce and Iceberg lettuce are substitutes, an increase in the price of Romaine lettuce will ______ the demand for Iceberg lettuce.

Accepted Answer

A)  reduce 
B)  increase 
C)  not shift 
D)  decrease 
A)  reduce 
B)  increase 
C)  not shift 
D)  decrease

Question 15

A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following factors does NOT result in a shift of the supply curve?

Accepted Answer

A)  a change in the number of sellers in the market 
B)  a change in the demand for the product 
C)  a change in production technology 
D)  a change in the costs of production 
A)  a change in the number of sellers in the market 
B)  a change in the demand for the product 
C)  a change in production technology 
D)  a change in the costs of production

Question 17

A market has a supply equation as follows: Qs = P. The market price for the product is $50. Calculate the dollar amount of producer surplus in this market and illustrate your answer graphically.

Accepted Answer

The first step is to calculate the inter

Question 18

What is the difference between a change in quantity demanded (Qd) and a change in demand? Explain what causes a change in Qd and what causes a change in demand, and illustrate using graphs.

Accepted Answer

A change in quantity demanded (Qd) resul

Question 19

If producers form expectations that copper prices will be higher in the future, then this will shift the:

Accepted Answer

A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left. 
A)  demand curve for copper to the left. 
B)  supply curve of copper to the right. 
C)  demand curve for copper to the right. 
D)  supply curve of copper to the left.

Question 20

(Figure: Earned Consumer Surplus) Refer to the figure. The market price of the product is $20 per unit. Calculate the dollar amount of consumer surplus being earned in this market. Figure: Earned Consumer Surplus

Accepted Answer

A)  $120,000 
B)  $60,000 
C)  $100,000 
D)  $80,000 
A)  $120,000 
B)  $60,000 
C)  $100,000 
D)  $80,000

Exam 3: Business Fluctuations: Aggregate Demand and Supply

Which of the following would cause the demand for hot dog buns to increase?

What does the law of demand state?

Figure: Supply Shifts Reference: Ref 3-4 (Figure: Supply Shifts) In the figure, the initial supply curve is S1. Producers engage in market speculation with the belief that the price of the good will increase in the near future. This would be represented in the figure by shifting the:

In the oil market, an increase in the wage of oil workers will:

The quantity demanded of a good or service is the amount that:

Which one of the following choices would cause the demand curve for an inferior good to shift to the left?

Figure: Producer Surplus Reference: Ref 3-2 (Figure: Producer Surplus) Refer to the figure. What is the producer surplus at a price of $2 per unit?

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve.

The price of coffee has increased, yet evidence suggests the demand for coffee has been stable. A possible explanation is that:

A tax of $4 shifts the supply curve down and to the right by $4.

Advertising, fads, and fashion are examples of influences on demand that are generally referred to as altering expectations about products.

Which of the following might happen as a result of an aging population?

If Romaine lettuce and Iceberg lettuce are substitutes, an increase in the price of Romaine lettuce will ______ the demand for Iceberg lettuce.

A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve.

Which of the following factors does NOT result in a shift of the supply curve?

A market has a supply equation as follows: Qs = P. The market price for the product is $50. Calculate the dollar amount of producer surplus in this market and illustrate your answer graphically.

What is the difference between a change in quantity demanded (Qd) and a change in demand? Explain what causes a change in Qd and what causes a change in demand, and illustrate using graphs.

If producers form expectations that copper prices will be higher in the future, then this will shift the:

(Figure: Earned Consumer Surplus) Refer to the figure. The market price of the product is $20 per unit. Calculate the dollar amount of consumer surplus being earned in this market. Figure: Earned Consumer Surplus

The Big Ideas in Economics

The Power of Trade and Comparative Advantage

Equilibrium: How Supply and Demand Determine Prices

Elasticity and Its Applications

Taxes and Subsidies

The Price System: Signals, Speculation, and Prediction

Price Ceilings and Floors

International Trade

Externalities: When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination and Pricing Strategy

Oligopoly and Game Theory

Competing for Monopoly: the Economics of Network Goods

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Asymmetric Information: Moral Hazard and Adverse Selection

Consumer Choice

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

Supply and Demand

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

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