Question 1

The supply curve illustrates:

Accepted Answer

A)  that limited resources are available for society to use. 
B)  the relationship between the quantity supplied and the price of a good. 
C)  the total cost of producing a good. 
D)  the willingness to produce a good if the technology to produce it becomes available. 
A)  that limited resources are available for society to use. 
B)  the relationship between the quantity supplied and the price of a good. 
C)  the total cost of producing a good. 
D)  the willingness to produce a good if the technology to produce it becomes available.

Question 2

Which of the following does NOT shift the demand curve?

Accepted Answer

A)  changes in the product's price 
B)  changes in income 
C)  changes in population 
D)  changes in tastes and preferences 
A)  changes in the product's price 
B)  changes in income 
C)  changes in population 
D)  changes in tastes and preferences

Question 3

In the early 1980s, movie rentals averaged $5 a night; by the early 1990s that average was $1 per night. This is an example of a supply curve shifter based on:

Accepted Answer

A)  a change in tastes and preferences. 
B)  a decrease in the wages of workers in the video rental stores. 
C)  an increase in the number of VRCs owned by consumers. 
D)  the entry of new suppliers into the market. 
A)  a change in tastes and preferences. 
B)  a decrease in the wages of workers in the video rental stores. 
C)  an increase in the number of VRCs owned by consumers. 
D)  the entry of new suppliers into the market.

Question 4

Reference: Ref 3-3 (Table: Willingness to Sell) Refer to the table. Which country is earning the least amount of producer surplus at a market price of $52 per barrel of oil?

Accepted Answer

A)  Country X 
B)  Country Y 
C)  Country Z 
D)  Country A 
A)  Country X 
B)  Country Y 
C)  Country Z 
D)  Country A

Question 5

The quantity of DVDs that people plan to buy this month depends on all of the following EXCEPT the:

Accepted Answer

A)  price of DVDs. 
B)  price of movies for download. 
C)  population. 
D)  quantity of DVDs the sellers have stocked. 
A)  price of DVDs. 
B)  price of movies for download. 
C)  population. 
D)  quantity of DVDs the sellers have stocked.

Question 6

It is widely known that the rapidly expanding corn-ethanol industry is quickly increasing the price of corn on world markets. Given this, many farmers have begun to grow corn more intensively. For instance, some producers who currently pursue a corn-soybean rotation (planting corn one year and soybeans the next) might shift to a corn-corn-soybean rotation (planting corn two years in a row and then planting soybeans in the third). Continuous production of corn (planting corn every year on the same plot of land) is another possibility. Explain what impact this explosion in the market for corn may have on the market for soybeans. In particular, will those that produce soybeans exclusively be better off, worse off, or unaffected as a result of the increase in corn prices?

Accepted Answer

Given the now relatively high price of c

Question 7

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the:

Accepted Answer

A)  demand for spaghetti will decrease shifting the demand curve to the left. 
B)  demand for spaghetti will decrease shifting the demand curve to the right. 
C)  demand for spaghetti will increase shifting the demand curve to the left. 
D)  demand for spaghetti will increase shifting the demand curve to the right. 
A)  demand for spaghetti will decrease shifting the demand curve to the left. 
B)  demand for spaghetti will decrease shifting the demand curve to the right. 
C)  demand for spaghetti will increase shifting the demand curve to the left. 
D)  demand for spaghetti will increase shifting the demand curve to the right.

Question 8

For each of the following changes, determine whether there will be a change in supply (that is, a shift of the supply curve) or a change in quantity supplied (that is, no shift of the supply curve). I. a change in the resource cost II. a change in producer expectations III. a change in price IV. a change in technology V. the number of sellers

Accepted Answer

I, II, IV, and V are all suppl

Question 9

(Figure: Earned Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100.

Accepted Answer

A)  $5,000 
B)  $10,000 
C)  $100 
D)  $200 
A)  $5,000 
B)  $10,000 
C)  $100 
D)  $200

Question 10

Which of the following statements is TRUE?

Accepted Answer

A)  When the price of oil is high, consumers will use oil only for its most valuable uses. 
B)  When the price of oil is low, consumers will use oil for both valuable and less valuable uses. 
C)  When the price of oil rises, consumers tend to use oil for uses (for example, transportation) in which there are few substitutes for oil. 
D)  All of these statements are correct. 
A)  When the price of oil is high, consumers will use oil only for its most valuable uses. 
B)  When the price of oil is low, consumers will use oil for both valuable and less valuable uses. 
C)  When the price of oil rises, consumers tend to use oil for uses (for example, transportation) in which there are few substitutes for oil. 
D)  All of these statements are correct.

Question 11

(Figure: Supply Curve) Refer to the figure. A vertical reading of the figure indicates that:

Accepted Answer

A)  at a price higher than $40, the quantity supplied drops to zero. 
B)  to produce 500 units suppliers must be paid at least $40 per unit. 
C)  at a price of $40 per unit, suppliers are willing and able to sell 
A)  at a price higher than $40, the quantity supplied drops to zero. 
B)  to produce 500 units suppliers must be paid at least $40 per unit. 
C)  at a price of $40 per unit, suppliers are willing and able to sell

Question 12

Reference: Ref 3-1 (Table: Sweetbrand) The table shows the maximum consumer willingness to pay for "Sweetbrand" cheesecakes. Which of the four consumers receives the smallest consumer surplus, if the market price of the cheesecakes is $12.50 each?

Accepted Answer

A)  Frodo 
B)  Sam 
C)  Mary 
D)  Pippin 
A)  Frodo 
B)  Sam 
C)  Mary 
D)  Pippin

Question 13

Which of the following choices contains only factors that would cause a demand curve for a normal good to shift to the right?

Accepted Answer

A)  a rise in population, economic growth, a fall in the price of a substitute good 
B)  a rise in preferences for the good, economic growth, and a rise in the price of a complementary good 
C)  positive expectations for the economy, economic growth, a fall in the price of a complementary good 
D)  a fall in population, economic growth, a rise in tastes and preferences for the product 
A)  a rise in population, economic growth, a fall in the price of a substitute good 
B)  a rise in preferences for the good, economic growth, and a rise in the price of a complementary good 
C)  positive expectations for the economy, economic growth, a fall in the price of a complementary good 
D)  a fall in population, economic growth, a rise in tastes and preferences for the product

Question 14

(Figure: Demand Shift) Which of the following factors would cause the change in the figure? Figure: Demand Shift   I. an increase in the price of a complement good II. an increase in production costs III. an increase in the price of a substitute good IV. an increase in income for an inferior good

Accepted Answer

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

Question 15

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which of the following would NOT occur based upon the expected storm?

Accepted Answer

A)  an increase in the demand for groceries 
B)  a decrease in the supply of winter clothing 
C)  an increase in the demand for gasoline and tire chains 
D)  an increase in the supply of electric generators to the area 
A)  an increase in the demand for groceries 
B)  a decrease in the supply of winter clothing 
C)  an increase in the demand for gasoline and tire chains 
D)  an increase in the supply of electric generators to the area

Question 16

Michael graduates from college and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

Accepted Answer

A)  an inferior good. 
B)  a complement. 
C)  a substitute. 
D)  a normal good. 
A)  an inferior good. 
B)  a complement. 
C)  a substitute. 
D)  a normal good.

Question 17

(Figure: Generic Market Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

Accepted Answer

A)  $800 
B)  $1,600 
C)  $2,400 
D)  $1,200 
A)  $800 
B)  $1,600 
C)  $2,400 
D)  $1,200

Question 18

(Figure: Demand Shift) Refer to the figure. Which of the following factors would cause the change in the figure?   I. a decrease in the price of a complement good II. a decrease in the price of the product III. a decrease in the price of a substitute good IV. an increase in taxes

Accepted Answer

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

Question 19

Which of the following statements is TRUE? I. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. II. Mr. Bill is willing to pay $10 for two pounds of clay. If the market price per pound of clay is $2.50, his consumer surplus is $7.50. III. Total consumer surplus is represented graphically by the area beneath the demand curve and above the market price.

Accepted Answer

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

Question 20

Recall the discussion in your textbook about the supply curve for oil. What explains why the supply curve for oil is positively sloped?

Accepted Answer

A)  As the price of oil rises, producers' costs of drilling oil also rise. 
B)  As more and more producers enter the market, the price of oil rises. 
C)  As the price of oil rises, consumers buy less and less oil. 
D)  As the price of oil rises, more producers enter the market. 
A)  As the price of oil rises, producers' costs of drilling oil also rise. 
B)  As more and more producers enter the market, the price of oil rises. 
C)  As the price of oil rises, consumers buy less and less oil. 
D)  As the price of oil rises, more producers enter the market.

Exam 3: Business Fluctuations: Aggregate Demand and Supply

The supply curve illustrates:

Which of the following does NOT shift the demand curve?

In the early 1980s, movie rentals averaged $5 a night; by the early 1990s that average was $1 per night. This is an example of a supply curve shifter based on:

Reference: Ref 3-3 (Table: Willingness to Sell) Refer to the table. Which country is earning the least amount of producer surplus at a market price of $52 per barrel of oil?

The quantity of DVDs that people plan to buy this month depends on all of the following EXCEPT the:

Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the:

(Figure: Earned Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100.

Which of the following statements is TRUE?

(Figure: Supply Curve) Refer to the figure. A vertical reading of the figure indicates that:

Reference: Ref 3-1 (Table: Sweetbrand) The table shows the maximum consumer willingness to pay for "Sweetbrand" cheesecakes. Which of the four consumers receives the smallest consumer surplus, if the market price of the cheesecakes is $12.50 each?

Which of the following choices contains only factors that would cause a demand curve for a normal good to shift to the right?

(Figure: Demand Shift) Which of the following factors would cause the change in the figure? Figure: Demand Shift I. an increase in the price of a complement good II. an increase in production costs III. an increase in the price of a substitute good IV. an increase in income for an inferior good

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which of the following would NOT occur based upon the expected storm?

Michael graduates from college and his income increases by $40,000 a year. Other things held constant, he decreases the quantity of pizza he buys. For Michael, pizza is:

(Figure: Generic Market Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60.

(Figure: Demand Shift) Refer to the figure. Which of the following factors would cause the change in the figure? I. a decrease in the price of a complement good II. a decrease in the price of the product III. a decrease in the price of a substitute good IV. an increase in taxes

Recall the discussion in your textbook about the supply curve for oil. What explains why the supply curve for oil is positively sloped?

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

Filters