Question 1

In competitive markets,firms ________.

Accepted Answer

A)  coordinate pricing decisions with other firms 
B)  take the market price as given 
C)  have the government set maximum and minimum prices 
D)  set the market price 
A)  coordinate pricing decisions with other firms 
B)  take the market price as given 
C)  have the government set maximum and minimum prices 
D)  set the market price B

Question 2

Which of the following could explain why there was a stampede at the Richmond International Raceway where 1,000 laptops were being sold at $50 each?

Accepted Answer

A)  The demand for laptops is not very responsive to price. 
B)  The price of $50 per laptop was above the equilibrium price of laptops. 
C)  The quantity of laptops demanded at $50 was higher than the quantity supplied. 
D)  The people who bought the laptops at that price were those who valued laptops the most. 
A)  The demand for laptops is not very responsive to price. 
B)  The price of $50 per laptop was above the equilibrium price of laptops. 
C)  The quantity of laptops demanded at $50 was higher than the quantity supplied. 
D)  The people who bought the laptops at that price were those who valued laptops the most. C

Question 3

The demand curve for most goods is normally ________.

Accepted Answer

A)  upward sloping 
B)  downward sloping 
C)  parallel to the y-axis 
D)  parallel to the x-axis 
A)  upward sloping 
B)  downward sloping 
C)  parallel to the y-axis 
D)  parallel to the x-axis B

Question 4

A supply schedule is a table that reports the ________.

Accepted Answer

A)  expected excess supply in the market at different prices 
B)  profits earned by producers at different levels of production 
C)  different quantities of a good that producers are willing to sell at different income levels 
D)  different quantities of a good that producers are willing to sell at different prices 
A)  expected excess supply in the market at different prices 
B)  profits earned by producers at different levels of production 
C)  different quantities of a good that producers are willing to sell at different income levels 
D)  different quantities of a good that producers are willing to sell at different prices

Question 5

Which of the following was an effect of the price ceiling placed on gasoline in the United States in the 1970s?

Accepted Answer

A)  The inventory of unsold gas increased, and gas stations incurred losses. 
B)  Those who valued gas the most were able to buy gas under the price ceiling. 
C)  Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied. 
D)  Car owners started buying luxury cars that were less fuel efficient as the price of gas was very low. 
A)  The inventory of unsold gas increased, and gas stations incurred losses. 
B)  Those who valued gas the most were able to buy gas under the price ceiling. 
C)  Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied. 
D)  Car owners started buying luxury cars that were less fuel efficient as the price of gas was very low.

Question 6

Explain how the following will affect the supply curve of coffee.
a)A fall in the wages paid to coffee workers
b)An increase in the availability of high-yielding coffee plants
c)A decrease in the quantity of land under coffee cultivation

Accepted Answer

a)A fall in the wages paid to workers wi

Question 7

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S₁ is the initial supply curve.
  
-Refer to the figure above.When the demand curve for flash drives is D and the supply curve of flash drives is S₁,what is the surplus in the market if the price is $7?

Accepted Answer

A)  10 units 
B)  20 units 
C)  50 units 
D)  60 units 
A)  10 units 
B)  20 units 
C)  50 units 
D)  60 units

Question 8

The ________ plots the relationship between prices and the quantity that buyers are willing to purchase.

Accepted Answer

A)  marginal cost curve 
B)  supply curve 
C)  demand curve 
D)  budget constraint 
A)  marginal cost curve 
B)  supply curve 
C)  demand curve 
D)  budget constraint

Question 9

Assume that the market for cell phones comprises two buyers and two sellers.The following table shows the demand and supply of cell phones at different prices.Using the information in the table,determine the market equilibrium price and quantity.

Accepted Answer

To determine the market equilibrium quan

Question 10

A price ceiling imposed by the government ________.

Accepted Answer

A)  can create situations of excess demand 
B)  is a tax that increases the market price of a good 
C)  involves pricing a commodity above the market price 
D)  helps establish equilibrium in case of a shortage or surplus 
A)  can create situations of excess demand 
B)  is a tax that increases the market price of a good 
C)  involves pricing a commodity above the market price 
D)  helps establish equilibrium in case of a shortage or surplus

Question 11

Other things remaining same,a rightward shift in the demand curve will lead to a(n)________.

Accepted Answer

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

Question 12

Refer to the scenario above.If you are told that the increase in emerald sales was due to an increase in the supply of 1-carat commercial grade emeralds,you can conclude that commercial grade emerald prices ________.

Accepted Answer

A)  increased 
B)  remained constant 
C)  decreased 
D)  was uncertain 
A)  increased 
B)  remained constant 
C)  decreased 
D)  was uncertain

Question 13

Scenario: Suppose that the government imposes a price control on gasoline where the legal price is set at $1.50 per gallon while the equilibrium price would be $2.25. A shortage ensues. Worried that you may not have enough gas to commute to school and do errands, you get up before dawn to go to a gas station to fill up the tank. But you find yourself waiting in a long line. Fortunately, the station did not run out of gas before your turn came up, and you were happy to drive away with a full tank.
-Refer to the scenario above.The shortage results because ________.

Accepted Answer

A)  consumers demand more than sellers can produce 
B)  consumers demand more than sellers are willing to supply at the legal price 
C)  consumers demand more than the quantity of the resource that physically exists 
D)  the government withholds a large quantity of the resources under the price control 
A)  consumers demand more than sellers can produce 
B)  consumers demand more than sellers are willing to supply at the legal price 
C)  consumers demand more than the quantity of the resource that physically exists 
D)  the government withholds a large quantity of the resources under the price control

Question 14

The figure below shows the market demand and the market supply curve for gasoline. It would be useful to find the equations of the curves to answer the questions below.
  
-Refer to the figure above.Suppose that a government regulation mandates a higher quality of gasoline,which raises the marginal cost of each liter by 2.00 euros.Meanwhile,the popularity of hybrid and other energy-efficient vehicles lowers consumers' willingness to pay by 2.00 euros.Then the new equilibrium quantity is ________ and the new equilibrium price ________.

Accepted Answer

A)  800,000 liters; is higher than the old equilibrium price 
B)  600,000 liters; is same as the old equilibrium price 
C)  500,000 liters; is lower than the old equilibrium price 
D)  400,000 liters; could be either higher or lower than the old equilibrium price 
A)  800,000 liters; is higher than the old equilibrium price 
B)  600,000 liters; is same as the old equilibrium price 
C)  500,000 liters; is lower than the old equilibrium price 
D)  400,000 liters; could be either higher or lower than the old equilibrium price

Question 15

Assume that a seller in a perfectly competitive market charges more than the equilibrium price.It is likely that this seller will ________.

Accepted Answer

A)  increase his profit 
B)  increase his sales 
C)  lose only a few buyers 
D)  lose almost all of his buyers 
A)  increase his profit 
B)  increase his sales 
C)  lose only a few buyers 
D)  lose almost all of his buyers

Question 16

A seller who is a price-taker charges ________.

Accepted Answer

A)  the market price 
B)  a price above the market price 
C)  a price below the market price 
D)  different prices to different buyers 
A)  the market price 
B)  a price above the market price 
C)  a price below the market price 
D)  different prices to different buyers

Question 17

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market.
  
-Refer to the table above.What is the market demand for wine when the price is $1?

Accepted Answer

A)  50 units 
B)  51 units 
C)  76 units 
D)  80 units 
A)  50 units 
B)  51 units 
C)  76 units 
D)  80 units

Question 18

The following table shows the supply schedule of bread for three sellers in the economy. Assume that these three sellers constitute the entire market.
  
-Refer to the table above.Assuming that the market consists of only these three sellers,what is the market supply when the price is $2 per loaf?

Accepted Answer

A)  39 loaves 
B)  41 loaves 
C)  52 loaves 
D)  89 loaves 
A)  39 loaves 
B)  41 loaves 
C)  52 loaves 
D)  89 loaves

Question 19

Scenario: Suppose that the government imposes a price control on gasoline where the legal price is set at $1.50 per gallon while the equilibrium price would be $2.25. A shortage ensues. Worried that you may not have enough gas to commute to school and do errands, you get up before dawn to go to a gas station to fill up the tank. But you find yourself waiting in a long line. Fortunately, the station did not run out of gas before your turn came up, and you were happy to drive away with a full tank.
-Refer to the scenario above.For the last gallon of gas that the seller is willing to produce at $1.50,the consumers are willing to pay ________.

Accepted Answer

A)  more than $2.25 
B)  more than $1.50 but less than $2.25 
C)  exactly $1.50 
D)  less than $1.50 
A)  more than $2.25 
B)  more than $1.50 but less than $2.25 
C)  exactly $1.50 
D)  less than $1.50

Question 20

Which of the following factors will NOT cause a shift in the demand for a good?

Accepted Answer

A)  A change in consumer incomes 
B)  A change in tastes and preferences 
C)  A change in the number of consumers 
D)  A change in the market price of the good 
A)  A change in consumer incomes 
B)  A change in tastes and preferences 
C)  A change in the number of consumers 
D)  A change in the market price of the good

In competitive markets,firms ________.

Which of the following could explain why there was a stampede at the Richmond International Raceway where 1,000 laptops were being sold at $50 each?

The demand curve for most goods is normally ________.

A supply schedule is a table that reports the ________.

Which of the following was an effect of the price ceiling placed on gasoline in the United States in the 1970s?

Explain how the following will affect the supply curve of coffee. a)A fall in the wages paid to coffee workers b)An increase in the availability of high-yielding coffee plants c)A decrease in the quantity of land under coffee cultivation

The ________ plots the relationship between prices and the quantity that buyers are willing to purchase.

Assume that the market for cell phones comprises two buyers and two sellers.The following table shows the demand and supply of cell phones at different prices.Using the information in the table,determine the market equilibrium price and quantity.

A price ceiling imposed by the government ________.

Other things remaining same,a rightward shift in the demand curve will lead to a(n)________.

Refer to the scenario above.If you are told that the increase in emerald sales was due to an increase in the supply of 1-carat commercial grade emeralds,you can conclude that commercial grade emerald prices ________.

Assume that a seller in a perfectly competitive market charges more than the equilibrium price.It is likely that this seller will ________.

A seller who is a price-taker charges ________.

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. -Refer to the table above.What is the market demand for wine when the price is $1?

The following table shows the supply schedule of bread for three sellers in the economy. Assume that these three sellers constitute the entire market. -Refer to the table above.Assuming that the market consists of only these three sellers,what is the market supply when the price is $2 per loaf?

Which of the following factors will NOT cause a shift in the demand for a good?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

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Exam 4: Demand, Supply, and Equilibrium

In competitive markets,firms ________.

Which of the following could explain why there was a stampede at the Richmond International Raceway where 1,000 laptops were being sold at $50 each?

The demand curve for most goods is normally ________.

A supply schedule is a table that reports the ________.

Which of the following was an effect of the price ceiling placed on gasoline in the United States in the 1970s?

Explain how the following will affect the supply curve of coffee. a)A fall in the wages paid to coffee workers b)An increase in the availability of high-yielding coffee plants c)A decrease in the quantity of land under coffee cultivation

The ________ plots the relationship between prices and the quantity that buyers are willing to purchase.

Assume that the market for cell phones comprises two buyers and two sellers.The following table shows the demand and supply of cell phones at different prices.Using the information in the table,determine the market equilibrium price and quantity.

A price ceiling imposed by the government ________.

Other things remaining same,a rightward shift in the demand curve will lead to a(n)________.

Refer to the scenario above.If you are told that the increase in emerald sales was due to an increase in the supply of 1-carat commercial grade emeralds,you can conclude that commercial grade emerald prices ________.

Assume that a seller in a perfectly competitive market charges more than the equilibrium price.It is likely that this seller will ________.

A seller who is a price-taker charges ________.

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. -Refer to the table above.What is the market demand for wine when the price is $1?

The following table shows the supply schedule of bread for three sellers in the economy. Assume that these three sellers constitute the entire market. -Refer to the table above.Assuming that the market consists of only these three sellers,what is the market supply when the price is $2 per loaf?

Which of the following factors will NOT cause a shift in the demand for a good?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters