Question 1

Buyers and sellers receive signals from markets

Accepted Answer

A) by listening to the TV news programs. 
B) through the price system. 
C) from the gossip columns in the newspapers. 
D) from their friends and acquaintances. 
A) by listening to the TV news programs. 
B) through the price system. 
C) from the gossip columns in the newspapers. 
D) from their friends and acquaintances. B

Question 2

An effective price ceiling occurs when

Accepted Answer

A) the government sets a maximum price for a good above the equilibrium price. 
B) the government sets a minimum price for a good above the equilibrium price. 
C) the government sets a minimum price for a good below the equilibrium price. 
D) the government sets a maximum price for a good below the equilibrium price. 
A) the government sets a maximum price for a good above the equilibrium price. 
B) the government sets a minimum price for a good above the equilibrium price. 
C) the government sets a minimum price for a good below the equilibrium price. 
D) the government sets a maximum price for a good below the equilibrium price. D

Question 3

When a market clearing price is determined

Accepted Answer

A) the exchange between buyers and sellers is voluntary. 
B) the exchange between buyers and sellers is directed by outside factors such as the government. 
C) the exchange between buyers and sellers benefits only the buyers. 
D) the exchange between buyers and sellers benefits only the sellers. 
A) the exchange between buyers and sellers is voluntary. 
B) the exchange between buyers and sellers is directed by outside factors such as the government. 
C) the exchange between buyers and sellers benefits only the buyers. 
D) the exchange between buyers and sellers benefits only the sellers. A

Question 4

The effect of a legal minimum wage set above the equilibrium wage rate is

Accepted Answer

A) an excess quantity of labor demanded. 
B) an excess quantity of labor supplied. 
C) an increase in the quantity of labor demanded. 
D) a decrease in quantity of labor supplied. 
A) an excess quantity of labor demanded. 
B) an excess quantity of labor supplied. 
C) an increase in the quantity of labor demanded. 
D) a decrease in quantity of labor supplied.

Question 5

Which of the following is a price floor?

Accepted Answer

A) rent controls 
B) minimum wage rates 
C) a freeze on upward-moving gasoline prices 
D) college tuition caps 
A) rent controls 
B) minimum wage rates 
C) a freeze on upward-moving gasoline prices 
D) college tuition caps

Question 6

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?

Accepted Answer

For price to fall, either demand had to

Question 7

For a given market demand curve, if the market clearing price decreases, then the amount of consumer surplus will

Accepted Answer

A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information. 
A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information.

Question 8

Following adjustments to a new equilibrium in a market, the equilibrium quantity remains unchanged, but the market clearing price is now lower. Which of the following could definitely have caused this outcome?

Accepted Answer

A) Demand and supply both increased. 
B) Demand and supply both decreased. 
C) Demand increased, and supply decreased. 
D) Demand decreased, and supply increased. 
A) Demand and supply both increased. 
B) Demand and supply both decreased. 
C) Demand increased, and supply decreased. 
D) Demand decreased, and supply increased.

Question 9

Your local grocery store reduces transaction costs to the consumer

Accepted Answer

A) by reducing the consumer's need to travel from food producer to food producer (or manufacturer to manufacturer)to purchase the food staples that the consumer desires. 
B) by providing a system that directs funds from lenders to borrowers. 
C) by providing a system of justice to enforce contracts. 
D) All of the above are correct. 
A) by reducing the consumer's need to travel from food producer to food producer (or manufacturer to manufacturer)to purchase the food staples that the consumer desires. 
B) by providing a system that directs funds from lenders to borrowers. 
C) by providing a system of justice to enforce contracts. 
D) All of the above are correct.

Question 10

Suppose that demand for tablets increases, and simultaneously, the supply of tablets increases. Which of the following would you conclude definitely will occur in the market for tablets?

Accepted Answer

A) The market clearing price will rise. 
B) The market clearing price will fall. 
C) The equilibrium quantity will rise. 
D) The equilibrium quantity will fall. 
A) The market clearing price will rise. 
B) The market clearing price will fall. 
C) The equilibrium quantity will rise. 
D) The equilibrium quantity will fall.

Question 11

Queuing is a way to ration goods

Accepted Answer

A) on a first-come, first-serve basis. 
B) through prices. 
C) through the use of political power. 
D) through markets. 
A) on a first-come, first-serve basis. 
B) through prices. 
C) through the use of political power. 
D) through markets.

Question 12

What will happen when there is a rightward shift in the demand curve?

Accepted Answer

A) The product price will instantaneously adjust downward. 
B) Product prices do not change in this situation. 
C) Producers will decrease the product price. 
D) A new, higher price is not instantaneously achieved, but the price will rise over time. 
A) The product price will instantaneously adjust downward. 
B) Product prices do not change in this situation. 
C) Producers will decrease the product price. 
D) A new, higher price is not instantaneously achieved, but the price will rise over time.

Question 13

To enhance their prestige, some country clubs like to point to the fact that they have a waiting list for new members. Even at clubs with high initiation fees, it is common that prospective members have to wait three or more years before there is room for them on the membership rolls. How do these country clubs set the price of membership to ensure that they have a waiting list?

Accepted Answer

A) Set the membership price above the market clearing price. 
B) Set the membership price below the market clearing price. 
C) Set the price so that the quantity supplied of memberships exceeds the quantity demanded. 
D) Set the price at a level that will generate a surplus of memberships. 
A) Set the membership price above the market clearing price. 
B) Set the membership price below the market clearing price. 
C) Set the price so that the quantity supplied of memberships exceeds the quantity demanded. 
D) Set the price at a level that will generate a surplus of memberships.

Question 14

The supply of eggs comes from chickens. The price of eggs will decrease if

Accepted Answer

A) the supply of chickens decreases. 
B) the supply of eggs decreases. 
C) the price of chickens increases. 
D) the demand for eggs decreases. 
A) the supply of chickens decreases. 
B) the supply of eggs decreases. 
C) the price of chickens increases. 
D) the demand for eggs decreases.

Question 15

Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?

Accepted Answer

A) an improvement in the technology of producing LED televisions 
B) an increase in resource costs for producing LED televisions 
C) a reduction in the price of LED televisions 
D) an expectation that the price of LED televisions will be lower in the future 
A) an improvement in the technology of producing LED televisions 
B) an increase in resource costs for producing LED televisions 
C) a reduction in the price of LED televisions 
D) an expectation that the price of LED televisions will be lower in the future

Question 16

Government intervention in agriculture usually involves

Accepted Answer

A) price ceilings in order to keep food prices low. 
B) price ceilings in order to subsidize U.S. exports. 
C) price supports in order to keep farm incomes high. 
D) price supports in order to keep agricultural imports low. 
A) price ceilings in order to keep food prices low. 
B) price ceilings in order to subsidize U.S. exports. 
C) price supports in order to keep farm incomes high. 
D) price supports in order to keep agricultural imports low.

Question 17

Nonprice rationing devices are required

Accepted Answer

A) because the price system does not allocate resources efficiently. 
B) when there are price floors but not when there are price ceilings. 
C) so that prices will go back to equilibrium. 
D) to allocate goods when there is a price ceiling. 
A) because the price system does not allocate resources efficiently. 
B) when there are price floors but not when there are price ceilings. 
C) so that prices will go back to equilibrium. 
D) to allocate goods when there is a price ceiling.

Question 18

As demand for MP3 music downloads increases, other things being equal, we can expect

Accepted Answer

A) a decrease in both the relative price and quantity of MP3 music downloads. 
B) a decrease in the supply of MP3 music downloads. 
C) more MP3 music downloads to be produced. 
D) an excess number of MP3 music downloads in the market. 
A) a decrease in both the relative price and quantity of MP3 music downloads. 
B) a decrease in the supply of MP3 music downloads. 
C) more MP3 music downloads to be produced. 
D) an excess number of MP3 music downloads in the market.

Question 19

-Refer to the above figure. If a price floor of $5 was set

Accepted Answer

A) the quantity sold would be 80 units. 
B) the quantity sold would be 60 units. 
C) the quantity demanded would be 100 units. 
D) there would be a shortage of 20 units. 
A) the quantity sold would be 80 units. 
B) the quantity sold would be 60 units. 
C) the quantity demanded would be 100 units. 
D) there would be a shortage of 20 units.

Question 20

An effective price ceiling usually generates

Accepted Answer

A) fire sales as firms try to unload their excess inventories. 
B) higher nominal prices. 
C) the use of nonprice rationing devices. 
D) happy sellers and dissatisfied buyers. 
A) fire sales as firms try to unload their excess inventories. 
B) higher nominal prices. 
C) the use of nonprice rationing devices. 
D) happy sellers and dissatisfied buyers.

Buyers and sellers receive signals from markets

An effective price ceiling occurs when

When a market clearing price is determined

The effect of a legal minimum wage set above the equilibrium wage rate is

Which of the following is a price floor?

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?

For a given market demand curve, if the market clearing price decreases, then the amount of consumer surplus will

Following adjustments to a new equilibrium in a market, the equilibrium quantity remains unchanged, but the market clearing price is now lower. Which of the following could definitely have caused this outcome?

Your local grocery store reduces transaction costs to the consumer

Suppose that demand for tablets increases, and simultaneously, the supply of tablets increases. Which of the following would you conclude definitely will occur in the market for tablets?

Queuing is a way to ration goods

What will happen when there is a rightward shift in the demand curve?

The supply of eggs comes from chickens. The price of eggs will decrease if

Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?

Government intervention in agriculture usually involves

Nonprice rationing devices are required

As demand for MP3 music downloads increases, other things being equal, we can expect

-Refer to the above figure. If a price floor of $5 was set

An effective price ceiling usually generates

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

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

Buyers and sellers receive signals from markets

An effective price ceiling occurs when

When a market clearing price is determined

The effect of a legal minimum wage set above the equilibrium wage rate is

Which of the following is a price floor?

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?

For a given market demand curve, if the market clearing price decreases, then the amount of consumer surplus will

Following adjustments to a new equilibrium in a market, the equilibrium quantity remains unchanged, but the market clearing price is now lower. Which of the following could definitely have caused this outcome?

Your local grocery store reduces transaction costs to the consumer

Suppose that demand for tablets increases, and simultaneously, the supply of tablets increases. Which of the following would you conclude definitely will occur in the market for tablets?

Queuing is a way to ration goods

What will happen when there is a rightward shift in the demand curve?

The supply of eggs comes from chickens. The price of eggs will decrease if

Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?

Government intervention in agriculture usually involves

Nonprice rationing devices are required

As demand for MP3 music downloads increases, other things being equal, we can expect

-Refer to the above figure. If a price floor of $5 was set

An effective price ceiling usually generates

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters