Question 1

-Refer to the above figure. At a price of $2 per gallon, there is

Accepted Answer

A) a surplus of 20,000 gallons per month. 
B) a shortage of 40,000 gallons per month. 
C) a shortage of 80,000 gallons per month. 
D) a shortage of 60,000 gallons per month. 
A) a surplus of 20,000 gallons per month. 
B) a shortage of 40,000 gallons per month. 
C) a shortage of 80,000 gallons per month. 
D) a shortage of 60,000 gallons per month.

Question 2

In the 1970s, the government placed price ceilings on gasoline prices. A shortage of gasoline occurred, and long lines formed at the pumps. Some gas stations required that in addition to paying the price on the pump you had to buy a blank will. The action of having to purchase the will in order to purchase gas is known as

Accepted Answer

A) a surplus. 
B) a price support. 
C) the price system. 
D) a black market. 
A) a surplus. 
B) a price support. 
C) the price system. 
D) a black market.

Question 3

The market clearing price of computer modems has just decreased. Which of the following could have caused this change?

Accepted Answer

A) a decrease in supply at the same time that demand increases 
B) an increase in supply at the same time that demand decreases 
C) a decrease in supply with demand unchanged 
D) an increase in demand with supply unchanged 
A) a decrease in supply at the same time that demand increases 
B) an increase in supply at the same time that demand decreases 
C) a decrease in supply with demand unchanged 
D) an increase in demand with supply unchanged

Question 4

Suppose the market clearing price is $20 and the price ceiling is $15. The price that prevails in the market will be

Accepted Answer

A) $20. 
B) $15. 
C) less than $15. 
D) $0. 
A) $20. 
B) $15. 
C) less than $15. 
D) $0.

Question 5

Government imposed price controls often lead to

Accepted Answer

A) illegal trades of the good. 
B) the most efficient use of resources. 
C) the equilibrium solution in terms of price and quantity. 
D) maximization of profits. 
A) illegal trades of the good. 
B) the most efficient use of resources. 
C) the equilibrium solution in terms of price and quantity. 
D) maximization of profits.

Question 6

Voluntary exchange

Accepted Answer

A) will eliminate scarcity. 
B) is a nonprice rationing device. 
C) is trading so that the consumer and producers are better off. 
D) never involves transactions costs. 
A) will eliminate scarcity. 
B) is a nonprice rationing device. 
C) is trading so that the consumer and producers are better off. 
D) never involves transactions costs.

Question 7

Which of the following is most likely to generate a surplus?

Accepted Answer

A) a price floor 
B) a price ceiling 
C) an illegal market 
D) all of these 
A) a price floor 
B) a price ceiling 
C) an illegal market 
D) all of these

Question 8

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

Accepted Answer

A) production excess. 
B) excess demand. 
C) market surplus. 
D) producer surplus. 
A) production excess. 
B) excess demand. 
C) market surplus. 
D) producer surplus.

Question 9

-According to the above figure, the market clearing wage rate is

Accepted Answer

A) Wₑ. 
B) Wm. 
C) Wₑ - Wm. 
D) Wm + Wₑ. 
A) Wₑ. 
B) Wm. 
C) Wₑ - Wm. 
D) Wm + Wₑ.

Question 10

The more flexible prices are, the

Accepted Answer

A) greater demand shifts have to be to bring about a new equilibrium. 
B) larger the shifts in supply will be after a change in demand. 
C) greater the reliance by sellers to change the nominal price. 
D) more quickly a shock to the economy can be absorbed. 
A) greater demand shifts have to be to bring about a new equilibrium. 
B) larger the shifts in supply will be after a change in demand. 
C) greater the reliance by sellers to change the nominal price. 
D) more quickly a shock to the economy can be absorbed.

Question 11

A limit on the amount of strawberries that can be imported into the United States is an example of

Accepted Answer

A) the rationing function of prices protecting domestic strawberry farmers. 
B) a price floor set by the government. 
C) a price ceiling set by government. 
D) an import quota. 
A) the rationing function of prices protecting domestic strawberry farmers. 
B) a price floor set by the government. 
C) a price ceiling set by government. 
D) an import quota.

Question 12

The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, 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

In which of the following situations will both market clearing price and the equilibrium quantity increase?

Accepted Answer

A) an increase in demand with no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply 
A) an increase in demand with no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply

Question 14

If demand and supply both increase

Accepted Answer

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

Question 15

In a market system, how are the price signals established?

Accepted Answer

A) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers. 
B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines. 
C) The forces underlying supply and demand interact to determine a market clearing price. 
D) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items. 
A) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers. 
B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines. 
C) The forces underlying supply and demand interact to determine a market clearing price. 
D) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.

Question 16

The difference between quantity restrictions and price ceilings as to their effect on the market is that

Accepted Answer

A) only price ceilings make the market inefficient. 
B) only quantity restrictions make the market inefficient. 
C) while some consumers gain from price ceilings, no consumers gain from quantity restrictions. 
D) while price ceilings are efficient, quantity restrictions are not. 
A) only price ceilings make the market inefficient. 
B) only quantity restrictions make the market inefficient. 
C) while some consumers gain from price ceilings, no consumers gain from quantity restrictions. 
D) while price ceilings are efficient, quantity restrictions are not.

Question 17

More farmers have recently entered the corn industry. In addition there has been a technological advancement in the fertilizer industry providing corn farmers with a cheaper and a more effective fertilizer. In the market for corn, the effects these changes will have on the equilibrium price and quantity are

Accepted Answer

A) price will increase, and quantity will decrease. 
B) price will increase, and the effect on quantity is indeterminate. 
C) price will decrease, and quantity will increase. 
D) price will decrease, and the effect on quantity is indeterminate. 
A) price will increase, and quantity will decrease. 
B) price will increase, and the effect on quantity is indeterminate. 
C) price will decrease, and quantity will increase. 
D) price will decrease, and the effect on quantity is indeterminate.

Question 18

-Refer to the above figure. If the government imposes a price ceiling of $60

Accepted Answer

A) the quantity traded will be 150, and the price will be $40. 
B) the quantity traded will be 100, and the price will be $60. 
C) the quantity traded will be 200, and the price will be $60. 
D) the quantity traded will be 150, and the price will be $60. 
A) the quantity traded will be 150, and the price will be $40. 
B) the quantity traded will be 100, and the price will be $60. 
C) the quantity traded will be 200, and the price will be $60. 
D) the quantity traded will be 150, and the price will be $60.

Question 19

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will increase when

Accepted Answer

A) supply increases and demand decreases. 
B) supply and demand for a product simultaneously decrease. 
C) supply and demand for a product simultaneously increase. 
D) supply decreases and demand increases. 
A) supply increases and demand decreases. 
B) supply and demand for a product simultaneously decrease. 
C) supply and demand for a product simultaneously increase. 
D) supply decreases and demand increases.

Question 20

The market for gasoline in May is in equilibrium, at a market clearing price of $4.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes

Accepted Answer

A) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
B) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
C) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
D) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
A) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
B) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
C) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
D) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall.

-Refer to the above figure. At a price of $2 per gallon, there is

The market clearing price of computer modems has just decreased. Which of the following could have caused this change?

Suppose the market clearing price is $20 and the price ceiling is $15. The price that prevails in the market will be

Government imposed price controls often lead to

Voluntary exchange

Which of the following is most likely to generate a surplus?

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

-According to the above figure, the market clearing wage rate is

The more flexible prices are, the

A limit on the amount of strawberries that can be imported into the United States is an example of

The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, this will lead to

In which of the following situations will both market clearing price and the equilibrium quantity increase?

If demand and supply both increase

In a market system, how are the price signals established?

The difference between quantity restrictions and price ceilings as to their effect on the market is that

-Refer to the above figure. If the government imposes a price ceiling of $60

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will increase when

The market for gasoline in May is in equilibrium, at a market clearing price of $4.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes

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

-Refer to the above figure. At a price of $2 per gallon, there is

The market clearing price of computer modems has just decreased. Which of the following could have caused this change?

Suppose the market clearing price is $20 and the price ceiling is $15. The price that prevails in the market will be

Government imposed price controls often lead to

Voluntary exchange

Which of the following is most likely to generate a surplus?

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

-According to the above figure, the market clearing wage rate is

The more flexible prices are, the

A limit on the amount of strawberries that can be imported into the United States is an example of

The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, this will lead to

In which of the following situations will both market clearing price and the equilibrium quantity increase?

If demand and supply both increase

In a market system, how are the price signals established?

The difference between quantity restrictions and price ceilings as to their effect on the market is that

-Refer to the above figure. If the government imposes a price ceiling of $60

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will increase when

The market for gasoline in May is in equilibrium, at a market clearing price of $4.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes

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