Question 1

If demand increases while supply simultaneously decreases, then the equilibrium quantity

Accepted Answer

A) always increases. 
B) always decreases. 
C) can never change. 
D) none of the above 
A) always increases. 
B) always decreases. 
C) can never change. 
D) none of the above

Question 2

When a government imposes price controls, the result is that

Accepted Answer

A) the rationing function of prices is not allowed to function freely. 
B) the price system operates more efficiently. 
C) all trades are as mutually beneficial to each party as possible. 
D) scarcity usually disappears. 
A) the rationing function of prices is not allowed to function freely. 
B) the price system operates more efficiently. 
C) all trades are as mutually beneficial to each party as possible. 
D) scarcity usually disappears.

Question 3

If a price floor is set below the current market clearing price, then

Accepted Answer

A) a surplus must immediately occur. 
B) a shortage must immediately occur. 
C) there will be incentives for black markets to develop. 
D) quantity demanded will remain equal to quantity supplied at the current market clearing price. 
A) a surplus must immediately occur. 
B) a shortage must immediately occur. 
C) there will be incentives for black markets to develop. 
D) quantity demanded will remain equal to quantity supplied at the current market clearing price.

Question 4

Prices play a role in a market

Accepted Answer

A) because they distribute scarce goods to those consumers who value them most highly. 
B) because when prices are in equilibrium, product shortages or surpluses can occur. 
C) because they help eliminate poverty. 
D) because they eliminate scarcity. 
A) because they distribute scarce goods to those consumers who value them most highly. 
B) because when prices are in equilibrium, product shortages or surpluses can occur. 
C) because they help eliminate poverty. 
D) because they eliminate scarcity.

Question 5

A price floor set above a market equilibrium price causes

Accepted Answer

A) a surplus. 
B) a shortage. 
C) producers to receive lower prices. 
D) consumers to pay lower prices. 
A) a surplus. 
B) a shortage. 
C) producers to receive lower prices. 
D) consumers to pay lower prices.

Question 6

Suppose new research shows that soy milk and other products derived from soybeans provide more health benefits than previously thought. At the same time, drought conditions result in extensive damage to the soybean crop. What will be the combined impact of these two factors on the equilibrium price and quantity of soybeans?

Accepted Answer

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

Question 7

When the government establishes a minimum price for an agricultural product above the equilibrium price, the government is creating a(n)

Accepted Answer

A) price ceiling. 
B) elevated price. 
C) price floor. 
D) surplus price. 
A) price ceiling. 
B) elevated price. 
C) price floor. 
D) surplus price.

Question 8

Price ceilings often generate

Accepted Answer

A) market clearing prices. 
B) rapid increases in supply to meet the excess demand. 
C) equilibriums that utilize rationing by price. 
D) black markets. 
A) market clearing prices. 
B) rapid increases in supply to meet the excess demand. 
C) equilibriums that utilize rationing by price. 
D) black markets.

Question 9

The income of consumers increases. and the wage rate in the DVD industry increases. As a result

Accepted Answer

A) the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply. 
B) the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply. 
C) the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply. 
D) the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply. 
A) the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply. 
B) the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply. 
C) the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply. 
D) the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.

Question 10

If equilibrium price falls and the equilibrium quantity of the good purchased decreases, what has happened to either the supply curve or to the demand curve?

Accepted Answer

A) Supply increased. 
B) Demand decreased. 
C) Demand increased. 
D) Supply decreased. 
A) Supply increased. 
B) Demand decreased. 
C) Demand increased. 
D) Supply decreased.

Question 11

A decrease in demand and an increase in supply will lead to

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous decrease in price, but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity, but the effect on price is indeterminate. 
A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous decrease in price, but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity, but the effect on price is indeterminate.

Question 12

The market clearing price of corn has just increased. Which of the following could have caused this change?

Accepted Answer

A) a reduction in demand 
B) a reduction in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied 
A) a reduction in demand 
B) a reduction in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied

Question 13

If one day it was discovered that lime juice caused cancer, which of the following would likely result?

Accepted Answer

A) The supply curve for lime juice would shift to the right. 
B) The supply curve for lime juice would shift to the left. 
C) The demand curve for lime juice would shift to the right. 
D) The demand curve for lime juice would shift to the left. 
A) The supply curve for lime juice would shift to the right. 
B) The supply curve for lime juice would shift to the left. 
C) The demand curve for lime juice would shift to the right. 
D) The demand curve for lime juice would shift to the left.

Question 14

In a market, the rationing function of prices results in

Accepted Answer

A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus. 
A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus.

Question 15

The price of milk increases. Which of the following is NOT part of the likely chain of events that follows from this price change?

Accepted Answer

A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers. 
A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers.

Question 16

-Refer to the above figure. A price support set at P₃ will

Accepted Answer

A) lead to a surplus of Q₃ minus Q₁. 
B) lead to a shortage of Q₃ minus Q₁. 
C) lead to an equilibrium quantity of Q₂. 
D) be ineffective. 
A) lead to a surplus of Q₃ minus Q₁. 
B) lead to a shortage of Q₃ minus Q₁. 
C) lead to an equilibrium quantity of Q₂. 
D) be ineffective.

Question 17

In a market system, the costs associated with exchanging goods are known as

Accepted Answer

A) voluntary costs. 
B) signaling costs. 
C) wholesale costs. 
D) transaction costs. 
A) voluntary costs. 
B) signaling costs. 
C) wholesale costs. 
D) transaction costs.

Question 18

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York. The game was sold out and some fans could not get tickets. This suggests that

Accepted Answer

A) selling price was below equilibrium price. 
B) selling price was above equilibrium price. 
C) selling price was at equilibrium. 
D) the game was advertised too heavily. 
A) selling price was below equilibrium price. 
B) selling price was above equilibrium price. 
C) selling price was at equilibrium. 
D) the game was advertised too heavily.

Question 19

What would happen in the market for rental housing in your community if the local government legally mandated rents that were below the market clearing price?

Accepted Answer

A) There would be a surplus of rental housing. 
B) There would be a shortage of rental housing. 
C) The demand for rental housing would increase. 
D) The supply of rental housing would decrease. 
A) There would be a surplus of rental housing. 
B) There would be a shortage of rental housing. 
C) The demand for rental housing would increase. 
D) The supply of rental housing would decrease.

Question 20

-Refer to the above figure. A price ceiling of $20 results in

Accepted Answer

A) a shortage of 100 units. 
B) a shortage of 200 units. 
C) a surplus of 100 units. 
D) a surplus of 200 units. 
A) a shortage of 100 units. 
B) a shortage of 200 units. 
C) a surplus of 100 units. 
D) a surplus of 200 units.

If demand increases while supply simultaneously decreases, then the equilibrium quantity

When a government imposes price controls, the result is that

If a price floor is set below the current market clearing price, then

Prices play a role in a market

A price floor set above a market equilibrium price causes

When the government establishes a minimum price for an agricultural product above the equilibrium price, the government is creating a(n)

Price ceilings often generate

The income of consumers increases. and the wage rate in the DVD industry increases. As a result

If equilibrium price falls and the equilibrium quantity of the good purchased decreases, what has happened to either the supply curve or to the demand curve?

A decrease in demand and an increase in supply will lead to

The market clearing price of corn has just increased. Which of the following could have caused this change?

If one day it was discovered that lime juice caused cancer, which of the following would likely result?

In a market, the rationing function of prices results in

The price of milk increases. Which of the following is NOT part of the likely chain of events that follows from this price change?

-Refer to the above figure. A price support set at P₃ will

In a market system, the costs associated with exchanging goods are known as

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York. The game was sold out and some fans could not get tickets. This suggests that

What would happen in the market for rental housing in your community if the local government legally mandated rents that were below the market clearing price?

-Refer to the above figure. A price ceiling of $20 results in

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

If demand increases while supply simultaneously decreases, then the equilibrium quantity

When a government imposes price controls, the result is that

If a price floor is set below the current market clearing price, then

Prices play a role in a market

A price floor set above a market equilibrium price causes

When the government establishes a minimum price for an agricultural product above the equilibrium price, the government is creating a(n)

Price ceilings often generate

The income of consumers increases. and the wage rate in the DVD industry increases. As a result

If equilibrium price falls and the equilibrium quantity of the good purchased decreases, what has happened to either the supply curve or to the demand curve?

A decrease in demand and an increase in supply will lead to

The market clearing price of corn has just increased. Which of the following could have caused this change?

If one day it was discovered that lime juice caused cancer, which of the following would likely result?

In a market, the rationing function of prices results in

The price of milk increases. Which of the following is NOT part of the likely chain of events that follows from this price change?

-Refer to the above figure. A price support set at P₃ will

In a market system, the costs associated with exchanging goods are known as

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York. The game was sold out and some fans could not get tickets. This suggests that

What would happen in the market for rental housing in your community if the local government legally mandated rents that were below the market clearing price?

-Refer to the above figure. A price ceiling of $20 results in

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