Question 1

An example of a black market is

Accepted Answer

A)  the market for high fashions. 
B)  the hiring of undocumented workers. 
C)  a farmer's market. 
D)  a discount market. 
A)  the market for high fashions. 
B)  the hiring of undocumented workers. 
C)  a farmer's market. 
D)  a discount market. B

Question 2

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. D

Question 3

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. C

Question 4

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is

Accepted Answer

A)  $5. 
B)  $2. 
C)  $7. 
D)  -$5. 
A)  $5. 
B)  $2. 
C)  $7. 
D)  -$5.

Question 5

Who bears the costs of a program to control rents at a maximum level?

Accepted Answer

A)  Landlords or owners of housing units 
B)  Consumers who face difficulty moving to a more suitable apartment 
C)  Homeless who cannot find rental units 
D)  All of these 
A)  Landlords or owners of housing units 
B)  Consumers who face difficulty moving to a more suitable apartment 
C)  Homeless who cannot find rental units 
D)  All of these

Question 6

Which of the following will tend to occur when a surplus exists in a market?

Accepted Answer

A)  supply will increase and demand will decrease until the surplus disappears. 
B)  supply will decrease and demand will increase until the surplus disappears. 
C)  the price will tend to rise over time. 
D)  the price will tend to decrease over time. 
A)  supply will increase and demand will decrease until the surplus disappears. 
B)  supply will decrease and demand will increase until the surplus disappears. 
C)  the price will tend to rise over time. 
D)  the price will tend to decrease over time.

Question 7

A black market

Accepted Answer

A)  can arise when government imposes a price ceiling below the market clearing price. 
B)  can arise when government imposes a price floor below the market clearing price. 
C)  was created when after hours trading was permitted on some stock exchanges. 
D)  is a market where products with outdated expiration dates are sold. 
A)  can arise when government imposes a price ceiling below the market clearing price. 
B)  can arise when government imposes a price floor below the market clearing price. 
C)  was created when after hours trading was permitted on some stock exchanges. 
D)  is a market where products with outdated expiration dates are sold.

Question 8

Markets tend to

Accepted Answer

A)  exist primarily in towns or cities. 
B)  increase transaction costs. 
C)  reduce transaction costs. 
D)  make exchange more difficult. 
A)  exist primarily in towns or cities. 
B)  increase transaction costs. 
C)  reduce transaction costs. 
D)  make exchange more difficult.

Question 9

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the ________ and supply shifts to the ________.

Accepted Answer

A)  left, left 
B)  left, right 
C)  right, left 
D)  right, right 
A)  left, left 
B)  left, right 
C)  right, left 
D)  right, right

Question 10

As compared to the market clearing price, the total amount of consumer surplus and producer surplus is

Accepted Answer

A)  greater for a government-imposed price floor that is higher than that market clearing price. 
B)  greater for a government-imposed price ceiling that is lower than that market clearing price. 
C)  the same as a government-imposed price floor that is higher than that market clearing price. 
D)  smaller for a government-imposed price ceiling that is lower than that market clearing price. 
A)  greater for a government-imposed price floor that is higher than that market clearing price. 
B)  greater for a government-imposed price ceiling that is lower than that market clearing price. 
C)  the same as a government-imposed price floor that is higher than that market clearing price. 
D)  smaller for a government-imposed price ceiling that is lower than that market clearing price.

Question 11

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 12

A price ceiling is

Accepted Answer

A)  the lowest price a seller can charge for a good without losing all her customers. 
B)  a legal minimum price that can be charged for a particular good or service. 
C)  a legal maximum price that can be charged for a particular good or service. 
D)  the lowest price a buyer can pay for a good without having to report the purchase to the government. 
A)  the lowest price a seller can charge for a good without losing all her customers. 
B)  a legal minimum price that can be charged for a particular good or service. 
C)  a legal maximum price that can be charged for a particular good or service. 
D)  the lowest price a buyer can pay for a good without having to report the purchase to the government.

Question 13

Which of the following is an example of a price ceiling?

Accepted Answer

A)  The minimum wage 
B)  Agricultural price supports 
C)  Rent controls 
D)  None of the above is correct 
A)  The minimum wage 
B)  Agricultural price supports 
C)  Rent controls 
D)  None of the above is correct

Question 14

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.

Question 15

Price controls often generate

Accepted Answer

A)  more efficient markets. 
B)  black markets. 
C)  rapid adjustment to market-clearing prices. 
D)  greater price flexibility. 
A)  more efficient markets. 
B)  black markets. 
C)  rapid adjustment to market-clearing prices. 
D)  greater price flexibility.

Question 16

Price floors are designed to

Accepted Answer

A)  establish a minimum allowable price. 
B)  allow free market prices to be achieved. 
C)  create shortages where none existed before. 
D)  none of the above. 
A)  establish a minimum allowable price. 
B)  allow free market prices to be achieved. 
C)  create shortages where none existed before. 
D)  none of the above.

Question 17

In which of the following situations will market clearing price decrease 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 18

In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?

Accepted Answer

A)  Price controls must be applied by governments. 
B)  Relative prices must be able to adjust to market clearing levels. 
C)  Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. 
D)  Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages. 
A)  Price controls must be applied by governments. 
B)  Relative prices must be able to adjust to market clearing levels. 
C)  Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. 
D)  Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages.

Question 19

If both the demand for and the supply of computers are increasing, which of the following statements is true?

Accepted Answer

A)  The consumer should buy a computer now since the price will be higher in the future. 
B)  The consumer should wait and buy a computer later since the price will be lower in the future. 
C)  The price of a computer will be the same in the future as it is now. 
D)  It is impossible to know, given only this information, whether the prices of computers will go up or down in the future. 
A)  The consumer should buy a computer now since the price will be higher in the future. 
B)  The consumer should wait and buy a computer later since the price will be lower in the future. 
C)  The price of a computer will be the same in the future as it is now. 
D)  It is impossible to know, given only this information, whether the prices of computers will go up or down in the future.

Question 20

When supply and demand for a product decrease simultaneously, we

Accepted Answer

A)  can predict that both equilibrium price and quantity will increase. 
B)  can predict that both equilibrium price and quantity will decrease. 
C)  cannot predict equilibrium price, but know that equilibrium quantity will decrease. 
D)  cannot predict the change in either the equilibrium quantity or equilibrium price. 
A)  can predict that both equilibrium price and quantity will increase. 
B)  can predict that both equilibrium price and quantity will decrease. 
C)  cannot predict equilibrium price, but know that equilibrium quantity will decrease. 
D)  cannot predict the change in either the equilibrium quantity or equilibrium price.

Exam 4: Extensions of Demand and Supply Analysis

An example of a black market is

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

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

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is

Who bears the costs of a program to control rents at a maximum level?

Which of the following will tend to occur when a surplus exists in a market?

A black market

Markets tend to

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the ________ and supply shifts to the ________.

As compared to the market clearing price, the total amount of consumer surplus and producer surplus is

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

A price ceiling is

Which of the following is an example of a price ceiling?

An effective price ceiling usually generates

Price controls often generate

Price floors are designed to

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

In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?

If both the demand for and the supply of computers are increasing, which of the following statements is true?

When supply and demand for a product decrease simultaneously, we

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the and supply shifts to the .