Question 1

The buyer's reservation price of a particular good or service is the:

Accepted Answer

A)  minimum amount the buyer would be willing to pay for it. 
B)  same as the market price. 
C)  maximum amount the buyer would be willing to pay for it. 
D)  price the buyer must pay to ensure he or she gets it. 
A)  minimum amount the buyer would be willing to pay for it. 
B)  same as the market price. 
C)  maximum amount the buyer would be willing to pay for it. 
D)  price the buyer must pay to ensure he or she gets it. C

Question 2

Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _______ because not all of the _________ are accounted for in the marketplace.

Accepted Answer

A)  too high; benefits 
B)  too low; benefits 
C)  too high; costs 
D)  too low; costs 
A)  too high; benefits 
B)  too low; benefits 
C)  too high; costs 
D)  too low; costs D

Question 3

If, in a particular market, all unexploited opportunities have been realized, one can conclude that:

Accepted Answer

A)  government regulation has proven successful. 
B)  the market is in equilibrium. 
C)  demanders are unable to find adequate amounts of the good. 
D)  excess demand is present. 
A)  government regulation has proven successful. 
B)  the market is in equilibrium. 
C)  demanders are unable to find adequate amounts of the good. 
D)  excess demand is present. B

Question 4

Which of the following is NOT a characteristic of a market in equilibrium?

Accepted Answer

A)  Excess supply is zero. 
B)  All consumers are able to purchase an amount equal to their quantity demanded. 
C)  Excess demand is zero. 
D)  The equilibrium price is stable, i.e., there is no pressure for it to change. 
A)  Excess supply is zero. 
B)  All consumers are able to purchase an amount equal to their quantity demanded. 
C)  Excess demand is zero. 
D)  The equilibrium price is stable, i.e., there is no pressure for it to change.

Question 5

The No Cash on the Table Principle asserts that:

Accepted Answer

A)  in equilibrium, a few unexploited opportunities exist. 
B)  sometimes tips aren't picked up. 
C)  in disequilibrium, no opportunities exist. 
D)  in equilibrium, all opportunities have been exploited. 
A)  in equilibrium, a few unexploited opportunities exist. 
B)  sometimes tips aren't picked up. 
C)  in disequilibrium, no opportunities exist. 
D)  in equilibrium, all opportunities have been exploited.

Question 6

If the price of computers increases and the demand for monitors decreases as a result, then:

Accepted Answer

A)  computers and monitors are complements. 
B)  computers are a normal good and monitors are inferior. 
C)  computers and monitors are substitutes. 
D)  computers are an inferior good and monitors are normal. 
A)  computers and monitors are complements. 
B)  computers are a normal good and monitors are inferior. 
C)  computers and monitors are substitutes. 
D)  computers are an inferior good and monitors are normal.

Question 7

In general, when the supply curve shifts to the left and demand is constant then:

Accepted Answer

A)  the market cannot reestablish an equilibrium. 
B)  the equilibrium price will fall. 
C)  the equilibrium quantity will rise. 
D)  the equilibrium price will rise. 
A)  the market cannot reestablish an equilibrium. 
B)  the equilibrium price will fall. 
C)  the equilibrium quantity will rise. 
D)  the equilibrium price will rise.

Question 8

Whether or not a good can be classified as a complement depends on whether;

Accepted Answer

A)  you personally tend to consume the goods together. 
B)  no substitutes exist. 
C)  an increase in demand for one good follows a decrease in the price of the other. 
D)  an increase in demand for one good follows an increase in the price of the other. 
A)  you personally tend to consume the goods together. 
B)  no substitutes exist. 
C)  an increase in demand for one good follows a decrease in the price of the other. 
D)  an increase in demand for one good follows an increase in the price of the other.

Question 9

Suppose that the production of oranges reduces global warming. The equilibrium price of oranges is _______ because not all of the _________ are accounted for in the marketplace.

Accepted Answer

A)  too high; benefits 
B)  too low; benefits 
C)  too low; costs 
D)  optimal; costs 
A)  too high; benefits 
B)  too low; benefits 
C)  too low; costs 
D)  optimal; costs

Question 10

Last summer, real estate prices in your town soared. You started noticing more "For Sale" signs in your neighbors' yards. You conclude that:

Accepted Answer

A)  people don't like to live in your neighborhood anymore. 
B)  when housing prices rose, they started to exceed some of your neighbors' reservation prices. 
C)  the demand curve for housing in your town has shifted to the left while supply remained constant. 
D)  the supply curve for housing in your town has shifted to the right while demand has remained constant. 
A)  people don't like to live in your neighborhood anymore. 
B)  when housing prices rose, they started to exceed some of your neighbors' reservation prices. 
C)  the demand curve for housing in your town has shifted to the left while supply remained constant. 
D)  the supply curve for housing in your town has shifted to the right while demand has remained constant.

Question 11

A seller's reservation price is generally equal to:

Accepted Answer

A)  the buyer's reservation price. 
B)  the seller's opportunity cost. 
C)  the seller's marginal benefit. 
D)  the market price. 
A)  the buyer's reservation price. 
B)  the seller's opportunity cost. 
C)  the seller's marginal benefit. 
D)  the market price.

Question 12

Assume both the demand and the supply of bagels increase. Which of the following outcomes is certain to occur?

Accepted Answer

A)  The equilibrium price of bagels will rise. 
B)  The equilibrium quantity of bagels will rise. 
C)  The equilibrium price of bagels will fall. 
D)  The equilibrium quantity of bagels will fall. 
A)  The equilibrium price of bagels will rise. 
B)  The equilibrium quantity of bagels will rise. 
C)  The equilibrium price of bagels will fall. 
D)  The equilibrium quantity of bagels will fall.

Question 13

The supply curve illustrates that firms:

Accepted Answer

A)  increase the supply of a good when its price rises. 
B)  increase the quantity supplied of a good when its price rises. 
C)  decrease the quantity supplied of a good when input prices fall. 
D)  decrease the quantity supplied to earn higher profits. 
A)  increase the supply of a good when its price rises. 
B)  increase the quantity supplied of a good when its price rises. 
C)  decrease the quantity supplied of a good when input prices fall. 
D)  decrease the quantity supplied to earn higher profits.

Question 14

The demand curve illustrates the fact that consumers:

Accepted Answer

A)  tend to purchase more of a good as its price rises. 
B)  purchase name brand products more frequently than generic products. 
C)  tend to purchase more of a good as its price falls. 
D)  purchase more of a good as their incomes rise. 
A)  tend to purchase more of a good as its price rises. 
B)  purchase name brand products more frequently than generic products. 
C)  tend to purchase more of a good as its price falls. 
D)  purchase more of a good as their incomes rise.

Question 15

Suppose that the equilibrium price of French fries rises while the equilibrium quantity falls. The most consistent explanation for these observations is:

Accepted Answer

A)  a decrease in demand for French fries with no change in supply. 
B)  an increase in demand for French fries with no change in supply. 
C)  an increase in the supply of French fries and an increase in the demand for French fries. 
D)  a decrease in the supply of French fries with no change in demand. 
A)  a decrease in demand for French fries with no change in supply. 
B)  an increase in demand for French fries with no change in supply. 
C)  an increase in the supply of French fries and an increase in the demand for French fries. 
D)  a decrease in the supply of French fries with no change in demand.

Question 16

Assume the demand for coffee increases while the supply decreases. Which of the following outcomes is certain to occur?

Accepted Answer

A)  The equilibrium price of coffee will rise. 
B)  The equilibrium quantity of coffee will rise. 
C)  The equilibrium price of coffee will fall. 
D)  The equilibrium quantity of coffee will fall. 
A)  The equilibrium price of coffee will rise. 
B)  The equilibrium quantity of coffee will rise. 
C)  The equilibrium price of coffee will fall. 
D)  The equilibrium quantity of coffee will fall.

Question 17

Suppose that both the equilibrium price and quantity of ketchup fall. The most consistent explanation for these observations is:

Accepted Answer

A)  a decrease in demand for ketchup with no change in supply. 
B)  an increase in demand for ketchup with no change in supply. 
C)  an increase in demand for ketchup and a decrease in the supply of ketchup. 
D)  an increase in the supply of ketchup with no change in demand. 
A)  a decrease in demand for ketchup with no change in supply. 
B)  an increase in demand for ketchup with no change in supply. 
C)  an increase in demand for ketchup and a decrease in the supply of ketchup. 
D)  an increase in the supply of ketchup with no change in demand.

Question 18

Which of the following is NOT a characteristic of governmental rent controls?

Accepted Answer

A)  Equitable distribution of apartments. 
B)  Excess demand for apartments. 
C)  Fewer newly built apartment buildings. 
D)  Very low vacancy rates. 
A)  Equitable distribution of apartments. 
B)  Excess demand for apartments. 
C)  Fewer newly built apartment buildings. 
D)  Very low vacancy rates.

Question 19

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is ________ and the change in the equilibrium quantity is _________.

Accepted Answer

A)  positive; positive 
B)  positive; negative 
C)  positive; indeterminate 
D)  indeterminate; positive 
A)  positive; positive 
B)  positive; negative 
C)  positive; indeterminate 
D)  indeterminate; positive

Question 20

A demand curve is ________ sloping because __________________.

Accepted Answer

A)  downward; of increasing opportunity costs 
B)  upward; people prefer to purchase high-quality consumer goods 
C)  downward; reservation prices tend to fall over time 
D)  downward; fewer people are willing to buy an item at higher prices 
A)  downward; of increasing opportunity costs 
B)  upward; people prefer to purchase high-quality consumer goods 
C)  downward; reservation prices tend to fall over time 
D)  downward; fewer people are willing to buy an item at higher prices

The buyer's reservation price of a particular good or service is the:

Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _ because not all of the ___ are accounted for in the marketplace.

If, in a particular market, all unexploited opportunities have been realized, one can conclude that:

Which of the following is NOT a characteristic of a market in equilibrium?

The No Cash on the Table Principle asserts that:

If the price of computers increases and the demand for monitors decreases as a result, then:

In general, when the supply curve shifts to the left and demand is constant then:

Whether or not a good can be classified as a complement depends on whether;

Suppose that the production of oranges reduces global warming. The equilibrium price of oranges is _ because not all of the ___ are accounted for in the marketplace.

Last summer, real estate prices in your town soared. You started noticing more "For Sale" signs in your neighbors' yards. You conclude that:

A seller's reservation price is generally equal to:

Assume both the demand and the supply of bagels increase. Which of the following outcomes is certain to occur?

The supply curve illustrates that firms:

The demand curve illustrates the fact that consumers:

Suppose that the equilibrium price of French fries rises while the equilibrium quantity falls. The most consistent explanation for these observations is:

Assume the demand for coffee increases while the supply decreases. Which of the following outcomes is certain to occur?

Suppose that both the equilibrium price and quantity of ketchup fall. The most consistent explanation for these observations is:

Which of the following is NOT a characteristic of governmental rent controls?

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is and the change in the equilibrium quantity is _.

A demand curve is sloping because __________.

Thinking Like an Economist

Comparative Advantage

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Exam 3: Supply and Demand

The buyer's reservation price of a particular good or service is the:

Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _______ because not all of the _________ are accounted for in the marketplace.

If, in a particular market, all unexploited opportunities have been realized, one can conclude that:

Which of the following is NOT a characteristic of a market in equilibrium?

The No Cash on the Table Principle asserts that:

If the price of computers increases and the demand for monitors decreases as a result, then:

In general, when the supply curve shifts to the left and demand is constant then:

Whether or not a good can be classified as a complement depends on whether;

Suppose that the production of oranges reduces global warming. The equilibrium price of oranges is _______ because not all of the _________ are accounted for in the marketplace.

Last summer, real estate prices in your town soared. You started noticing more "For Sale" signs in your neighbors' yards. You conclude that:

A seller's reservation price is generally equal to:

Assume both the demand and the supply of bagels increase. Which of the following outcomes is certain to occur?

The supply curve illustrates that firms:

The demand curve illustrates the fact that consumers:

Suppose that the equilibrium price of French fries rises while the equilibrium quantity falls. The most consistent explanation for these observations is:

Assume the demand for coffee increases while the supply decreases. Which of the following outcomes is certain to occur?

Suppose that both the equilibrium price and quantity of ketchup fall. The most consistent explanation for these observations is:

Which of the following is NOT a characteristic of governmental rent controls?

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is ________ and the change in the equilibrium quantity is _________.

A demand curve is ________ sloping because __________________.

Thinking Like an Economist

Comparative Advantage

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _ because not all of the ___ are accounted for in the marketplace.

Suppose that the production of oranges reduces global warming. The equilibrium price of oranges is _ because not all of the ___ are accounted for in the marketplace.

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is and the change in the equilibrium quantity is _.

A demand curve is sloping because __________.