Question 1

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Accepted Answer

A)  The demand curve for traditional camera film shifts to the right. 
B)  The quantity of traditional camera film demanded decreases. 
C)  The quantity of traditional camera film demanded increases. 
D)  The demand curve for traditional camera film shifts to the left. 
A)  The demand curve for traditional camera film shifts to the right. 
B)  The quantity of traditional camera film demanded decreases. 
C)  The quantity of traditional camera film demanded increases. 
D)  The demand curve for traditional camera film shifts to the left.

Question 2

Suppose you pre-ordered a non-refundable movie ticket to X-Men: Days of Future Past.On the day of the movie you decide that you would rather not go to the movie.According to economists,what is the rational thing to do?

Accepted Answer

A)  Since the cost of the movie ticket is a sunk cost, it should not influence your decision. Your decision should be based solely on whether you want to see the movie or not. 
B)  You should not waste resources. Since you have paid for the ticket you should watch the movie. 
C)  You should go to the movie to minimise your losses. 
D)  You should go to the movie to maximise your utility. 
A)  Since the cost of the movie ticket is a sunk cost, it should not influence your decision. Your decision should be based solely on whether you want to see the movie or not. 
B)  You should not waste resources. Since you have paid for the ticket you should watch the movie. 
C)  You should go to the movie to minimise your losses. 
D)  You should go to the movie to maximise your utility.

Question 3

Danielle Ocean pays for monthly pool maintenance for her home swimming pool.Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals.How is the market for pool maintenance services affected by this?

Accepted Answer

A)  There is an increase in the supply of pool maintenance services. 
B)  There is a decrease in the demand for pool maintenance services. 
C)  There is a decrease in the quantity of pool maintenance services supplied. 
D)  There is a decrease in the supply of pool maintenance services. 
A)  There is an increase in the supply of pool maintenance services. 
B)  There is a decrease in the demand for pool maintenance services. 
C)  There is a decrease in the quantity of pool maintenance services supplied. 
D)  There is a decrease in the supply of pool maintenance services.

Question 4

A positive technological change will cause the supply of a good to increase.

Accepted Answer

A) True 
 B)False

Question 5

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

Accepted Answer

A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good. 
A)  an inferior good. 
B)  a neutral good. 
C)  a necessity. 
D)  a normal good.

Question 6

Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time.In less than a week she discovered that the shoes were uncomfortable.Grace went back to wearing her old pair and stashed away the new pair.When asked by her boss,Mme.Ramotswe,why she does not simply give away the new pair,she said: 'But I paid so much for them.' Grace's behaviour

Accepted Answer

A)  is rational: she should not discard a valuable item. 
B)  ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not. 
C)  supports the endowment effect which states that ownership of an item makes it more valuable. 
D)  is rational because the more you pay for an item the more valuable it is. 
A)  is rational: she should not discard a valuable item. 
B)  ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not. 
C)  supports the endowment effect which states that ownership of an item makes it more valuable. 
D)  is rational because the more you pay for an item the more valuable it is.

Question 7

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Accepted Answer

A)  A decrease in demand and an increase in supply. 
B)  An increase in supply. 
C)  An increase in supply and an increase in demand greater than the increase in supply. 
D)  A decrease in demand and a decrease in supply. 
A)  A decrease in demand and an increase in supply. 
B)  An increase in supply. 
C)  An increase in supply and an increase in demand greater than the increase in supply. 
D)  A decrease in demand and a decrease in supply.

Question 8

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

Accepted Answer

A)  An increase in the price of olive oil presses. 
B)  A decrease in the cost of transporting olive oil to markets. 
C)  An increase in the price of land used to plant olives. 
D)  Research finds that consumption of olive oil reduces the risk of heart disease. 
A)  An increase in the price of olive oil presses. 
B)  A decrease in the cost of transporting olive oil to markets. 
C)  An increase in the price of land used to plant olives. 
D)  Research finds that consumption of olive oil reduces the risk of heart disease.

Question 9

In a perfectly competitive market,there are ________ buyers and ________ sellers.

Accepted Answer

A)  many; few 
B)  few; many 
C)  many; many 
D)  few; few 
A)  many; few 
B)  few; many 
C)  many; many 
D)  few; few

Question 10

What is the endowment effect?

Accepted Answer

A)  The tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than what they would be willing to pay to buy the good if they did not already own it. 
B)  The tendency of people to be unwilling to sell something they already own because of its sentimental value. 
C)  The tendency of people to overstate the value of a good they already own even though similar items can be purchased at a lower price. 
D)  The sum total of assets that a person has acquired over the years. 
A)  The tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than what they would be willing to pay to buy the good if they did not already own it. 
B)  The tendency of people to be unwilling to sell something they already own because of its sentimental value. 
C)  The tendency of people to overstate the value of a good they already own even though similar items can be purchased at a lower price. 
D)  The sum total of assets that a person has acquired over the years.

Question 11

Table 3-1
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price per } \
\text { Bushel (\$) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (bushels) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (bushels) }
\end{array} \
\hline 3 & 30000 & 0 \
\hline 6 & 26000 & 4000 \
\hline 9 & 22000 & 9000 \
\hline 12 & 18000 & 12000 \
\hline 15 & 15000 & 15000 \
\hline 18 & 12000 & 22000 \
\hline 21 & 8000 & 28000 \
\hline 24 & 4000 & 36000 \
\hline
\end{array}$$
-Refer to Table 3-1.The table contains information about the corn market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of corn?
b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $9 per bushel?
e.If the market price is $9 per bushel,what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 22 000 bushels of corn?
g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $21 per bushel?
j.If the market price is $21 per bushel,what must happen to restore equilibrium in the market?

Accepted Answer

a.Equilibrium price = $15; Equilibrium q

Question 12

Behavioural economists examine choices that consumers make that are not economically rational.Economists generally assume that people are rational; that is,they weigh the benefits and costs of an action and choose an action only if the benefits outweigh the costs.Why do consumers not act rationally when the result is that they make themselves worse off?

Accepted Answer

Most people who do not act rationally do

Question 13

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

Accepted Answer

A) True 
 B)False

Question 14

A change in all of the following variables will change the market demand for a product except

Accepted Answer

A)  the price of the product. 
B)  population and demographics. 
C)  income. 
D)  tastes. 
A)  the price of the product. 
B)  population and demographics. 
C)  income. 
D)  tastes.

Question 15

The phrase 'demand has decreased' means that

Accepted Answer

A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right. 
A)  a demand curve has shifted to the left. 
B)  there has been an upward movement along a demand curve. 
C)  there has been a downward movement along a demand curve. 
D)  a demand curve has shifted to the right.

Question 16

Figure 3-6 Canvas Tote Bags  
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

Accepted Answer

A)  There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. 
B)  There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. 
C)  There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. 
D)  There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. 
A)  There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. 
B)  There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. 
C)  There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. 
D)  There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Question 17

Figure 3-2  
-Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1. 
A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1.

Question 18

Figure 3-1  
-Refer to Figure 3-1.A decrease in taste or preference for the product would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1. 
A)  A to B. 
B)  B to A. 
C)  D1 to D2. 
D)  D2 to D1.

Question 19

A sunk cost is

Accepted Answer

A)  another term that means opportunity cost. 
B)  a term used to describe the cost of capital that the owners of a firm sink into their business. 
C)  the highest-valued alternative that must be given up to engage in an activity. 
D)  a cost that has already been paid and cannot be recovered. 
A)  another term that means opportunity cost. 
B)  a term used to describe the cost of capital that the owners of a firm sink into their business. 
C)  the highest-valued alternative that must be given up to engage in an activity. 
D)  a cost that has already been paid and cannot be recovered.

Question 20

If the price of orchids falls,the substitution effect due to the price change will cause

Accepted Answer

A)  an increase in the demand for orchids. 
B)  an increase in the demand for roses, a substitute for orchids. 
C)  an increase in the quantity demanded of orchids. 
D)  an increase in the quantity supplied of orchids. 
A)  an increase in the demand for orchids. 
B)  an increase in the demand for roses, a substitute for orchids. 
C)  an increase in the quantity demanded of orchids. 
D)  an increase in the quantity supplied of orchids.

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Suppose you pre-ordered a non-refundable movie ticket to X-Men: Days of Future Past.On the day of the movie you decide that you would rather not go to the movie.According to economists,what is the rational thing to do?

A positive technological change will cause the supply of a good to increase.

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

In a perfectly competitive market,there are buyers and sellers.

What is the endowment effect?

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

A change in all of the following variables will change the market demand for a product except

The phrase 'demand has decreased' means that

Figure 3-6 Canvas Tote Bags -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

Figure 3-2 -Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

Figure 3-1 -Refer to Figure 3-1.A decrease in taste or preference for the product would be represented by a movement from

A sunk cost is

If the price of orchids falls,the substitution effect due to the price change will cause

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Suppose you pre-ordered a non-refundable movie ticket to X-Men: Days of Future Past.On the day of the movie you decide that you would rather not go to the movie.According to economists,what is the rational thing to do?

A positive technological change will cause the supply of a good to increase.

If an increase in income leads to a decrease in the demand for popcorn,then popcorn is

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

In a perfectly competitive market,there are ________ buyers and ________ sellers.

What is the endowment effect?

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

A change in all of the following variables will change the market demand for a product except

The phrase 'demand has decreased' means that

Figure 3-6 Canvas Tote Bags -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

Figure 3-2 -Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

Figure 3-1 -Refer to Figure 3-1.A decrease in taste or preference for the product would be represented by a movement from

A sunk cost is

If the price of orchids falls,the substitution effect due to the price change will cause

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

In a perfectly competitive market,there are buyers and sellers.