Question 1

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Accepted Answer

A)  a neutral good. 
B)  a normal good. 
C)  a necessity. 
D)  a complement. 
A)  a neutral good. 
B)  a normal good. 
C)  a necessity. 
D)  a complement.

Question 2

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Accepted Answer

A)  Demand will increase, but these two factors will not shift the supply curve. 
B)  Supply will increase, but these two factors will not shift the demand curve. 
C)  Demand and supply will both increase. 
D)  Demand will increase and supply will decrease. 
A)  Demand will increase, but these two factors will not shift the supply curve. 
B)  Supply will increase, but these two factors will not shift the demand curve. 
C)  Demand and supply will both increase. 
D)  Demand will increase and supply will decrease.

Question 3

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 4

Figure 3-7  
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 5

In response to a surplus the market price of a good will fall; as the price falls,the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Accepted Answer

A) True 
 B)False

Question 6

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

Accepted Answer

A)  The demand for Booth letters decreases. 
B)  The supply of Lincoln letters increases. 
C)  The demand for Lincoln letters increases and the supply of Booth letters increases. 
D)  The demand for Lincoln letters decreases and the demand for Booth letters increases.. 
A)  The demand for Booth letters decreases. 
B)  The supply of Lincoln letters increases. 
C)  The demand for Lincoln letters increases and the supply of Booth letters increases. 
D)  The demand for Lincoln letters decreases and the demand for Booth letters increases..

Question 7

Table 3-2
  
-Refer to Table 3-2.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 8

A supply schedule

Accepted Answer

A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C)  is the relationship between the supply of a good and the cost of producing the good. 
D)  is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. 
A)  is a table that shows the relationship between the price of a product and the quantity of the product supplied. 
B)  is a curve that shows the relationship between the price of a product and the quantity of the product supplied. 
C)  is the relationship between the supply of a good and the cost of producing the good. 
D)  is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Question 9

Figure 3-6  
-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 statement 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.

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

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

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

In response to a surplus the market price of a good will fall; as the price falls,the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

A supply schedule

Figure 3-6 -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 statement is true?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

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

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

In response to a surplus the market price of a good will fall; as the price falls,the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

A supply schedule

Figure 3-6 -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 statement is true?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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