Question 1

In which of the following situations will both market clearing price 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 2

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 3

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

Question 4

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 5

In the 1970s,the government placed price ceilings on gasoline prices.A shortage of gasoline occurred,and long lines formed at the pumps.Some gas stations required that in addition to paying the price on the pump you had to buy a blank will.The action of having to purchase the will in order to purchase gas is known as

Accepted Answer

A) a surplus. 
B) a price support. 
C) the price system. 
D) a black market. 
A) a surplus. 
B) a price support. 
C) the price system. 
D) a black market.

Question 6

Which of the following is most likely to generate a surplus?

Accepted Answer

A) A price floor 
B) A price ceiling 
C) An illegal market 
D) All of these 
A) A price floor 
B) A price ceiling 
C) An illegal market 
D) All of these

Question 7

Rent control is an example of

Accepted Answer

A) a price floor. 
B) a price ceiling. 
C) the rationing function of prices not working. 
D) the government increasing the demand for certain products. 
A) a price floor. 
B) a price ceiling. 
C) the rationing function of prices not working. 
D) the government increasing the demand for certain products.

Question 8

A price floor set below the equilibrium price will cause which of the following?

Accepted Answer

A) an increase in demand 
B) a shortage 
C) a surplus 
D) none of the above 
A) an increase in demand 
B) a shortage 
C) a surplus 
D) none of the above

Question 9

Hospitals announce that there are not enough nurses available to keep them fully staffed.Economically speaking,what does this announcement mean?

Accepted Answer

A) The market wage for trained nurses is currently above the equilibrium wage. 
B) There is currently a surplus of nurses in this market. 
C) The market wage for nurses will eventually rise to the market clearing wage. 
D) The market will adjust very rapidly to correct this imbalance because anyone can be a nurse without any training. 
A) The market wage for trained nurses is currently above the equilibrium wage. 
B) There is currently a surplus of nurses in this market. 
C) The market wage for nurses will eventually rise to the market clearing wage. 
D) The market will adjust very rapidly to correct this imbalance because anyone can be a nurse without any training.

Question 10

All of the following result from price floors in agriculture EXCEPT

Accepted Answer

A) surpluses of agricultural products that have price floors. 
B) higher prices to consumers for agricultural products that have price floors. 
C) lower prices to consumers for agricultural products that have price floors. 
D) governmental bureaucracy. 
A) surpluses of agricultural products that have price floors. 
B) higher prices to consumers for agricultural products that have price floors. 
C) lower prices to consumers for agricultural products that have price floors. 
D) governmental bureaucracy.

Question 11

Prices in a market economy perform a rationing function because they reflect

Accepted Answer

A) the demand of all buyers in the market. 
B) the extent to which the goods are necessities. 
C) the strength of the supply curve. 
D) the relative scarcity of the goods. 
A) the demand of all buyers in the market. 
B) the extent to which the goods are necessities. 
C) the strength of the supply curve. 
D) the relative scarcity of the goods.

Question 12

What is the result of an agricultural support price established above the equilibrium price?

Accepted Answer

A) The market gravitates toward and remains in equilibrium. 
B) There will be excess quantity supplied of the product involved. 
C) There will be excess quantity demanded the product in this market. 
D) Since the support price is set above the equilibrium price,it will have no impact on the market price. 
A) The market gravitates toward and remains in equilibrium. 
B) There will be excess quantity supplied of the product involved. 
C) There will be excess quantity demanded the product in this market. 
D) Since the support price is set above the equilibrium price,it will have no impact on the market price.

Question 13

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 14

Rationing of resources,goods,and services

Accepted Answer

A) is not required under the price system. 
B) is required because of scarcity. 
C) must be done by the government. 
D) happens only when the price is zero. 
A) is not required under the price system. 
B) is required because of scarcity. 
C) must be done by the government. 
D) happens only when the price is zero.

Question 15

Voluntary exchange

Accepted Answer

A) will eliminate scarcity. 
B) is a nonprice rationing device. 
C) is trading so that the consumer and producers are better off. 
D) never involves transactions costs. 
A) will eliminate scarcity. 
B) is a nonprice rationing device. 
C) is trading so that the consumer and producers are better off. 
D) never involves transactions costs.

Question 16

After an increase in the demand for construction workers,the market will attain its new long-run equilibrium faster if

Accepted Answer

A) wages are flexible. 
B) wages are inflexible,forcing new people to enter the market. 
C) unions restrict the number of new construction workers. 
D) people ignore the shortage in the short run. 
A) wages are flexible. 
B) wages are inflexible,forcing new people to enter the market. 
C) unions restrict the number of new construction workers. 
D) people ignore the shortage in the short run.

Question 17

Would it take longer for a labor market to move to a new equilibrium for house painters or architects? Why?

Accepted Answer

It would take longer for the market for

Question 18

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price } \
\text { Per Phone }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Month }
\end{array} & \begin{array} { r } 
\text { Quantity Supplied } \
\text { Per Month }
\end{array} \
\hline \$ 400 & 2,000 & 12,000 \
375 & 3,000 & 11,000 \
350 & 4,000 & 10,000 \
325 & 5,000 & 9,000 \
300 & 6,000 & 8,000 \
275 & 7,000 & 7,000 \
250 & 8,000 & 6,000 \
225 & 9,000 & 5,000 \
200 & 10,000 & 4,000
\end{array}$$
-Refer to the above table.Suppose there are technological advances in the production of smartphones.The new equilibrium price will be

Accepted Answer

A) $275. 
B) $375. 
C) less than $275. 
D) between $275 and $375. 
A) $275. 
B) $375. 
C) less than $275. 
D) between $275 and $375.

Question 19

In the labor market,adjustments to changes in supply and demand

Accepted Answer

A) usually occur instantly. 
B) usually take time to occur. 
C) do not apply,since the labor market does not respond to supply and demand forces. 
D) do not apply,since wages in the labor market always go up. 
A) usually occur instantly. 
B) usually take time to occur. 
C) do not apply,since the labor market does not respond to supply and demand forces. 
D) do not apply,since wages in the labor market always go up.

Question 20

We cannot predict the effect on the market clearing price,but know that the equilibrium quantity will decrease when

Accepted Answer

A) supply increases and demand decreases 
B) supply decreases and demand increases. 
C) supply and demand for a product simultaneously decrease. 
D) supply and demand for a product simultaneously increase. 
A) supply increases and demand decreases 
B) supply decreases and demand increases. 
C) supply and demand for a product simultaneously decrease. 
D) supply and demand for a product simultaneously increase.

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

Price floors are designed to

An increase 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?

Which of the following is most likely to generate a surplus?

Rent control is an example of

A price floor set below the equilibrium price will cause which of the following?

Hospitals announce that there are not enough nurses available to keep them fully staffed.Economically speaking,what does this announcement mean?

All of the following result from price floors in agriculture EXCEPT

Prices in a market economy perform a rationing function because they reflect

What is the result of an agricultural support price established above the equilibrium price?

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

Rationing of resources,goods,and services

Voluntary exchange

After an increase in the demand for construction workers,the market will attain its new long-run equilibrium faster if

Would it take longer for a labor market to move to a new equilibrium for house painters or architects? Why?

In the labor market,adjustments to changes in supply and demand

We cannot predict the effect on the market clearing price,but know that the equilibrium quantity will decrease when

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

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

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Exam 3: Extensions of Demand and Supply Analysis

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

Price floors are designed to

An increase 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?

Which of the following is most likely to generate a surplus?

Rent control is an example of

A price floor set below the equilibrium price will cause which of the following?

Hospitals announce that there are not enough nurses available to keep them fully staffed.Economically speaking,what does this announcement mean?

All of the following result from price floors in agriculture EXCEPT

Prices in a market economy perform a rationing function because they reflect

What is the result of an agricultural support price established above the equilibrium price?

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

Rationing of resources,goods,and services

Voluntary exchange

After an increase in the demand for construction workers,the market will attain its new long-run equilibrium faster if

Would it take longer for a labor market to move to a new equilibrium for house painters or architects? Why?

In the labor market,adjustments to changes in supply and demand

We cannot predict the effect on the market clearing price,but know that the equilibrium quantity will decrease when

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

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