Question 1

Firms that produce 80 percent of all computer chips have shut down their facilities for maintenance.In the computer chip market this will lead to

Accepted Answer

A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity. 
A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity.

Question 2

Suppose that the current equilibrium price of gasoline is $5.50 per gallon and that the government passes a law that requires the price to be no more than $5 per gallon.What will be the effects?

Accepted Answer

The fall in price from $5.50 to $5.00 ca

Question 3

-Refer to the above figure.If a price floor of $5 was set,

Accepted Answer

A) the quantity sold would be 80 units. 
B) the quantity sold would be 60 units. 
C) the quantity demanded would be 100 units. 
D) there would be a shortage of 20 units. 
A) the quantity sold would be 80 units. 
B) the quantity sold would be 60 units. 
C) the quantity demanded would be 100 units. 
D) there would be a shortage of 20 units.

Question 4

The City Council of Happy Village is thinking about imposing rent controls.If they put rent controls in place,which constituency are they trying to please?

Accepted Answer

A) Landlords 
B) All taxpayers 
C) Existing tenants 
D) All voters 
A) Landlords 
B) All taxpayers 
C) Existing tenants 
D) All voters

Question 5

The market for gasoline in May is in equilibrium,at a market clearing price of $4.50 per gallon.After Memorial Day,the demand curve for gasoline increases,which causes

Accepted Answer

A) the demand curve for gasoline to shift to the right,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
B) the demand curve for gasoline to shift to the right,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
C) the demand curve for gasoline to shift to the left,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
D) the demand curve for gasoline to shift to the left,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
A) the demand curve for gasoline to shift to the right,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
B) the demand curve for gasoline to shift to the right,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall. 
C) the demand curve for gasoline to shift to the left,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to rise. 
D) the demand curve for gasoline to shift to the left,creating a shortage at $4.50 per gallon which causes the market clearing price of gasoline to fall.

Question 6

Holding supply constant,a reduction in demand leads to

Accepted Answer

A) lower prices and higher quantity supplied. 
B) lower prices and lower quantity supplied. 
C) higher prices and higher quantity supplied. 
D) higher prices and lower quantity supplied. 
A) lower prices and higher quantity supplied. 
B) lower prices and lower quantity supplied. 
C) higher prices and higher quantity supplied. 
D) higher prices and lower quantity supplied.

Question 7

Goods X and Y are complementary goods.An increase in the price of good X has occurred.In the market for good Y this will lead to

Accepted Answer

A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity. 
A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity.

Question 8

Suppose you observe that the price of a good increases and that the quantity of this good sold also increases.If only the demand curve or the supply curve shifts this suggests that

Accepted Answer

A) supply increased over time while demand remained the same. 
B) supply decreased over time while demand remained the same. 
C) demand increased over time while supply remained the same. 
D) demand decreased over time while supply remained the same. 
A) supply increased over time while demand remained the same. 
B) supply decreased over time while demand remained the same. 
C) demand increased over time while supply remained the same. 
D) demand decreased over time while supply remained the same.

Question 9

In a price system,changes in prices

Accepted Answer

A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more. 
A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more.

Question 10

The U.S.government imposes import quotas on many agricultural products,especially products that receive price supports.Offer an economic explanation for this.

Accepted Answer

If the price supports generate a price i

Question 11

If demand increases while supply simultaneously decreases,then the equilibrium quantity

Accepted Answer

A) always increases. 
B) always decreases. 
C) can never change. 
D) none of the above 
A) always increases. 
B) always decreases. 
C) can never change. 
D) none of the above

Question 12

In a market system,intermediaries in the exchange process are known as

Accepted Answer

A) producers. 
B) consumers. 
C) middlemen. 
D) free agents. 
A) producers. 
B) consumers. 
C) middlemen. 
D) free agents.

Question 13

The total gains from trade within a price system is

Accepted Answer

A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price. 
B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price. 
C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price. 
D) always equal to zero. 
A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price. 
B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price. 
C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price. 
D) always equal to zero.

Question 14

Some oil refineries were damaged by Hurricane Ike of 2008,leading to

Accepted Answer

A) a decrease in supply of gasoline. 
B) a decrease in quantity supplied of gasoline. 
C) a decrease in demand for gasoline. 
D) a decrease in quantity demanded for gasoline. 
A) a decrease in supply of gasoline. 
B) a decrease in quantity supplied of gasoline. 
C) a decrease in demand for gasoline. 
D) a decrease in quantity demanded for gasoline.

Question 15

Finding an apartment in New York City is difficult.People even scan the obituaries in the hopes of finding an apartment.Provide an economic explanation for this.

Accepted Answer

Rental rates in New York City are contro

Question 16

The more flexible prices are,the

Accepted Answer

A) greater demand shifts have to be to bring about a new equilibrium. 
B) larger the shifts in supply will be after a change in demand. 
C) greater the reliance by sellers to change the nominal price. 
D) more quickly a shock to the economy can be absorbed. 
A) greater demand shifts have to be to bring about a new equilibrium. 
B) larger the shifts in supply will be after a change in demand. 
C) greater the reliance by sellers to change the nominal price. 
D) more quickly a shock to the economy can be absorbed.

Question 17

Excess quantity demanded may result from

Accepted Answer

A) a government-imposed minimum price above market equilibrium. 
B) a government-imposed maximum price below market equilibrium. 
C) an oversupply of output. 
D) technological progress. 
A) a government-imposed minimum price above market equilibrium. 
B) a government-imposed maximum price below market equilibrium. 
C) an oversupply of output. 
D) technological progress.

Question 18

If demand and supply both decrease,

Accepted Answer

A) the equilibrium quantity definitely will decrease,and the market clearing price definitely will decrease. 
B) the equilibrium quantity definitely will decrease,and the market clearing price definitely will increase. 
C) the market clearing price definitely will decrease,but the change in the equilibrium quantity cannot be determined without more information. 
D) the equilibrium quantity definitely will decrease,but the change in market clearing price cannot be determined without more information. 
A) the equilibrium quantity definitely will decrease,and the market clearing price definitely will decrease. 
B) the equilibrium quantity definitely will decrease,and the market clearing price definitely will increase. 
C) the market clearing price definitely will decrease,but the change in the equilibrium quantity cannot be determined without more information. 
D) the equilibrium quantity definitely will decrease,but the change in market clearing price cannot be determined without more information.

Question 19

Which of the following statements is NOT true about exchanges in the market system?

Accepted Answer

A) In voluntary exchange both parties are better off because of the exchange. 
B) Exchanges occur only in situations of barter where the market price is irrelevant. 
C) Prices indicate what is relatively abundant and what is relatively scarce. 
D) Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information. 
A) In voluntary exchange both parties are better off because of the exchange. 
B) Exchanges occur only in situations of barter where the market price is irrelevant. 
C) Prices indicate what is relatively abundant and what is relatively scarce. 
D) Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information.

Question 20

The supply of eggs comes from chickens.The price of eggs will decrease if

Accepted Answer

A) the supply of chickens decreases. 
B) the supply of eggs decreases. 
C) the price of chickens increases. 
D) the demand for eggs decreases. 
A) the supply of chickens decreases. 
B) the supply of eggs decreases. 
C) the price of chickens increases. 
D) the demand for eggs decreases.

Exam 3: Extensions of Demand and Supply Analysis

Firms that produce 80 percent of all computer chips have shut down their facilities for maintenance.In the computer chip market this will lead to

Suppose that the current equilibrium price of gasoline is $5.50 per gallon and that the government passes a law that requires the price to be no more than $5 per gallon.What will be the effects?

-Refer to the above figure.If a price floor of $5 was set,

The City Council of Happy Village is thinking about imposing rent controls.If they put rent controls in place,which constituency are they trying to please?

The market for gasoline in May is in equilibrium,at a market clearing price of $4.50 per gallon.After Memorial Day,the demand curve for gasoline increases,which causes

Holding supply constant,a reduction in demand leads to

Goods X and Y are complementary goods.An increase in the price of good X has occurred.In the market for good Y this will lead to

Suppose you observe that the price of a good increases and that the quantity of this good sold also increases.If only the demand curve or the supply curve shifts this suggests that

In a price system,changes in prices

The U.S.government imposes import quotas on many agricultural products,especially products that receive price supports.Offer an economic explanation for this.

If demand increases while supply simultaneously decreases,then the equilibrium quantity

In a market system,intermediaries in the exchange process are known as

The total gains from trade within a price system is

Some oil refineries were damaged by Hurricane Ike of 2008,leading to

Finding an apartment in New York City is difficult.People even scan the obituaries in the hopes of finding an apartment.Provide an economic explanation for this.

The more flexible prices are,the

Excess quantity demanded may result from

If demand and supply both decrease,

Which of the following statements is NOT true about exchanges in the market system?

The supply of eggs comes from chickens.The price of eggs will decrease if

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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