Question 1

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

Accepted Answer

A) greater demand. 
B) lower excess demands. 
C) higher prices. 
D) long queues. 
A) greater demand. 
B) lower excess demands. 
C) higher prices. 
D) long queues.

Question 2

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

Question 3

If the government should decide to legalize marijuana,all other things remaining the same,we should expect to see

Accepted Answer

A) a decrease in the price of marijuana. 
B) an increase in the price of marijuana. 
C) a decrease in the demand for marijuana. 
D) an increase in the use of imported versus domestic marijuana. 
A) a decrease in the price of marijuana. 
B) an increase in the price of marijuana. 
C) a decrease in the demand for marijuana. 
D) an increase in the use of imported versus domestic marijuana.

Question 4

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well.If only the demand curve or the supply curve shifts,this suggests that

Accepted Answer

A) movies are a normal good and incomes have increased. 
B) high salaries for Hollywood actors have increased the cost of movie making. 
C) movie theaters have experienced an increase in their operating costs due to increases in the minimum wage. 
D) admission prices for other types of entertainment,such as live shows and sporting events,have also declined. 
A) movies are a normal good and incomes have increased. 
B) high salaries for Hollywood actors have increased the cost of movie making. 
C) movie theaters have experienced an increase in their operating costs due to increases in the minimum wage. 
D) admission prices for other types of entertainment,such as live shows and sporting events,have also declined.

Question 5

Suppose you are told that the equilibrium price of gasoline has increased,while the equilibrium quantity of gasoline has fallen.You are also told that either the demand changed or supply changed,but not both.Which of the following must have occurred?

Accepted Answer

A) Demand increased. 
B) Demand decreased. 
C) Supply increased. 
D) Supply decreased. 
A) Demand increased. 
B) Demand decreased. 
C) Supply increased. 
D) Supply decreased.

Question 6

An example of a black market is

Accepted Answer

A) the market for high fashions. 
B) the hiring of undocumented workers. 
C) a farmer's market. 
D) a discount market. 
A) the market for high fashions. 
B) the hiring of undocumented workers. 
C) a farmer's market. 
D) a discount market.

Question 7

Suppose there is a simultaneous increase in the demand for wheat and increase in the supply of wheat.Which of the following will occur as a result of these simultaneous events?

Accepted Answer

A) Both the market clearing price and equilibrium quantity will rise. 
B) The market clearing price will fall,but the equilibrium quantity will rise. 
C) The market clearing price may rise,fall,or stay the same,but the equilibrium quantity will rise. 
D) The market clearing price will fall,but the equilibrium quantity may rise,fall,or stay the same. 
A) Both the market clearing price and equilibrium quantity will rise. 
B) The market clearing price will fall,but the equilibrium quantity will rise. 
C) The market clearing price may rise,fall,or stay the same,but the equilibrium quantity will rise. 
D) The market clearing price will fall,but the equilibrium quantity may rise,fall,or stay the same.

Question 8

Who benefits primarily from rent controls?

Accepted Answer

A) Construction workers 
B) Poor people looking for low-income housing 
C) All who want to rent 
D) Only renters who are able to get units at below-market rates 
A) Construction workers 
B) Poor people looking for low-income housing 
C) All who want to rent 
D) Only renters who are able to get units at below-market rates

Question 9

The gains from trade within a price system is

Accepted Answer

A) the sum of consumer surplus and producer surplus. 
B) consumer surplus less producer surplus. 
C) consumer surplus divided by producer surplus. 
D) consumer surplus multiplied by producer surplus. 
A) the sum of consumer surplus and producer surplus. 
B) consumer surplus less producer surplus. 
C) consumer surplus divided by producer surplus. 
D) consumer surplus multiplied by producer surplus.

Question 10

If a price ceiling were established above the equilibrium price,

Accepted Answer

A) it would have no effect on the quantity demanded. 
B) it would create a shortage. 
C) it would create a surplus. 
D) none of the above. 
A) it would have no effect on the quantity demanded. 
B) it would create a shortage. 
C) it would create a surplus. 
D) none of the above.

Question 11

Price ceilings often generate

Accepted Answer

A) market clearing prices. 
B) rapid increases in supply to meet the excess demand. 
C) equilibriums that utilize rationing by price. 
D) black markets. 
A) market clearing prices. 
B) rapid increases in supply to meet the excess demand. 
C) equilibriums that utilize rationing by price. 
D) black markets.

Question 12

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

Accepted Answer

A) An increase in demand pushes up the market clearing price of roses. 
B) People buying the roses are irrational. 
C) Roses are not subject to the law of demand. 
D) Florists know that there are no substitutes for roses,so they take advantage of consumers on Valentine's Day. 
A) An increase in demand pushes up the market clearing price of roses. 
B) People buying the roses are irrational. 
C) Roses are not subject to the law of demand. 
D) Florists know that there are no substitutes for roses,so they take advantage of consumers on Valentine's Day.

Question 13

In September 2005,destruction to U.S.gasoline refineries was caused by back-to-back storms along the U.S.Gulf Coast-Hurricane Katrina and Hurricane Rita.In one week,the average price of a gallon of gasoline in the United States increased by about 40 cents.Which of the following best explains why these events pushed up the price of gasoline?

Accepted Answer

A) The demand curve for gasoline shifted to the left along the supply curve for gasoline. 
B) The supply curve for gasoline shifted to the left along the demand curve for gasoline. 
C) The demand curve for gasoline shifted to the right along the supply curve for gasoline. 
D) The supply curve for gasoline shifted to the right along the demand curve for gasoline. 
A) The demand curve for gasoline shifted to the left along the supply curve for gasoline. 
B) The supply curve for gasoline shifted to the left along the demand curve for gasoline. 
C) The demand curve for gasoline shifted to the right along the supply curve for gasoline. 
D) The supply curve for gasoline shifted to the right along the demand curve for gasoline.

Question 14

When are black markets likely to arise?

Accepted Answer

A) when the government removes a price floor 
B) when the government enforces a price ceiling 
C) when there is a surplus of a good 
D) when the quantity supplied of a good exceeds the quantity demanded 
A) when the government removes a price floor 
B) when the government enforces a price ceiling 
C) when there is a surplus of a good 
D) when the quantity supplied of a good exceeds the quantity demanded

Question 15

Which of the following is NOT an attempt to evade rent controls?

Accepted Answer

A) Make life unpleasant for tenants 
B) Require tenants to get furniture from the landlord 
C) Subletting 
D) Using the courts to challenge the sublease of a tenant 
A) Make life unpleasant for tenants 
B) Require tenants to get furniture from the landlord 
C) Subletting 
D) Using the courts to challenge the sublease of a tenant

Question 16

A black market

Accepted Answer

A) can arise when government imposes a price ceiling below the market clearing price. 
B) can arise when government imposes a price floor below the market clearing price. 
C) was created when after hours trading was permitted on some stock exchanges. 
D) is a market where products with outdated expiration dates are sold. 
A) can arise when government imposes a price ceiling below the market clearing price. 
B) can arise when government imposes a price floor below the market clearing price. 
C) was created when after hours trading was permitted on some stock exchanges. 
D) is a market where products with outdated expiration dates are sold.

Question 17

Which of the following will tend to occur when a surplus exists in a market?

Accepted Answer

A) supply will increase and demand will decrease until the surplus disappears. 
B) supply will decrease and demand will increase until the surplus disappears. 
C) the price will tend to rise over time. 
D) the price will tend to decrease over time. 
A) supply will increase and demand will decrease until the surplus disappears. 
B) supply will decrease and demand will increase until the surplus disappears. 
C) the price will tend to rise over time. 
D) the price will tend to decrease over time.

Question 18

An import quota is an example of

Accepted Answer

A) a price ceiling. 
B) a price floor. 
C) a queuing device. 
D) a quantity restriction. 
A) a price ceiling. 
B) a price floor. 
C) a queuing device. 
D) a quantity restriction.

Question 19

The price of a good always changes when

Accepted Answer

A) either a shortage or a surplus occurs. 
B) quantity demanded and quantity supplied are constant. 
C) there is an increase in demand and an increase in supply. 
D) there is a decrease in demand and a decrease in supply. 
A) either a shortage or a surplus occurs. 
B) quantity demanded and quantity supplied are constant. 
C) there is an increase in demand and an increase in supply. 
D) there is a decrease in demand and a decrease in supply.

Question 20

The gains from consumer surplus and producer surplus occur when

Accepted Answer

A) both consumers and producers engage in voluntary exchange. 
B) consumers are willing to buy a good but producers are not willing to provide it. 
C) producers are willing to provide a good but consumers are not willing to pay for it. 
D) the government supplies the good instead of firms. 
A) both consumers and producers engage in voluntary exchange. 
B) consumers are willing to buy a good but producers are not willing to provide it. 
C) producers are willing to provide a good but consumers are not willing to pay for it. 
D) the government supplies the good instead of firms.

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

A decrease in demand and an increase in supply will lead to

If the government should decide to legalize marijuana,all other things remaining the same,we should expect to see

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well.If only the demand curve or the supply curve shifts,this suggests that

Suppose you are told that the equilibrium price of gasoline has increased,while the equilibrium quantity of gasoline has fallen.You are also told that either the demand changed or supply changed,but not both.Which of the following must have occurred?

An example of a black market is

Suppose there is a simultaneous increase in the demand for wheat and increase in the supply of wheat.Which of the following will occur as a result of these simultaneous events?

Who benefits primarily from rent controls?

The gains from trade within a price system is

If a price ceiling were established above the equilibrium price,

Price ceilings often generate

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

When are black markets likely to arise?

Which of the following is NOT an attempt to evade rent controls?

A black market

Which of the following will tend to occur when a surplus exists in a market?

An import quota is an example of

The price of a good always changes when

The gains from consumer surplus and producer surplus occur 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

Exam 3: Extensions of Demand and Supply Analysis

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

A decrease in demand and an increase in supply will lead to

If the government should decide to legalize marijuana,all other things remaining the same,we should expect to see

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well.If only the demand curve or the supply curve shifts,this suggests that

Suppose you are told that the equilibrium price of gasoline has increased,while the equilibrium quantity of gasoline has fallen.You are also told that either the demand changed or supply changed,but not both.Which of the following must have occurred?

An example of a black market is

Suppose there is a simultaneous increase in the demand for wheat and increase in the supply of wheat.Which of the following will occur as a result of these simultaneous events?

Who benefits primarily from rent controls?

The gains from trade within a price system is

If a price ceiling were established above the equilibrium price,

Price ceilings often generate

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

When are black markets likely to arise?

Which of the following is NOT an attempt to evade rent controls?

A black market

Which of the following will tend to occur when a surplus exists in a market?

An import quota is an example of

The price of a good always changes when

The gains from consumer surplus and producer surplus occur 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