Question 1

Figure 4-E  
-An increase in the expected future price of a good may act to increase the present price of the good.

Accepted Answer

A) True 
 B)False  True

Question 2

For a given decrease in demand, the effect on price is smallest and the effect on quantity exchanged largest when:

Accepted Answer

A) supply is perfectly elastic. 
B) supply is elastic. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is perfectly inelastic. 
A) supply is perfectly elastic. 
B) supply is elastic. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is perfectly inelastic. A

Question 3

Based on the graph below, what is the sum of consumer surplus and producer surplus for the 10th unit bought/sold?

Accepted Answer

A) $3.50 
B) $5.00 
C) $6.25 
D) $25.00 
E) $50.00 
A) $3.50 
B) $5.00 
C) $6.25 
D) $25.00 
E) $50.00 A

Question 4

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:

Accepted Answer

A) largely by the sellers of apples. 
B) largely by the buyers of apples. 
C) equally by the sellers and buyers of apples. 
D) by the government. 
A) largely by the sellers of apples. 
B) largely by the buyers of apples. 
C) equally by the sellers and buyers of apples. 
D) by the government.

Question 5

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

Accepted Answer

A) An increase in demand. 
B) A decrease in demand. 
C) An increase in supply. 
D) A decrease in supply. 
E) None of the above; there is no surplus. 
A) An increase in demand. 
B) A decrease in demand. 
C) An increase in supply. 
D) A decrease in supply. 
E) None of the above; there is no surplus.

Question 6

Based on the table below, what is the total amount of producer surplus assuming this market reaches equilibrium? $\begin{array}{lcc}
\underline{\text { Price } }&\underline{ \text { Quantity Demanded }} & \underline{\text { Quantity Supplied }} \
\$ 1.00 & 7 & 1 \
\$ 2.00 & 6 & 2 \
\$ 3.00 & 5 & 3 \
\$ 4.00 & 4 & 4 \
\$ 5.00 & 3 & 5 \
\$6.00 & 2 & 6 \
\$ 7.00 & 1 & 7
\end{array}$

Accepted Answer

A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00 
E) $10.00 
A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00 
E) $10.00

Question 7

Which of the following would most likely feature elastic demand?

Accepted Answer

A) heart surgery 
B) a required textbook 
C) fresh green beans 
D) all of the above 
E) none of the above 
A) heart surgery 
B) a required textbook 
C) fresh green beans 
D) all of the above 
E) none of the above

Question 8

Figure 4-E  
-If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right.

Accepted Answer

A) True 
 B)False

Question 9

Figure 4-E  
-An increase in both the equilibrium price and the equilibrium quantity of a good could not have been caused by a shift in supply.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-E  
-Differentiate between a change in quantity demanded and a change in demand.

Accepted Answer

A change in a good's own, current price

Question 11

Figure 4-E  
-Price reductions will usually result whenever the quantity supplied exceeds the quantity demanded at the current price.

Accepted Answer

A) True 
 B)False

Question 12

Table 4-D
Miles demands jazz CDs according to the following demand schedule:
 $$\begin{array} { c c } 
\text { Price af jazz CDs } & \text { Qurantity of jazz CDs } \
\$ 30 & 1 \
\$ 25 & 2 \
\$ 20 & 3 \
\$ 15 & 4 \
\$ 10 & 5
\end{array}$$
-Refer to Table 4-D.If in the schedule, consumer surplus equals $5, the market price of a jazz CD is:

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $25. 
E) $30. 
A) $10. 
B) $15. 
C) $20. 
D) $25. 
E) $30.

Question 13

If the supply curve for a product is vertical, then the elasticity of supply is:

Accepted Answer

A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity. 
A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity.

Question 14

If the government wanted to reduce the quantity of a good traded, it could do so by:

Accepted Answer

A) setting a price ceiling for the good below the equilibrium price. 
B) setting a price floor for the good above the equilibrium price. 
C) tax the good more heavily. 
D) tax an input used intensively in the industry more heavily. 
E) doing any of the above. 
A) setting a price ceiling for the good below the equilibrium price. 
B) setting a price floor for the good above the equilibrium price. 
C) tax the good more heavily. 
D) tax an input used intensively in the industry more heavily. 
E) doing any of the above.

Question 15

A secondary effect of an action that may occur after the initial effects is known as a(n):

Accepted Answer

A) direct effect. 
B) inverse effect. 
C) correlated consequence. 
D) unintended consequence. 
E) indirect conclusion. 
A) direct effect. 
B) inverse effect. 
C) correlated consequence. 
D) unintended consequence. 
E) indirect conclusion.

Question 16

What type of demand curve is depicted by the graph below?

Accepted Answer

A) perfectly elastic 
B) relatively elastic 
C) unit elastic 
D) relatively inelastic 
E) perfectly inelastic 
A) perfectly elastic 
B) relatively elastic 
C) unit elastic 
D) relatively inelastic 
E) perfectly inelastic

Question 17

If the elasticity of demand coefficient for a good is one-sixth (in absolute terms), we know:

Accepted Answer

A) that for every 1% increase in quantity, there will be a 6% increase in price. 
B) that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) that for every 6% increase in quantity, there will be a 1% increase in price. 
D) that for every 6% increase in quantity, there will be a 1% decrease in price. 
A) that for every 1% increase in quantity, there will be a 6% increase in price. 
B) that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) that for every 6% increase in quantity, there will be a 1% increase in price. 
D) that for every 6% increase in quantity, there will be a 1% decrease in price.

Question 18

Exhibit 4-C  
-Refer to Exhibit 4-C.With reference to Graph B, at a price of $5, total revenue equals:

Accepted Answer

A) $200. 
B) $300. 
C) $250. 
D) $150. 
A) $200. 
B) $300. 
C) $250. 
D) $150.

Question 19

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

Accepted Answer

A) quantity demanded will increase proportionately 
B) quantity demanded will fall to zero 
C) quantity demanded will register a disproportionately high increase 
D) quantity demanded will decrease proportionately 
E) quantity demanded will remain the same 
A) quantity demanded will increase proportionately 
B) quantity demanded will fall to zero 
C) quantity demanded will register a disproportionately high increase 
D) quantity demanded will decrease proportionately 
E) quantity demanded will remain the same

Question 20

A decrease in the current minimum wage would:

Accepted Answer

A) decrease employment for low skill workers. 
B) increase firm's demand curves for low skill workers. 
C) increase the supply of low skill workers. 
D) decrease the incomes of some low skill workers. 
E) do none of the above. 
A) decrease employment for low skill workers. 
B) increase firm's demand curves for low skill workers. 
C) increase the supply of low skill workers. 
D) decrease the incomes of some low skill workers. 
E) do none of the above.

Figure 4-E -An increase in the expected future price of a good may act to increase the present price of the good.

For a given decrease in demand, the effect on price is smallest and the effect on quantity exchanged largest when:

Based on the graph below, what is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

Based on the table below, what is the total amount of producer surplus assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7

Which of the following would most likely feature elastic demand?

Figure 4-E -If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right.

Figure 4-E -An increase in both the equilibrium price and the equilibrium quantity of a good could not have been caused by a shift in supply.

Figure 4-E -Differentiate between a change in quantity demanded and a change in demand.

Figure 4-E -Price reductions will usually result whenever the quantity supplied exceeds the quantity demanded at the current price.

Table 4-D Miles demands jazz CDs according to the following demand schedule: Price af jazz CDs Qurantity of jazz CDs \ 30 1 \ 25 2 \ 20 3 \ 15 4 \ 10 5 -Refer to Table 4-D.If in the schedule, consumer surplus equals $5, the market price of a jazz CD is:

If the supply curve for a product is vertical, then the elasticity of supply is:

If the government wanted to reduce the quantity of a good traded, it could do so by:

A secondary effect of an action that may occur after the initial effects is known as a(n):

What type of demand curve is depicted by the graph below?

If the elasticity of demand coefficient for a good is one-sixth (in absolute terms), we know:

Exhibit 4-C -Refer to Exhibit 4-C.With reference to Graph B, at a price of $5, total revenue equals:

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

A decrease in the current minimum wage would:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 4: Using Supply and Demand

Figure 4-E -An increase in the expected future price of a good may act to increase the present price of the good.

For a given decrease in demand, the effect on price is smallest and the effect on quantity exchanged largest when:

Based on the graph below, what is the sum of consumer surplus and producer surplus for the 10th unit bought/sold?

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

Based on the table below, what is the total amount of producer surplus assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7

Which of the following would most likely feature elastic demand?

Figure 4-E -If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right.

Figure 4-E -An increase in both the equilibrium price and the equilibrium quantity of a good could not have been caused by a shift in supply.

Figure 4-E -Differentiate between a change in quantity demanded and a change in demand.

Figure 4-E -Price reductions will usually result whenever the quantity supplied exceeds the quantity demanded at the current price.

Table 4-D Miles demands jazz CDs according to the following demand schedule: Price af jazz CDs Qurantity of jazz CDs \ 30 1 \ 25 2 \ 20 3 \ 15 4 \ 10 5 -Refer to Table 4-D.If in the schedule, consumer surplus equals $5, the market price of a jazz CD is:

If the supply curve for a product is vertical, then the elasticity of supply is:

If the government wanted to reduce the quantity of a good traded, it could do so by:

A secondary effect of an action that may occur after the initial effects is known as a(n):

What type of demand curve is depicted by the graph below?

If the elasticity of demand coefficient for a good is one-sixth (in absolute terms), we know:

Exhibit 4-C -Refer to Exhibit 4-C.With reference to Graph B, at a price of $5, total revenue equals:

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

A decrease in the current minimum wage would:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Based on the graph below, what is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?