Question 1

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 2

Suppose Brad Pitts and Angelina Jolie wear matching platinum jewelry in their new movie.After the movie is released,suppose that consumers increase their demand for the jewelry and at the same time manufacturers increase the supply of the jewelry.As a result,

Accepted Answer

A) the equilibrium quantity will increase,and there is an indeterminate change in the equilibrium price. 
B) the equilibrium quantity and price are both indeterminate. 
C) the equilibrium quantity will decrease,and the equilibrium price will increase. 
D) the equilibrium price and quantity will both decrease. 
A) the equilibrium quantity will increase,and there is an indeterminate change in the equilibrium price. 
B) the equilibrium quantity and price are both indeterminate. 
C) the equilibrium quantity will decrease,and the equilibrium price will increase. 
D) the equilibrium price and quantity will both decrease.

Question 3

In a freely operating market system,queuing is most likely to occur when

Accepted Answer

A) selling necessities. 
B) the market clearing price increases. 
C) demand fluctuates unpredictably and quickly. 
D) demand increases gradually over time. 
A) selling necessities. 
B) the market clearing price increases. 
C) demand fluctuates unpredictably and quickly. 
D) demand increases gradually over time.

Question 4

Garbanzo Beans  
-Consider the above table.Assuming the government imposes a price ceiling on garbanzo beans of $4,what would be the likely result?

Accepted Answer

A) a surplus of 2,000 garbanzo beans 
B) a shortage of 2,000 garbanzo beans 
C) no change,equilibrium would prevail 
D) The quantity demanded of garbanzo beans would fall to zero. 
A) a surplus of 2,000 garbanzo beans 
B) a shortage of 2,000 garbanzo beans 
C) no change,equilibrium would prevail 
D) The quantity demanded of garbanzo beans would fall to zero.

Question 5

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

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 6

If an excess quantity of labor demanded exists in a free market,there is a tendency for

Accepted Answer

A) quantity supplied to rise. 
B) the wage rate to fall. 
C) quantity demanded to fall. 
D) the wage rate to rise. 
A) quantity supplied to rise. 
B) the wage rate to fall. 
C) quantity demanded to fall. 
D) the wage rate to rise.

Question 7

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 8

The price of milk increases.Which of the following is NOT part of the likely chain of events that follows from this price change?

Accepted Answer

A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers. 
A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers.

Question 9

If equilibrium price falls and the equilibrium quantity of the good purchased decreases,what has happened to either the supply curve or to the demand curve?

Accepted Answer

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

Question 10

Consumer surplus is

Accepted Answer

A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay. 
B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. 
C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. 
D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item. 
A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay. 
B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. 
C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. 
D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item.

Question 11

Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?

Accepted Answer

A) an increase in the quantity of rental housing supplied 
B) a decrease in the quantity of rental housing demanded 
C) a black market in rental housing 
D) a surplus of rental housing 
A) an increase in the quantity of rental housing supplied 
B) a decrease in the quantity of rental housing demanded 
C) a black market in rental housing 
D) a surplus of rental housing

Question 12

A limit on the amount of strawberries that can be imported into the United States is an example of

Accepted Answer

A) the rationing function of prices protecting domestic strawberry farmers. 
B) a price floor set by the government. 
C) a price ceiling set by government. 
D) an import quota. 
A) the rationing function of prices protecting domestic strawberry farmers. 
B) a price floor set by the government. 
C) a price ceiling set by government. 
D) an import quota.

Question 13

In a market system,how are the price signals established?

Accepted Answer

A) Consumer advocacy groups establish fair prices for items,and most firms follow these pricing guidelines because they don't want to anger their consumers. 
B) Industry associations establish an acceptable price range for each commodity sold within the industry,and member firms are obligated to abide by association guidelines. 
C) The forces underlying supply and demand interact to determine a market clearing price. 
D) Federal legislation establishes maximum prices for most goods,and state governments regulate the prices of any remaining items. 
A) Consumer advocacy groups establish fair prices for items,and most firms follow these pricing guidelines because they don't want to anger their consumers. 
B) Industry associations establish an acceptable price range for each commodity sold within the industry,and member firms are obligated to abide by association guidelines. 
C) The forces underlying supply and demand interact to determine a market clearing price. 
D) Federal legislation establishes maximum prices for most goods,and state governments regulate the prices of any remaining items.

Question 14

Suppose the equilibrium quantity of ethanol has decreased.Which of the following could have caused this change?

Accepted Answer

A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied 
A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied

Question 15

In the housing market,rents serve the purpose of

Accepted Answer

A) making landlords rich. 
B) rationing the availability of existing housing. 
C) providing an entry by the government into the housing market. 
D) increasing tax collections by the community. 
A) making landlords rich. 
B) rationing the availability of existing housing. 
C) providing an entry by the government into the housing market. 
D) increasing tax collections by the community.

Question 16

Which group of individuals most likely benefits from rent controls?

Accepted Answer

A) the unemployed who fail to obtain rental housing 
B) low-income wage earners who fail to obtain rental housing 
C) single parent families without savings or other financial assets who fail to obtain rental housing 
D) upper-income professionals who rent apartments at the price ceiling rate 
A) the unemployed who fail to obtain rental housing 
B) low-income wage earners who fail to obtain rental housing 
C) single parent families without savings or other financial assets who fail to obtain rental housing 
D) upper-income professionals who rent apartments at the price ceiling rate

Question 17

Suppose a price ceiling is set above the equilibrium price.Now suppose that policy makers decide to raise the price ceiling.This increase in the price ceiling will cause which of the following to occur?

Accepted Answer

A) The surplus in the market will increase. 
B) The surplus in the market will decrease. 
C) The shortage in the market will increase. 
D) None of the above. 
A) The surplus in the market will increase. 
B) The surplus in the market will decrease. 
C) The shortage in the market will increase. 
D) None of the above.

Question 18

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 19

A severe drought has devastated cocoa plants,causing an increase in the price of chocolate.In the market for chocolate chip cookies,

Accepted Answer

A) a surplus will arise. 
B) supply has decreased and price has increased. 
C) quantity has decreased and price has decreased. 
D) quantity demanded has increased. 
A) a surplus will arise. 
B) supply has decreased and price has increased. 
C) quantity has decreased and price has decreased. 
D) quantity demanded has increased.

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 Brad Pitts and Angelina Jolie wear matching platinum jewelry in their new movie.After the movie is released,suppose that consumers increase their demand for the jewelry and at the same time manufacturers increase the supply of the jewelry.As a result,

In a freely operating market system,queuing is most likely to occur when

Garbanzo Beans -Consider the above table.Assuming the government imposes a price ceiling on garbanzo beans of $4,what would be the likely result?

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

If an excess quantity of labor demanded exists in a free market,there is a tendency for

Excess quantity demanded may result from

The price of milk increases.Which of the following is NOT part of the likely chain of events that follows from this price change?

If equilibrium price falls and the equilibrium quantity of the good purchased decreases,what has happened to either the supply curve or to the demand curve?

Consumer surplus is

Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?

A limit on the amount of strawberries that can be imported into the United States is an example of

In a market system,how are the price signals established?

Suppose the equilibrium quantity of ethanol has decreased.Which of the following could have caused this change?

In the housing market,rents serve the purpose of

Which group of individuals most likely benefits from rent controls?

Suppose a price ceiling is set above the equilibrium price.Now suppose that policy makers decide to raise the price ceiling.This increase in the price ceiling will cause which of the following to occur?

Voluntary exchange

A severe drought has devastated cocoa plants,causing an increase in the price of chocolate.In the market for chocolate chip cookies,

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 4: Extensions of Demand and Supply Analysis

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 Brad Pitts and Angelina Jolie wear matching platinum jewelry in their new movie.After the movie is released,suppose that consumers increase their demand for the jewelry and at the same time manufacturers increase the supply of the jewelry.As a result,

In a freely operating market system,queuing is most likely to occur when

Garbanzo Beans -Consider the above table.Assuming the government imposes a price ceiling on garbanzo beans of $4,what would be the likely result?

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

If an excess quantity of labor demanded exists in a free market,there is a tendency for

Excess quantity demanded may result from

The price of milk increases.Which of the following is NOT part of the likely chain of events that follows from this price change?

If equilibrium price falls and the equilibrium quantity of the good purchased decreases,what has happened to either the supply curve or to the demand curve?

Consumer surplus is

Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?

A limit on the amount of strawberries that can be imported into the United States is an example of

In a market system,how are the price signals established?

Suppose the equilibrium quantity of ethanol has decreased.Which of the following could have caused this change?

In the housing market,rents serve the purpose of

Which group of individuals most likely benefits from rent controls?

Suppose a price ceiling is set above the equilibrium price.Now suppose that policy makers decide to raise the price ceiling.This increase in the price ceiling will cause which of the following to occur?

Voluntary exchange

A severe drought has devastated cocoa plants,causing an increase in the price of chocolate.In the market for chocolate chip cookies,

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters