Question 1

If demand and supply both increase,

Accepted Answer

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

Question 2

Economists assume that when there is a change in supply and/or demand,the market clearing price returns to the equilibrium

Accepted Answer

A) quickly. 
B) slowly. 
C) after a protracted negotiation process. 
D) after an adjustment period. 
A) quickly. 
B) slowly. 
C) after a protracted negotiation process. 
D) after an adjustment period.

Question 3

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.

Question 4

-Refer to the above figure for the corn market.The government wants to set an effective price support in the corn market.To be effective the price should be set

Accepted Answer

A) below   . 
B) at   . 
C) at   . 
D) at   . 
A) below   . 
B) at   . 
C) at   . 
D) at   .

Question 5

To enhance their prestige,some country clubs like to point to the fact that they have a waiting list for new members.Even at clubs with high initiation fees,it is common that prospective members have to wait three or more years before there is room for them on the membership rolls.How do these country clubs set the price of membership to ensure that they have a waiting list?

Accepted Answer

A) Set the membership price above the market clearing price. 
B) Set the membership price below the market clearing price. 
C) Set the price so that the quantity supplied of memberships exceeds the quantity demanded. 
D) Set the price at a level that will generate a surplus of memberships. 
A) Set the membership price above the market clearing price. 
B) Set the membership price below the market clearing price. 
C) Set the price so that the quantity supplied of memberships exceeds the quantity demanded. 
D) Set the price at a level that will generate a surplus of memberships.

Question 6

For a given market demand curve,if the market clearing price increases,then the amount of producer surplus will

Accepted Answer

A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information 
A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information

Question 7

An effective price ceiling usually generates

Accepted Answer

A) fire sales as firms try to unload their excess inventories. 
B) higher nominal prices. 
C) the use of nonprice rationing devices. 
D) happy sellers and dissatisfied buyers. 
A) fire sales as firms try to unload their excess inventories. 
B) higher nominal prices. 
C) the use of nonprice rationing devices. 
D) happy sellers and dissatisfied buyers.

Question 8

What will happen when there is a rightward shift in the demand curve?

Accepted Answer

A) The product price will instantaneously adjust downward. 
B) Product prices do not change in this situation. 
C) Producers will decrease the product price. 
D) A new,higher price is not instantaneously achieved,but the price will rise over time. 
A) The product price will instantaneously adjust downward. 
B) Product prices do not change in this situation. 
C) Producers will decrease the product price. 
D) A new,higher price is not instantaneously achieved,but the price will rise over time.

Question 9

Which of the following will likely occur when price floors in agriculture are implemented?

Accepted Answer

A) Quantity supplied will exceed quantity demanded. 
B) Quantity demanded will exceed quantity supplied. 
C) Farmland will be underutilized. 
D) Supply will decrease. 
A) Quantity supplied will exceed quantity demanded. 
B) Quantity demanded will exceed quantity supplied. 
C) Farmland will be underutilized. 
D) Supply will decrease.

Question 10

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Accepted Answer

A) 10-20 % 
B) 20-30 % 
C) 40-50 % 
D) 75-80 % 
A) 10-20 % 
B) 20-30 % 
C) 40-50 % 
D) 75-80 %

Question 11

Governments may intervene in private markets through

Accepted Answer

A) rationing by political power. 
B) price floors. 
C) price ceilings. 
D) all of the above. 
A) rationing by political power. 
B) price floors. 
C) price ceilings. 
D) all of the above.

Question 12

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

Accepted Answer

A) There would be a surplus of bread. 
B) There would be a shortage of bread. 
C) The supply of bread would increase. 
D) The supply of bread would decrease. 
A) There would be a surplus of bread. 
B) There would be a shortage of bread. 
C) The supply of bread would increase. 
D) The supply of bread would decrease.

Question 13

The price system has

Accepted Answer

A) prices fixed by the government. 
B) prices fixed by the seller. 
C) voluntary exchange. 
D) prices fixed by the producer. 
A) prices fixed by the government. 
B) prices fixed by the seller. 
C) voluntary exchange. 
D) prices fixed by the producer.

Question 14

Suppose we observe the following two simultaneous events in the market for beef.First,there is a decrease in the demand for beef due to changes in consumer tastes.And second,there is a reduction in supply due to cattle farmers selling their land to real estate developers.We know with certainty that these two simultaneous events will cause which of the following?

Accepted Answer

A) no change in the equilibrium quantity and a reduction in the equilibrium price 
B) an increase in the equilibrium quantity and in the equilibrium price 
C) a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D) a decrease in the equilibrium quantity and an increase in the equilibrium price 
A) no change in the equilibrium quantity and a reduction in the equilibrium price 
B) an increase in the equilibrium quantity and in the equilibrium price 
C) a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D) a decrease in the equilibrium quantity and an increase in the equilibrium price

Question 15

Suppose that the supply curve remains unchanged.If the demand curve shifts to the right,

Accepted Answer

A) the market clearing price definitely will decrease. 
B) the market clearing price definitely will increase. 
C) there will be no change in the market clearing price. 
D) the market will collapse. 
A) the market clearing price definitely will decrease. 
B) the market clearing price definitely will increase. 
C) there will be no change in the market clearing price. 
D) the market will collapse.

Question 16

Many economists estimate that for every 10 % increase in relative minimum wage rates,there is a corresponding decrease in employment of those affected equal to

Accepted Answer

A) 5-10 %. 
B) 1-2 %. 
C) 10-20 %. 
D) 30-40 %. 
A) 5-10 %. 
B) 1-2 %. 
C) 10-20 %. 
D) 30-40 %.

Question 17

Price ceilings set below the equilibrium price cause

Accepted Answer

A) shortages. 
B) surpluses. 
C) a new market equilibrium. 
D) a greater number of exchanges. 
A) shortages. 
B) surpluses. 
C) a new market equilibrium. 
D) a greater number of exchanges.

Question 18

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 19

Suppose that an early frost damages the Florida orange crop.As a result,the price of California oranges increases.Ceteris paribus,which one of the following statements best explains this situation?

Accepted Answer

A) The supply of Florida oranges decreased,causing the supply of California oranges to increase,which resulted in a higher price. 
B) The supply of Florida oranges decreased,causing the supply of California oranges to decrease,which resulted in a higher price. 
C) The supply of Florida oranges decreased,causing their price to increase,and thus causing the demand for California oranges to increase. 
D) The demand for Florida oranges fell because of the freeze,and this led to a higher demand for California oranges. 
A) The supply of Florida oranges decreased,causing the supply of California oranges to increase,which resulted in a higher price. 
B) The supply of Florida oranges decreased,causing the supply of California oranges to decrease,which resulted in a higher price. 
C) The supply of Florida oranges decreased,causing their price to increase,and thus causing the demand for California oranges to increase. 
D) The demand for Florida oranges fell because of the freeze,and this led to a higher demand for California oranges.

Question 20

Which one of the following statements is true?

Accepted Answer

A) An effective price ceiling results in a surplus of the good. 
B) An effective price floor results in a shortage of the good. 
C) When the market clearing price of a good is the equilibrium,then everyone can afford it. 
D) The market clearing price of a good reflects its relative scarcity. 
A) An effective price ceiling results in a surplus of the good. 
B) An effective price floor results in a shortage of the good. 
C) When the market clearing price of a good is the equilibrium,then everyone can afford it. 
D) The market clearing price of a good reflects its relative scarcity.

If demand and supply both increase,

Economists assume that when there is a change in supply and/or demand,the market clearing price returns to the equilibrium

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

-Refer to the above figure for the corn market.The government wants to set an effective price support in the corn market.To be effective the price should be set

For a given market demand curve,if the market clearing price increases,then the amount of producer surplus will

An effective price ceiling usually generates

What will happen when there is a rightward shift in the demand curve?

Which of the following will likely occur when price floors in agriculture are implemented?

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Governments may intervene in private markets through

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

The price system has

Suppose that the supply curve remains unchanged.If the demand curve shifts to the right,

Many economists estimate that for every 10 % increase in relative minimum wage rates,there is a corresponding decrease in employment of those affected equal to

Price ceilings set below the equilibrium price cause

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

Suppose that an early frost damages the Florida orange crop.As a result,the price of California oranges increases.Ceteris paribus,which one of the following statements best explains this situation?

Which one of the following statements is true?

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

Exam 4: Extensions of Demand and Supply Analysis

If demand and supply both increase,

Economists assume that when there is a change in supply and/or demand,the market clearing price returns to the equilibrium

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

-Refer to the above figure for the corn market.The government wants to set an effective price support in the corn market.To be effective the price should be set

For a given market demand curve,if the market clearing price increases,then the amount of producer surplus will

An effective price ceiling usually generates

What will happen when there is a rightward shift in the demand curve?

Which of the following will likely occur when price floors in agriculture are implemented?

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Governments may intervene in private markets through

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

The price system has

Suppose that the supply curve remains unchanged.If the demand curve shifts to the right,

Many economists estimate that for every 10 % increase in relative minimum wage rates,there is a corresponding decrease in employment of those affected equal to

Price ceilings set below the equilibrium price cause

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

Suppose that an early frost damages the Florida orange crop.As a result,the price of California oranges increases.Ceteris paribus,which one of the following statements best explains this situation?

Which one of the following statements is true?

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