Question 1

In a voluntary exchange, the price must at least be equal to the maximum amount the buyer is willing to pay.

Accepted Answer

A) True 
 B)False

Question 2

Figure 4.5.3.
-Look at Figure 4.5.3. If If quantity is 100, deadweight loss is area

Accepted Answer

A)  BCF. 
B)  ACG. 
C)  DCE. 
D)  ACH. 
E)  HCG. 
A)  BCF. 
B)  ACG. 
C)  DCE. 
D)  ACH. 
E)  HCG.

Question 3

Producer surplus is the area below the market price but above the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 4

We observe a fall in the price of service A and a decrease in the quantity of service A bought and sold. Which is a likely explanation?

Accepted Answer

A)  The law of demand is violated. 
B)  The demand for A decreased. 
C)  The demand for A increased. 
D)  The supply of A increased. 
E)  The supply of A decreased. 
A)  The law of demand is violated. 
B)  The demand for A decreased. 
C)  The demand for A increased. 
D)  The supply of A increased. 
E)  The supply of A decreased.

Question 5

There is a shortage when quantity supplied exceeds quantity demanded.

Accepted Answer

A) True 
 B)False

Question 6

Market-clearing prices

Accepted Answer

A)  are equilibrium prices. 
B)  equalize quantity demanded and quantity supplied. 
C)  have no tendency to change. 
D)  eliminate frustrated sellers. 
E)  do all of the above. 
A)  are equilibrium prices. 
B)  equalize quantity demanded and quantity supplied. 
C)  have no tendency to change. 
D)  eliminate frustrated sellers. 
E)  do all of the above.

Question 7

Businesses adjust quantities more frequently than they adjust prices.

Accepted Answer

A) True 
 B)False

Question 8

At an efficient market outcome,

Accepted Answer

A)  deadweight loss is zero. 
B)  marginal benefit equals marginal cost at the efficient quantity. 
C)  prices just cover all opportunity costs of production. 
D)  total surplus is maximized. 
E)  all of the above are true. 
A)  deadweight loss is zero. 
B)  marginal benefit equals marginal cost at the efficient quantity. 
C)  prices just cover all opportunity costs of production. 
D)  total surplus is maximized. 
E)  all of the above are true.

Question 9

We observe a rise in the price of service A and an increase in the quantity of service A bought and sold. Which is a likely explanation?

Accepted Answer

A)  The law of demand is violated. 
B)  The demand for A decreased. 
C)  The demand for A increased. 
D)  The supply of A increased. 
E)  The supply of A decreased. 
A)  The law of demand is violated. 
B)  The demand for A decreased. 
C)  The demand for A increased. 
D)  The supply of A increased. 
E)  The supply of A decreased.

Question 10

The concept of consumer surplus is easiest to see by reading the supply curve as a marginal cost curve instead of as a supply curve.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the price of Pepsi (a substitute for coffee)

Accepted Answer

A)  raises the price of coffee and increases the quantity demanded of coffee. 
B)  raises the price of coffee and increases the quantity supplied of coffee. 
C)  lowers the price of coffee and decreases the quantity demanded of coffee. 
D)  lowers the price of coffee and decreases the quantity supplied of coffee. 
E)  causes none of the above. 
A)  raises the price of coffee and increases the quantity demanded of coffee. 
B)  raises the price of coffee and increases the quantity supplied of coffee. 
C)  lowers the price of coffee and decreases the quantity demanded of coffee. 
D)  lowers the price of coffee and decreases the quantity supplied of coffee. 
E)  causes none of the above.

Question 12

The concept of producer surplus is easiest to see by reading the demand curve as a marginal benefit curve instead of as a demand curve.

Accepted Answer

A) True 
 B)False

Question 13

Consumer surplus is the area

Accepted Answer

A)  under the marginal benefit curve but above the market price. 
B)  under the marginal benefit curve but above the marginal cost curve. 
C)  below the market price but above the marginal cost curve. 
D)  under the marginal benefit curve. 
E)  above the marginal cost curve. 
A)  under the marginal benefit curve but above the market price. 
B)  under the marginal benefit curve but above the marginal cost curve. 
C)  below the market price but above the marginal cost curve. 
D)  under the marginal benefit curve. 
E)  above the marginal cost curve.

Question 14

Markets eliminate surpluses through falling prices, which increase quantity demanded and decrease quantity supplied.

Accepted Answer

A) True 
 B)False

Question 15

How do price adjustments eliminate a shortage?

Accepted Answer

A)  As price rises, quantity demanded decreases and quantity supplied increases. 
B)  As price rises, quantity demanded increases and quantity supplied decreases. 
C)  As price falls, quantity demanded decreases and quantity supplied increases. 
D)  As price falls, quantity demanded increases and quantity supplied decreases. 
E)  As price falls, quantity demanded increases and quantity supplied increases. 
A)  As price rises, quantity demanded decreases and quantity supplied increases. 
B)  As price rises, quantity demanded increases and quantity supplied decreases. 
C)  As price falls, quantity demanded decreases and quantity supplied increases. 
D)  As price falls, quantity demanded increases and quantity supplied decreases. 
E)  As price falls, quantity demanded increases and quantity supplied increases.

Question 16

Figure 4.3.1. 
-Look at Figure 4.3.1. If the price is set at $0.80 per espresso shot, there is a(n) ________ leading to a price ________.

Accepted Answer

A)  shortage; rise 
B)  shortage; fall 
C)  surplus; rise 
D)  surplus; fall 
E)  equilibrium; rise 
A)  shortage; rise 
B)  shortage; fall 
C)  surplus; rise 
D)  surplus; fall 
E)  equilibrium; rise

Question 17

When price is too high, we see

Accepted Answer

A)  excess supply. 
B)  shortages. 
C)  frustrated buyers. 
D)  long lineups. 
E)  falling inventories. 
A)  excess supply. 
B)  shortages. 
C)  frustrated buyers. 
D)  long lineups. 
E)  falling inventories.

Question 18

When a market is in equilibrium, the market-clearing quantity bought and sold equals the quantity supplied at the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 19

All markets involve negotiations between buyers and sellers that result in exchange.

Accepted Answer

A) True 
 B)False

Question 20

When the RCMP arrests a large number of marijuana dealers, we expect the street price of marijuana to rise.

Accepted Answer

A) True 
 B)False

In a voluntary exchange, the price must at least be equal to the maximum amount the buyer is willing to pay.

Figure 4.5.3. -Look at Figure 4.5.3. If If quantity is 100, deadweight loss is area

Producer surplus is the area below the market price but above the marginal cost curve.

We observe a fall in the price of service A and a decrease in the quantity of service A bought and sold. Which is a likely explanation?

There is a shortage when quantity supplied exceeds quantity demanded.

Market-clearing prices

Businesses adjust quantities more frequently than they adjust prices.

At an efficient market outcome,

We observe a rise in the price of service A and an increase in the quantity of service A bought and sold. Which is a likely explanation?

The concept of consumer surplus is easiest to see by reading the supply curve as a marginal cost curve instead of as a supply curve.

An increase in the price of Pepsi (a substitute for coffee)

The concept of producer surplus is easiest to see by reading the demand curve as a marginal benefit curve instead of as a demand curve.

Consumer surplus is the area

Markets eliminate surpluses through falling prices, which increase quantity demanded and decrease quantity supplied.

How do price adjustments eliminate a shortage?

Figure 4.3.1. -Look at Figure 4.3.1. If the price is set at $0.80 per espresso shot, there is a(n) leading to a price .

When price is too high, we see

When a market is in equilibrium, the market-clearing quantity bought and sold equals the quantity supplied at the equilibrium price.

All markets involve negotiations between buyers and sellers that result in exchange.

When the RCMP arrests a large number of marijuana dealers, we expect the street price of marijuana to rise.

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters

Exam 4: Coordinating Smart Choices: Demand and Supply

In a voluntary exchange, the price must at least be equal to the maximum amount the buyer is willing to pay.

Figure 4.5.3. -Look at Figure 4.5.3. If If quantity is 100, deadweight loss is area

Producer surplus is the area below the market price but above the marginal cost curve.

We observe a fall in the price of service A and a decrease in the quantity of service A bought and sold. Which is a likely explanation?

There is a shortage when quantity supplied exceeds quantity demanded.

Market-clearing prices

Businesses adjust quantities more frequently than they adjust prices.

At an efficient market outcome,

We observe a rise in the price of service A and an increase in the quantity of service A bought and sold. Which is a likely explanation?

The concept of consumer surplus is easiest to see by reading the supply curve as a marginal cost curve instead of as a supply curve.

An increase in the price of Pepsi (a substitute for coffee)

The concept of producer surplus is easiest to see by reading the demand curve as a marginal benefit curve instead of as a demand curve.

Consumer surplus is the area

Markets eliminate surpluses through falling prices, which increase quantity demanded and decrease quantity supplied.

How do price adjustments eliminate a shortage?

Figure 4.3.1. -Look at Figure 4.3.1. If the price is set at $0.80 per espresso shot, there is a(n) ________ leading to a price ________.

When price is too high, we see

When a market is in equilibrium, the market-clearing quantity bought and sold equals the quantity supplied at the equilibrium price.

All markets involve negotiations between buyers and sellers that result in exchange.

When the RCMP arrests a large number of marijuana dealers, we expect the street price of marijuana to rise.

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters

Figure 4.3.1. -Look at Figure 4.3.1. If the price is set at $0.80 per espresso shot, there is a(n) leading to a price .