Question 1

Market-clearing prices

Accepted Answer

A)  are set by the visible hand of government. 
B)  scare away all consumers from the market. 
C)  scare away all businesses from the market. 
D)  balance the forces of competition and cooperation. 
E)  do all of the above. 
A)  are set by the visible hand of government. 
B)  scare away all consumers from the market. 
C)  scare away all businesses from the market. 
D)  balance the forces of competition and cooperation. 
E)  do all of the above.

Question 2

When inventories are rising, businesses have incentives to decrease quantity supplied because price is less than marginal benefits.

Accepted Answer

A) True 
 B)False

Question 3

If consumers' incomes decrease, the price of an inferior product

Accepted Answer

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

Question 4

When demand decreases,

Accepted Answer

A)  price falls and quantity supplied decreases. 
B)  supply decreases so that price remains the same. 
C)  price rises and quantity supplied decreases. 
D)  price rises with no change in supply. 
E)  supply increases so that price remains the same. 
A)  price falls and quantity supplied decreases. 
B)  supply decreases so that price remains the same. 
C)  price rises and quantity supplied decreases. 
D)  price rises with no change in supply. 
E)  supply increases so that price remains the same.

Question 5

If buyers expect the price of gasoline will be lower in the future, the price of gasoline today ________ and the quantity supplied today ________.

Accepted Answer

A)  falls; increases 
B)  falls; decreases 
C)  falls; is unaffected 
D)  rises; increases 
E)  rises; decreases 
A)  falls; increases 
B)  falls; decreases 
C)  falls; is unaffected 
D)  rises; increases 
E)  rises; decreases

Question 6

When supply decreases, price rises and quantity demanded increases.

Accepted Answer

A) True 
 B)False

Question 7

The number of working mothers has increased dramatically. Based on this information alone, we can predict that the market for child care services has had a(n)

Accepted Answer

A)  increased demand. 
B)  decreased demand. 
C)  increased quantity demanded. 
D)  decreased quantity supplied. 
E)  increased supply. 
A)  increased demand. 
B)  decreased demand. 
C)  increased quantity demanded. 
D)  decreased quantity supplied. 
E)  increased supply.

Question 8

If the wages of workers at the Oakville Ford plant rise, the price of automobiles ________ because rising input prices ________.

Accepted Answer

A)  falls; increase supply 
B)  rises; decrease supply 
C)  rises; increase quantity supplied 
D)  falls; increase demand 
E)  rises; decrease demand 
A)  falls; increase supply 
B)  rises; decrease supply 
C)  rises; increase quantity supplied 
D)  falls; increase demand 
E)  rises; decrease demand

Question 9

Fixed prices in markets eliminate competition between buyers.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

As consumers become more health conscious, the price of potato chips

Accepted Answer

A)  rises because there are many tasty alternatives to chips. 
B)  falls because supply decreases. 
C)  falls because demand decreases. 
D)  rises due to new cost-saving technologies. 
E)  rises because demand decreases. 
A)  rises because there are many tasty alternatives to chips. 
B)  falls because supply decreases. 
C)  falls because demand decreases. 
D)  rises due to new cost-saving technologies. 
E)  rises because demand decreases.

Question 12

Markets produce the products and services we want as the unintended consequence of self-interested choices.

Accepted Answer

A) True 
 B)False

Question 13

Which statement about markets is false?

Accepted Answer

A)  sellers compete with other sellers 
B)  buyers cooperate with sellers 
C)  buyers compete with other buyers 
D)  sellers cooperate with other sellers 
E)  sellers cooperate with buyers 
A)  sellers compete with other sellers 
B)  buyers cooperate with sellers 
C)  buyers compete with other buyers 
D)  sellers cooperate with other sellers 
E)  sellers cooperate with buyers

Question 14

Rising prices provide incentives for businesses to increase supply and for consumers to decrease demand.

Accepted Answer

A) True 
 B)False

Question 15

Surpluses are eliminated by

Accepted Answer

A)  allowing price to fall. 
B)  increasing quantity supplied. 
C)  decreasing quantity demanded. 
D)  allowing price to rise. 
E)  frightening consumers. 
A)  allowing price to fall. 
B)  increasing quantity supplied. 
C)  decreasing quantity demanded. 
D)  allowing price to rise. 
E)  frightening consumers.

Question 16

Rising prices for a service

Accepted Answer

A)  create incentives for consumers to buy more, switching from more expensive substitutes. 
B)  eliminate surpluses. 
C)  create incentives for businesses to produce less. 
D)  increase supply of the service. 
E)  do none of the above. 
A)  create incentives for consumers to buy more, switching from more expensive substitutes. 
B)  eliminate surpluses. 
C)  create incentives for businesses to produce less. 
D)  increase supply of the service. 
E)  do none of the above.

Question 17

When supply increases,

Accepted Answer

A)  price falls and demand decreases. 
B)  price rises with no change in demand. 
C)  price rises and quantity demanded decreases. 
D)  price falls and quantity demanded increases. 
E)  demand increases so that price remains the same. 
A)  price falls and demand decreases. 
B)  price rises with no change in demand. 
C)  price rises and quantity demanded decreases. 
D)  price falls and quantity demanded increases. 
E)  demand increases so that price remains the same.

Question 18

We observe a fall 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 supply 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 supply 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 19

Supporters of "free markets" believe that

Accepted Answer

A)  the government has no role to play in the economy. 
B)  competition between buyers is all that is needed for voluntary exchange. 
C)  voluntary exchange is a zero-sum game. 
D)  the government has an important role in enforcing property rights. 
E)  competition between sellers is all that is needed for voluntary exchange. 
A)  the government has no role to play in the economy. 
B)  competition between buyers is all that is needed for voluntary exchange. 
C)  voluntary exchange is a zero-sum game. 
D)  the government has an important role in enforcing property rights. 
E)  competition between sellers is all that is needed for voluntary exchange.

Question 20

At the equilibrium price, business inventories are

Accepted Answer

A)  unstable. 
B)  stable. 
C)  zero. 
D)  growing. 
E)  shrinking. 
A)  unstable. 
B)  stable. 
C)  zero. 
D)  growing. 
E)  shrinking.

Market-clearing prices

When inventories are rising, businesses have incentives to decrease quantity supplied because price is less than marginal benefits.

If consumers' incomes decrease, the price of an inferior product

When demand decreases,

If buyers expect the price of gasoline will be lower in the future, the price of gasoline today and the quantity supplied today .

When supply decreases, price rises and quantity demanded increases.

The number of working mothers has increased dramatically. Based on this information alone, we can predict that the market for child care services has had a(n)

If the wages of workers at the Oakville Ford plant rise, the price of automobiles because rising input prices .

Fixed prices in markets eliminate competition between buyers.

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

As consumers become more health conscious, the price of potato chips

Markets produce the products and services we want as the unintended consequence of self-interested choices.

Which statement about markets is false?

Rising prices provide incentives for businesses to increase supply and for consumers to decrease demand.

Surpluses are eliminated by

Rising prices for a service

When supply increases,

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

Supporters of "free markets" believe that

At the equilibrium price, business inventories are

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

Market-clearing prices

When inventories are rising, businesses have incentives to decrease quantity supplied because price is less than marginal benefits.

If consumers' incomes decrease, the price of an inferior product

When demand decreases,

If buyers expect the price of gasoline will be lower in the future, the price of gasoline today ________ and the quantity supplied today ________.

When supply decreases, price rises and quantity demanded increases.

The number of working mothers has increased dramatically. Based on this information alone, we can predict that the market for child care services has had a(n)

If the wages of workers at the Oakville Ford plant rise, the price of automobiles ________ because rising input prices ________.

Fixed prices in markets eliminate competition between buyers.

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

As consumers become more health conscious, the price of potato chips

Markets produce the products and services we want as the unintended consequence of self-interested choices.

Which statement about markets is false?

Rising prices provide incentives for businesses to increase supply and for consumers to decrease demand.

Surpluses are eliminated by

Rising prices for a service

When supply increases,

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

Supporters of "free markets" believe that

At the equilibrium price, business inventories are

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

If buyers expect the price of gasoline will be lower in the future, the price of gasoline today and the quantity supplied today .

If the wages of workers at the Oakville Ford plant rise, the price of automobiles because rising input prices .