Question 1

At the quantity of an efficient market outcome, marginal benefit is greater than marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Voluntary exchange is competitive at heart.

Accepted Answer

A) True 
 B)False

Question 3

Figure 4.5.1
-Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus from the 2nd unit?

Accepted Answer

A)  $7 
B)  $3 
C)  $4 
D)  $1 
E)  $10 
A)  $7 
B)  $3 
C)  $4 
D)  $1 
E)  $10

Question 4

Voluntary exchange is a zero-sum game.

Accepted Answer

A) True 
 B)False

Question 5

Prices rise if supply decreases.

Accepted Answer

A) True 
 B)False

Question 6

If workers demand a wage above the market-clearing wage, we observe

Accepted Answer

A)  unemployment. 
B)  an excess supply of jobs. 
C)  a shortage of workers. 
D)  unions. 
E)  an excess demand for workers. 
A)  unemployment. 
B)  an excess supply of jobs. 
C)  a shortage of workers. 
D)  unions. 
E)  an excess demand for workers.

Question 7

Shortages are eliminated by

Accepted Answer

A)  increasing quantity demanded. 
B)  allowing price to fall. 
C)  clever advertising campaigns. 
D)  allowing price to rise. 
E)  decreasing quantity supplied. 
A)  increasing quantity demanded. 
B)  allowing price to fall. 
C)  clever advertising campaigns. 
D)  allowing price to rise. 
E)  decreasing quantity supplied.

Question 8

If all sellers in a market charge the same price, that eliminates competition between sellers.

Accepted Answer

A) True 
 B)False

Question 9

Market-clearing prices

Accepted Answer

A)  are prices that sit still. 
B)  eliminate frustrated buyers. 
C)  result when smart choices are coordinated. 
D)  balance the forces of competition and cooperation. 
E)  do all of the above. 
A)  are prices that sit still. 
B)  eliminate frustrated buyers. 
C)  result when smart choices are coordinated. 
D)  balance the forces of competition and cooperation. 
E)  do all of the above.

Question 10

At the equilibrium price, the forces of cooperation and competition are in balance.

Accepted Answer

A) True 
 B)False

Question 11

When inventories decrease, it signals businesses to lower the price.

Accepted Answer

A) True 
 B)False

Question 12

When inventories increase, it signals businesses to lower the price.

Accepted Answer

A) True 
 B)False

Question 13

How do price adjustments eliminate a surplus?

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)  None of the above are true. 
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)  None of the above are true.

Question 14

If the price of Pepsi falls, the price of Coke ________ because ________.

Accepted Answer

A)  falls; Coke and Pepsi are complements 
B)  falls; Coke and Pepsi are substitutes 
C)  falls; Coke is a normal good 
D)  rises; Coke and Pepsi are substitutes 
E)  rises; Coke is an inferior good 
A)  falls; Coke and Pepsi are complements 
B)  falls; Coke and Pepsi are substitutes 
C)  falls; Coke is a normal good 
D)  rises; Coke and Pepsi are substitutes 
E)  rises; Coke is an inferior good

Question 15

Falling prices provide incentives for businesses to decrease quantity supplied and for consumers to increase quantity demanded.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4.5.1
-Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus?

Accepted Answer

A)  $32.50 
B)  $25.00 
C)  $20.00 
D)  $12.50 
E)  none of the above 
A)  $32.50 
B)  $25.00 
C)  $20.00 
D)  $12.50 
E)  none of the above

Question 17

For exchange to be voluntary the price must be greater than the marginal opportunity cost of the seller and less than the marginal benefit of the buyer.

Accepted Answer

A) True 
 B)False

Question 18

The concept of consumer 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 19

At an efficient market outcome,

Accepted Answer

A)  total consumer surplus is zero. 
B)  total producer surplus is zero. 
C)  consumer surplus exceeds producer surplus by the greatest possible amount. 
D)  producer surplus exceeds consumer surplus by the greatest possible amount. 
E)  consumer surplus plus producer surplus is maximized. 
A)  total consumer surplus is zero. 
B)  total producer surplus is zero. 
C)  consumer surplus exceeds producer surplus by the greatest possible amount. 
D)  producer surplus exceeds consumer surplus by the greatest possible amount. 
E)  consumer surplus plus producer surplus is maximized.

Question 20

Rising prices for a product

Accepted Answer

A)  create incentives for consumers to find cheaper substitutes. 
B)  eliminate shortages. 
C)  create incentives for businesses to produce more. 
D)  decrease quantity demanded of the product. 
E)  do all of the above. 
A)  create incentives for consumers to find cheaper substitutes. 
B)  eliminate shortages. 
C)  create incentives for businesses to produce more. 
D)  decrease quantity demanded of the product. 
E)  do all of the above.

At the quantity of an efficient market outcome, marginal benefit is greater than marginal cost.

Voluntary exchange is competitive at heart.

Figure 4.5.1 -Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus from the 2nd unit?

Voluntary exchange is a zero-sum game.

Prices rise if supply decreases.

If workers demand a wage above the market-clearing wage, we observe

Shortages are eliminated by

If all sellers in a market charge the same price, that eliminates competition between sellers.

Market-clearing prices

At the equilibrium price, the forces of cooperation and competition are in balance.

When inventories decrease, it signals businesses to lower the price.

When inventories increase, it signals businesses to lower the price.

How do price adjustments eliminate a surplus?

If the price of Pepsi falls, the price of Coke because .

Falling prices provide incentives for businesses to decrease quantity supplied and for consumers to increase quantity demanded.

Figure 4.5.1 -Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus?

For exchange to be voluntary the price must be greater than the marginal opportunity cost of the seller and less than the marginal benefit of the buyer.

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

At an efficient market outcome,

Rising prices for a product

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

At the quantity of an efficient market outcome, marginal benefit is greater than marginal cost.

Voluntary exchange is competitive at heart.

Figure 4.5.1 -Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus from the 2nd unit?

Voluntary exchange is a zero-sum game.

Prices rise if supply decreases.

If workers demand a wage above the market-clearing wage, we observe

Shortages are eliminated by

If all sellers in a market charge the same price, that eliminates competition between sellers.

Market-clearing prices

At the equilibrium price, the forces of cooperation and competition are in balance.

When inventories decrease, it signals businesses to lower the price.

When inventories increase, it signals businesses to lower the price.

How do price adjustments eliminate a surplus?

If the price of Pepsi falls, the price of Coke ________ because ________.

Falling prices provide incentives for businesses to decrease quantity supplied and for consumers to increase quantity demanded.

Figure 4.5.1 -Look at the demand curve in Figure 4.5.1. If the price of the product is $4, what is the consumer surplus?

For exchange to be voluntary the price must be greater than the marginal opportunity cost of the seller and less than the marginal benefit of the buyer.

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

At an efficient market outcome,

Rising prices for a product

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 the price of Pepsi falls, the price of Coke because .