Question 1

Use the following diagram to answer the following questions.
 
-Refer to Unit. If the price of housing is currently $90,000, the quantity of housing demanded will be:

Accepted Answer

A)   10,000 units.
B)   20,000 units.
C)   30,000 units.
D)   cannot be determined without further information. A

Question 2

Suppose the price of CDs increases from $12 to $15 per CD. The law of supply states that if other things are constant:

Accepted Answer

A)   quantity supplied will increase.
B)   quantity supplied will decrease.
C)   quantity demanded will increase.
D)   quantity demanded will decrease. A

Question 3

Which situation is indicative of barter?

Accepted Answer

A)   A physician chooses to grow her own food and trade it for carpentry work.
B)   The government accepts fuel, fertilizer, and pesticides in lieu of tax payments by companies.
C)   A power company accepts medicine from a pharmaceutical company as payment for electricity.
D)   All of the above are indicative of barter. D

Question 4

Use the following diagram to answer the following questions.
 
-Refer to Unit. If the price of housing is currently $90,000 per unit, there will be:

Accepted Answer

A)   an excess demand of 20,000 units.
B)   an excess demand of 10,000 units.
C)   an excess supply of 20,000 units.
D)   an excess supply of 30,000 units.

Question 5

Use the following diagram to answer the following questions.
 
-Refer to Unit. If the price of housing is currently $80,000, the quantity of housing supplied will be:

Accepted Answer

A)   10,000 units.
B)   20,000 units.
C)   30,000 units.
D)   cannot be determined without further information.

Question 6

Suppose the current price of hamburger is $3.00 per pound. However, supply and demand analysis indicates that the equilibrium price is actually $2.50 per pound. Using a diagram to aid you, show and explain how the market will adjust toward equilibrium.

Accepted Answer

The answer of Suppose the current price of hamburger is...

Question 7

The relative price of a good is:

Accepted Answer

A)   the price of one good in terms of another.
B)   the money price of a good.
C)   identical to the absolute price of the good.
D)   not a very good measure of how much must be given up in order to purchase an item.

Question 8

Demand and supply framework explains how prices are formed in a competitive markets.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that the price of Pepsi decreases from $4.50 to $4.20 per twelve-pack. The law of demand states that if other things are held constant:

Accepted Answer

A)   quantity demanded will increase.
B)   quantity demanded will decrease.
C)   quantity supplied will increase.
D)   quantity supplied will decrease.

Question 10

Many of the transition economies have experienced problems with inflation because:

Accepted Answer

A)   prices under central planning were artificially low.
B)   prices under central planning accurately reflected scarcity.
C)   prices under central planning were artificially high.
D)   increased employment in the transition period has resulted in large increases in the demand for goods and services.

Question 11

If there is an excess demand for N'Sync CDs, the price of N'Sync CDs would rise.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following economic systems is characterized by central government planning?

Accepted Answer

A)   a market economy
B)   a price system
C)   a command economy
D)   a feudal economy

Question 13

The demand price is:

Accepted Answer

A)   the price at which quantity demanded is equal to quantity supplied.
B)   the price at which producers receive just enough money to cover their production costs.
C)   the price just high enough so that a specified quantity will be purchased.
D)   the price at which consumers will buy a greater quantity than the market is offering.

Question 14

The demand curve shows the quantity demanded of a good for each possible price, holding other factors that affect demand constant.

Accepted Answer

A) True 
 B)False

Question 15

Which is NOT a characteristic of a centrally planned economy?

Accepted Answer

A)   Planners set prices for goods produced in the economy.
B)   The right amounts of goods are usually available at the right time.
C)   Production levels for goods are determined by planners.
D)   Excess demand for some goods and excess supply for other goods is a common occurrence.

Question 16

An increase in the supply of rollerblades will result in a higher equilibrium price for rollerblades.

Accepted Answer

A) True 
 B)False

Question 17

Use the following diagram to answer the following questions.
 
-Refer to Coffee. Suppose the demand for coffee increases from D₁ to D₂. The immediate effect would be to increase the demand price for Q₁ from:

Accepted Answer

A)   P₁ to P₂.
B)   P₁ to P3.
C)   P₂ to P3.
D)   P3 to P₁.

Question 18

In general:

Accepted Answer

A)   transition economies have been reluctant to free the prices of necessities.
B)   transition economies have experienced smooth and easy transitions toward market economies.
C)   economies that have reformed slowly have had the most economic growth since 1989.
D)   transition economies have successfully provided incentives to state owned enterprises.

Question 19

Explain how relative price helps in making purchasing decisions.

Accepted Answer

The answer of Explain how relative price helps in making...

Question 20

Prices in a command economy do not change very often, and thus do not inform consumers about the relative scarcity of goods.

Accepted Answer

A) True 
 B)False

Exam 2: An Introduction to Economic Systems and the Workings of the Price System

Use the following diagram to answer the following questions. -Refer to Unit. If the price of housing is currently $90,000, the quantity of housing demanded will be:

Suppose the price of CDs increases from $12 to $15 per CD. The law of supply states that if other things are constant:

Which situation is indicative of barter?

Use the following diagram to answer the following questions. -Refer to Unit. If the price of housing is currently $90,000 per unit, there will be:

Use the following diagram to answer the following questions. -Refer to Unit. If the price of housing is currently $80,000, the quantity of housing supplied will be:

Suppose the current price of hamburger is $3.00 per pound. However, supply and demand analysis indicates that the equilibrium price is actually $2.50 per pound. Using a diagram to aid you, show and explain how the market will adjust toward equilibrium.

The relative price of a good is:

Demand and supply framework explains how prices are formed in a competitive markets.

Suppose that the price of Pepsi decreases from $4.50 to $4.20 per twelve-pack. The law of demand states that if other things are held constant:

Many of the transition economies have experienced problems with inflation because:

If there is an excess demand for N'Sync CDs, the price of N'Sync CDs would rise.

Which of the following economic systems is characterized by central government planning?

The demand price is:

The demand curve shows the quantity demanded of a good for each possible price, holding other factors that affect demand constant.

Which is NOT a characteristic of a centrally planned economy?

An increase in the supply of rollerblades will result in a higher equilibrium price for rollerblades.

Use the following diagram to answer the following questions. -Refer to Coffee. Suppose the demand for coffee increases from D₁ to D₂. The immediate effect would be to increase the demand price for Q₁ from:

In general:

Explain how relative price helps in making purchasing decisions.

Prices in a command economy do not change very often, and thus do not inform consumers about the relative scarcity of goods.