Question 1

If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 2

Graphically, the market demand curve is

Accepted Answer

A)  steeper than any individual demand curve that is part of it.
B)  greater than the sum of the individual demand curves.
C)  the horizontal sum of individual demand curves.
D)  the vertical sum of individual demand curves.E) A) and B)
F) A) and C)

Question 3

Answer the question based on the given supply and demand data for wheat.  If price was initially $4 and free to fluctuate, we would expect the

Accepted Answer

A)  quantity supplied to continue to exceed the quantity demanded.
B)  quantity of wheat supplied to decline as a result of the subsequent price change.
C)  quantity of wheat demanded to fall as a result of the subsequent price change.
D)  price of wheat to rise.E) A) and C)
F) A) and B)

Question 4

A market that achieves productive efficiency is necessarily producing the quantity of goods most desired by society.

Accepted Answer

A) True 
 B)False

Question 5

What is a price ceiling and what are its economic effects?

Accepted Answer

A price ceiling is an artificial price s...

Question 6

Refer to the diagram. The equilibrium price and quantity in this market will be

Accepted Answer

A)  $1.00 and 200.
B)  $1.60 and 130.
C)  $0.50 and 130.
D)  $1.60 and 290.E) B) and C)
F) A) and D)

Question 7

Refer to the diagram. A government price support program to aid farmers is best illustrated by

Accepted Answer

A)  quantity E.
B)  price C.
C)  price A.
D)  price B.E) A) and D)
F) A) and C)

Question 8

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is correct?

Accepted Answer

A)  If supply decreases and demand increases, equilibrium price will rise.
B)  If supply decreases and demand decreases, equilibrium quantity will rise.
C)  If supply decreases and demand decreases, equilibrium price will fall.
D)  If supply decreases and demand increases, equilibrium quantity will rise.
E)  If supply decreases and demand remains constant, equilibrium price is indeterminate.F) B) and C)
G) All of the above

Question 10

A market is in equilibrium

Accepted Answer

A)  provided there is no surplus of the product.
B)  at all prices above that shown by the intersection of the supply and demand curves.
C)  if the amount producers want to sell is equal to the amount consumers want to buy.
D)  whenever the demand curve is downsloping and the supply curve is upsloping.E) None of the above
F) All of the above

Question 11

A market that is achieving allocative efficiency also is assumed to be achieving productive efficiency.

Accepted Answer

A) True 
 B)False

Question 12

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Accepted Answer

A)  improved technology for producing Z
B)  an increase in the prices of the resources used to make Z
C)  an increase in the excise tax on product Z
D)  increases in the incomes of the buyers of ZE) B) and C)
F) C) and D)

Question 14

If the demand curve for product B shifts to the right as the price of product A declines, then

Accepted Answer

A)  both A and B are inferior goods.
B)  A is a superior good and B is an inferior good.
C)  A is an inferior good and B is a superior good.
D)  A and B are complementary goods.E) A) and D)
F) None of the above

Question 15

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2 Q and supply by the equation P = 2 + 0.2 Q. If demand changes from P = 10 - 0.2 Q to P = 7 - 0.3 Q, we can conclude that

Accepted Answer

A)  demand has increased.
B)  demand has decreased.
C)  supply will increase.
D)  supply will decrease.E) B) and C)
F) A) and B)

Question 16

Use supply and demand analysis to explain what is most likely to happen to price and quantity in a market for a crop such as lettuce, tomatoes, or oranges, when extreme weather destroys a large portion of the crop.

Accepted Answer

The supply of the crop will de...

Question 17

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Accepted Answer

A) True 
 B)False

Question 18

In cases where sellers have a fixed number of units of a product to sell, the supply curve will be horizontal.

Accepted Answer

A) True 
 B)False

Question 19

A product market is in equilibrium

Accepted Answer

A)  whenever there is no surplus of the product.
B)  whenever there is no shortage of the product.
C)  when consumers want to buy more of the product than producers offer for sale.
D)  where the demand and supply curves intersect.E) None of the above
F) A) and C)

Question 20

A primary advantage of Uber to government-regulated taxis is that

Accepted Answer

A)  Uber riders are guaranteed lower fares.
B)  Uber drivers are required to meet more stringent safety standards.
C)  Uber's dynamic pricing avoids the inefficiencies caused by regulated taxi fares.
D)  the greater monopoly for rides increases profits for both Uber and regular taxi drivers.E) A) and D)
F) C) and D)

Exam 3: Demand, Supply, and Market Equilibrium

When the government pushes for expanded use of corn, such as requiring ethanol from corn to be used as an additive to gasoline, the impact in the market is that the supply of corn decreases.

Correct AnswerverifiedShow Answer

A product market is in equilibrium

Correct AnswerverifiedShow Answer

If the demand curve for product B shifts to the right as the price of product A declines, then

Correct AnswerverifiedShow Answer

Refer to the diagram. The equilibrium price and quantity in this market will be

Correct AnswerverifiedShow Answer

Graphically, the market demand curve is

Correct AnswerverifiedShow Answer

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2 Q and supply by the equation P = 2 + 0.2 Q. If demand changes from P = 10 - 0.2 Q to P = 7 - 0.3 Q, we can conclude that

Correct AnswerverifiedShow Answer

In cases where sellers have a fixed number of units of a product to sell, the supply curve will be horizontal.

Correct AnswerverifiedShow Answer

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

Correct AnswerverifiedShow Answer

What is a price ceiling and what are its economic effects?

Correct AnswerverifiedA price ceiling is an artificial price s...View AnswerShow Answer

Use supply and demand analysis to explain what is most likely to happen to price and quantity in a market for a crop such as lettuce, tomatoes, or oranges, when extreme weather destroys a large portion of the crop.

Correct AnswerverifiedThe supply of the crop will de...View AnswerShow Answer

A market that is achieving allocative efficiency also is assumed to be achieving productive efficiency.

Correct AnswerverifiedShow Answer

A primary advantage of Uber to government-regulated taxis is that

Correct AnswerverifiedShow Answer

Answer the question based on the given supply and demand data for wheat. If price was initially $4 and free to fluctuate, we would expect the

Correct AnswerverifiedShow Answer

Refer to the diagram. A government price support program to aid farmers is best illustrated by

Correct AnswerverifiedShow Answer

If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price.

Correct AnswerverifiedShow Answer

A market that achieves productive efficiency is necessarily producing the quantity of goods most desired by society.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Correct AnswerverifiedShow Answer

A market is in equilibrium

Correct AnswerverifiedShow Answer

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A price ceiling is an artificial price s...
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The supply of the crop will de...
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