Question 1

Which of the following statements is true about price ceilings?

Accepted Answer

A)   Price ceilings cause goods to be rationed.
B)   Price ceilings cause goods to be rationed by some other means than legally determined market prices.
C)   Ration coupons are the only way to ration goods when price ceilings are in place.
D)   All of the other statements are correct.E) A) and C)
F) A) and B)

Question 2

A government subsidy to the producers of a product:

Accepted Answer

A)   reduces product supply.
B)   increases product supply.
C)   reduces product demand.
D)   increases product demand.E) B) and C)
F) A) and B)

Question 3

The income and substitution effects account for:

Accepted Answer

A)   the upward-sloping supply curve.
B)   the downward-sloping demand curve.
C)   movements along a given supply curve.
D)   shifts in the demand curve.E) A) and B)
F) A) and C)

Question 4

(Advanced analysis) The equation for the supply curve in the below diagram is approximately: 1/3Q. B)  P = 4 + 2Q. C)  P = 4 + 3Q. D)  P = 4 - 3Q." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   P = 4 + 1/3Q.
B)   P = 4 + 2Q.
C)   P = 4 + 3Q.
D)   P = 4 - 3Q.E) All of the above
F) A) and C)

Question 5

Price floors and ceiling prices:

Accepted Answer

A)   both cause shortages.
B)   both cause surpluses.
C)   cause the supply and demand curves to shift until equilibrium is established.
D)   interfere with the rationing function of prices.E) A) and B)
F) None of the above

Question 6

The location of the product supply curve depends on the:

Accepted Answer

A)   production technology.
B)   number of buyers in the market.
C)   tastes of buyers.
D)   location of the demand curve.E) None of the above
F) B) and C)

Question 7

Other things equal,which of the following might shift the demand curve for gasoline to the left?

Accepted Answer

A)   The discovery of vast new oil reserves in Montana.
B)   The development of a low-cost electric automobile.
C)   An increase in the price of train and air transportation.
D)   A large decline in the price of automobiles.E) B) and C)
F) A) and B)

Question 8

Toothpaste and toothbrushes are substitute goods.

Accepted Answer

A) True 
 B)False

Question 9

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) A) and D)
F) B) and D)

Question 10

A leftward shift of a product supply curve might be caused by:

Accepted Answer

A)   an improvement in the relevant technique of production.
B)   a decline in the prices of needed inputs.
C)   an increase in consumer incomes.
D)   some firms leaving an industry.E) All of the above
F) None of the above

Question 11

A normal good is one:

Accepted Answer

A)   whose amount demanded will increase as its price decreases.
B)   whose amount demanded will increase as its price increases.
C)   whose demand curve will shift leftward as incomes rise.
D)   for which the consumption varies directly with income.E) B) and C)
F) All of the above

Question 12

Which of the following statements is true about productive and allocative efficiency?

Accepted Answer

A)   Realizing allocative efficiency implies that productive efficiency has been realized.
B)   Productive efficiency can only occur if there is also allocative efficiency.
C)   Society can achieve either productive efficiency or allocative efficiency,but not both simultaneously.
D)   Productive efficiency and allocative efficiency can only occur together;neither can occur without the other.E) C) and D)
F) B) and D)

Question 13

A government tax per unit of output reduces supply.

Accepted Answer

A) True 
 B)False

Question 14

If the supply of a product decreases and the demand for that product simultaneously increases,then equilibrium:

Accepted Answer

A)   price must rise,but equilibrium quantity may rise,fall,or remain unchanged.
B)   price must rise and equilibrium quantity must fall.
C)   price and equilibrium quantity must both increase.
D)   price and equilibrium quantity must both decline.E) C) and D)
F) A) and D)

Question 15

An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction assumes that:

Accepted Answer

A)   there are many goods that are substitutes for bicycles.
B)   there are many goods that are complementary to bicycles.
C)   there are few goods that are substitutes for bicycles.
D)   bicycles are normal goods.E) B) and D)
F) B) and C)

Question 16

The upward slope of the supply curve reflects the:

Accepted Answer

A)   principle of specialization in production.
B)   law of supply.
C)   fact that price and quantity supplied are inversely related.
D)   law of diminishing marginal utility.E) None of the above
F) All of the above

Question 17

A market:

Accepted Answer

A)   reflects upsloping demand and downsloping supply curves.
B)   entails the exchange of goods,but not services.
C)   is an institution that brings together buyers and sellers.
D)   always requires face-to-face contact between buyer and seller.E) All of the above
F) A) and C)

Question 18

In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for,or supply (S) of,X; (2) the equilibrium price (P) of X;and (3) the equilibrium quantity (Q) of X. Refer to the given information.A reduction in the number of firms producing X will:

Accepted Answer

A)   increase D,increase P,and increase Q.
B)   increase S,decrease P,and increase Q.
C)   decrease S,increase P,and decrease Q.
D)   decrease S,decrease P,and increase Q.E) B) and D)
F) A) and D)

Question 19

The supply curve shows the relationship between:

Accepted Answer

A)   price and quantity supplied.
B)   production costs and the amount demanded.
C)   total business revenues and quantity supplied.
D)   physical inputs of resources and the resulting units of output.E) C) and D)
F) B) and C)

Question 20

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)

Exam 3: Demand, Supply, and Market Equilibrium

A normal good is one:

Correct Answer
verified

A leftward shift of a product supply curve might be caused by:

Correct Answer
verified

An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction assumes that:

Correct Answer
verified

Which of the following statements is true about productive and allocative efficiency?

Correct Answer
verified

Graphically,the market demand curve is:

Correct Answer
verified

A market:

Correct Answer
verified

The location of the product supply curve depends on the:

Correct Answer
verified

If the supply of a product decreases and the demand for that product simultaneously increases,then equilibrium:

Correct Answer
verified

Toothpaste and toothbrushes are substitute goods.

Correct Answer
verified

Which of the following statements is true about price ceilings?

Correct Answer
verified

The upward slope of the supply curve reflects the:

Correct Answer
verified

The income and substitution effects account for:

Correct Answer
verified

The supply curve shows the relationship between:

Correct Answer
verified

A government tax per unit of output reduces supply.

Correct Answer
verified

Correct Answer
verified

Other things equal,which of the following might shift the demand curve for gasoline to the left?

Correct Answer
verified

(Advanced analysis) The equation for the supply curve in the below diagram is approximately:

Correct Answer
verified

A government subsidy to the producers of a product:

Correct Answer
verified

A market is in equilibrium:

Correct Answer
verified

Price floors and ceiling prices:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

A normal good is one:

Correct AnswerverifiedShow Answer

A leftward shift of a product supply curve might be caused by:

Correct AnswerverifiedShow Answer

An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction assumes that:

Correct AnswerverifiedShow Answer

Which of the following statements is true about productive and allocative efficiency?

Correct AnswerverifiedShow Answer

Graphically,the market demand curve is:

Correct AnswerverifiedShow Answer

A market:

Correct AnswerverifiedShow Answer

The location of the product supply curve depends on the:

Correct AnswerverifiedShow Answer

If the supply of a product decreases and the demand for that product simultaneously increases,then equilibrium:

Correct AnswerverifiedShow Answer

Toothpaste and toothbrushes are substitute goods.

Correct AnswerverifiedShow Answer

Which of the following statements is true about price ceilings?

Correct AnswerverifiedShow Answer

The upward slope of the supply curve reflects the:

Correct AnswerverifiedShow Answer

The income and substitution effects account for:

Correct AnswerverifiedShow Answer

The supply curve shows the relationship between:

Correct AnswerverifiedShow Answer

A government tax per unit of output reduces supply.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things equal,which of the following might shift the demand curve for gasoline to the left?

Correct AnswerverifiedShow Answer

(Advanced analysis) The equation for the supply curve in the below diagram is approximately:

Correct AnswerverifiedShow Answer

A government subsidy to the producers of a product:

Correct AnswerverifiedShow Answer

A market is in equilibrium:

Correct AnswerverifiedShow Answer

Price floors and ceiling prices:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified