Question 1

Define consumer surplus and producer surplus.

Accepted Answer

Consumer surplus is the gap between the ...

Question 2

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

Accepted Answer

A)   no change; only the supply curve for beef is likely to be affected.
B)   a shift of the demand curve for beef to the left.
C)   a movement down along the demand curve for beef to the right.
D)   a shift of the demand curve for beef to the right.E) A) and C)
F) A) and B)

Question 3

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Accepted Answer

A)   Andy's demand for pizza to increase.
B)   Andy's demand for pizza to decrease.
C)   Andy's quantity of pizza demanded to decrease.
D)   Andy's demand for beer to increase.E) A) and B)
F) C) and D)

Question 4

When quantity demanded decreases in response to a change in price:

Accepted Answer

A)   the demand curve shifts to the right.
B)   the demand curve shifts to the left.
C)   there is a movement down along the demand curve.
D)   there is a movement up along the demand curve.E) B) and D)
F) B) and C)

Question 5

In economics, the demand for a good refers to the amount of the good that people:

Accepted Answer

A)   would like to have if the good were free.
B)   will buy at various prices.
C)   need to achieve a minimum standard of living.
D)   will buy at alternative income levels.E) B) and C)
F) None of the above

Question 6

When _______, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

Accepted Answer

A)   prices rise
B)   equilibrium is achieved
C)   costs of production fall
D)   there is a population increaseE) A) and D)
F) A) and C)

Question 7

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as _______

Accepted Answer

A)   excess supply
B)   excess demand
C)   ceteris paribus
D)   a price ceilingE) All of the above
F) None of the above

Question 8

What are five things that will shift a supply curve to the right?

Accepted Answer

(any five of)
• A decrease in the price ...

Question 9

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

Accepted Answer

A)   The statement is correct.
B)   The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied."
C)   The statement is incorrect because it confuses a change in quantity supplied with a change in supply.
D)   The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."E) B) and D)
F) C) and D)

Question 10

But nearly all supply curves share a basic similarity: they slope _______.

Accepted Answer

A)   down from left to right
B)   up from left to right
C)   up from right to left
D)   down from right to leftE) B) and C)
F) A) and B)

Question 11

Various factors cause a demand curve to shift. List four different factors.

Accepted Answer

Various factors may cause a demand curve to shift: changes in income, changes in
population, changes in taste, changes in expectations of future prices.

Question 12

The term "ceteris paribus" means that:

Accepted Answer

A)   everything is variable.
B)   all variables except those specified are constant.
C)   no one knows which variables will change and which will remain constant.
D)   what is true for the individual is not necessarily true for the whole.E) A) and C)
F) B) and C)

Question 13

The downward slope of the demand curve again illustrates the pattern that as _______ rises, _______ Decreases.

Accepted Answer

A)   quantity demanded, price
B)   quantity supplied, quantity demanded
C)   price, quantity demanded
D)   price, quantity suppliedE) A) and B)
F) A) and C)

Question 14

If a firm faces _______, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

Accepted Answer

A)   higher demand
B)   lower costs of production
C)   equilibrium
D)   a shift in demandE) All of the above
F) C) and D)

Question 15

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the _______.

Accepted Answer

A)   demand curve to the right
B)   supply curve to the left
C)   supply curve to the right
D)   demand curve to the leftE) C) and D)
F) All of the above

Question 16

Around the world, many countries have passed laws to keep farm prices higher than they otherwise would be. Why does this widespread practice continue?

Accepted Answer

Price floors are enacted when...

Question 17

Any given demand or supply curve is based on the ceteris paribus assumption that _______

Accepted Answer

A)   everything is variable.
B)   all else is held equal
C)   no one knows which variables will change and which will remain constant.
D)   what is true for the individual is not necessarily true for the whole.E) A) and D)
F) B) and C) B

Question 18

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and , _______ shown on the horizontal axis.

Accepted Answer

A)   demand
B)   quantity
C)   quantity supplied
D)   quantity demandedE) B) and C)
F) A) and D)

Question 19

The _______ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

Accepted Answer

A)   quantity demanded
B)   equilibrium quantity
C)   demand schedule
D)   supply scheduleE) C) and D)
F) A) and B) B

Question 20

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _______.

Accepted Answer

A)   demand schedule
B)   market price
C)   quantity supplied
D)   demand curveE) None of the above
F) A) and B)

Exam 3: Demand and Supply

Define consumer surplus and producer surplus.

Correct AnswerverifiedConsumer surplus is the gap between the ...View AnswerShow Answer

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

Correct AnswerverifiedShow Answer

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Correct AnswerverifiedShow Answer

When quantity demanded decreases in response to a change in price:

Correct AnswerverifiedShow Answer

In economics, the demand for a good refers to the amount of the good that people:

Correct AnswerverifiedShow Answer

When _______, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

Correct AnswerverifiedShow Answer

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as _______

Correct AnswerverifiedShow Answer

What are five things that will shift a supply curve to the right?

Correct Answerverified(any five of)• A decrease in the price ...View AnswerShow Answer

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

Correct AnswerverifiedShow Answer

But nearly all supply curves share a basic similarity: they slope _______.

Correct AnswerverifiedShow Answer

Various factors cause a demand curve to shift. List four different factors.

Correct AnswerverifiedVarious factors may cause a demand curve to shift: changes in income, changes in population, changes in taste, changes in expectations of future prices.

The term "ceteris paribus" means that:

Correct AnswerverifiedShow Answer

The downward slope of the demand curve again illustrates the pattern that as _______ rises, _______ Decreases.

Correct AnswerverifiedShow Answer

If a firm faces _______, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

Correct AnswerverifiedShow Answer

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the _______.

Correct AnswerverifiedShow Answer

Around the world, many countries have passed laws to keep farm prices higher than they otherwise would be. Why does this widespread practice continue?

Correct Answerverified Price floors are enacted when...View AnswerShow Answer

Any given demand or supply curve is based on the ceteris paribus assumption that _______

Correct AnswerverifiedB

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and , _______ shown on the horizontal axis.

Correct AnswerverifiedShow Answer

The _______ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

Correct AnswerverifiedB

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _______.

Correct AnswerverifiedShow Answer

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Consumer surplus is the gap between the ...
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(any five of)
• A decrease in the price ...
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Various factors may cause a demand curve to shift: changes in income, changes in population, changes in taste, changes in expectations of future prices.

Correct Answer
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The downward slope of the demand curve again illustrates the pattern that as _ rises, _ Decreases.

Correct Answer
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Price floors are enacted when...
View Answer

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B

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B

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