Question 1

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an example of a price ceiling?

Accepted Answer

A)  limits on interest rates charged by credit card companies
B)  subsidies for apartment rent in major cities
C)  minimum-wage laws for unskilled workers
D)  price supports for agricultural productsE) C) and D)
F) B) and D)

Question 3

If there is a shortage of product X, and the price is free to change,

Accepted Answer

A)  fewer resources will be allocated to the production of this good.
B)  the price of the product will rise.
C)  the price of the product will decline.
D)  the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.E) B) and C)
F) C) and D)

Question 4

Consumers buy more of normal goods as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 5

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

A) True 
 B)False

Question 6

If X is a normal good, a rise in money income will shift the

Accepted Answer

A)  supply curve for X to the left.
B)  supply curve for X to the right.
C)  demand curve for X to the left.
D)  demand curve for X to the right.E) None of the above
F) A) and B)

Question 7

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Accepted Answer

A)  When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell.
B)  When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell.
C)  When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell.
D)  None of these statements use the terms correctly.E) All of the above
F) A) and B)

Question 8

If the price of oil increases significantly, buyers and sellers of gasoline will both expect the price of gasoline to also increase.If sellers of gasoline act on their expectations more than the buyers do, then

Accepted Answer

A)  the equilibrium price of gasoline will increase, while the equilibrium quantity will decrease.
B)  the equilibrium price of gasoline will increase, while the equilibrium quantity will increase.
C)  the equilibrium price of gasoline will decrease, while the equilibrium quantity will decrease.
D)  the equilibrium price of gasoline will decrease, while the equilibrium quantity will increase.E) All of the above
F) A) and B)

Question 9

Which of the following factors is a "demand shifter" for new houses?

Accepted Answer

A)  the price of lumber
B)  wages for construction workers
C)  the price of new houses
D)  the interest rates on mortgage loansE) C) and D)
F) None of the above

Question 10

A government will create a surplus in a market when it

Accepted Answer

A)  sets a price ceiling above the equilibrium price.
B)  sets a price floor above the equilibrium price.
C)  sets a price floor below the equilibrium price.
D)  sets a price ceiling below the equilibrium price.E) A) and D)
F) A) and C)

Question 11

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 12

The supply curve in a market is vertical instead of upsloping whenever

Accepted Answer

A)  all buyers are willing to pay only one price for the item.
B)  sellers have no flexibility in setting the price of the item.
C)  buyers want to buy a fixed quantity regardless of price.
D)  sellers have a fixed quantity of the item for sale.E) B) and C)
F) None of the above

Question 13

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Accepted Answer

A) True 
 B)False

Question 14

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective)  will

Accepted Answer

A)  increase equilibrium price and quantity.
B)  decrease equilibrium price and quantity.
C)  increase equilibrium price and decrease equilibrium quantity.
D)  decrease equilibrium price and increase equilibrium quantity.E) None of the above
F) A) and B)

Question 15

If products C and D are close substitutes, an increase in the price of C will

Accepted Answer

A)  tend to cause the price of D to fall.
B)  shift the demand curve for C to the left and the demand curve for D to the right.
C)  shift the demand curve for D to the right.
D)  shift the demand curves of both products to the right.E) None of the above
F) A) and C)

Question 16

If the price of product L increases, the demand curve for close-substitute product J will

Accepted Answer

A)  shift downward toward the horizontal axis.
B)  shift to the left.
C)  shift to the right.
D)  remain unchanged.E) C) and D)
F) None of the above

Question 17

If product Y is an inferior good, a decrease in consumer incomes will

Accepted Answer

A)  make buyers want to buy less of Product Y.
B)  not affect the sales of product Y.
C)  shift the demand curve for product Y to the left.
D)  shift the demand curve for product Y to the right.E) A) and D)
F) All of the above

Question 18

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 19

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.If demand changes from P = 10 - .2Q to P = 7 - .3Q, we can conclude that

Accepted Answer

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

Question 20

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Accepted Answer

A)  consumer incomes have declined, and consumers now want to buy less of A at each possible price.
B)  the price of A has increased and, as a result, consumers want to purchase less of it.
C)  consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
D)  the price of A has declined and, as a result, consumers want to purchase more of it.E) None of the above
F) B) and D)

Exam 3: Demand, Supply, and Market Equilibrium

The supply curve in a market is vertical instead of upsloping whenever

Correct AnswerverifiedShow Answer

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Correct AnswerverifiedShow Answer

Consumers buy more of normal goods as their incomes rise.

Correct AnswerverifiedShow Answer

If X is a normal good, a rise in money income will shift the

Correct AnswerverifiedShow Answer

If the price of oil increases significantly, buyers and sellers of gasoline will both expect the price of gasoline to also increase.If sellers of gasoline act on their expectations more than the buyers do, then

Correct AnswerverifiedShow Answer

If the price of product L increases, the demand curve for close-substitute product J will

Correct AnswerverifiedShow Answer

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

Correct AnswerverifiedShow Answer

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Correct AnswerverifiedShow Answer

If products C and D are close substitutes, an increase in the price of C will

Correct AnswerverifiedShow Answer

A shift to the right in the demand curve for product A can be most reasonably explained by saying that

Correct AnswerverifiedShow Answer

Which of the following is an example of a price ceiling?

Correct AnswerverifiedShow Answer

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Correct AnswerverifiedShow Answer

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it.

Correct AnswerverifiedShow Answer

If product Y is an inferior good, a decrease in consumer incomes will

Correct AnswerverifiedShow Answer

A government will create a surplus in a market when it

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

Which of the following factors is a "demand shifter" for new houses?

Correct AnswerverifiedShow Answer

If there is a shortage of product X, and the price is free to change,

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.If demand changes from P = 10 - .2Q to P = 7 - .3Q, we can conclude that

Correct AnswerverifiedShow Answer

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Correct AnswerverifiedShow Answer

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