Question 1

Goods X and Y are complementary goods.A decrease in price of good X has occurred.In the market for good Y,this will lead to

Accepted Answer

A)  an increase in price and a decrease in quantity.
B)  an increase in price and an increase in quantity.
C)  a decrease in price and a decrease in quantity.
D)  a decrease in price and an increase in quantity.E) A) and B)
F) C) and D)

Question 2

Under rent controls,

Accepted Answer

A)  apartments tend to be nicer than they would be under freely competitive markets.
B)  landlord-tenant relationships are more harmonious than under freely competitive markets.
C)  the quantity demanded of rental units is less than it would be under freely competitive markets.
D)  the number of rental units available for rent is lower than under freely competitive markets.E) B) and D)
F) A) and D)

Question 3

Suppose that the market for coffee is in equilibrium at a price of $1.50 per pound and a monthly quantity of 20 million pounds.News of a freeze in Brazil arrives so that people know that the supply of coffee months from now will be sharply reduced.What,if anything,will happen in the coffee market now? Explain.

Accepted Answer

The expectations of reduced su...

Question 4

"Scarcity implies that some way of rationing goods must be found." Explain what this statement means.How is this rationing done?

Accepted Answer

Scarcity means that there are not enough...

Question 5

Prices in a market economy perform a rationing function because they reflect

Accepted Answer

A)  the demand of all buyers in the market.
B)  the extent to which the goods are necessities.
C)  the strength of the supply curve.
D)  the relative scarcity of the goods.E) A) and B)
F) A) and C)

Question 6

-Refer to the above table.Suppose the demand for smartphones rises because more people use the Internet with a smartphone.The new equilibrium price will be

Accepted Answer

A)  $200.
B)  $275.
C)  more than $275.
D)  impossible to be determined given the information.E) A) and B)
F) A) and C)

Question 7

Your local grocery store reduces transaction costs to the consumer

Accepted Answer

A)  by reducing the consumer's need to travel from food producer to food producer (or manufacturer to manufacturer) to purchase the food staples that the consumer desires.
B)  by providing a system that directs funds from lenders to borrowers.
C)  by providing a system of justice to enforce contracts.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 8

Which of the following statements is NOT true about exchanges in the market system?

Accepted Answer

A)  In voluntary exchange both parties are better off because of the exchange.
B)  Exchanges occur only in situations of barter where the market price is irrelevant.
C)  Prices indicate what is relatively abundant and what is relatively scarce.
D)  Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information.E) B) and D)
F) B) and C)

Question 9

If demand increases and supply decreases,

Accepted Answer

A)  the market clearing price definitely will increase,and the equilibrium quantity definitely will increase.
B)  the market clearing price definitely will increase,and the equilibrium quantity definitely will decrease.
C)  the market clearing price definitely will increase,but the change in the equilibrium quantity cannot be determined without more information.
D)  the equilibrium quantity definitely will decrease,but the change in the market clearing price cannot be determined without more information.E) A) and D)
F) B) and D)

Question 10

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York.The game was sold out and some fans could not get tickets.This suggests that

Accepted Answer

A)  selling price was below equilibrium price.
B)  selling price was above equilibrium price.
C)  selling price was at equilibrium.
D)  the game was advertised too heavily.E) A) and D)
F) A) and C)

Question 11

A minimum wage is an example of a

Accepted Answer

A)  price ceiling.
B)  price floor.
C)  black market.
D)  market clearing price.E) A) and B)
F) B) and D)

Question 12

The effect of a legal minimum wage set above the equilibrium wage rate is

Accepted Answer

A)  an excess quantity of labor demanded.
B)  an excess quantity of labor supplied.
C)  an increase in the quantity of labor demanded.
D)  a decrease in quantity of labor supplied.E) A) and B)
F) C) and D)

Question 13

An increase in the minimum wage will tend to cause which of the following to occur?

Accepted Answer

A)  an increase in the size of the surplus of labor
B)  a leftward shift in the demand for labor
C)  a rightward shift in the supply of labor
D)  a reduction in the unemployment rateE) A) and C)
F) A) and B)

Question 14

When are black markets likely to arise?

Accepted Answer

A)  when the government removes a price floor
B)  when the government enforces a price ceiling
C)  when there is a surplus of a good
D)  when the quantity supplied of a good exceeds the quantity demandedE) All of the above
F) B) and D)

Question 15

-Assume that the initial demand and supply curves in the above figure are DA and SA,respectively.The initial equilibrium price and quantity are

Accepted Answer

A)  P1 and E.
B)  P3 and F.
C)  P1 and G.
D)  P2 and F.E) None of the above
F) A) and C)

Question 16

One effect of a minimum wage in the market for low-skilled labor is

Accepted Answer

A)  a shortage of low-skilled labor.
B)  a surplus of low-skilled labor.
C)  no effect in the market for low-skilled labor.
D)  an increase in demand for low-skilled labor.E) B) and C)
F) All of the above

Question 17

The rationing function of prices means that

Accepted Answer

A)  government is responsible for setting the prices of basic foods.
B)  all goods and services are produced by large firms.
C)  businesses determine what goods consumers should purchase.
D)  buyers and sellers synchronize their decisions through the price system.E) A) and B)
F) A) and C)

Question 18

People consume more fresh fruit in the summer than during the rest of the year,yet the prices of fresh fruit are lower in the summer than in other seasons.What accounts for this?

Accepted Answer

A)  Fresh fruit is not subject to the law of supply.
B)  The supply of fresh fruit increases in the summer.
C)  Fresh fruit is an inferior good.
D)  Fresh fruit is not subject to the law of demand.E) All of the above
F) C) and D)

Question 19

In a market system,the costs associated with exchanging goods are known as

Accepted Answer

A)  voluntary costs.
B)  signaling costs.
C)  wholesale costs.
D)  transaction costs.E) All of the above
F) A) and B)

Question 20

-In the above figure,a shortage could be caused by a government price ceiling set at

Accepted Answer

A)  $1.00.
B)  $2.00.
C)  $2.50.
D)  $3.00.E) A) and C)
F) A) and B)

Exam 4: Extensions of Demand and Supply Analysis

In a market system,the costs associated with exchanging goods are known as

Correct Answer
verified

People consume more fresh fruit in the summer than during the rest of the year,yet the prices of fresh fruit are lower in the summer than in other seasons.What accounts for this?

Correct Answer
verified

One effect of a minimum wage in the market for low-skilled labor is

Correct Answer
verified

-Assume that the initial demand and supply curves in the above figure are DA and SA,respectively.The initial equilibrium price and quantity are

Correct Answer
verified

Goods X and Y are complementary goods.A decrease in price of good X has occurred.In the market for good Y,this will lead to

Correct Answer
verified

-In the above figure,a shortage could be caused by a government price ceiling set at

Correct Answer
verified

Correct Answer
verified
The expectations of reduced su...
View Answer

Which of the following statements is NOT true about exchanges in the market system?

Correct Answer
verified

The rationing function of prices means that

Correct Answer
verified

Prices in a market economy perform a rationing function because they reflect

Correct Answer
verified

When are black markets likely to arise?

Correct Answer
verified

-Refer to the above table.Suppose the demand for smartphones rises because more people use the Internet with a smartphone.The new equilibrium price will be

Correct Answer
verified

A minimum wage is an example of a

Correct Answer
verified

Your local grocery store reduces transaction costs to the consumer

Correct Answer
verified

An increase in the minimum wage will tend to cause which of the following to occur?

Correct Answer
verified

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York.The game was sold out and some fans could not get tickets.This suggests that

Correct Answer
verified

"Scarcity implies that some way of rationing goods must be found." Explain what this statement means.How is this rationing done?

Correct Answer
verified
Scarcity means that there are not enough...
View Answer

Under rent controls,

Correct Answer
verified

If demand increases and supply decreases,

Correct Answer
verified

The effect of a legal minimum wage set above the equilibrium wage rate is

Correct Answer
verified

Exam 4: Extensions of Demand and Supply Analysis

In a market system,the costs associated with exchanging goods are known as

Correct AnswerverifiedShow Answer

People consume more fresh fruit in the summer than during the rest of the year,yet the prices of fresh fruit are lower in the summer than in other seasons.What accounts for this?

Correct AnswerverifiedShow Answer

One effect of a minimum wage in the market for low-skilled labor is

Correct AnswerverifiedShow Answer

-Assume that the initial demand and supply curves in the above figure are DA and SA,respectively.The initial equilibrium price and quantity are

Correct AnswerverifiedShow Answer

Goods X and Y are complementary goods.A decrease in price of good X has occurred.In the market for good Y,this will lead to

Correct AnswerverifiedShow Answer

-In the above figure,a shortage could be caused by a government price ceiling set at

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe expectations of reduced su...View AnswerShow Answer

Which of the following statements is NOT true about exchanges in the market system?

Correct AnswerverifiedShow Answer

The rationing function of prices means that

Correct AnswerverifiedShow Answer

Prices in a market economy perform a rationing function because they reflect

Correct AnswerverifiedShow Answer

When are black markets likely to arise?

Correct AnswerverifiedShow Answer

-Refer to the above table.Suppose the demand for smartphones rises because more people use the Internet with a smartphone.The new equilibrium price will be

Correct AnswerverifiedShow Answer

A minimum wage is an example of a

Correct AnswerverifiedShow Answer

Your local grocery store reduces transaction costs to the consumer

Correct AnswerverifiedShow Answer

An increase in the minimum wage will tend to cause which of the following to occur?

Correct AnswerverifiedShow Answer

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York.The game was sold out and some fans could not get tickets.This suggests that

Correct AnswerverifiedShow Answer

"Scarcity implies that some way of rationing goods must be found." Explain what this statement means.How is this rationing done?

Correct AnswerverifiedScarcity means that there are not enough...View AnswerShow Answer

Under rent controls,

Correct AnswerverifiedShow Answer

If demand increases and supply decreases,

Correct AnswerverifiedShow Answer

The effect of a legal minimum wage set above the equilibrium wage rate is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The expectations of reduced su...
View 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
Scarcity means that there are not enough...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified