Question 1

Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

Accepted Answer

A) True 
 B)False

Question 2

A supply curve indicates that:

Accepted Answer

A)   the quantity supplied of a good is higher when the price of that good is higher.
B)   the quantity supplied of a good is higher when the price of that good is lower.
C)   the supply for a good is higher when the price of that good is lower.
D)   the supply for a good is higher when the price of that good is higher.E) A) and B)
F) A) and C)

Question 3

There are 100 consumers, each of whom values a concert ticket at a unique whole number dollar amount between $1 and $100. One customer is willing to pay $1, a second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number of concert tickets are on sale for $15 each. What is the total consumer surplus in this market?

Accepted Answer

A)   $3,612.50
B)   $4,250.00
C)   $4,887.50
D)   $5,000.00E) All of the above
F) B) and D)

Question 4

If producers form expectations that copper prices will be higher in the future, then this will shift the:

Accepted Answer

A)   demand curve for copper to the left.
B)   supply curve of copper to the right.
C)   demand curve for copper to the right.
D)   supply curve of copper to the left.E) C) and D)
F) All of the above

Question 5

At low prices, only low-cost producers serve the market, but as market prices rise, higher cost-producers begin to serve the market.

Accepted Answer

A) True 
 B)False

Question 6

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

Accepted Answer

A)   The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases.
B)   The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases.
C)   The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases.
D)   The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.E) C) and D)
F) B) and D)

Question 7

Which of the following choices correctly illustrates how changes in opportunity costs affect supply?

Accepted Answer

A)   A farmer produces corn and wheat. The price of wheat rises, so he shifts his resources toward wheat and the supply of wheat rises.
B)   A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he decides to spend more of his time fishing for oysters because he can make the same amount of money with fewer lobsters.
C)   A textbook for economics becomes cheaper, so more students opt to buy that particular textbook.
D)   Milk and cereal are complementary goods, so when the price of cereal falls, the quantity supplied of milk rises.E) A) and D)
F) B) and D)

Question 8

If the government decided to heavily regulate small farmers who grow organic and free-range food, the supply of that food:

Accepted Answer

A)   would increase because the regulations would improve the quality of that food.
B)   would decrease because the regulations are like a tax on the food; they make it more expensive to produce.
C)   would have no effect, because none of the shifters of supply are affected.
D)   would increase because of changing expectations.E) All of the above
F) B) and C)

Question 9

When the price of a good goes down, demand for the good goes down.

Accepted Answer

A) True 
 B)False

Question 10

A change in which factor would shift the supply curve?

Accepted Answer

A)   the price of the good being sold
B)   the demand for the product
C)   production technology
D)   the willingness of consumers to payE) C) and D)
F) B) and C)

Question 11

Figure: Supply Shift 1 to S2 represents: A)  a decrease in supply. B)  an increase in supply. C)  a decrease in quantity supplied. D)  an increase in quantity supplied." class="answers-bank-image d-inline" rel="preload" > In the figure, a movement from S1 to S2 represents:

Accepted Answer

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

Question 12

The quantity demanded is the quantity that buyers are:

Accepted Answer

A)   willing to buy but they cannot afford to pay.
B)   able to buy at a given income level but not willing to pay.
C)   willing to buy at a given income level.
D)   willing and able to buy at a given price.E) A) and D)
F) None of the above

Question 13

New production technology in the manufacture of plasma television screens has reduced the number of defective screens. What effect will this have in the market for plasma televisions?

Accepted Answer

A)   The demand curve will increase.
B)   The supply curve will increase.
C)   The demand and supply curve both increase.
D)   The demand curve will decrease.E) A) and C)
F) All of the above

Question 14

The quantity demanded of a good or service is the amount that:

Accepted Answer

A)   consumers are willing and able to buy at a given price.
B)   firms are willing to sell during a given time period at a given price.
C)   a consumer would like to buy but might not be able to afford.
D)   a consumer needs to consume during a given time period.E) B) and D)
F) B) and C)

Question 15

Why does supply slope up?

Accepted Answer

A)   At higher prices, suppliers can profitably produce using more expensive techniques and inputs.
B)   The cost of producing a given good is the same, no matter how many are produced.
C)   Producers charge the maximum price that they can get.
D)   If supply did not slope up, it would not intersect with demand.E) B) and C)
F) A) and D)

Question 16

A decrease in expected future supply of a good will lead to:

Accepted Answer

A)   a change in the demand for the good, but not until the supply actually goes down.
B)   a change in the price of the good, but not until the supply actually goes down.
C)   a change in the demand for the good even before the supply actually decreases.
D)   no change in the demand for the good.E) B) and C)
F) C) and D)

Question 17

Use the following to answer questions: Figure: Supply Shift 1 to S2 as shown in the diagram? A)  an increase in taxes on firms' output B)  an increase in the price of inputs used to produce the output C)  a decrease in the number of firms that produce the output D)  a decrease in the wages paid to union workers who produce the output" class="answers-bank-image d-inline" rel="preload" >
-(Figure: Supply Shift)  What would cause the supply curve to shift from S1 to S2 as shown in the diagram?

Accepted Answer

A)   an increase in taxes on firms' output
B)   an increase in the price of inputs used to produce the output
C)   a decrease in the number of firms that produce the output
D)   a decrease in the wages paid to union workers who produce the outputE) A) and D)
F) A) and C)

Question 18

If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:

Accepted Answer

A)   $30.
B)   $470.
C)   $500.
D)   $530.E) All of the above
F) B) and C)

Question 19

Table: Maximum Willingness to Pay   Name  Willingness to pay  for 1 lb of bananas  Jill $2.00 Joe 1.25 Jane 0.75 James 0.25\begin{array} { l c } \hline 	ext { Name } & \begin{array} { c } 	ext { Willingness to pay } \	ext { for } 1 	ext { lb of bananas }\end{array} \\hline 	ext { Jill } & \$ 2.00 \	ext { Joe } & 1.25 \	ext { Jane } & 0.75 \	ext { James } & 0.25 \\hline\end{array} Name  Jill  Joe  Jane  James ​ Willingness to pay  for 1 lb of bananas ​$2.001.250.750.25​​  The table shows four individuals' maximum willingness to pay for one pound of bananas. If the market price of bananas is $0.50/lb, what is the total consumer surplus in the market?

Accepted Answer

A)   $4.00
B)   $2.50
C)   $2.75
D)   $4.25 E) A) and B)
F) All of the above

Question 20

A higher opportunity cost of producing a good increases the supply of that good.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

A decrease in expected future supply of a good will lead to:

Correct Answer
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If the government decided to heavily regulate small farmers who grow organic and free-range food, the supply of that food:

Correct Answer
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If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:

Correct Answer
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Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

Correct Answer
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If producers form expectations that copper prices will be higher in the future, then this will shift the:

Correct Answer
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Which of the following choices correctly illustrates how changes in opportunity costs affect supply?

Correct Answer
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Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S₁ to S₂ as shown in the diagram?

Correct Answer
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A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

Correct Answer
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At low prices, only low-cost producers serve the market, but as market prices rise, higher cost-producers begin to serve the market.

Correct Answer
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Figure: Supply Shift In the figure, a movement from S₁ to S₂ represents:

Correct Answer
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New production technology in the manufacture of plasma television screens has reduced the number of defective screens. What effect will this have in the market for plasma televisions?

Correct Answer
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Correct Answer
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A supply curve indicates that:

Correct Answer
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A change in which factor would shift the supply curve?

Correct Answer
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Correct Answer
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The quantity demanded of a good or service is the amount that:

Correct Answer
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The quantity demanded is the quantity that buyers are:

Correct Answer
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When the price of a good goes down, demand for the good goes down.

Correct Answer
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A higher opportunity cost of producing a good increases the supply of that good.

Correct Answer
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Why does supply slope up?

Correct Answer
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Exam 3: Supply and Demand

A decrease in expected future supply of a good will lead to:

Correct AnswerverifiedShow Answer

If the government decided to heavily regulate small farmers who grow organic and free-range food, the supply of that food:

Correct AnswerverifiedShow Answer

If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:

Correct AnswerverifiedShow Answer

Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

Correct AnswerverifiedShow Answer

If producers form expectations that copper prices will be higher in the future, then this will shift the:

Correct AnswerverifiedShow Answer

Which of the following choices correctly illustrates how changes in opportunity costs affect supply?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S1 to S2 as shown in the diagram?

Correct AnswerverifiedShow Answer

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

Correct AnswerverifiedShow Answer

At low prices, only low-cost producers serve the market, but as market prices rise, higher cost-producers begin to serve the market.

Correct AnswerverifiedShow Answer

Figure: Supply Shift In the figure, a movement from S1 to S2 represents:

Correct AnswerverifiedShow Answer

New production technology in the manufacture of plasma television screens has reduced the number of defective screens. What effect will this have in the market for plasma televisions?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A supply curve indicates that:

Correct AnswerverifiedShow Answer

A change in which factor would shift the supply curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The quantity demanded of a good or service is the amount that:

Correct AnswerverifiedShow Answer

The quantity demanded is the quantity that buyers are:

Correct AnswerverifiedShow Answer

When the price of a good goes down, demand for the good goes down.

Correct AnswerverifiedShow Answer

A higher opportunity cost of producing a good increases the supply of that good.

Correct AnswerverifiedShow Answer

Why does supply slope up?

Correct AnswerverifiedShow Answer

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Use the following to answer questions: Figure: Supply Shift -(Figure: Supply Shift) What would cause the supply curve to shift from S₁ to S₂ as shown in the diagram?

Correct Answer
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Correct Answer
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Correct Answer
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Figure: Supply Shift In the figure, a movement from S₁ to S₂ represents:

Correct Answer
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