Question 1

By an "increase in demand," economists mean that

Accepted Answer

A)  product price has fallen, so consumers move down to a new point on the demand curve.
B)  the quantity demanded at each price in a set of prices is greater.
C)  the quantity demanded at each price in a set of prices is smaller.
D)  a leftward shift of the demand curve has occurreD.E) A) and B)
F) B) and C)

Question 2

In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

Accepted Answer

A) True 
 B)False

Question 3

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

Accepted Answer

A)  a decrease in people's incomes, and the product is an inferior good
B)  a long strike by workers who make the product
C)  a decrease in the price of a substitute good
D)  a technological improvement in production methodsE) All of the above
F) C) and D)

Question 4

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased.Based on this we can conclude that

Accepted Answer

A)  decreases in the demand for computer memory have exceeded increases in supply.
B)  decreases in the supply of computer memory have exceeded increases in demand.
C)  increases in the demand for computer memory have exceeded increases in supply.
D)  increases in the supply of computer memory have exceeded increases in demand.E) A) and D)
F) All of the above

Question 5

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will increase.

Accepted Answer

A) True 
 B)False

Question 6

A government subsidy per unit of output increases supply.

Accepted Answer

A) True 
 B)False

Question 7

Buyers and sellers do not have to deal face-to-face with one another in markets.

Accepted Answer

A) True 
 B)False

Question 8

The rationing function of prices refers to the

Accepted Answer

A)  tendency of supply and demand to shift in opposite directions.
B)  fact that ration coupons are needed to alleviate wartime shortages of goods.
C)  capacity of a competitive market to equalize quantity demanded and quantity supplied.
D)  ability of the market system to generate an equitable distribution of income.E) B) and D)
F) A) and C)

Question 9

Camille's Creations and Julia's Jewels both sell beads in a competitive market.If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to

Accepted Answer

A)  raise their price and reduce their quantity supplied.
B)  raise their price and increase their quantity supplied.
C)  lower their price and reduce their quantity supplied.
D)  lower their price and increase their quantity supplied.E) None of the above
F) A) and D)

Question 10

Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased.This statement

Accepted Answer

A)  suggests that the supply of Blu-ray players has increased.
B)  suggests that the demand for Blu-ray players has increased.
C)  constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve.
D)  constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve.E) None of the above
F) A) and D)

Question 11

If there was initially a shortage in the market for a product, then

Accepted Answer

A)  sellers will drive the price down.
B)  sellers will drive the price up.
C)  buyers will drive the price down.
D)  buyers will drive the price up.E) A) and B)
F) A) and C)

Question 12

When tickets are "scalped," then in this market transaction

Accepted Answer

A)  the buyer benefits, but the seller does not.
B)  the seller benefits, but the buyer does not.
C)  both the buyer and seller benefit.
D)  neither the buyer nor seller benefit, because it is illegal.E) A) and B)
F) C) and D)

Question 13

Which of the following is not a determinant of demand for laptop computers?

Accepted Answer

A)  income of buyers of laptop computers
B)  the cost of inputs for producing laptop computers
C)  the prices of related goods such as software and iPads
D)  expectations about the future price of laptop computersE) All of the above
F) None of the above

Question 14

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Accepted Answer

A)  substitutes are relatively more expensive.
B)  consumers' real income has increased.
C)  the marginal benefit of additional units of the good now outweigh the marginal cost.
D)  the good is now perceived as having higher quality.E) A) and B)
F) A) and C)

Question 15

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate.

Accepted Answer

A) True 
 B)False

Question 16

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese.When they finish school and start careers, their consumption of both goods frequently declines.This suggests that ramen noodles and boxed macaroni and cheese are

Accepted Answer

A)  inferior goods.
B)  normal goods.
C)  complementary goods.
D)  substitute goods.E) B) and C)
F) A) and B)

Question 17

A demand curve

Accepted Answer

A)  shows the relationship between price and quantity supplied.
B)  indicates the quantity demanded at each price in a series of prices.
C)  graphs as an upsloping line.
D)  shows the relationship between income and spending.E) A) and C)
F) B) and D)

Question 18

If an economy is being "productively efficient," then that means the economy is

Accepted Answer

A)  producing the products most wanted by society.
B)  fully employing all economic resources.
C)  maximizing the returns to factors of production.
D)  using the least costly production techniques.E) B) and C)
F) B) and D)

Question 19

A and B are substitute goods, but A and C are complementary goods.If the cost of producing A decreases, then the demand for

Accepted Answer

A)  both B and C will decrease.
B)  both B and C will increase.
C)  B will increase and the demand for C will decrease.
D)  B will decrease and the demand for C will increase.E) A) and B)
F) None of the above

Question 20

An increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium

Accepted Answer

A)  price to go up and quantity to go down.
B)  price to go up and quantity to go up.
C)  price to go down and quantity to go down.
D)  price to go down and quantity to go up.E) A) and D)
F) B) and D)

Exam 3: Demand, Supply, and Market Equilibrium

The rationing function of prices refers to the

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An increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium

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Buyers and sellers do not have to deal face-to-face with one another in markets.

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A demand curve

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By an "increase in demand," economists mean that

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If there was initially a shortage in the market for a product, then

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In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.

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An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate.

Correct AnswerverifiedShow Answer

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased.Based on this we can conclude that

Correct AnswerverifiedShow Answer

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese.When they finish school and start careers, their consumption of both goods frequently declines.This suggests that ramen noodles and boxed macaroni and cheese are

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Which of the following is not a determinant of demand for laptop computers?

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Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased.This statement

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A and B are substitute goods, but A and C are complementary goods.If the cost of producing A decreases, then the demand for

Correct AnswerverifiedShow Answer

Camille's Creations and Julia's Jewels both sell beads in a competitive market.If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to

Correct AnswerverifiedShow Answer

Which would best explain a decrease in both the price and the quantity of a product over a period of time?

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According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

Correct AnswerverifiedShow Answer

A government subsidy per unit of output increases supply.

Correct AnswerverifiedShow Answer

If an economy is being "productively efficient," then that means the economy is

Correct AnswerverifiedShow Answer

The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will increase.

Correct AnswerverifiedShow Answer

When tickets are "scalped," then in this market transaction

Correct AnswerverifiedShow Answer

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