Question 1

A surplus of a product will arise when price is

Accepted Answer

A)  above equilibrium, with the result that quantity demanded exceeds quantity supplied.
B)  above equilibrium, with the result that quantity supplied exceeds quantity demanded.
C)  below equilibrium, with the result that quantity demanded exceeds quantity supplied.
D)  below equilibrium, with the result that quantity supplied exceeds quantity demanded.E) A) and B)
F) A) and C)

Question 2

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  gold watches
B)  ocean cruises
C)  used clothing
D)  steakE) None of the above
F) A) and C)

Question 3

When the price of oil declines significantly, the price of gasoline also declines.The latter occurs because of a(n)

Accepted Answer

A)  increase in the demand for gasoline.
B)  decrease in the demand for gasoline.
C)  increase in the supply of gasoline.
D)  decrease in the supply of gasoline.E) B) and D)
F) All of the above

Question 4

A price floor means that

Accepted Answer

A)  inflation is severe in this particular market.
B)  sellers are artificially restricting supply to raise price.
C)  government is imposing a maximum legal price that is typically below the equilibrium price.
D)  government is imposing a minimum legal price that is typically above the equilibrium price.E) C) and D)
F) A) and D)

Question 5

Allocative efficiency involves determining

Accepted Answer

A)  which output mix will result in the most rapid rate of economic growth.
B)  which production possibilities curve reflects the lowest opportunity costs.
C)  the mix of output that will maximize society's satisfaction.
D)  the optimal rate of technological progress.E) B) and C)
F) A) and D)

Question 6

There will be a surplus of a product when

Accepted Answer

A)  price is below the equilibrium level.
B)  the supply curve is downward sloping and the demand curve is upward sloping.
C)  the demand and supply curves fail to intersect.
D)  consumers want to buy less than producers offer for sale.E) A) and B)
F) B) and D)

Question 7

Other things being equal, the law of demand suggests that as

Accepted Answer

A)  the demand for iPads increases, this will cause the price to increase.
B)  income increases, the quantity of iPads demanded will increase.
C)  the price of iPads decreases, the quantity demanded will increase.
D)  the price of iPads decreases, the quantity demanded will decrease.E) A) and B)
F) A) and C)

Question 8

If producers must obtain higher prices than before to produce a given level of output, then the following has occurred.

Accepted Answer

A)  a decrease in demand
B)  an increase in demand
C)  a decrease in supply
D)  an increase in supplyE) B) and D)
F) B) and C)

Question 9

(Consider This)  Uberâ€™s dynamic pricing

Accepted Answer

A)  prevents regulated taxi drivers from changing their fares.
B)  keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions.
C)  creates long wait times for consumers wanting rides at peak demand times.
D)  results in ride pricing that is unfair to consumers.E) C) and D)
F) B) and C)

Question 10

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Accepted Answer

A) True 
 B)False

Question 11

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1)  the demand (D)  for, or supply (S)  of, X; (2)  the equilibrium price (P)  of X; and (3)  the equilibrium quantity (Q)  of X.A decrease in the number of consumers of product X will

Accepted Answer

A)  decrease S, decrease P, and decrease Q.
B)  increase D, increase P, and increase Q.
C)  decrease D, decrease P, and decrease Q.
D)  decrease D, decrease P, and increase Q.E) A) and B)
F) B) and C)

Question 12

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips.This is an illustration of

Accepted Answer

A)  the income effect.
B)  the substitution effect.
C)  diminishing marginal utility.
D)  consumer sovereignty.E) A) and B)
F) A) and C)

Question 13

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise.This can best be explained by saying that oil and natural gas are

Accepted Answer

A)  complementary goods, and the higher price for oil increased the demand for natural gas.
B)  substitute goods, and the higher price for oil increased the demand for natural gas.
C)  complementary goods, and the higher price for oil decreased the supply of natural gas.
D)  substitute goods, and the higher price for oil decreased the supply of natural gas.E) All of the above
F) C) and D)

Question 14

Over a period of time, the equilibrium price of a good increases and the quantity decreases.All of the following could account for this situation, except

Accepted Answer

A)  an increase in the costs of production.
B)  the removal of a subsidy on the good or service.
C)  the imposition of a sales tax on the good or service.
D)  a decrease in the price of an alternative good or service that producers could also produce.E) A) and C)
F) None of the above

Question 15

An effective price floor will

Accepted Answer

A)  force some firms in this industry to go out of business.
B)  result in a product surplus.
C)  result in a product shortage.
D)  clear the market.E) None of the above
F) C) and D)

Question 16

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Accepted Answer

A) True 
 B)False

Question 17

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased.From this information we can conclude that

Accepted Answer

A)  higher education is an exception to the law of demand.
B)  the supply of education provided by GSU has also increased over the 20-year period.
C)  factors such as school-age population, incomes, and preferences for education have increased over the 20-year period.
D)  GSU's supply curve of education is downsloping.E) B) and C)
F) A) and D)

Question 18

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Accepted Answer

A) True 
 B)False

Question 19

(Consider This)  Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year.Based on this information, we can conclude that the

Accepted Answer

A)  law of supply has been violated.
B)  law of demand has been violated.
C)  demand for salsa has increased.
D)  supply of salsa has increased.E) A) and B)
F) A) and C)

Question 20

(Consider This)  Dynamic pricing refers to

Accepted Answer

A)  the ability to set equilibrium prices in real time in response to changing supply and demand conditions.
B)  the rapid inflation that occurs in economies without a stable money supply.
C)  pricing tickets so low that an athletic or artistic event is guaranteed to sell out and create a buzz among fans.
D)  reselling a good at a price above its original purchase price.E) B) and C)
F) C) and D)

Exam 3: Demand, Supply, and Market Equilibrium

Other things being equal, the law of demand suggests that as

Correct Answer
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When the price of oil declines significantly, the price of gasoline also declines.The latter occurs because of a(n)

Correct Answer
verified

Correct Answer
verified

If producers must obtain higher prices than before to produce a given level of output, then the following has occurred.

Correct Answer
verified

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Correct Answer
verified

Over a period of time, the equilibrium price of a good increases and the quantity decreases.All of the following could account for this situation, except

Correct Answer
verified

Allocative efficiency involves determining

Correct Answer
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An effective price floor will

Correct Answer
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There will be a surplus of a product when

Correct Answer
verified

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Correct Answer
verified

Which of the following is most likely to be an inferior good?

Correct Answer
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In 2007, the price of oil increased, which in turn caused the price of natural gas to rise.This can best be explained by saying that oil and natural gas are

Correct Answer
verified

A price floor means that

Correct Answer
verified

A surplus of a product will arise when price is

Correct Answer
verified

(Consider This) Dynamic pricing refers to

Correct Answer
verified

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year.Based on this information, we can conclude that the

Correct Answer
verified

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips.This is an illustration of

Correct Answer
verified

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Correct Answer
verified

(Consider This) Uberâ€™s dynamic pricing

Correct Answer
verified

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased.From this information we can conclude that

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Other things being equal, the law of demand suggests that as

Correct AnswerverifiedShow Answer

When the price of oil declines significantly, the price of gasoline also declines.The latter occurs because of a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If producers must obtain higher prices than before to produce a given level of output, then the following has occurred.

Correct AnswerverifiedShow Answer

If the demand for electronic readers and tablets increases, then their supply will increase as price rises.

Correct AnswerverifiedShow Answer

Over a period of time, the equilibrium price of a good increases and the quantity decreases.All of the following could account for this situation, except

Correct AnswerverifiedShow Answer

Allocative efficiency involves determining

Correct AnswerverifiedShow Answer

An effective price floor will

Correct AnswerverifiedShow Answer

There will be a surplus of a product when

Correct AnswerverifiedShow Answer

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise.This can best be explained by saying that oil and natural gas are

Correct AnswerverifiedShow Answer

A price floor means that

Correct AnswerverifiedShow Answer

A surplus of a product will arise when price is

Correct AnswerverifiedShow Answer

(Consider This) Dynamic pricing refers to

Correct AnswerverifiedShow Answer

(Consider This) Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year.Based on this information, we can conclude that the

Correct AnswerverifiedShow Answer

As a result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips.This is an illustration of

Correct AnswerverifiedShow Answer

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Correct AnswerverifiedShow Answer

(Consider This) Uberâ€™s dynamic pricing

Correct AnswerverifiedShow Answer

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased.From this information we can conclude that

Correct AnswerverifiedShow Answer

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