Question 1

Which of the following statements is TRUE?

Accepted Answer

A)   Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.
B)   Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2.
C)   Total consumer surplus is represented graphically by the area beneath the demand curve.
D)   Total consumer surplus is represented graphically by the area above the demand curve.E) A) and B)
F) B) and C)

Question 2

The demand curve for oil slopes downward because:

Accepted Answer

A)   oil will only be used in its higher-valued uses when the price of oil is lower.
B)   oil will only be used in its higher-valued uses when the price of oil is higher.
C)   oil has many substitutes so that no buyer is willing to pay when the price of oil rises.
D)   oil has no substitutes so that buyers do not react to any change in the price of oil.E) C) and D)
F) A) and D)

Question 3

Figure: Demand Curve  Refer to the figure. What is the maximum amount that buyers are willing and able to pay at a price of $45 per book?

Accepted Answer

A)   300 books
B)   450 books
C)   100 books
D)   0 booksE) A) and C)
F) B) and C)

Question 4

A government subsidy to producers causes the:

Accepted Answer

A)   supply of the product to increase.
B)   supply of the product to decrease.
C)   supply curve to change slope.
D)   supply curve to shift up and to the left.E) None of the above
F) A) and B)

Question 5

Which of the following choices contains only factors that cause the supply curve to shift to the right?

Accepted Answer

A)   a fall in production costs, a rise in technology, an increase in taxes on output
B)   a fall in tastes and preferences for the product, economic growth, and a rise in technology
C)   a decrease in taxes on production, a fall in subsidies on production, a rise in costs of production
D)   a rise in technology, a fall in the costs of production, a fall in taxes on outputE) A) and D)
F) A) and C)

Question 6

One result of the North American Free Trade Agreement was that the number of Canadian lumber companies selling in United States markets _____, causing a(n)  _____ in the total market supply of lumber in the United States.

Accepted Answer

A)   increased; decrease
B)   increased; increase
C)   decreased; decrease
D)   decreased; increaseE) B) and C)
F) B) and D)

Question 7

Which of the following are likely to be complements?

Accepted Answer

A)   hot dogs and hamburgers
B)   books and book-lights
C)   coffee and tea
D)   cars and vansE) A) and B)
F) A) and C)

Question 8

The quantity demanded is the quantity that consumers are willing and able to purchase at a given price.

Accepted Answer

A) True 
 B)False

Question 9

An increase in supply shifts the supply curve:

Accepted Answer

A)   down and to the right.
B)   down and to the left.
C)   up and to the right.
D)   up and to the left.E) A) and D)
F) A) and C)

Question 10

Which statement expresses the law of demand?

Accepted Answer

A)   There is a positive relationship between price and consumer surplus.
B)   There is a positive relationship between price and quantity that buyers are willing and able to purchase.
C)   There is an inverse relationship between the willingness to pay and the ability to pay.
D)   There is a negative relationship between price and quantity demanded.E) C) and D)
F) A) and B)

Question 11

Use the following to answer questions: Figure: Producer Surplus 
-(Figure: Producer Surplus)  Refer to the figure. What is the producer surplus at a price of $2 per unit?

Accepted Answer

A)   $5
B)   $6
C)   $10
D)   $20E) C) and D)
F) B) and C)

Question 12

If the price of _____ rises, all else the same, the demand for large SUVs will decrease.

Accepted Answer

A)   electric vehicles
B)   gasoline
C)   minivans
D)   motorcyclesE) None of the above
F) A) and D)

Question 13

The quantity supplied is the:

Accepted Answer

A)   amount of inputs that a firm earns profit on.
B)   change in the sellers' output multiplied by the change in price.
C)   incremental cost of producing one more unit of output, holding all other things constant.
D)   amount of a good that firms are willing and able to sell at a particular price during a given period of time.E) B) and D)
F) B) and C)

Question 14

For a normal good, higher income results in:

Accepted Answer

A)   an increase in demand.
B)   a decrease in demand.
C)   a movement up along the demand curve.
D)   a movement down along the demand curve.E) B) and C)
F) A) and D)

Question 15

Figure: Shifting Demand 1 to D2? A)  an increase in the price of a substitute good B)  a decrease in the price of a complement good C)  an increase in the population D)  an increase in income if this is an inferior good" class="answers-bank-image d-inline" rel="preload" > In the diagram, which of the following factors would cause the demand curve to shift from D1 to D2?

Accepted Answer

A)   an increase in the price of a substitute good
B)   a decrease in the price of a complement good
C)   an increase in the population
D)   an increase in income if this is an inferior goodE) A) and B)
F) A) and C)

Question 16

Alex and Tyler enjoy the food at a restaurant named China Star. Alex values a meal there at $15 and Tyler values it at $26. If the restaurant charges only $10 a meal, what is Alex and Tyler's joint consumer surplus from a meal at China Star?

Accepted Answer

A)   $41
B)   $31
C)   $21
D)   $16E) C) and D)
F) None of the above

Question 17

Figure: Lobster Market  In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day?

Accepted Answer

A)   $10
B)   $40
C)   $50
D)   $60E) A) and B)
F) A) and C)

Question 18

Consumer surplus is the amount that consumers:

Accepted Answer

A)   are willing to pay for a good minus what they actually pay for it.
B)   are willing to pay for a good.
C)   actually pay for a good.
D)   are willing to pay for a good plus the amount that they actually pay for it.E) C) and D)
F) B) and C)

Question 19

Use the following to answer questions: Figure: Producer Surplus 
-(Figure: Producer Surplus)  Refer to the figure. What is the change in producer surplus if the price rises from $2 to $3 per unit?

Accepted Answer

A)   $5
B)   $10
C)   $15
D)   $20E) None of the above
F) C) and D)

Question 20

The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is:

Accepted Answer

A)   producer shortage.
B)   consumer shortage.
C)   producer surplus.
D)   consumer surplus.E) A) and D)
F) A) and B)

Exam 3: Supply and Demand

Which of the following are likely to be complements?

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Use the following to answer questions: Figure: Producer Surplus -(Figure: Producer Surplus) Refer to the figure. What is the change in producer surplus if the price rises from $2 to $3 per unit?

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Figure: Demand Curve Refer to the figure. What is the maximum amount that buyers are willing and able to pay at a price of $45 per book?

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The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is:

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The quantity demanded is the quantity that consumers are willing and able to purchase at a given price.

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Which statement expresses the law of demand?

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One result of the North American Free Trade Agreement was that the number of Canadian lumber companies selling in United States markets _____, causing a(n) _____ in the total market supply of lumber in the United States.

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A government subsidy to producers causes the:

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Consumer surplus is the amount that consumers:

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The demand curve for oil slopes downward because:

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Which of the following statements is TRUE?

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Figure: Lobster Market In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day?

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Figure: Shifting Demand In the diagram, which of the following factors would cause the demand curve to shift from D1 to D2?

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Alex and Tyler enjoy the food at a restaurant named China Star. Alex values a meal there at $15 and Tyler values it at $26. If the restaurant charges only $10 a meal, what is Alex and Tyler's joint consumer surplus from a meal at China Star?

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The quantity supplied is the:

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If the price of _____ rises, all else the same, the demand for large SUVs will decrease.

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Use the following to answer questions: Figure: Producer Surplus -(Figure: Producer Surplus) Refer to the figure. What is the producer surplus at a price of $2 per unit?

Correct AnswerverifiedShow Answer

Which of the following choices contains only factors that cause the supply curve to shift to the right?

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For a normal good, higher income results in:

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An increase in supply shifts the supply curve:

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One result of the North American Free Trade Agreement was that the number of Canadian lumber companies selling in United States markets _, causing a(n) _ in the total market supply of lumber in the United States.

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Figure: Shifting Demand In the diagram, which of the following factors would cause the demand curve to shift from D₁ to D₂?

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