Question 1

In competitive markets a surplus or shortage will:

Accepted Answer

A)   never exist.
B)   cause buyer and seller reactions which tend to eliminate the surplus or shortage.
C)   cause shifts in the demand and supply curves.
D)   cause buyer and seller reactions which tend to intensify the surplus or shortage.E) C) and D)
F) B) and D)

Question 2

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
-Refer to the above information.After the change in demand,the new equilibrium quantity is:

Accepted Answer

A)   10
B)   20
C)   15
D)   30E) A) and B)
F) None of the above

Question 3

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Accepted Answer

A)   decrease,quantity demanded will decrease,and quantity supplied will increase.
B)   decrease and quantity demanded and quantity supplied will both decrease.
C)   decrease,quantity demanded will increase,and quantity supplied will decrease.
D)   increase,quantity demanded will decrease,and quantity supplied will increase.E) C) and D)
F) A) and B)

Question 4

A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

Accepted Answer

A)   quantity supplied.
B)   quantity demanded.
C)   supply.
D)   demand.E) All of the above
F) A) and B)

Question 5

A ceiling price in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 6

-Which of the above diagrams illustrate(s) the effect of a decrease in consumer incomes upon the market for second-hand clothing? (Second-hand clothing is considered to be an inferior good)

Accepted Answer

A)   A and C
B)   A only
C)   B only
D)   C onlyE) None of the above
F) B) and C)

Question 7

The table below shows the market demand for a bushel of wheat in a market where there are just three buyers (data are hypothetical) .
 
-Refer to the above table.If there were 500 buyers with demand schedules similar to the market demand schedule for each of the three buyers in the table above,then the quantity of bushels of wheat demanded at $5 by the 500 buyers would be:

Accepted Answer

A)   8,500
B)   12,000
C)   18,500
D)   26,000E) A) and B)
F) B) and C)

Question 8

An inferior good is one:

Accepted Answer

A)   that doesn't work.
B)   that costs too much.
C)   that won't be purchased at any price.
D)   for which demand increases as income decreases.E) All of the above
F) A) and B)

Question 9

If Z is an inferior good,a decrease in money income will shift the:

Accepted Answer

A)   supply curve for Z to the left.
B)   supply curve for Z to the right.
C)   demand curve for Z to the left.
D)   demand curve for Z to the right.E) B) and C)
F) B) and D)

Question 10

There is a shortage in a market for a product when:

Accepted Answer

A)   the increase in supply is greater than the increase in demand.
B)   the increase in demand is greater than the increase in supply.
C)   quantity demanded is less than quantity supplied.
D)   quantity demanded is greater than quantity supplied.E) B) and C)
F) A) and B)

Question 11

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Accepted Answer

A) True 
 B)False

Question 12

A newspaper reports that in an urban area the average price of new homes had decreased,but the number of new homes sold had increased.This situation would best be explained by a(n) :

Accepted Answer

A)   increase in demand.
B)   increase in supply.
C)   decrease in demand.
D)   decrease in supply.E) A) and B)
F) B) and C)

Question 13

Refer to the diagram,which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D2? 1 to D2?   A)  a decrease in the price of tea B)  an increase in consumer incomes C)  an increase in the price of sugar D)  a technological improvement in the production of coffee" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   a decrease in the price of tea
B)   an increase in consumer incomes
C)   an increase in the price of sugar
D)   a technological improvement in the production of coffeeE) B) and C)
F) C) and D)

Question 14

An increase in the price of a product will reduce the amount of it purchased because:

Accepted Answer

A)   supply curves are upsloping.
B)   the higher price means that real incomes have risen.
C)   consumers will substitute other products for the one whose price has risen.
D)   consumers substitute relatively high-priced for relatively low-priced products.E) B) and C)
F) A) and D)

Question 15

What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Accepted Answer

A)   when supply increases and demand increases
B)   when supply decreases and demand decreases
C)   when supply decreases and demand increases
D)   when supply increases and demand decreasesE) B) and C)
F) All of the above

Question 16

Productive efficiency refers to:

Accepted Answer

A)   the use of the least-cost method of production.
B)   the production of the product-mix most wanted by society.
C)   the full employment of all available resources.
D)   production at some point inside of the production possibilities curve.E) None of the above
F) A) and D)

Question 17

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Accepted Answer

A)   it is too costly to estimate the equilibrium price.
B)   equilibrium ticket prices would be illegal.
C)   it lowers their gross income which has consequent tax advantages.
D)   the behaviour of fans in attempting to get tickets generates publicity and sold-out concerts promote record sales.E) A) and B)
F) None of the above

Question 18

An "increase in demand" means that:

Accepted Answer

A)   given supply,the price of the product can be expected to decline.
B)   the demand curve has shifted to the right.
C)   price has declined and consumers therefore want to purchase more of the product.
D)   the demand curve has shifted to the left.E) A) and C)
F) B) and D)

Question 19

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.
-Refer to the above.Consumer expectations that the price of X will rise sharply in the future will:

Accepted Answer

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

Question 20

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel,the part of the line marked A would represent a:

Accepted Answer

A)   surplus of 8,000 bushels.
B)   shortage of 8,000 bushels.
C)   surplus of 7,000 bushels.
D)   shortage of 7,000 bushels.E) None of the above
F) A) and C)

Exam 3: Demand, Supply, and Market Equilibrium

-Which of the above diagrams illustrate(s) the effect of a decrease in consumer incomes upon the market for second-hand clothing? (Second-hand clothing is considered to be an inferior good)

Correct Answer
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If Z is an inferior good,a decrease in money income will shift the:

Correct Answer
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In competitive markets a surplus or shortage will:

Correct Answer
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A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct Answer
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A newspaper reports that in an urban area the average price of new homes had decreased,but the number of new homes sold had increased.This situation would best be explained by a(n) :

Correct Answer
verified

A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

Correct Answer
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Correct Answer
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An inferior good is one:

Correct Answer
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What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Correct Answer
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Refer to the diagram,which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D₁ to D₂?

Correct Answer
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A price fixed above the equilibrium price of a product will cause a shortage of that product.

Correct Answer
verified

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Correct Answer
verified

There is a shortage in a market for a product when:

Correct Answer
verified

An increase in the price of a product will reduce the amount of it purchased because:

Correct Answer
verified

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. -Refer to the above information.After the change in demand,the new equilibrium quantity is:

Correct Answer
verified

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Correct Answer
verified

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel,the part of the line marked A would represent a:

Correct Answer
verified

An "increase in demand" means that:

Correct Answer
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Productive efficiency refers to:

Correct Answer
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Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

-Which of the above diagrams illustrate(s) the effect of a decrease in consumer incomes upon the market for second-hand clothing? (Second-hand clothing is considered to be an inferior good)

Correct AnswerverifiedShow Answer

If Z is an inferior good,a decrease in money income will shift the:

Correct AnswerverifiedShow Answer

In competitive markets a surplus or shortage will:

Correct AnswerverifiedShow Answer

A ceiling price in a competitive market will result in persistent surpluses of a product.

Correct AnswerverifiedShow Answer

A newspaper reports that in an urban area the average price of new homes had decreased,but the number of new homes sold had increased.This situation would best be explained by a(n) :

Correct AnswerverifiedShow Answer

A schedule that shows the various amounts of a product which producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An inferior good is one:

Correct AnswerverifiedShow Answer

What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Correct AnswerverifiedShow Answer

Refer to the diagram,which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D1 to D2?

Correct AnswerverifiedShow Answer

A price fixed above the equilibrium price of a product will cause a shortage of that product.

Correct AnswerverifiedShow Answer

Superstar rock singers may set concert ticket prices below the equilibrium level because:

Correct AnswerverifiedShow Answer

There is a shortage in a market for a product when:

Correct AnswerverifiedShow Answer

An increase in the price of a product will reduce the amount of it purchased because:

Correct AnswerverifiedShow Answer

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. -Refer to the above information.After the change in demand,the new equilibrium quantity is:

Correct AnswerverifiedShow Answer

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

Correct AnswerverifiedShow Answer

Refer to the diagram illustrating the market for corn.If the price in this market were to be fixed at $4 per bushel,the part of the line marked A would represent a:

Correct AnswerverifiedShow Answer

An "increase in demand" means that:

Correct AnswerverifiedShow Answer

Productive efficiency refers to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Refer to the diagram,which shows three demand curves for coffee.Which of the following would cause the change in the demand for coffee illustrated by the shift from D₁ to D₂?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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