Question 1

An effective ceiling price will:

Accepted Answer

A)   induce new firms to enter the industry.
B)   result in a product surplus.
C)   result in a product shortage.
D)   clear the market.E) B) and C)
F) None of the above

Question 2

A result of a fall in the price of gasoline,consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Accepted Answer

A)   the income effect.
B)   the substitution effect.
C)   diminishing marginal utility.
D)   the demand for inferior goods.E) B) and C)
F) C) and D)

Question 3

In the corn market,demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Accepted Answer

A)   in neither statement
B)   in the second statement
C)   in the first statement
D)   in both statementsE) A) and B)
F) All of the above

Question 4

If demand increases and supply simultaneously decreases,equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 5

The market system automatically corrects a surplus condition in a competitive market by:

Accepted Answer

A)   raising the price of the commodity in question while increasing the quantity demanded.
B)   raising the price of the commodity in question while decreasing the quantity demanded.
C)   reducing the price of the commodity in question while increasing the quantity demanded.
D)   reducing the price of the commodity in question while decreasing the quantity demanded.E) A) and B)
F) B) and C)

Question 6

-Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods. )

Accepted Answer

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

Question 7

On a graph,an increase in quantity demanded is represented by a:

Accepted Answer

A)   leftward shift of the demand curve.
B)   rightward shift of the demand curve.
C)   movement upward and to the left along the demand curve.
D)   movement downward and to the right along the demand curve.E) B) and D)
F) A) and C)

Question 8

At any above-equilibrium price:

Accepted Answer

A)   quantity demanded exceeds quantity supplied.
B)   the equilibrium price is above the current price.
C)   quantity supplied exceeds quantity demanded.
D)   the price of the good is likely to rise.E) C) and D)
F) A) and D)

Question 9

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium,this suggests that:

Accepted Answer

A)   student incomes are too low.
B)   parking permits are underpriced.
C)   parking permits are overpriced.
D)   the University should make parking free.E) All of the above
F) None of the above

Question 10

1 and demand D0,then: A)  at any price above 0G a shortage would occur. B)  0F represents a price which would result in a surplus of AC. C)  a surplus of GH would occur. D)  0F represents a price which would result in a shortage of AC." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.If supply is S1 and demand D0,then:

Accepted Answer

A)   at any price above 0G a shortage would occur.
B)   0F represents a price which would result in a surplus of AC.
C)   a surplus of GH would occur.
D)   0F represents a price which would result in a shortage of AC.E) C) and D)
F) A) and B)

Question 11

Which of the following would not shift the demand curve for beef?

Accepted Answer

A)   a widely publicized study which indicates beef increases one's cholesterol
B)   a reduction in the price of cattle feed
C)   an effective advertising campaign by pork producers
D)   a change in the incomes of beef consumersE) A) and D)
F) B) and C)

Question 12

Graphically,the horizontal sum of all individual demand curves is known as:

Accepted Answer

A)   consumers' tastes and preferences.
B)   the market demand curve.
C)   the equilibrium price.
D)   consumer sovereignty.E) C) and D)
F) B) and C)

Question 13

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.A reduction in the number of firms producing X will:

Accepted Answer

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

Question 14

In a competitive market the equilibrium price and quantity occur where:

Accepted Answer

A)   the downward sloping demand curve intersects the upward sloping supply curve.
B)   the upward sloping demand curve intersects the downward sloping supply curve.
C)   consumers and suppliers bargain to a mutually acceptable price.
D)   quantity demanded exceeds quantity supplied or vice versa.E) A) and B)
F) B) and D)

Question 15

1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from: A)  an increase in expectations of higher future prices for chicken. B)  an increase in the cost of chicken feed to produce chickens. C)  a decrease in the price of beef products. D)  an increase in consumer incomes." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above graph,which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

Accepted Answer

A)   an increase in expectations of higher future prices for chicken.
B)   an increase in the cost of chicken feed to produce chickens.
C)   a decrease in the price of beef products.
D)   an increase in consumer incomes.E) None of the above
F) A) and B)

Question 16

If two goods are close substitutes:

Accepted Answer

A)   consumers will always buy the one that has the highest price.
B)   a fall in the price of one will decrease the demand for the other.
C)   an increase in the price of one causes the demand for the other to decrease.
D)   a decrease in the price of one causes an increase in the demand for the other.E) A) and D)
F) A) and C)

Question 17

A price ceiling means that:

Accepted Answer

A)   there is currently a surplus of the relevant product.
B)   government is imposing a legal price which is below the equilibrium price.
C)   government wants to stop a deflationary spiral.
D)   government is imposing a legal price which is above the equilibrium price.E) C) and D)
F) B) and D)

Question 18

We observe a market where the price has risen and the quantity being sold has declined.This could be caused by a(n) :

Accepted Answer

A)   increase in demand.
B)   increase in supply.
C)   decrease in demand.
D)   decrease in supply.E) None of the above
F) All of the above

Question 19

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Accepted Answer

A)   an increase in both price and quantity
B)   an increase in price and a decrease in output
C)   a decrease in price and an indeterminate effect on quantity
D)   an increase in price and an indeterminate effect on quantityE) B) and D)
F) B) and C)

Question 20

If the price of a product increases,we would expect:

Accepted Answer

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

Exam 3: Demand, Supply, and Market Equilibrium

The market system automatically corrects a surplus condition in a competitive market by:

Correct Answer
verified

A result of a fall in the price of gasoline,consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Correct Answer
verified

On a graph,an increase in quantity demanded is represented by a:

Correct Answer
verified

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Correct Answer
verified

At any above-equilibrium price:

Correct Answer
verified

We observe a market where the price has risen and the quantity being sold has declined.This could be caused by a(n) :

Correct Answer
verified

If demand increases and supply simultaneously decreases,equilibrium price will rise.

Correct Answer
verified

A price ceiling means that:

Correct Answer
verified

-Refer to the above graph,which shows the market for chicken where D₁ and D₂ represent different demand curves.A change from E₁ to E₂ is most likely to result from:

Correct Answer
verified

If the price of a product increases,we would expect:

Correct Answer
verified

Which of the following would not shift the demand curve for beef?

Correct Answer
verified

In the corn market,demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Correct Answer
verified

Correct Answer
verified

-Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods. )

Correct Answer
verified

If two goods are close substitutes:

Correct Answer
verified

-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.If supply is S₁ and demand D₀,then:

Correct Answer
verified

An effective ceiling price will:

Correct Answer
verified

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium,this suggests that:

Correct Answer
verified

Graphically,the horizontal sum of all individual demand curves is known as:

Correct Answer
verified

In a competitive market the equilibrium price and quantity occur where:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

The market system automatically corrects a surplus condition in a competitive market by:

Correct AnswerverifiedShow Answer

A result of a fall in the price of gasoline,consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

Correct AnswerverifiedShow Answer

On a graph,an increase in quantity demanded is represented by a:

Correct AnswerverifiedShow Answer

What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?

Correct AnswerverifiedShow Answer

At any above-equilibrium price:

Correct AnswerverifiedShow Answer

We observe a market where the price has risen and the quantity being sold has declined.This could be caused by a(n) :

Correct AnswerverifiedShow Answer

If demand increases and supply simultaneously decreases,equilibrium price will rise.

Correct AnswerverifiedShow Answer

A price ceiling means that:

Correct AnswerverifiedShow Answer

-Refer to the above graph,which shows the market for chicken where D1 and D2 represent different demand curves.A change from E1 to E2 is most likely to result from:

Correct AnswerverifiedShow Answer

If the price of a product increases,we would expect:

Correct AnswerverifiedShow Answer

Which of the following would not shift the demand curve for beef?

Correct AnswerverifiedShow Answer

In the corn market,demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Which of the above diagrams illustrate(s) the effect of an increase in the price of Molson upon the market for Labatt? (Molson and Labatt are brands of beer that are considered to be substitute goods. )

Correct AnswerverifiedShow Answer

If two goods are close substitutes:

Correct AnswerverifiedShow Answer

-Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.If supply is S1 and demand D0,then:

Correct AnswerverifiedShow Answer

An effective ceiling price will:

Correct AnswerverifiedShow Answer

Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium,this suggests that:

Correct AnswerverifiedShow Answer

Graphically,the horizontal sum of all individual demand curves is known as:

Correct AnswerverifiedShow Answer

In a competitive market the equilibrium price and quantity occur where:

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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-Refer to the above graph,which shows the market for chicken where D₁ and D₂ represent different demand curves.A change from E₁ to E₂ is most likely to result from:

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 above diagram,which shows demand and supply conditions in the competitive market for product X.If supply is S₁ and demand D₀,then:

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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