Question 1

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

Accepted Answer

A)   declining costs of construction materials and services in that city.
B)   declining incomes of people in that city.
C)   higher government subsidies to new homebuyers in that city.
D)   a rising population in that city.E) B) and D)
F) A) and D)

Question 2

A market is in equilibrium

Accepted Answer

A)   provided there is no surplus of the product.
B)   at all prices above that shown by the intersection of the supply and demand curves.
C)   if the amount producers want to sell is equal to the amount consumers want to buy.
D)   whenever the demand curve is downsloping and the supply curve is upsloping.E) None of the above
F) All of the above

Question 3

In constructing a demand curve for product X,

Accepted Answer

A)   consumer preferences are allowed to vary.
B)   the prices of other goods are assumed constant.
C)   money incomes are allowed to vary.
D)   the supply curve of product X is assumed constant.E) A) and D)
F) A) and C)

Question 4

Price ﬂoors and ceiling prices both

Accepted Answer

A)   cause shortages.
B)   cause surpluses.
C)   cause the supply and demand curves to shift until equilibrium is established.
D)   interfere with the rationing function of prices.E) B) and D)
F) A) and C)

Question 5

Which of the following statements is correct?

Accepted Answer

A)   An increase in the price of C will decrease the demand for complementary product D.
B)   A decrease in income will decrease the demand for an inferior good.
C)   An increase in income will reduce the demand for a normal good.
D)   A decline in the price of X will increase the demand for substitute product Y.E) B) and C)
F) A) and D)

Question 6

If product Y is an inferior good, a decrease in consumer incomes will

Accepted Answer

A)   make buyers want to buy less of Product Y.
B)   not affect the sales of product Y.
C)   shift the demand curve for product Y to the left.
D)   shift the demand curve for product Y to the right.E) A) and D)
F) None of the above

Question 7

(Advanced analysis)  The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

Accepted Answer

A)   $50.
B)   $70.
C)   $80.
D)   $130.E) All of the above
F) A) and B)

Question 8

Which of the following statements is true about price ceilings?

Accepted Answer

A)   Price ceilings create surpluses for goods but shortages for services.
B)   Price ceilings cause goods to be rationed by some other means than legally determined market prices.
C)   Ration coupons are the only way to ration goods when price ceilings are in place.
D)   All of these choices are correct.E) A) and D)
F) B) and C)

Question 9

The price of pork may increase as a result of

Accepted Answer

A)   a decrease in the cost of feed for pigs.
B)   decreased advertising of pork.
C)   an increase in the cost of producing beef.
D)   a subsidy to pork producers.E) A) and B)
F) A) and C)

Question 10

0, if the supply curve moved from S0 to S1, then A)  supply has increased and equilibrium quantity has decreased. B)  supply has decreased and equilibrium quantity has decreased. C)  there has been an increase in the quantity supplied. D)  supply has increased and price has risen to G." class="answers-bank-image d-inline" rel="preload" > Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then

Accepted Answer

A)   supply has increased and equilibrium quantity has decreased.
B)   supply has decreased and equilibrium quantity has decreased.
C)   there has been an increase in the quantity supplied.
D)   supply has increased and price has risen to G.E) A) and C)
F) None of the above

Question 11

An effective price ceiling 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) C) and D)
F) B) and C)

Question 12

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with
Which explanation for the law of demand?

Accepted Answer

A)   diminishing marginal utility
B)   the rationing function of prices
C)   the substitution effect
D)   the income effectE) A) and C)
F) None of the above

Question 13

Which of the following will not cause a change in the demand for product A?

Accepted Answer

A)   a change in the number of buyers
B)   a change in the price of A
C)   a decline in consumer incomes
D)   a decrease in the price of close-substitute product BE) A) and B)
F) B) and D)

Question 14

The table below shows the weekly demand for hamburgers in a market where there are just three buyers.
  Price  Buyer 1Qd 1  Buyer 2 Qd 2  Buyer 3 Qd 3 $6746597841510123211516\begin{array} { | c | c | c | c | } \hline 	ext { Price } & 	ext { Buyer 1Qd 1 } & 	ext { Buyer 2 Qd 2 } & 	ext { Buyer 3 Qd 3 } \\hline \$ 6 & 7 & 4 & 6 \\hline 5 & 9 & 7 & 8 \\hline 4 & 15 & 10 & 12 \\hline 3 & 21 & 15 & 16 \\hline\end{array} Price $6543​ Buyer 1Qd 1 791521​ Buyer 2 Qd 2 471015​ Buyer 3 Qd 3 681216​​  If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

Accepted Answer

A)   increase from 24 to 52.
B)   decrease from 52 to 24.
C)   increase from 120 to 156.
D)   increase from 29 to 55. E) A) and C)
F) None of the above

Question 15

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.
An increase in the price of a product that is a complement to X will

Accepted Answer

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

Question 16

(Advanced analysis)  The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new
Equilibrium quantity is

Accepted Answer

A)   10.
B)   20.
C)   15.
D)   30.E) C) and D)
F) All of the above

Question 17

Refer to the diagram. A price of $20 in this market will result in a

Accepted Answer

A)   shortage of 50 units.
B)   surplus of 50 units.
C)   surplus of 100 units.
D)   shortage of 100 units.E) All of the above
F) A) and D)

Question 18

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) A) and B)
F) B) and D)

Question 19

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

Accepted Answer

A)   at $15.
B)   below $15.
C)   above $15.
D)   at $10.E) B) and D)
F) B) and C)

Question 20

A market that is achieving allocative eﬃciency also is assumed to be achieving productive
eﬃciency.

Accepted Answer

A) True 
 B)False

Exam 3: Demand, Supply, and Market Equilibrium

Which of the following statements is true about price ceilings?

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

Correct Answer
verified

The price of pork may increase as a result of

Correct Answer
verified

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium quantity is

Correct Answer
verified

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

Correct Answer
verified

Which of the following will not cause a change in the demand for product A?

Correct Answer
verified

Price ﬂoors and ceiling prices both

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

An effective price ceiling will

Correct Answer
verified

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D₀, if the supply curve moved from S₀ to S₁, then

Correct Answer
verified

A market is in equilibrium

Correct Answer
verified

If product Y is an inferior good, a decrease in consumer incomes will

Correct Answer
verified

Correct Answer
verified

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

Correct Answer
verified

A market that is achieving allocative eﬃciency also is assumed to be achieving productive eﬃciency.

Correct Answer
verified

Correct Answer
verified

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with Which explanation for the law of demand?

Correct Answer
verified

In constructing a demand curve for product X,

Correct Answer
verified

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

Correct Answer
verified

Refer to the diagram. A price of $20 in this market will result in a

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

Which of the following statements is true about price ceilings?

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

Correct AnswerverifiedShow Answer

The price of pork may increase as a result of

Correct AnswerverifiedShow Answer

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium quantity is

Correct AnswerverifiedShow Answer

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by

Correct AnswerverifiedShow Answer

Which of the following will not cause a change in the demand for product A?

Correct AnswerverifiedShow Answer

Price ﬂoors and ceiling prices both

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

An effective price ceiling will

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then

Correct AnswerverifiedShow Answer

A market is in equilibrium

Correct AnswerverifiedShow Answer

If product Y is an inferior good, a decrease in consumer incomes will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a competitive market illustrated by the diagram above, for a price ﬂoor to be effective and alter the market situation, it must be set

Correct AnswerverifiedShow Answer

A market that is achieving allocative eﬃciency also is assumed to be achieving productive eﬃciency.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with Which explanation for the law of demand?

Correct AnswerverifiedShow Answer

In constructing a demand curve for product X,

Correct AnswerverifiedShow Answer

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to deﬁnitely rise, but the effect on price is indeterminate?

Correct AnswerverifiedShow Answer

Refer to the diagram. A price of $20 in this market will result in a

Correct AnswerverifiedShow Answer

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Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D₀, if the supply curve moved from S₀ to S₁, then

Correct Answer
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