Question 1

Which of the following is an example of a market?

Accepted Answer

A)   The exchange of votes and benefits by voters and politicians
B)   The exchange of shares of stock
C)   Sales and purchases of illegal drugs
D)   The exchange of a particular good at many different locations
E)   All of these

Question 2

A freeze that destroys all of the Florida orange crop would result in

Accepted Answer

A)   a lower price for orange juice as people will switch to Texas grapefruit juice
B)   a higher price for orange juice as people demand more orange juice
C)   no change in the price for orange juice
D)   a higher price for orange juice due to the decrease in supply of oranges
E)   a higher price for orange juice due to the increase in demand for oranges

Question 3

In which of the following statements are the terms demand, supply, quantity demanded, and/or quantity supplied used correctly?

Accepted Answer

A)   Changes in demand and supply cause changes in the equilibrium price.
B)   If the demand rises, supply rises.
C)   Oranges are cheaper in Florida and therefore the demand is greater in Florida.
D)   When the quantity demanded exceeds supply, the equilibrium price will rise.
E)   All of these

Question 4

When economists say that people are self-interested, they mean that people are

Accepted Answer

A)   using their scarce resources to maximize their well-being.
B)   selfish.
C)   greedy for other peoples' possessions.
D)   efficiently substituting market demands for complementary goods.
E)   reacting to shortages by creating surpluses of socially acceptable wants and needs.

Question 5

The law of demand illustrates that

Accepted Answer

A)   as price decreases, demand increases.
B)   price changes are always in the same direction as demand changes.
C)   as price increases, quantity demanded increases.
D)   as price decreases, quantity supplied increases.
E)   as price decreases, quantity demanded increases.

Question 6

The development of a low-cost synthetic fuel is expected to affect the market for crude oil and cause a decrease in the price of oil.

Accepted Answer

A) True 
 B)False

Question 7

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 8

Assume the demand for watermelons is downward sloping. An increase in price from $1 per pound to $2 per pound

Accepted Answer

A)   could have been caused by an increase in supply.
B)   will cause a larger quantity of watermelons to be demanded.
C)   will cause demand to decrease.
D)   could have been caused by an extra-large crop yield.
E)   will cause a smaller quantity of watermelons to be demanded.

Question 9

Which of the following would least affect the supply of automobiles?

Accepted Answer

A)   An increase in the price of steel
B)   An improvement in the technology of automobile manufacturing
C)   An increase in the price of motor oil
D)   A decrease in the number of automobile producers
E)   An increase in the productivity of workers

Question 10

According to the law of demand, if the price of compact disks decreased, everything else held constant, the demand for compact disks would increase.

Accepted Answer

A) True 
 B)False

Question 11

Markets

Accepted Answer

A)   must be specialized.
B)   must be general.
C)   must consist of one buyer and one seller.
D)   must consist of many buyers and many sellers.
E)   can be organized either loosely or formally.

Question 12

A boycott of lettuce would, if effective, cause a(n)

Accepted Answer

A)   increase in the equilibrium quantity of lettuce bought and sold.
B)   increase in the price of lettuce.
C)   decrease in the demand for lettuce.
D)   decrease in the supply of lettuce.
E)   decrease in the demand for and the supply of lettuce.

Question 13

According to the law of supply, if the price of calculators decreased, the supply of calculators would decrease, everything else held constant.

Accepted Answer

A) True 
 B)False

Question 14

What incentives are created under a first come, first served allocation mechanism?

Accepted Answer

A)   Fairness
B)   Equality for all
C)   To be first
D)   To produce the most
E)   To acquire purchasing ability (to obtain income and wealth)

Question 15

The increase in gas prices can be explained by

Accepted Answer

A)   increased instability in the Middle East
B)   a decrease in personal income
C)   an increase in the number of hybrid vehicles sold
D)   higher mileage standards for new cars
E)   all of these

Question 16

If the price of product X falls and thus causes the demand for product Y to shift to the right, then we can conclude that X and Y are substitutes.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2.1
 
-Assume that the market described by the demand and supply curves in Figure 2.1 is originally in equilibrium. What is the most likely consequence of a government-imposed price ceiling (maximum price that producers are allowed to charge)  of $10 per unit?

Accepted Answer

A)   Supply will increase.
B)   Demand will increase.
C)   Quantity supplied will decrease.
D)   There will be a surplus of the good.
E)   There will be no consequence at all.

Question 18

The efficiency of an economic system is a measure of

Accepted Answer

A)   how well off people are.
B)   how well a system satisfies people's wants and needs.
C)   the standard of living.
D)   inflation.
E)   unemployment.

Question 19

Figure 2.5
 
-In Figure 2.5, which graph represents what might happen if there were an increase in the price of metal used in the production of bicycles?

Accepted Answer

A)   A
B)   B
C)   C
D)   D
E)   E

Question 20

Figure 2.3
 1 and the supply curve is S1. The most likely result of pessimistic producer expectations is a move from equilibrium A)  A to equilibrium D. B)  A to equilibrium E. C)  A to equilibrium F. D)  B to equilibrium A. E)  A to equilibrium B." class="answers-bank-image d-inline" rel="preload" >
-In Figure 2.3, the initial demand curve is D1 and the supply curve is S1. The most likely result of pessimistic producer expectations is a move from equilibrium

Accepted Answer

A)   A to equilibrium D.
B)   A to equilibrium E.
C)   A to equilibrium F.
D)   B to equilibrium A.
E)   A to equilibrium B.

Exam 2: Markets and the Market Process

Assume the demand for watermelons is downward sloping. An increase in price from $1 per pound to $2 per pound

Correct AnswerverifiedShow Answer

Which of the following would least affect the supply of automobiles?

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According to the law of demand, if the price of compact disks decreased, everything else held constant, the demand for compact disks would increase.

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Markets

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The increase in gas prices can be explained by

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Figure 2.3 -In Figure 2.3, the initial demand curve is D1 and the supply curve is S1. The most likely result of pessimistic producer expectations is a move from equilibrium

Correct AnswerverifiedShow Answer

If the price of product X falls and thus causes the demand for product Y to shift to the right, then we can conclude that X and Y are substitutes.

Correct AnswerverifiedShow Answer

According to the law of supply, if the price of calculators decreased, the supply of calculators would decrease, everything else held constant.

Correct AnswerverifiedShow Answer

The development of a low-cost synthetic fuel is expected to affect the market for crude oil and cause a decrease in the price of oil.

Correct AnswerverifiedShow Answer

The efficiency of an economic system is a measure of

Correct AnswerverifiedShow Answer

When economists say that people are self-interested, they mean that people are

Correct AnswerverifiedShow Answer

The law of demand illustrates that

Correct AnswerverifiedShow Answer

Figure 2.1 -Assume that the market described by the demand and supply curves in Figure 2.1 is originally in equilibrium. What is the most likely consequence of a government-imposed price ceiling (maximum price that producers are allowed to charge) of $10 per unit?

Correct AnswerverifiedShow Answer

Which of the following is an example of a market?

Correct AnswerverifiedShow Answer

Figure 2.5 -In Figure 2.5, which graph represents what might happen if there were an increase in the price of metal used in the production of bicycles?

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A boycott of lettuce would, if effective, cause a(n)

Correct AnswerverifiedShow Answer

What incentives are created under a first come, first served allocation mechanism?

Correct AnswerverifiedShow Answer

In which of the following statements are the terms demand, supply, quantity demanded, and/or quantity supplied used correctly?

Correct AnswerverifiedShow Answer

A freeze that destroys all of the Florida orange crop would result in

Correct AnswerverifiedShow Answer

In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.

Correct AnswerverifiedShow Answer

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Figure 2.3 -In Figure 2.3, the initial demand curve is D₁ and the supply curve is S₁. The most likely result of pessimistic producer expectations is a move from equilibrium

Correct Answer
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