Question 1

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.The quantity demanded for wheat is:

Accepted Answer

A)   17 bushels at $6 and 37 bushels at $5.
B)   24 bushels at $5 and 52 bushels at $4.
C)   37 bushels at $4 and 52 bushels at $3.
D)   52 bushels at $3 and 37 bushels at $5.

Question 2

A government set minimum wage:

Accepted Answer

A)   imposes a legal ceiling above the wage of the least skilled worker.
B)   is one of the reasons why price level falls during recessions.
C)   imposes a legal floor under the wage of the most skilled worker.
D)   imposes a legal floor under the wage of the least skilled worker.

Question 3

1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by: A)  an increase in the wages paid to workers producing this good. B)  the development of more efficient machinery for producing this commodity. C)  this product becoming less fashionable. D)  an increase in consumer incomes." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by:

Accepted Answer

A)   an increase in the wages paid to workers producing this good.
B)   the development of more efficient machinery for producing this commodity.
C)   this product becoming less fashionable.
D)   an increase in consumer incomes.

Question 4

When product prices change,consumers are inclined to purchase larger amounts of the now cheaper products and less of the now dearer products.This describes:

Accepted Answer

A)   the cost effect.
B)   the price effect.
C)   the income effect.
D)   the substitution effect.

Question 5

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.An increase in income,if X is a normal good,will:

Accepted Answer

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

Question 6

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.An increase in the tastes and preferences for X will:

Accepted Answer

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

Question 7

With a downward sloping demand curve and an upward sloping supply curve for a product,placing an excise tax on this product will:

Accepted Answer

A)   increase equilibrium price and quantity.
B)   decrease equilibrium price and quantity.
C)   decrease equilibrium price and increase equilibrium quantity.
D)   increase equilibrium price and decrease equilibrium quantity.

Question 8

-Refer to the above diagram.A price of $20 in this market will result in:

Accepted Answer

A)   equilibrium.
B)   a shortage of 50 units.
C)   a surplus of 50 units.
D)   a shortage of 100 units.

Question 9

Which of the following is most likely to be an inferior good?

Accepted Answer

A)   fur coats
B)   Porsches
C)   used clothing
D)   steak

Question 10

What combination of changes would most likely decrease the equilibrium quantity?

Accepted Answer

A)   when supply increases and demand decreases
B)   when demand increases and supply decreases
C)   when demand decreases and supply decreases
D)   when supply increases and demand increases

Question 11

The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Accepted Answer

A)   0CFL
B)   0CEJ
C)   0BGK
D)   0BHL

Question 12

If the market price is above the equilibrium price:

Accepted Answer

A)   a shortage will occur and producers will produce more and lower prices.
B)   a surplus will occur and producers will produce less and lower prices.
C)   a surplus will result and consumers will bid prices up.
D)   producers will make extremely high profits.

Question 13

A surplus of any given commodity can be expected whenever the:

Accepted Answer

A)   prevailing price of the good is below the equilibrium price.
B)   prevailing price of the good is above the equilibrium price.
C)   prevailing price of the good is equal to the equilibrium price.
D)   amount demanded exceeds the amount supplied.

Question 14

An increase in product price will cause:

Accepted Answer

A)   quantity demanded to decrease.
B)   quantity supplied to decrease.
C)   quantity demanded to increase.
D)   the supply curve to shift to the right.

Question 15

A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n) :

Accepted Answer

A)   increase in the price of lettuce and quantity purchased.
B)   decrease in the price of lettuce and quantity purchased.
C)   increase in the price of lettuce and decrease in quantity purchased.
D)   decrease in the price of lettuce and increase in quantity purchased.

Question 16

A market supply schedule for a product indicates that:

Accepted Answer

A)   as the product's price falls,producers produce more.
B)   there is an inverse relationship between price and quantity supplied.
C)   as a product's price rises,producers produce less.
D)   there is a direct relationship between price and quantity supplied.

Question 17

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Accepted Answer

A)   consumer incomes have declined and they now want to buy less of A at each possible price.
B)   the price of A has increased and,as a result,consumers want to purchase less of it.
C)   consumer preferences have changed in favour of A so that they now want to buy more at each possible price.
D)   the price of A has declined and,as a result,consumers want to purchase more of it.

Question 18

-Refer to the above diagram.The highest price that buyers will be willing and able to pay for 100 units of this product is:

Accepted Answer

A)   $30
B)   $60
C)   $40
D)   $20

Question 19

A normal good is defined as one:

Accepted Answer

A)   whose amount demanded will increase as its price decreases.
B)   whose amount demanded will increase as its price increases.
C)   whose demand curve will shift leftward as incomes rise.
D)   the consumption of which varies directly with incomes.

Question 20

A surplus of a product will arise when price is:

Accepted Answer

A)   above equilibrium with the result that quantity demanded exceeds quantity supplied.
B)   above equilibrium with the result that quantity supplied exceeds quantity demanded.
C)   below equilibrium with the result that quantity demanded exceeds quantity supplied.
D)   below equilibrium with the result that quantity supplied exceeds quantity demanded.

Exam 3: Demand, Supply, and Market Equilibrium

A government set minimum wage:

Correct Answer
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A normal good is defined as one:

Correct Answer
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A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n) :

Correct Answer
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-Refer to the above diagram.A price of $20 in this market will result in:

Correct Answer
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The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Correct Answer
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An increase in product price will cause:

Correct Answer
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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.The quantity demanded for wheat is:

Correct Answer
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Correct Answer
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Which of the following is most likely to be an inferior good?

Correct Answer
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A surplus of any given commodity can be expected whenever the:

Correct Answer
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If the market price is above the equilibrium price:

Correct Answer
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With a downward sloping demand curve and an upward sloping supply curve for a product,placing an excise tax on this product will:

Correct Answer
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-Refer to the above diagram.The highest price that buyers will be willing and able to pay for 100 units of this product is:

Correct Answer
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A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Correct Answer
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When product prices change,consumers are inclined to purchase larger amounts of the now cheaper products and less of the now dearer products.This describes:

Correct Answer
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Correct Answer
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A surplus of a product will arise when price is:

Correct Answer
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What combination of changes would most likely decrease the equilibrium quantity?

Correct Answer
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-Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by:

Correct Answer
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A market supply schedule for a product indicates that:

Correct Answer
verified

Exam 3: Demand, Supply, and Market Equilibrium

A government set minimum wage:

Correct AnswerverifiedShow Answer

A normal good is defined as one:

Correct AnswerverifiedShow Answer

A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n) :

Correct AnswerverifiedShow Answer

-Refer to the above diagram.A price of $20 in this market will result in:

Correct AnswerverifiedShow Answer

The following graph represents a competitive market for a product.where the government now has introduced a price floor of 0C.Which area in the graph represents the producers' revenue after the imposition of the price floor?

Correct AnswerverifiedShow Answer

An increase in product price will cause:

Correct AnswerverifiedShow Answer

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.The quantity demanded for wheat is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

A surplus of any given commodity can be expected whenever the:

Correct AnswerverifiedShow Answer

If the market price is above the equilibrium price:

Correct AnswerverifiedShow Answer

With a downward sloping demand curve and an upward sloping supply curve for a product,placing an excise tax on this product will:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The highest price that buyers will be willing and able to pay for 100 units of this product is:

Correct AnswerverifiedShow Answer

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

Correct AnswerverifiedShow Answer

When product prices change,consumers are inclined to purchase larger amounts of the now cheaper products and less of the now dearer products.This describes:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A surplus of a product will arise when price is:

Correct AnswerverifiedShow Answer

What combination of changes would most likely decrease the equilibrium quantity?

Correct AnswerverifiedShow Answer

-Refer to the above diagram,in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by:

Correct AnswerverifiedShow Answer

A market supply schedule for a product indicates that:

Correct AnswerverifiedShow Answer

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-Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by:

Correct Answer
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Correct Answer
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