Question 1

The goal of the business firms in a market economy is to maximize

Accepted Answer

A)  Total profits.
B)  Total sales.
C)  Total utility.
D)  Total welfare.E) A) and B)
F) None of the above

Question 2

Choose the letter of the diagram in Figure 3.1 that best describes the type of shift that would occur in each situation for the market listed on the left, ceteris paribus. Figure 3.1 Shifts of Supply and Demand Designer clothes: consumer confidence in the economy improves.

Accepted Answer

A)  A
B)  B.
C)  C.
D)  D.E) B) and C)
F) B) and D)

Question 3

At the equilibrium price, there are

Accepted Answer

A)  Shortages.
B)  Surpluses.
C)  Excess inventories.
D)  No shortages or surpluses.E) All of the above
F) A) and C)

Question 4

In 2007 a company sold 35,000 MP3 players at $150 each.In 2008 the same company sold 40,000 MP3 players at $170 each.This information suggests that

Accepted Answer

A)  The supply of MP3 players increased from 2007 to 2008.
B)  The demand for MP3 players increased from 2007 to 2008.
C)  The price of MP3 players increased because the costs of production increased from 2007 to 2008.
D)  From 2007 to 2008, the demand curve for MP3 players was upward-sloping because of improvedE) C) and D)
F) B) and C)

Question 5

If the wages of the workers that harvest corn each fall decreases, then the

Accepted Answer

A)  Supply curve for corn will shift right.
B)  Supply curve for corn will shift left.
C)  Demand curve for corn will shift right.
D)  None of the choices are correct.E) None of the above
F) B) and D)

Question 6

To calculate market demand, we

Accepted Answer

A)  Add the quantities demanded for each individual demand schedule horizontally.
B)  Add the quantities demanded for each individual demand schedule vertically.
C)  Find the average quantity demanded at each price.
D)  Find the difference between the quantity demanded and the quantity supplied at each price.E) A) and D)
F) A) and C)

Question 7

In the United States, price ceilings on human organs have caused an increase in demand.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not held constant along a given supply curve for a good?

Accepted Answer

A)  The cost of factors of production.
B)  Price.
C)  Technology.
D)  Taxes.E) A) and D)
F) None of the above

Question 9

The federal government placed an upper limit on human organ prices, which is called a

Accepted Answer

A)  Price floor.
B)  Price ceiling.
C)  Price support.
D)  None of the choices are correct.E) B) and C)
F) A) and B)

Question 10

Define a price ceiling and explain how it affects resource allocation in a market.Give a real-world example of a price ceiling.

Accepted Answer

A price ceiling is an upper limit impose...

Question 11

If bagels and doughnuts are substitutes, then a decrease in the price of doughnuts will result in

Accepted Answer

A)  An increase in the demand for doughnuts.
B)  A decrease in the demand for doughnuts.
C)  An increase in the demand for bagels.
D)  A decrease in the demand for bagels.E) A) and B)
F) A) and C)

Question 12

Ceteris paribus, a consumer that purchases a sports car must consider the price of gasoline because these goods are

Accepted Answer

A)  Substitutes in production.
B)  Complements in production; by-products.
C)  Substitutes in consumption.
D)  Complements in consumption.E) All of the above
F) A) and C)

Question 13

If the actual market price were fixed at $15 per unit in Figure 3.2, Figure 3.2 Supply and Demand

Accepted Answer

A)  There would be a surplus of 40 units.
B)  There would be a surplus of 20 units.
C)  There would be a shortage of 40 units.
D)  There would be a shortage of 20 units.E) B) and D)
F) A) and B)

Question 14

One In the News article in the text titled "The Real March Madness: Ticket Prices " described how professional scalpers use the Internet to sell hard-to-get tickets to concerts and sporting events.Apparently the initial price of the tickets being scalped was too

Accepted Answer

A)  Low for equilibrium, resulting in a surplus of tickets.
B)  Low for equilibrium, resulting in a shortage of tickets.
C)  High for equilibrium, resulting in a surplus of tickets.
D)  High for equilibrium, resulting in a shortage of tickets.E) A) and C)
F) A) and B)

Question 15

A buyer is said to have a demand for a good only when

Accepted Answer

A)  The buyer is not willing to buy the good and does not have enough income to purchase the good.
B)  The buyer is both willing and able to purchase the good.
C)  The buyer has the income but the good is not preferred.
D)  An adequate supply of the good is available for purchase.E) A) and B)
F) None of the above

Question 16

According to the law of demand, during a given period of time, the quantity of a good demanded

Accepted Answer

A)  Increases as its price rises, ceteris paribus.
B)  Increases as its price falls, ceteris paribus.
C)  Decreases as its price falls, ceteris paribus.
D)  Does not change when price changes.E) B) and C)
F) A) and D)

Question 17

A market shortage is

Accepted Answer

A)  The amount by which the quantity demanded exceeds the quantity supplied at a given price.
B)  The result of a price floor.
C)  A situation in which producers cannot sell all the goods and services that they are willing and otherwise able to sell.
D)  The amount by which the cost of production exceeds the price of a good.A market shortage is the excess of quantity demanded over quantity supplied.E) C) and D)
F) A) and B)

Question 18

According to the law of demand, a demand curve

Accepted Answer

A)  Has a negative slope.
B)  Is a horizontal or flat line.
C)  Has a positive slope.
D)  Exceeds the economy's ability to produce.E) A) and B)
F) None of the above

Question 19

"Demand" is a statement of actual purchases.

Accepted Answer

A) True 
 B)False

Question 20

An increase in the price of one good can cause the demand for another good to increase if the goods are
complements.

Accepted Answer

A) True 
 B)False

Exam 3: Supply and Demand

Define a price ceiling and explain how it affects resource allocation in a market.Give a real-world example of a price ceiling.

Correct AnswerverifiedA price ceiling is an upper limit impose...View AnswerShow Answer

At the equilibrium price, there are

Correct AnswerverifiedShow Answer

A buyer is said to have a demand for a good only when

Correct AnswerverifiedShow Answer

Ceteris paribus, a consumer that purchases a sports car must consider the price of gasoline because these goods are

Correct AnswerverifiedShow Answer

In 2007 a company sold 35,000 MP3 players at $150 each.In 2008 the same company sold 40,000 MP3 players at $170 each.This information suggests that

Correct AnswerverifiedShow Answer

An increase in the price of one good can cause the demand for another good to increase if the goods are complements.

Correct AnswerverifiedShow Answer

A market shortage is

Correct AnswerverifiedShow Answer

The goal of the business firms in a market economy is to maximize

Correct AnswerverifiedShow Answer

One In the News article in the text titled "The Real March Madness: Ticket Prices " described how professional scalpers use the Internet to sell hard-to-get tickets to concerts and sporting events.Apparently the initial price of the tickets being scalped was too

Correct AnswerverifiedShow Answer

According to the law of demand, a demand curve

Correct AnswerverifiedShow Answer

According to the law of demand, during a given period of time, the quantity of a good demanded

Correct AnswerverifiedShow Answer

If the wages of the workers that harvest corn each fall decreases, then the

Correct AnswerverifiedShow Answer

If the actual market price were fixed at $15 per unit in Figure 3.2, Figure 3.2 Supply and Demand

Correct AnswerverifiedShow Answer

In the United States, price ceilings on human organs have caused an increase in demand.

Correct AnswerverifiedShow Answer

The federal government placed an upper limit on human organ prices, which is called a

Correct AnswerverifiedShow Answer

"Demand" is a statement of actual purchases.

Correct AnswerverifiedShow Answer

Choose the letter of the diagram in Figure 3.1 that best describes the type of shift that would occur in each situation for the market listed on the left, ceteris paribus. Figure 3.1 Shifts of Supply and Demand Designer clothes: consumer confidence in the economy improves.

Correct AnswerverifiedShow Answer

Which of the following is not held constant along a given supply curve for a good?

Correct AnswerverifiedShow Answer

To calculate market demand, we

Correct AnswerverifiedShow Answer

If bagels and doughnuts are substitutes, then a decrease in the price of doughnuts will result in

Correct AnswerverifiedShow Answer

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A price ceiling is an upper limit impose...
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