Question 1

Graphically, the area that represents the difference between the market price and the minimum price required to induce suppliers to produce a good is called

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   marginal cost.
D)   triangular arbitrage.E) All of the above
F) B) and D)

Question 2

Use the figure below to answer the following question(s) .
Figure 3-9

Given the demand ( D )  and supply ( S )  for gasoline in Figure 3-9, if the price of gasoline were $1 per gallon,

Accepted Answer

A)   consumers would wish to purchase more than was being supplied.
B)   producers would be supplying more than consumers wished to purchase.
C)   the quantity consumers wished to purchase would equal the quantity that producers wished to supply.
D)   there would be a tendency for the price of gasoline to fall.E) A) and D)
F) All of the above

Question 3

According to the law of supply, as the price of a good falls,

Accepted Answer

A)   buyers will buy more of the good.
B)   buyers will buy less of the good.
C)   sellers will produce more of the good.
D)   sellers will produce less of the good.E) All of the above
F) A) and C)

Question 4

Use the figure below to answer the following question(s) .
Figure 3-9

In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Accepted Answer

A)   price, $1; quantity, 20
B)   price, $2; quantity, 30
C)   price, $3; quantity, 40
D)   price, $4; quantity, 50E) A) and D)
F) A) and B)

Question 5

If the price of a good is below the equilibrium price,

Accepted Answer

A)   suppliers will find inventories building; they will cut output and raise prices.
B)   suppliers will find inventories being depleted. They will increase production and raise prices.
C)   the demand curve will shift down until an equilibrium is established at the existing price.
D)   the supply curve will shift up until an equilibrium is established at the existing price.E) None of the above
F) A) and C)

Question 6

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Accepted Answer

A)   Price will increase, and quantity will decrease.
B)   Price will decrease, and quantity will decrease.
C)   Price will decrease, and quantity will increase.
D)   Price will increase, and quantity will increase.E) A) and D)
F) B) and D)

Question 7

If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively

Accepted Answer

A)   inelastic.
B)   elastic.
C)   robust.
D)   inverse.E) A) and B)
F) A) and C)

Question 8

Figure 3-20 
Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Accepted Answer

A)   $120.
B)   $360.
C)   $480.
D)   $600.E) B) and D)
F) A) and B)

Question 9

Which of the following would be the best example of consumer surplus?

Accepted Answer

A)   Jane pays $30 a month for phone service even though it is worth $70 to her.
B)   Sam refuses to pay $10 for a hair cut because it is only worth $8 to him.
C)   Fred buys a car for $4,000, the maximum amount that he would be willing to pay for it.
D)   When Sue purchases a candy bar for $.50, she uses a $20 bill to pay for it.E) C) and D)
F) A) and B)

Question 10

Use the figure below to answer the following question(s) .
Figure 3-13

Refer to Figure 3-13. The market for margarine was initially in equilibrium at point e. Other things constant, an increase in the price of soybean oil, an important ingredient used to produce margarine, would likely move the equilibrium in this market toward point

Accepted Answer

A)   r.
B)   s.
C)   t.
D)   u.E) B) and C)
F) A) and D)

Question 11

An increase in the expected future price of a good will cause the current demand for the good to

Accepted Answer

A)   decrease, which is a shift to the left of the demand curve.
B)   decrease, which is a shift to the right of the demand curve.
C)   increase, which is a shift to the left of the demand curve.
D)   increase, which is a shift to the right of the demand curve.E) A) and B)
F) None of the above

Question 12

Assume that supply increases greatly and demand increases slightly. Which of the following will happen?

Accepted Answer

A)   Equilibrium price will fall and equilibrium quantity will rise.
B)   Equilibrium price will rise and equilibrium quantity will fall.
C)   Equilibrium price will rise and equilibrium quantity will rise.
D)   Equilibrium price will fall and equilibrium quantity will fall.
E)   Neither equilibrium price nor equilibrium quantity will change.F) A) and E)
G) B) and D)

Question 13

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Accepted Answer

A)   An upward movement along the demand curve for tomato juice.
B)   A downward movement along the demand curve for tomato juice.
C)   A rightward shift in the demand curve for tomato juice.
D)   A leftward shift in the demand curve for tomato juice.E) A) and B)
F) A) and C)

Question 14

Figure 3-18 2? A)  ABD B)  ACF C)  BCDE D)  DEF" class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-18. Which area represents consumer surplus at a price of P 2?

Accepted Answer

A)   ABD
B)   ACF
C)   BCDE
D)   DEFE) A) and B)
F) All of the above

Question 15

Assume that supply decreases greatly and demand decreases slightly. Which of the following will happen?

Accepted Answer

A)   Equilibrium price will fall and equilibrium quantity will rise.
B)   Equilibrium price will rise and equilibrium quantity will fall.
C)   Equilibrium price will rise and equilibrium quantity will rise.
D)   Equilibrium price will fall and equilibrium quantity will fall.
E)   Neither equilibrium price nor equilibrium quantity will change.F) A) and D)
G) A) and E)

Question 16

Figure 3-18 1 to P 2, which area represents the increase in consumer surplus to existing buyers? A)  ABD B)  ACF C)  BCED D)  DEF" class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-18. When the price falls from P 1 to P 2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A)   ABD
B)   ACF
C)   BCED
D)   DEFE) B) and C)
F) A) and B)

Question 17

Consumer surplus is the area on the graph

Accepted Answer

A)   above the supply curve and below the demand curve.
B)   below the demand curve and above the market price.
C)   that represents the gains that producers receive when they sell a product.
D)   that reflect the opportunity cost of producing the a good.E) A) and D)
F) B) and C)

Question 18

Figure 3-22

Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Accepted Answer

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

Question 19

Figure 3-18 1? A)  ABD B)  ACF C)  BCDE D)  DEF" class="answers-bank-image d-inline" rel="preload" >
Refer to Figure 3-18. Which area represents consumer surplus at a price of P 1?

Accepted Answer

A)   ABD
B)   ACF
C)   BCDE
D)   DEFE) All of the above
F) B) and C)

Question 20

Adam Smith's invisible hand principle stresses

Accepted Answer

A)   that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity.
B)   the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society.
C)   the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society.
D)   the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society.E) A) and B)
F) A) and C)

Exam 3: Demand, Supply, and the Market Process

If the price of a good is below the equilibrium price,

Correct Answer
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Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₂?

Correct Answer
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If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively

Correct Answer
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Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Correct Answer
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Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₁?

Correct Answer
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An increase in the expected future price of a good will cause the current demand for the good to

Correct Answer
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Use the figure below to answer the following question(s) . Figure 3-9 Given the demand ( D ) and supply ( S ) for gasoline in Figure 3-9, if the price of gasoline were $1 per gallon,

Correct Answer
verified

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Correct Answer
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Figure 3-20 Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Correct Answer
verified

Adam Smith's invisible hand principle stresses

Correct Answer
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After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Correct Answer
verified

Consumer surplus is the area on the graph

Correct Answer
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Correct Answer
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Assume that supply increases greatly and demand increases slightly. Which of the following will happen?

Correct Answer
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Graphically, the area that represents the difference between the market price and the minimum price required to induce suppliers to produce a good is called

Correct Answer
verified

Which of the following would be the best example of consumer surplus?

Correct Answer
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Assume that supply decreases greatly and demand decreases slightly. Which of the following will happen?

Correct Answer
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Figure 3-18 Refer to Figure 3-18. When the price falls from P ₁ to P ₂, which area represents the increase in consumer surplus to existing buyers?

Correct Answer
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Use the figure below to answer the following question(s) . Figure 3-9 In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Correct Answer
verified

According to the law of supply, as the price of a good falls,

Correct Answer
verified

Exam 3: Demand, Supply, and the Market Process

If the price of a good is below the equilibrium price,

Correct AnswerverifiedShow Answer

Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P 2?

Correct AnswerverifiedShow Answer

If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively

Correct AnswerverifiedShow Answer

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?

Correct AnswerverifiedShow Answer

Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P 1?

Correct AnswerverifiedShow Answer

An increase in the expected future price of a good will cause the current demand for the good to

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 3-9 Given the demand ( D ) and supply ( S ) for gasoline in Figure 3-9, if the price of gasoline were $1 per gallon,

Correct AnswerverifiedShow Answer

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Correct AnswerverifiedShow Answer

Figure 3-20 Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Correct AnswerverifiedShow Answer

Adam Smith's invisible hand principle stresses

Correct AnswerverifiedShow Answer

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Correct AnswerverifiedShow Answer

Consumer surplus is the area on the graph

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that supply increases greatly and demand increases slightly. Which of the following will happen?

Correct AnswerverifiedShow Answer

Graphically, the area that represents the difference between the market price and the minimum price required to induce suppliers to produce a good is called

Correct AnswerverifiedShow Answer

Which of the following would be the best example of consumer surplus?

Correct AnswerverifiedShow Answer

Assume that supply decreases greatly and demand decreases slightly. Which of the following will happen?

Correct AnswerverifiedShow Answer

Figure 3-18 Refer to Figure 3-18. When the price falls from P 1 to P 2, which area represents the increase in consumer surplus to existing buyers?

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Use the figure below to answer the following question(s) . Figure 3-9 In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Correct AnswerverifiedShow Answer

According to the law of supply, as the price of a good falls,

Correct AnswerverifiedShow Answer

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Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₂?

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Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₁?

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Figure 3-18 Refer to Figure 3-18. When the price falls from P ₁ to P ₂, which area represents the increase in consumer surplus to existing buyers?

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