Question 1

If price rises, what happens to the quantity demanded for a product?

Accepted Answer

A)  It increases.
B)  It decreases.
C)  It does not change.
D)  Uncertain--economic theory has no answer to this question.E) A) and B)
F) A) and C)

Question 2

If air travel and bus travel are substitutes,

Accepted Answer

A)  an increase in the price of bus travel will decrease the demand for air travel.
B)  a decrease in the price of bus travel will decrease the demand for air travel.
C)  an increase in the price of bus travel will generally have no effect on the demand for air travel.
D)  an increase in the price of bus travel will shift the demand curve for air travel to the left.E) C) and D)
F) B) and C)

Question 3

Which of the following would lead to an increase in the demand for computer software?

Accepted Answer

A)  a decrease in the price of computer software
B)  a decrease in the price of personal computers
C)  an decrease in the cost of producing computer software
D)  an decrease in personal incomeE) A) and B)
F) A) and C)

Question 4

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

Accepted Answer

A)  price elasticity of demand.
B)  consumer surplus.
C)  the substitution effect.
D)  income elasticity of demand.E) B) and C)
F) All of the above

Question 5

If consumer tastes are changing more in favor of the consumption of a particular good the

Accepted Answer

A)  market demand curve will shift to the left.
B)  consumer will move up a given demand curve, decreasing the quantity demanded.
C)  consumer would move down a given demand curve, decreasing the quantity demanded.
D)  consumer would move down a given demand curve, increasing the quantity demanded.
E)  market demand curve would shift to the right.F) A) and C)
G) B) and C)

Question 6

Which of the following events would increase producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases.
B)  Sellers' costs increase and the price of the good stays the same.
C)  Sellers' costs increase and the price of the good decreases.
D)  All of the above are correct.E) C) and D)
F) B) and D)

Question 7

Which of the following would most likely increase the supply of beef?

Accepted Answer

A)  lower prices of grains used to feed cattle
B)  lower prices for chicken, a substitute for beef
C)  new medical research suggesting that beef causes more serious health problems than was previously thought
D)  an increase in the cost of transporting beef products to the consumer marketE) B) and D)
F) B) and C)

Question 8

If a firm is not covering the cost of all resources employed by the firm (including the opportunity cost of resources owned by the firm) , it will generally

Accepted Answer

A)  go out of business in the long run.
B)  remain in business as long as the current conditions are unchanged.
C)  experience an increase in its stock price because investors will be attracted to it.
D)  attempt to expand the size of its operation.E) All of the above
F) None of the above

Question 9

How will consumers generally react to an increase in the price of butter?

Accepted Answer

A)  They will purchase a larger quantity of butter.
B)  They will substitute other goods like margarine for the more expensive butter.
C)  They will reduce their purchases of substitute goods like margarine.
D)  They will continue purchasing the same quantity of butter at the higher price.E) None of the above
F) All of the above

Question 10

If price rises, what happens to supply of a product?

Accepted Answer

A)  It increases.
B)  It decreases.
C)  It does not change.
D)  Uncertain--economic theory has no answer to this question.E) A) and C)
F) None of the above

Question 11

The price of a good will tend to fall when

Accepted Answer

A)  there is excess demand for the good.
B)  there is excess supply of the good.
C)  demand for the good increases.
D)  the supply of the good decreases.E) A) and B)
F) A) and C)

Question 12

Which of the following is most likely to shift the demand curve for electricity to the left?

Accepted Answer

A)  consumers becoming more energy conscious
B)  an increase in income
C)  a decrease in the price of electricity
D)  an increase in the price of natural gas, a substitute source of energyE) B) and D)
F) C) and D)

Question 13

Which of the following would most likely cause the demand for inkjet printers to decrease?

Accepted Answer

A)  a decrease in consumer income
B)  an increase in the price of laser printers, a substitute for inkjet printers
C)  a decrease in the price of printer paper used with inkjet printers
D)  a decrease in the price of inkjet printer cartridges used in inkjet printersE) B) and D)
F) C) and D)

Question 14

Which of the following would most likely increase the demand for peanut butter?

Accepted Answer

A)  a decrease in the price of jelly, a good that is often used with peanut butter
B)  the discovery that excessive consumption of peanut butter is harmful to one's health
C)  crop failures that raise the price of peanuts
D)  the invention of a new product that consumers think is a good substitute for peanut butterE) A) and D)
F) B) and C)

Question 15

When economists say an activity is consistent with economic efficiency, they mean

Accepted Answer

A)  a majority of citizens favor the activity.
B)  the benefits that result from the activity exceed the costs.
C)  the number of people who gain from the activity exceeds the number on whom costs are imposed.
D)  the costs that result from the activity exceed the benefits.E) B) and C)
F) A) and D)

Question 16

Profit can be defined as the

Accepted Answer

A)  difference between the sales revenue of a business firm and the opportunity cost of the resources required to produce the goods supplied by the firm.
B)  difference between a company's income and direct monetary costs of production.
C)  difference between the price of a product and the consumer's valuation of the good.
D)  amount of total revenue earned by the firm minus its payments to stockholders.E) None of the above
F) A) and B)

Question 17

A demand curve for concert tickets would show the

Accepted Answer

A)  number of tickets the box office is willing to sell at various prices.
B)  number of people who need tickets.
C)  quantity of people who want to buy these concert tickets.
D)  number of tickets that will be purchased at various prices.E) B) and C)
F) A) and D)

Question 18

As the number of elderly consumers in a market increases and the number of younger consumers declines, we would expect

Accepted Answer

A)  an increase in the demand for medical services.
B)  a decrease in the demand for medical services.
C)  a decrease in the demand for blue jeans.
D)  both a andc.E) A) and C)
F) None of the above

Question 19

Table 3-2
 
-Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

Accepted Answer

A)  $670.
B)  $770.
C)  $970.
D)  $1,170.E) None of the above
F) A) and B)

Question 20

Which of the following would reduce the supply of tennis shoes?

Accepted Answer

A)  an increase in the demand for tennis shoes
B)  a new tax imposed on the producers of tennis shoes
C)  a reduction in the price of leather used to make tennis shoes
D)  all of the aboveE) A) and B)
F) None of the above

Exam 3: A: Supply, Demand, and the Market Process

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

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Which of the following would lead to an increase in the demand for computer software?

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If consumer tastes are changing more in favor of the consumption of a particular good the

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A demand curve for concert tickets would show the

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Which of the following would most likely increase the supply of beef?

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If a firm is not covering the cost of all resources employed by the firm (including the opportunity cost of resources owned by the firm) , it will generally

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When economists say an activity is consistent with economic efficiency, they mean

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Which of the following would reduce the supply of tennis shoes?

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Which of the following would most likely increase the demand for peanut butter?

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Which of the following is most likely to shift the demand curve for electricity to the left?

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If price rises, what happens to supply of a product?

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The price of a good will tend to fall when

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If price rises, what happens to the quantity demanded for a product?

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Which of the following events would increase producer surplus?

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Table 3-2 -Refer to Table 3-2. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

Correct AnswerverifiedShow Answer

Profit can be defined as the

Correct AnswerverifiedShow Answer

If air travel and bus travel are substitutes,

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How will consumers generally react to an increase in the price of butter?

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Which of the following would most likely cause the demand for inkjet printers to decrease?

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As the number of elderly consumers in a market increases and the number of younger consumers declines, we would expect

Correct AnswerverifiedShow Answer

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