Question 1

What is a price floor, and what are its economic effects?

Accepted Answer

A price floor is an artificial price set...

Question 2

Define supply.

Accepted Answer

Supply is a schedule or a curve showing ...

Question 3

Blu-ray players and Blu-ray discs are

Accepted Answer

A)  complementary goods.
B)  substitute goods.
C)  independent goods.
D)  inferior goods.E) B) and C)
F) All of the above

Question 4

Differentiate between a normal good and an inferior good.

Accepted Answer

A normal good is a good that we buy more...

Question 5

How is a preset price similar to a government-imposed price ceiling or a price floor? How is a preset price different from a government-imposed price ceiling or price floor?

Accepted Answer

A preset price is a predetermined price ...

Question 6

In 2018, the price of oil increased, which in turn contributed to a rise in the price of natural gas. This can best be explained by saying that oil and natural gas are

Accepted Answer

A)  complementary goods, and the higher price for oil increased the demand for natural gas.
B)  substitute goods, and the higher price for oil increased the demand for natural gas.
C)  complementary goods, and the higher price for oil decreased the supply of natural gas.
D)  substitute goods, and the higher price for oil decreased the supply of natural gas.E) A) and B)
F) C) and D)

Question 7

Currently the federal U.S. government aims to make college more affordable by offering federal student loans at low interest rates. Discuss the effect this has had on tuition costs.

Accepted Answer

Low interest rates increase the demand f...

Question 8

There will be a surplus of a product when

Accepted Answer

A)  price is below the equilibrium level.
B)  the supply curve is downward sloping and the demand curve is upward sloping.
C)  the demand and supply curves fail to intersect.
D)  consumers want to buy less than producers offer for sale.E) A) and B)
F) B) and C)

Question 9

Consumers buy more of normal goods as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4) , equilibrium price and quantity will be

Accepted Answer

A)  $10 and 60 units.
B)  $9 and 60 units.
C)  $8 and 80 units.
D)  $8 and 60 units.E) B) and C)
F) A) and B)

Question 11

In cases where the supply curve is vertical, any change in demand will cause only a change in price but no change in quantity.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the diagram. Rent controls are best illustrated by

Accepted Answer

A)  price A.
B)  quantity E.
C)  price C.
D)  price B.E) None of the above
F) All of the above

Question 13

Today, economists classify market equilibrium as a behavior demonstrated by an entire system that is not found in any of its constituent parts; this is known as an emergent property.

Accepted Answer

A) True 
 B)False

Question 14

List five determinants of market demand that could cause demand to decrease.

Accepted Answer

Demand could decrease due to: (1)an unfa...

Question 15

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

A) True 
 B)False

Question 16

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the price of a product will reduce the amount of it purchased because

Accepted Answer

A)  the higher price will signal to consumers that the good is of low quality.
B)  the higher price means that real incomes have risen.
C)  consumers will substitute other products for the one whose price has risen.
D)  consumers substitute relatively high-priced for relatively low-priced products.E) A) and B)
F) B) and C)

Question 18

Assume the demand curve for product X shifts to the right. This might be caused by

Accepted Answer

A)  a decline in income if X is an inferior good.
B)  a decline in the price of Z if X and Z are substitute goods.
C)  a change in consumer tastes that is unfavorable to X.
D)  an increase in the price of Y if X and Y are complementary goods.E) B) and D)
F) B) and C)

Question 19

Refer to the diagram. A surplus of 160 units would be encountered if the price was

Accepted Answer

A)  $1.10, that is, $1.60 minus $.50.
B)  $1.60.
C)  $1.00.
D)  $0.50.E) All of the above
F) B) and D)

Question 20

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Accepted Answer

A)  In neither statement.
B)  In the second statement, "The price of corn rises and falls in response to changes in supply and demand."
C)  In the first statement, "In the corn market, demand often exceeds supply and supply sometimes exceeds demand."
D)  In both statements.E) None of the above
F) B) and D)

Exam 3: Demand, Supply, and Market Equilibrium

Refer to the diagram. Rent controls are best illustrated by

Correct AnswerverifiedShow Answer

Define supply.

Correct AnswerverifiedSupply is a schedule or a curve showing ...View AnswerShow Answer

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4) , equilibrium price and quantity will be

Correct AnswerverifiedShow Answer

Refer to the diagram. A surplus of 160 units would be encountered if the price was

Correct AnswerverifiedShow Answer

Currently the federal U.S. government aims to make college more affordable by offering federal student loans at low interest rates. Discuss the effect this has had on tuition costs.

Correct AnswerverifiedLow interest rates increase the demand f...View AnswerShow Answer

Consumers buy more of normal goods as their incomes rise.

Correct AnswerverifiedShow Answer

Assume the demand curve for product X shifts to the right. This might be caused by

Correct AnswerverifiedShow Answer

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Correct AnswerverifiedShow Answer

Today, economists classify market equilibrium as a behavior demonstrated by an entire system that is not found in any of its constituent parts; this is known as an emergent property.

Correct AnswerverifiedShow Answer

What is a price floor, and what are its economic effects?

Correct AnswerverifiedA price floor is an artificial price set...View AnswerShow Answer

An increase in the price of a product will reduce the amount of it purchased because

Correct AnswerverifiedShow Answer

How is a preset price similar to a government-imposed price ceiling or a price floor? How is a preset price different from a government-imposed price ceiling or price floor?

Correct AnswerverifiedA preset price is a predetermined price ...View AnswerShow Answer

There will be a surplus of a product when

Correct AnswerverifiedShow Answer

In 2018, the price of oil increased, which in turn contributed to a rise in the price of natural gas. This can best be explained by saying that oil and natural gas are

Correct AnswerverifiedShow Answer

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?

Correct AnswerverifiedShow Answer

List five determinants of market demand that could cause demand to decrease.

Correct AnswerverifiedDemand could decrease due to: (1)an unfa...View AnswerShow Answer

Differentiate between a normal good and an inferior good.

Correct AnswerverifiedA normal good is a good that we buy more...View AnswerShow Answer

In cases where the supply curve is vertical, any change in demand will cause only a change in price but no change in quantity.

Correct AnswerverifiedShow Answer

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Correct AnswerverifiedShow Answer

Blu-ray players and Blu-ray discs are

Correct AnswerverifiedShow Answer

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Supply is a schedule or a curve showing ...
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Low interest rates increase the demand f...
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Correct Answer
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A price floor is an artificial price set...
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A preset price is a predetermined price ...
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Demand could decrease due to: (1)an unfa...
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A normal good is a good that we buy more...
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