Question 1

Money is critical in facilitating market exchanges and the specialization that these exchanges permit.

Accepted Answer

A) True 
 B)False

Question 2

In a market economy, which of the following determines the answer to the WHAT to produce question?

Accepted Answer

A)   Direct negotiations between consumers and government.
B)   Prices and profit.
C)   Government directives.
D)   A democratic vote by all consumers.

Question 3

The term opportunity cost refers to

Accepted Answer

A)   The most a consumer is willing to exchange to get an item.
B)  The slope of the demand line for a consumer or slope of the supply line for the producer.
C)   The minimum price that a producer will accept for a product.
D)   All of the choices are correct.

Question 4

At the equilibrium price, there are

Accepted Answer

A)   Shortages.
B)   Surpluses.
C)   Excess inventories.
D)   No shortages or surpluses.

Question 5

An increase in the equilibrium price of electricity can be caused by

Accepted Answer

A)   An increase in the supply of electricity.
B)   An increase in the demand for electricity.
C)   A decrease in the demand for electricity.
D)   An increase in the quantity demanded of electricity.

Question 6

When the demand for coffee increases, ceteris paribus, the equilibrium price will also increase because

Accepted Answer

A)   A shortage exists at the old equilibrium price.
B)   There must be a surplus of the good.
C)   The market supply and demand curves do not intersect.
D)   Market demand must be upward-sloping.

Question 7

In a market economy, the people who receive the goods and services produced are those who

Accepted Answer

A)   Need the goods and services the most.
B)   Want the goods and services the most.
C)   Have the most political power.
D)   Are willing and able to pay the market price.

Question 8

The desire for carrots changes as one moves down the demand curve for carrots.

Accepted Answer

A) True 
 B)False

Question 9

Which determinant of demand changes in the personal computer market as more individuals become interested in "surfing the Internet"?

Accepted Answer

A)   Cost of factors of production.
B)   Income.
C)   Expectations.
D)   Number of buyers.

Question 10

An increase in the price of gasoline above equilibrium will

Accepted Answer

A)   Shift the gasoline supply curve to the right.
B)   Shift the gasoline demand curve to the right.
C)   Cause a surplus of gasoline.
D)   Cause a shortage of gasoline.

Question 11

Peanut butter and jelly are complements.A decrease in the price of one will result in

Accepted Answer

A)   A decrease in the demand for the other.
B)   A decrease in the quantity demanded of the other.
C)   An increase in the demand for the other.
D)   An increase in the quantity demanded of the other.

Question 12

A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium price to

Accepted Answer

A)   Increase and quantity to decrease.
B)   Decrease and quantity to decrease.
C)   Increase and quantity to increase.
D)   Decrease and quantity to increase.

Question 13

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.

Question 14

People benefit by participating in the market because

Accepted Answer

A)   Resources are no longer limited.
B)   There are always participants in the market that are more efficient than you are in production.
C)   Market participation allows individuals to specialize and, with trade, ultimately consume more.
D)   Participants in the market do not have to make choices.

Question 15

A change in demand means there has been a shift in the demand curve, and a change in quantity demanded

Accepted Answer

A)   Results from a change in price of other goods.
B)   Means a shortage or surplus will result from holding prices constant.
C)   Also means demand has shifted.
D)   Means that price has changed and there is movement along the demand curve. Movements along a demand curve are a response to price changes for that good.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

International participants

Accepted Answer

A)   Take no part in American markets.
B)   Participate only in American product markets.
C)   Participate only in American factor markets.
D)   Participate in both American factor markets and American product markets.

Question 18

Ceteris paribus, if the subsidies given to corn syrup producers decrease, then we can expect

Accepted Answer

A)   A decrease in the demand for corn syrup.
B)   A decrease in the supply of corn syrup.
C)   An increase in the demand for corn syrup.
D)   An increase in the supply of corn syrup.

Question 19

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.

Question 20

When economists talk about "optimal outcomes" in the marketplace, they mean that

Accepted Answer

A)   The allocation of resources by the market is perfect.
B)   All the consumer desires are satisfied and business profits are maximized.
C)   The allocation of resources by the market is likely to be the best possible, given scarce resources and income constraints.
D)   Everyone who wants a good or service can have it.

Exam 3: Supply and Demand

When economists talk about "optimal outcomes" in the marketplace, they mean that

Correct AnswerverifiedShow Answer

In a market economy, which of the following determines the answer to the WHAT to produce question?

Correct AnswerverifiedShow Answer

An increase in the price of gasoline above equilibrium will

Correct AnswerverifiedShow Answer

Money is critical in facilitating market exchanges and the specialization that these exchanges permit.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Peanut butter and jelly are complements.A decrease in the price of one will result in

Correct AnswerverifiedShow Answer

Ceteris paribus, if the subsidies given to corn syrup producers decrease, then we can expect

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

When the demand for coffee increases, ceteris paribus, the equilibrium price will also increase because

Correct AnswerverifiedShow Answer

A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium price to

Correct AnswerverifiedShow Answer

A change in demand means there has been a shift in the demand curve, and a change in quantity demanded

Correct AnswerverifiedShow Answer

The desire for carrots changes as one moves down the demand curve for carrots.

Correct AnswerverifiedShow Answer

In a market economy, the people who receive the goods and services produced are those who

Correct AnswerverifiedShow Answer

International participants

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The term opportunity cost refers to

Correct AnswerverifiedShow Answer

At the equilibrium price, there are

Correct AnswerverifiedShow Answer

An increase in the equilibrium price of electricity can be caused by

Correct AnswerverifiedShow Answer

People benefit by participating in the market because

Correct AnswerverifiedShow Answer

Which determinant of demand changes in the personal computer market as more individuals become interested in "surfing the Internet"?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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