Question 1

The minimum wage imposes a legal floor under the wage of the least skilled worker.

Accepted Answer

A) True 
 B)False

Question 2

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 3

If two goods are complements (in consumption),a decline in the price of one will cause an increase in the demand for the other.

Accepted Answer

A) True 
 B)False

Question 4

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Accepted Answer

A)   complementary goods.
B)   competitive goods.
C)   inferior goods.
D)   normal goods.E) A) and D)
F) None of the above

Question 5

If L and M are complementary goods,an increase in the price of L will result in:

Accepted Answer

A)   an increase in the sales of L.
B)   no change in either the price or sales of M.
C)   a decrease in the sales of M.
D)   an increase in the sales of M.E) None of the above
F) B) and C)

Question 6

Price floors and ceiling prices:

Accepted Answer

A)   both cause shortages.
B)   both cause surpluses.
C)   cause the supply and demand curves to shift until equilibrium is established.
D)   interfere with the rationing function of prices.E) A) and B)
F) A) and C)

Question 7

As a result of a decrease in the price of hamburgers,consumers buy more hamburgers and more T-bone steak.This is an illustration of:

Accepted Answer

A)   irrational consumer behaviour.
B)   changing tastes and preferences.
C)   the substitution effect.
D)   the income effect.E) A) and B)
F) None of the above

Question 8

According to the rationing function of prices,a competitive market will:

Accepted Answer

A)   achieve an equilibrium price.
B)   eliminate shortages.
C)   eliminate surplus.
D)   do all of the above.E) A) and C)
F) All of the above

Question 9

At the point where the demand and supply curves for a product intersect:

Accepted Answer

A)   the "selling price" and the "buying price" need not be equal.
B)   the market may,or may not,be in equilibrium.
C)   either a shortage or a surplus of the product might exist,depending on the degree of competition.
D)   the quantity which consumers want to purchase and the amount producers choose to sell are the same.E) None of the above
F) A) and B)

Question 10

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Accepted Answer

A)   quantity supplied will decrease,equilibrium price will increase and,demand will decrease.
B)   supply will decrease,equilibrium price will fall and,demand will increase.
C)   supply will decrease,equilibrium price will increase and,quantity demanded will decrease.
D)   cannot be determined from the information given.E) All of the above
F) B) and C)

Question 11

Which are not generally considered to be complementary goods?

Accepted Answer

A)   gasoline and motor oil
B)   beef and chicken
C)   beer and pretzels
D)   razors and razor bladesE) None of the above
F) A) and B)

Question 12

-If peanut butter and cheese spread are substitute products,which diagram above illustrates the effect on the peanut butter market of a decrease in the price of cheese spread?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) C) and D)
F) None of the above

Question 13

A market demand schedule for a product indicates that:

Accepted Answer

A)   as the product's price falls,consumers buy less of the good.
B)   there is a direct relationship between price and quantity demanded.
C)   as a product's price rises,consumers buy less of other goods.
D)   there is an inverse relationship between price and quantity demanded.E) None of the above
F) A) and C)

Question 14

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates that:

Accepted Answer

A)   the demand for oranges will necessarily rise.
B)   the equilibrium quantity of oranges will rise.
C)   the amount of oranges that will be available at various prices has declined.
D)   the price of oranges will fall.E) B) and D)
F) B) and C)

Question 15

An "increase in efficiency" suggests that an economy:

Accepted Answer

A)   has moved from a point outside of,to a point on,its production possibilities curve.
B)   has decided to produce more consumer goods and fewer capital goods.
C)   has moved from a point on,to a point inside,its production possibilities curve.
D)   is able to get more output from a given amount of inputs.E) C) and D)
F) None of the above

Question 16

Assume that the demand schedule for product C is downsloping.If the price of C falls from $2.00 to $1.75:

Accepted Answer

A)   a smaller quantity of C will be demanded.
B)   a larger quantity of C will be demanded.
C)   the demand for C will increase.
D)   the demand for C will decrease.E) C) and D)
F) All of the above

Question 17

The law of demand states that,ceteris paribus,there is an inverse relationship between the price of a good and the quantity demanded of the good.

Accepted Answer

A) True 
 B)False

Question 18

A demand curve:

Accepted Answer

A)   shows the relationship between price and quantity demanded.
B)   indicates the quantity demanded at each price in a series of prices.
C)   graphs as a downsloping line.
D)   has all of the above characteristics.E) B) and C)
F) A) and D)

Question 19

An improvement in production technology will:

Accepted Answer

A)   increase equilibrium price.
B)   shift the supply curve to the left.
C)   shift the supply curve to the right.
D)   shift the demand curve to the left.E) A) and D)
F) B) and D)

Question 20

-Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Accepted Answer

A)   A only
B)   B only
C)   C only
D)   D onlyE) All of the above
F) B) and D)

Exam 3: Demand, Supply, and Market Equilibrium

The demand for most products varies directly with changes in consumer incomes.Such products are known as:

Correct AnswerverifiedShow Answer

The minimum wage imposes a legal floor under the wage of the least skilled worker.

Correct AnswerverifiedShow Answer

A demand curve:

Correct AnswerverifiedShow Answer

As a result of a decrease in the price of hamburgers,consumers buy more hamburgers and more T-bone steak.This is an illustration of:

Correct AnswerverifiedShow Answer

Suppose that a severe freeze destroys a sizable portion of the lettuce crop.As a result:

Correct AnswerverifiedShow Answer

An "increase in efficiency" suggests that an economy:

Correct AnswerverifiedShow Answer

If L and M are complementary goods,an increase in the price of L will result in:

Correct AnswerverifiedShow Answer

-Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Correct AnswerverifiedShow Answer

-If peanut butter and cheese spread are substitute products,which diagram above illustrates the effect on the peanut butter market of a decrease in the price of cheese spread?

Correct AnswerverifiedShow Answer

An increase in supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

Correct AnswerverifiedShow Answer

An improvement in production technology will:

Correct AnswerverifiedShow Answer

If two goods are complements (in consumption),a decline in the price of one will cause an increase in the demand for the other.

Correct AnswerverifiedShow Answer

A market demand schedule for a product indicates that:

Correct AnswerverifiedShow Answer

Price floors and ceiling prices:

Correct AnswerverifiedShow Answer

Which are not generally considered to be complementary goods?

Correct AnswerverifiedShow Answer

Because of unseasonably cold weather,the supply of oranges has substantially decreased.This statement indicates that:

Correct AnswerverifiedShow Answer

Assume that the demand schedule for product C is downsloping.If the price of C falls from $2.00 to $1.75:

Correct AnswerverifiedShow Answer

The law of demand states that,ceteris paribus,there is an inverse relationship between the price of a good and the quantity demanded of the good.

Correct AnswerverifiedShow Answer

At the point where the demand and supply curves for a product intersect:

Correct AnswerverifiedShow Answer

According to the rationing function of prices,a competitive market will:

Correct AnswerverifiedShow Answer

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