Question 1

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Accepted Answer

A)   Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices.
B)   The quality of rental housing declines as landlords lack the funds and incentive to maintain properties.
C)   Apartment buildings are torn down in favor of office buildings,shopping malls,and other buildings where rents are not controlled.
D)   All of the above are consequences of rent controls.E) None of the above
F) A) and B)

Question 2

Price floors and price ceilings:

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) All of the above

Question 3

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased.From this information we can conclude that:

Accepted Answer

A)   higher education is an exception to the law of demand.
B)   the supply of education provided by GSU has also increased over the 20-year period.
C)   school-age population,incomes,and preferences for education have changed over the 20-year period.
D)   GSU's supply curve of education is downsloping.E) None of the above
F) B) and C)

Question 4

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Accepted Answer

A)   demand curve for cigarettes rightward.
B)   demand curve for cigarettes leftward.
C)   supply curve for cigarettes rightward.
D)   supply curve for cigarettes leftward.E) A) and B)
F) B) and D)

Question 5

If the price of K declines,the demand curve for the complementary product J will:

Accepted Answer

A)   shift to the left.
B)   shift to the right.
C)   decrease.
D)   remain unchanged.E) B) and D)
F) C) and D)

Question 6

In 2007 the price of oil increased,which in turn caused the price of natural gas to rise.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) B) and C)
F) None of the above

Question 7

A price ceiling in a competitive market will result in persistent surpluses of a product.

Accepted Answer

A) True 
 B)False

Question 8

Ticket scalping implies that:

Accepted Answer

A)   event sponsors have set ticket prices at above-equilibrium levels.
B)   an event is not likely to be sold out.
C)   event sponsors have set ticket prices at below-equilibrium levels.
D)   the demand for tickets has fallen between the time tickets were originally sold and the event takes place.E) A) and B)
F) None of the above

Question 9

0 to D1 might be caused by a(n) : A)  decrease in income if X is an inferior good. B)  increase in the price of complementary good Y. C)  increase in money incomes if X is a normal good. D)  increase in the price of substitute product Y." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D0 to D1 might be caused by a(n) :

Accepted Answer

A)   decrease in income if X is an inferior good.
B)   increase in the price of complementary good Y.
C)   increase in money incomes if X is a normal good.
D)   increase in the price of substitute product Y.E) C) and D)
F) A) and B)

Question 10

Suppose that in 2008 Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2009,600,000 Mustangs were sold at an average price of $22,500 per car.These statements:

Accepted Answer

A)   suggest that the demand for Mustangs decreased between 2008 and 2009.
B)   suggest that the supply of Mustangs must have increased between 2008 and 2009.
C)   suggest that the demand for Mustangs increased between 2008 and 2009.
D)   constitute an exception to the law of demand in that they suggest an upsloping demand curve.E) A) and B)
F) A) and C)

Question 11

If there is a shortage of product X:

Accepted Answer

A)   fewer resources will be allocated to the production of this good in the future.
B)   the price of the product will rise.
C)   the price of the product will decline.
D)   the supply curve will shift to the left and the demand curve to the right,eliminating the shortage.E) None of the above
F) B) and C)

Question 12

Given a downsloping demand curve and an upsloping supply curve for a product,an increase in the price of a substitute good will:

Accepted Answer

A)   increase equilibrium price and quantity.
B)   decrease equilibrium price and quantity.
C)   increase equilibrium price and decrease equilibrium quantity.
D)   decrease equilibrium price and increase equilibrium quantity.E) B) and D)
F) B) and C)

Question 13

If government set a maximum price of $45 in the above market:

Accepted Answer

A)   a shortage of 21 units would arise.
B)   a surplus of 21 units would arise.
C)   a surplus of 40 units would arise.
D)   it would not change the free market outcome.E) B) and C)
F) A) and D)

Question 14

If government set a minimum price of $50 in the above market,a:

Accepted Answer

A)   shortage of 21 units would occur.
B)   shortage of 125 units would occur.
C)   surplus of 21 units would occur.
D)   surplus of 125 units would occur.E) A) and D)
F) None of the above

Question 15

Refer to the above table.If demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5) ,equilibrium price and quantity will be:

Accepted Answer

A)   $10 and 60 units.
B)   $9 and 50 units.
C)   $8 and 60 units.
D)   $7 and 50 units.E) A) and B)
F) All of the above

Question 16

An unusually large crop of coffee beans would:

Accepted Answer

A)   increase the supply of coffee.
B)   increase the price of coffee.
C)   decrease the quantity of coffee consumed.
D)   increase the price of tea.E) A) and D)
F) C) and D)

Question 17

If the legal price floor is set below the equilibrium price in a market,then a surplus will develop in the market.

Accepted Answer

A) True 
 B)False

Question 18

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n) :

Accepted Answer

A)   increase in the demand for gasoline.
B)   decrease in the demand for gasoline.
C)   increase in the supply of gasoline.
D)   decrease in the supply of gasoline.E) A) and C)
F) None of the above

Question 19

In the above market,economists would call a government-set minimum price of $50 a:

Accepted Answer

A)   price ceiling.
B)   price floor.
C)   equilibrium price.
D)   fair price.E) A) and D)
F) None of the above

Question 20

An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Accepted Answer

A)   there are many goods that are substitutes for bicycles.
B)   there are many goods that are complementary to bicycles.
C)   there are few goods that are substitutes for bicycles.
D)   bicycles are normal goods.E) All of the above
F) C) and D)

Exam 3: Demand, Supply, and Market Equilibrium

If government set a minimum price of $50 in the above market,a:

Correct AnswerverifiedShow Answer

Refer to the above table.If demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5) ,equilibrium price and quantity will be:

Correct AnswerverifiedShow Answer

When the price of oil declines significantly,the price of gasoline also declines.The latter occurs because of a(n) :

Correct AnswerverifiedShow Answer

Ticket scalping implies that:

Correct AnswerverifiedShow Answer

An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Correct AnswerverifiedShow Answer

If the legal price floor is set below the equilibrium price in a market,then a surplus will develop in the market.

Correct AnswerverifiedShow Answer

Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

Correct AnswerverifiedShow Answer

An unusually large crop of coffee beans would:

Correct AnswerverifiedShow Answer

If there is a shortage of product X:

Correct AnswerverifiedShow Answer

Price floors and price ceilings:

Correct AnswerverifiedShow Answer

In 2007 the price of oil increased,which in turn caused the price of natural gas to rise.This can best be explained by saying that oil and natural gas are:

Correct AnswerverifiedShow Answer

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased.From this information we can conclude that:

Correct AnswerverifiedShow Answer

Given a downsloping demand curve and an upsloping supply curve for a product,an increase in the price of a substitute good will:

Correct AnswerverifiedShow Answer

A price ceiling in a competitive market will result in persistent surpluses of a product.

Correct AnswerverifiedShow Answer

Suppose that in 2008 Ford sold 500,000 Mustangs at an average price of $18,800 per car;in 2009,600,000 Mustangs were sold at an average price of $22,500 per car.These statements:

Correct AnswerverifiedShow Answer

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Correct AnswerverifiedShow Answer

In the above market,economists would call a government-set minimum price of $50 a:

Correct AnswerverifiedShow Answer

If the price of K declines,the demand curve for the complementary product J will:

Correct AnswerverifiedShow Answer

Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D0 to D1 might be caused by a(n) :

Correct AnswerverifiedShow Answer

If government set a maximum price of $45 in the above market:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the above diagram,which shows demand and supply conditions in the competitive market for product X.A shift in the demand curve from D₀ to D₁ might be caused by a(n) :

Correct Answer
verified

Correct Answer
verified