Question 1

An increase in quantity supplied is depicted by a:

Accepted Answer

move from point y to point x

Question 2

An increase in product price will cause:

Accepted Answer

quantity demanded to decrease.

Question 3

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:

Accepted Answer

the development of more efficient machinery for producing this commodity

Question 4

An effective ceiling price will:

Accepted Answer

result in a product shortage.

Question 5

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

Accepted Answer

demand has increased and equilibrium price has decreased.

Question 6

A decrease in supply is depicted by a:

Accepted Answer

shift from S2 to S1.

Question 7

A demand curve:

Accepted Answer

indicates the quantity demanded at each price in a series of prices.

Question 8

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

Accepted Answer

it would create neither a shortage nor a surplus.

Question 9

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to:

Accepted Answer

rise, the supply of bread to decrease, and the demand for potatoes to increase.

Question 10

Equilibrium price will be:

Accepted Answer

$2

Question 11

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

Accepted Answer

surplus of 21 units would occur

Question 12

In the market below, economists would call a government-set maximum price of $40 a:

Accepted Answer

price ceiling.

Question 13

Rent controls are best illustrated by:

Accepted Answer

price A

Question 14

If the price in this market was $4:

Accepted Answer

farmers would not be able to sell all their wheat.

Question 15

A normal good is one:

Accepted Answer

the consumption of which varies directly with incomes.

Question 16

If Z is an inferior good, an increase in money income will shift the:

Accepted Answer

demand curve for Z to the left.

Question 17

At the current price there is a shortage of a product. We would expect price to:

Accepted Answer

increase, quantity demanded to decrease, and quantity supplied to increase.

Question 18

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will:

Accepted Answer

increase, quantity demanded will decrease, and quantity supplied will increase.

Question 19

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

Accepted Answer

an increase in demand has been more than offset by an increase in supply.

Question 20

The law of supply:

Accepted Answer

reflects the amounts that producers will want to offer at each price in a series of prices.

Question 21

In constructing a stable demand curve for product X:

Accepted Answer

the prices of other goods are assumed constant.

Question 22

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes:

Accepted Answer

the income effect

Question 23

A government-set price floor is best illustrated by:

Accepted Answer

price C.

Question 24

By an increase in demand we mean that :

Accepted Answer

the quantity demanded at each price in a set of prices is greater.

Question 25

A decrease in demand is depicted by a:

Accepted Answer

shift from D2 to D1.

Question 26

If price was initially $4 and free to fluctuate, we would expect:

Accepted Answer

the quantity of wheat supplied to decline as a result of the subsequent price change

Question 27

If the price of product L increases, the demand curve for close-substitute product J will:

Accepted Answer

shift to the right.

Question 28

A decrease in quantity demanded is depicted by a:

Accepted Answer

move from point y to point x.

Question 29

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

Accepted Answer

price floor.

Question 30

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in demand may have been caused by:

Accepted Answer

an increase in incomes if the product is a normal good.

Question 31

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

Accepted Answer

shift to the right.

Question 32

The location of the supply curve of a product depends on:

Accepted Answer

all of these.

Question 33

A government-set price ceiling is best illustrated by:

Accepted Answer

price A.

Question 34

One can say with certainty that equilibrium quantity will increase when supply:

Accepted Answer

and demand both increase.

Question 35

A government price support program to aid farmers is best illustrated by:

Accepted Answer

price C

Question 36

A price floor means that:

Accepted Answer

government is imposing a minimum legal price that is typically above the equilibrium price.

Question 37

Black markets are associated with:

Accepted Answer

ceiling prices and the resulting product shortages.

Question 38

A market is in equilibrium:

Accepted Answer

A market is in equilibrium when price adjusts so that quantity demanded equals quantity supplied.

Question 39

A government-set maximum permissible interest rate is best illustrated by:

Accepted Answer

price A

Question 40

A market:

Accepted Answer

is an institution that brings together buyers and sellers.

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