Question 1

Suppose a recent and widely circulated medical article reports new benefits of exercise.Simultaneously, the price of the parts needed to make bikes falls.What is the likely effect on the equilibrium price and quantity of exercise bikes sold?

Accepted Answer

A)  Price of exercise bikes decreases and quantity sold remains the same.
B)  Price of exercise bikes increases and quantity sold also increases.
C)  Price of exercise bikes remains the same and quantity sold increases.
D)  The change in price is ambiguous, but the quantity sold increases.E) None of the above
F) A) and B)

Question 2

Refer to the following graph.  Suppose the graph depicted market demand for British cars sold in the United States.A tariff of $1,000 a car would result in tax revenue of:

Accepted Answer

A)  $10 million.
B)  less than $10 million.
C)  greater than $10 million.
D)  zero.E) All of the above
F) A) and B)

Question 3

The Katrina disaster in New Orleans decreased the ability of oil companies to purify crude oil into gasoline.This caused:

Accepted Answer

A)  the supply curve for gasoline to shift inward.
B)  the supply curve for gasoline to shift outward.
C)  the quantity of gasoline demanded to move out along the demand curve.
D)  the quantity of gasoline supplied to move in along the supply curve.E) All of the above
F) A) and B)

Question 4

At a Chicago Bulls game 20,000 tickets were sold at $30 apiece.The game was sold out and some people did not get tickets.This suggests that the selling price:

Accepted Answer

A)  was at equilibrium.
B)  was below equilibrium.
C)  was above equilibrium.
D)  could not have been any higher.E) B) and D)
F) A) and B)

Question 5

Honus Wagner, a major league baseball player from 1897 to 1917 and one of the first five men inducted into the Baseball Hall of fame, had his baseball card pulled from cigarette packs because he wasn't being paid for their distribution.What best describes the effect of his action on the market for his baseball card?

Accepted Answer

A)  Supply shifted to the left, price rose, and quantity demanded fell
B)  Supply shifted to the left, price rose, and demand shifted to the left
C)  Demand shifted to the left, price fell, and quantity supplied fell
D)  Demand shifted to the left, price fell, and supply fellE) B) and C)
F) A) and D)

Question 6

Fishing for king crabs for a living is risky business.Their migration habits along the Bering Strait are just not understood.The king crabs seem to disappear one year but return mysteriously a few years later, wreaking havoc on the income of crabbers.When crabs disappear, consumers buy lobster instead.What best describes this situation in the king crab market?

Accepted Answer

A)  The supply curve shifts to the left when crabs disappear (their price rises)  and shift to the right when they reappear (their price declines) .
B)  The supply curve shifts to the left when crabs disappear, (their price rises)  and the demand curve shifts to the left when consumers substitute lobster for crab (lowering their price) .The supply curve then shifts to the right when crabs reappear (their price declines) .
C)  The price of crab rises when crabs are scarce creating excess demand.The price of crab falls when crabs are abundant creating excess supply.
D)  The quantity of crab falls and then rises as crabs disappear and reappear in response to shifts in demand.Demand shifts to the left as consumers substitute toward lobster when crab is scarce and shift to the right when crab is abundant.E) B) and D)
F) B) and C)

Question 7

Refer to the table shown that depicts a third-party payer market.What is the cost of this program to the third-party if a $1 co-pay is established?

Accepted Answer

A)  $0
B)  $600
C)  $1,800
D)  $2,400E) None of the above
F) All of the above

Question 8

Price ceilings and price floors:

Accepted Answer

A)  cause surpluses and shortages in markets respectively.
B)  interfere with the allocation function of prices.
C)  make the rationing function of markets more efficient.
D)  cause demand and supply curves to shift thus having no effect on the rationing function of prices.E) C) and D)
F) B) and D)

Question 9

The invention of a machine that increases milk production is discovered.If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Accepted Answer

A)  Excess demand for milk
B)  Excess supply of milk
C)  Neither a shortage nor a surplus of milk
D)  A decline in the price of milkE) B) and C)
F) A) and B)

Question 10

Real-world experience shows that when weather conditions reduce crop yields, the price of agricultural products will fall.

Accepted Answer

A) True 
 B)False

Question 11

An increase in quantity and an indeterminate change in price are consistent with a:

Accepted Answer

A)  leftward shift in demand and supply
B)  rightward shift in supply and demand.
C)  rightward shift in supply, keeping demand constant.
D)  rightward shift in demand, keeping supply constant.E) None of the above
F) B) and D)

Question 12

If the United States imposes tariffs on steel imports:

Accepted Answer

A)  the demand for steel shifts to the left and lowers its market price.
B)  the supply of steel shifts to the right and lowers its market price.
C)  the supply of the imported steel shifts to the left and raises its market price.
D)  the demand for steel shifts to the left and raises its market price.E) C) and D)
F) None of the above

Question 13

To keep the price of gas from rising quickly after Katrina, the government instituted price ceilings on the price of gasoline in some states.These price ceilings caused ______ in the gasoline market.

Accepted Answer

A)  surpluses
B)  movement of the demand curve
C)  movement along the demand curve
D)  shortagesE) All of the above
F) A) and B)

Question 14

Some years ago, Stuyvesant Town and Peter Cooper Village in Manhattan were sold for redevelopment.These villages had been rent controlled, but now that these neighborhoods are no longer rent controlled, one would expect:

Accepted Answer

A)  the houses to be not as well maintained since rent will be so high.
B)  the housing shortage in the neighborhood to worsen.
C)  the rent to rise in those neighborhoods.
D)  the quantity of rentals demanded to rise.E) All of the above
F) C) and D)

Question 15

When computer manufacturers overcame the enormous 13,000 Chinese character barrier by creating a workable keyboard through voice and handwriting recognition, PCs became more accessible to the Chinese.What was the predicted effect of the events on equilibrium price and quantity of PCs sold in China?

Accepted Answer

A)  price and quantity fell
B)  price fell and quantity rose
C)  price rose and quantity fell
D)  price and quantity roseE) A) and D)
F) B) and C)

Question 16

The standard supply/demand framework:

Accepted Answer

A)  can be modified to explain real-world events.
B)  cannot be modified to explain real-world events.
C)  should not be modified to explain real-world events.
D)  explains real-world events with no need for modification.E) A) and B)
F) C) and D)

Question 17

In the late 1990s "mad cow" disease caused people to buy less beef.It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle.What is the effect of the following on price and quantity of British beef sold worldwide?

Accepted Answer

A)  Price of British beef falls and quantity sold also falls
B)  Price of British beef rises and quantity sold falls
C)  Price of British beef falls initially, but regains some of its losses; quantity sold initially rises, then falls
D)  Price of British beef falls initially, but regains some of its losses; quantity sold fallsE) A) and C)
F) C) and D)

Question 18

If government were to issue a fixed number of licenses to produce a good or provide a service, this would likely:

Accepted Answer

A)  lower the price of the good or service to consumers.
B)  lower the wage received by those who have licenses.
C)  increase the wage received by those who have licenses.
D)  increase the demand for goods.E) A) and B)
F) A) and C)

Question 19

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W.If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Accepted Answer

A)  30
B)  20
C)  10
D)  0E) B) and C)
F) None of the above

Question 20

Tariffs increase equilibrium price and quantity.

Accepted Answer

A) True 
 B)False

Exam 5: Using Supply and Demand

Suppose a recent and widely circulated medical article reports new benefits of exercise.Simultaneously, the price of the parts needed to make bikes falls.What is the likely effect on the equilibrium price and quantity of exercise bikes sold?

Correct Answer
verified

The Katrina disaster in New Orleans decreased the ability of oil companies to purify crude oil into gasoline.This caused:

Correct Answer
verified

At a Chicago Bulls game 20,000 tickets were sold at $30 apiece.The game was sold out and some people did not get tickets.This suggests that the selling price:

Correct Answer
verified

If government were to issue a fixed number of licenses to produce a good or provide a service, this would likely:

Correct Answer
verified

Price ceilings and price floors:

Correct Answer
verified

In the late 1990s "mad cow" disease caused people to buy less beef.It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle.What is the effect of the following on price and quantity of British beef sold worldwide?

Correct Answer
verified

Some years ago, Stuyvesant Town and Peter Cooper Village in Manhattan were sold for redevelopment.These villages had been rent controlled, but now that these neighborhoods are no longer rent controlled, one would expect:

Correct Answer
verified

An increase in quantity and an indeterminate change in price are consistent with a:

Correct Answer
verified

Correct Answer
verified

To keep the price of gas from rising quickly after Katrina, the government instituted price ceilings on the price of gasoline in some states.These price ceilings caused ______ in the gasoline market.

Correct Answer
verified

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W.If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Correct Answer
verified

Tariffs increase equilibrium price and quantity.

Correct Answer
verified

If the United States imposes tariffs on steel imports:

Correct Answer
verified

Refer to the following graph. Suppose the graph depicted market demand for British cars sold in the United States.A tariff of $1,000 a car would result in tax revenue of:

Correct Answer
verified

Correct Answer
verified

The standard supply/demand framework:

Correct Answer
verified

Refer to the table shown that depicts a third-party payer market.What is the cost of this program to the third-party if a $1 co-pay is established?

Correct Answer
verified

Real-world experience shows that when weather conditions reduce crop yields, the price of agricultural products will fall.

Correct Answer
verified

When computer manufacturers overcame the enormous 13,000 Chinese character barrier by creating a workable keyboard through voice and handwriting recognition, PCs became more accessible to the Chinese.What was the predicted effect of the events on equilibrium price and quantity of PCs sold in China?

Correct Answer
verified

The invention of a machine that increases milk production is discovered.If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Correct Answer
verified

Exam 5: Using Supply and Demand

Suppose a recent and widely circulated medical article reports new benefits of exercise.Simultaneously, the price of the parts needed to make bikes falls.What is the likely effect on the equilibrium price and quantity of exercise bikes sold?

Correct AnswerverifiedShow Answer

The Katrina disaster in New Orleans decreased the ability of oil companies to purify crude oil into gasoline.This caused:

Correct AnswerverifiedShow Answer

At a Chicago Bulls game 20,000 tickets were sold at $30 apiece.The game was sold out and some people did not get tickets.This suggests that the selling price:

Correct AnswerverifiedShow Answer

If government were to issue a fixed number of licenses to produce a good or provide a service, this would likely:

Correct AnswerverifiedShow Answer

Price ceilings and price floors:

Correct AnswerverifiedShow Answer

In the late 1990s "mad cow" disease caused people to buy less beef.It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle.What is the effect of the following on price and quantity of British beef sold worldwide?

Correct AnswerverifiedShow Answer

Some years ago, Stuyvesant Town and Peter Cooper Village in Manhattan were sold for redevelopment.These villages had been rent controlled, but now that these neighborhoods are no longer rent controlled, one would expect:

Correct AnswerverifiedShow Answer

An increase in quantity and an indeterminate change in price are consistent with a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To keep the price of gas from rising quickly after Katrina, the government instituted price ceilings on the price of gasoline in some states.These price ceilings caused ______ in the gasoline market.

Correct AnswerverifiedShow Answer

Suppose that the free market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W.If the minimum wage were set at $2.50 an hour, how many people would not be able to find work?

Correct AnswerverifiedShow Answer

Tariffs increase equilibrium price and quantity.

Correct AnswerverifiedShow Answer

If the United States imposes tariffs on steel imports:

Correct AnswerverifiedShow Answer

Refer to the following graph. Suppose the graph depicted market demand for British cars sold in the United States.A tariff of $1,000 a car would result in tax revenue of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The standard supply/demand framework:

Correct AnswerverifiedShow Answer

Refer to the table shown that depicts a third-party payer market.What is the cost of this program to the third-party if a $1 co-pay is established?

Correct AnswerverifiedShow Answer

Real-world experience shows that when weather conditions reduce crop yields, the price of agricultural products will fall.

Correct AnswerverifiedShow Answer

When computer manufacturers overcame the enormous 13,000 Chinese character barrier by creating a workable keyboard through voice and handwriting recognition, PCs became more accessible to the Chinese.What was the predicted effect of the events on equilibrium price and quantity of PCs sold in China?

Correct AnswerverifiedShow Answer

The invention of a machine that increases milk production is discovered.If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Correct AnswerverifiedShow Answer

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