Macroeconomics Chapter 3

______,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good. -An unchanged supply of a good -An increase in the supply of a good -A decrease in the supply of a good -A rightward shift of the supply curve of a good

A decrease in the supply of a good

Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society? -Production possibilities -Marginal efficiency -Productive efficiency -Allocative efficiency

Allocative efficiency

A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following? -A simultaneous decrease in both supply and demand -A decrease in supply and a simultaneous increase in demand -An increase in supply and a simultaneous decrease in demand -A simultaneous increase in both supply and demand

An increase in supply and a simultaneous decrease in demand

Which exemplifies a pair of substitute goods? -Hot dogs and hamburgers -Golf balls and golf clubs -Snow boards and lift tickets -CDs and CD players

Hot dogs and hamburgers

Which of the following is a determinant of demand? -Producer expectations -Resource prices -Income -Technology

Income

Which of the following does not exemplify an improvement in technology affecting supply? -Invention of new vaccines -Advances in producing flat panel computer monitors that have greatly reduced their cost -The introduction of the mass-assembly line -Increased subsidies to farmers for producing more corn

Increased subsidies to farmers for producing more corn

Which of the following has the greatest effect on the quantity supplied? -Tastes and preferences -Positive technological changes -Cost -Price

Price

Select all that apply In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels? -Prices are too low for firms. -Prices are too low for consumers. -Prices are too high for firms. -Prices are too high for consumers.

Prices are too low for firms. Prices are too high for consumers.

Which of the following are determinants of supply? -Prices of other goods -Taxes and subsidies -Producer expectations -Number of buyers

Prices of other goods Taxes and subsidies Producer expectations

Select all that apply Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply) -Substitute goods -Complementary goods -Normal goods -Inferior goods

Substitute goods Complementary goods

Select all that apply Which of the following are determinants of supply? -Consumer expectations -Taxes and subsidies -Resource prices -Technology

Taxes and subsidies Resource prices Technology

What is the price where the intentions of buyers and sellers match? -The equilibrium price -The equilibrium quantity -The surplus price -The inferior price

The equilibrium price

True or false: The law of demand can be supported by the income effect.

True

A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity. -a decline -an increase -a decline followed by an increase -no change

a decline

The inverse relationship between price and quantity demanded can be graphically illustrated by ______. -a vertical line -an upward sloping curve -a horizontal line -a downward sloping curve

a downward sloping curve

The willingness and ability of a consumer to buy a normal product falls because of ______. -no change in income -a fall in income -a rise in income -a raise in wages

a fall in income

The supply curve is ______ sloping curve. -a horizontal -a downward -a negative -an upward

an upward

The law of demand is consistent with common sense because people ordinarily ______. -buy more at a high price -do not change buying patterns based on price -buy less at a low price -buy more at a low price

buy more at a low price

A price ____ (floor/ceiling) is the maximum legal price a seller may charge for a product or service.

ceiling

A ______ good is one that is used together with another good. -normal -substitute -exception -complementary

complementary

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______. -subsidized at various possible prices -consumed at various possible prices -produced at various possible prices -given away at only one price

consumed at various possible prices

One of the determinants of demand is ______ expectations. -input price -producer -consumer -supply

consumer

The ______ incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service. -marginal product of labor -losses -costs of production -negative externality

costs of production

When the price of a product falls, demand for its substitute will _______. -stay the same -decrease -increase

decrease

An increase in business taxes causes a(n) ______ in supply and will ______ production costs. -increase; decrease -increase; increase -decrease; decrease -decrease; increase

decrease; increase

An unfavorable change in consumer tastes and preferences for a product will ______ demand, which is illustrated as a shift of the demand curve to the ______. -increase; right -increase; left -decrease; left -decrease; right

decrease; left

A change in the number of buyers is a determinant of market ____

demand

Consumer expectations are a determinant of ____

demand

The inverse, or negative, relationship between price and quantity demanded is known as the law of ______. -supply -diminishing returns -demand -increasing opportunity costs

demand

A shortage results from an excess of quantity ____

demanded

The ____ output is the quantity at which quantity demanded equals quantity supplied in a competitive market.

equilibrium

A price ____ is a minimum price fixed by the government, generally imposed above the equilibrium price.

floor

Producer expectations refer to firms' expectations of ______ for a good or service that they produce. -future prices -life-cycle -resource availability

future prices

Government may place legal limits on prices when it is determined that prices are unfairly ____ (high/low) for buyers or unfairly ____ (high/low) for sellers.

high, low

In general, a firm will ____ the output of a good or service if the price of the good is rising.

increase

An increase in the sales, property, or any other tax will ______ production costs and ______ supply. -decrease; increase -increase; increase -decrease; decrease -increase; decrease

increase; decrease

Select all that apply If the government of a country subsidizes the production of a good, it: -reduces supply. -increases supply. -increases the cost of production. -lowers the cost of production.

increases supply. lowers the cost of production.

Greater resource prices _______ the costs of production, thereby, ______ the incentive for firms to produce the good at each price. -decreases; reducing -increases; reducing -decreases; raising -increases; raising

increases; reducing

The income effect indicates that a ______ price increases the purchasing power of income, enabling consumers to purchase ______ of a product and vice versa. -higher; more -lower; more -higher; less -lower; less

lower; more

Upon receiving a substantial raise, Jessie increased her monthly consumption of beef. This information best exemplifies the relationship between income and a(n) ______. -inferior good -normal good

normal good

The production of a good or service in the least costly way is known as ______ efficiency. -productive -price -allocative -cost -expenditure

productive

Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______. -investment in physical capital goods -the law of supply -substitution in production -energy efficiency -productive efficiency

productive efficiency

If prices of a good or service are expected to increase in the future, the demand for that good or service will ______ today. If prices are expected to decrease in the future, demand will ______ today. -fall; fall -rise; rise -rise; not change -fall; rise -rise; fall

rise; fall

A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded. -rotation of; movement along -movement along; shift of -rotation of; shift of -shift of; movement along

shift of; movement along

In the marketplace, what is a good that is used together with another good? -A complementary good -A superior good -A substitute good -An independent good

A complementary good

Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners? -A price ceiling -A price floor -Equilibrium price -A negative externality

A price ceiling

Which of the following shows the effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand? -Equilibrium price rises and the change in equilibrium quantity is indeterminate. -The change in equilibrium price is indeterminate and equilibrium quantity falls. -The change in equilibrium price is indeterminate and equilibrium quantity rises. -Equilibrium price falls and the change in equilibrium quantity is indeterminate.

Equilibrium price falls and the change in equilibrium quantity is indeterminate.

Which of the following describe the effects on equilibrium price and equilibrium quantity as a result of a decrease in supply and a simultaneous increase in demand? -Equilibrium price and quantity rise. -Equilibrium price and quantity fall. -Equilibrium price rises and the change in equilibrium quantity is indeterminate. -Equilibrium price is indeterminate and the change in equilibrium quantity is indeterminate.

Equilibrium price rises and the change in equilibrium quantity is indeterminate.

True or false: An increase in the sales, property or any other tax will decrease production costs and increase supply.

False

Which of the following would increase the demand for goods and services in the United States? -A fall in national income -A decrease in the rate of population growth -A decline in the number of older people -Large-scale immigration

Large-scale immigration

Select all that apply In general, what goals does the improvement of production techniques help companies to achieve? -Reduce employee productivity -Lower production costs -Increase supply -Use fewer resources per unit of output

Lower production costs Increase supply Use fewer resources per unit of output

Select all that apply Which of the following are determinants of demand? -Number of buyers -Consumer tastes -Prices of related goods -Corporate taxes and subsidies -Consumer expectations -Resource prices -Consumer income

Number of buyers Consumer tastes Prices of related goods Consumer expectations Consumer income

Which of the following specifically refers to demand? -The seller side of any market -Both the buyer and seller sides of any market -The producer side of any market -The buyer side of any market

The buyer side of any market

Select all that apply Which are reasons for changes in buyer tastes? -The stability of existing markets -The development of new technology -The results of health studies -The introduction of products

The development of new technology The results of health studies The introduction of products

Other things equal, which of the following is correct regarding increasing the number of sellers in an industry? -The quality of products increases -More firms will leave the industry -The supply curve shifts to the left. -The market supply becomes greater

The market supply becomes greater

What does allocative efficiency refer to? -The particular mix of goods most highly valued by society -The ideal slope of the supply curve -The particular mix of goods least valued by society -The production state that corresponds to equilibrium quantity

The particular mix of goods most highly valued by society

At equilibrium quantity, which of the following is true? -The available quantity is a shortage. -The available quantity can be either a surplus or a shortage. -The quantity demanded equals quantity supplied. -The available quantity is a surplus.

The quantity demanded equals quantity supplied.

True or false: A surplus is when quantity supplied exceeds quantity demanded.

True

True or false: Resource costs or changes in these costs to production are responsible for shifts in the supply curve.

True

True or false: When the price of one product rises, the demand for its substitute will increase.

True

The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by ______. -an indeterminate change in equilibrium price and an increase in equilibrium quantity -an indeterminate change in equilibrium price and indeterminate change in equilibrium quantity -a decrease in equilibrium price and an indeterminate change in equilibrium quantity -an increase in equilibrium price and quantity

a decrease in equilibrium price and an indeterminate change in equilibrium quantity

The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______. -selling, but not buying, decisions are consistent -buying, but not selling, decisions are consistent -buying and selling decisions are consistent -buying and selling decisions are inconsistent

buying and selling decisions are consistent

Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price. -ceilings; below -floor; greater -ceilings; above -floor; below

ceilings; below

Consumers experience ______ marginal utility the more they consume of a particular good or service. -diminishing -additional -constant -increasing

diminishing

If a decline in demand is greater than an increase in supply, the equilibrium quantity will ______. -not change -fall -rise

fall

Suppose the market for a good is in equilibrium. Assume that there is a decline in the supply of the good and an increase in the demand for the good. If the decline in supply is larger than the increase in demand, the equilibrium quantity will ______. -rise -not change -fall

fall

A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity. -increase; decrease -decrease; decrease -decrease; increase -increase; increase

increase; decrease

A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______. -illegal; illegal -illegal; legal -legal; legal -legal; illegal

legal; illegal

The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the ____-clearing price.

market

The price of ______ goods is a determinant of demand. -intermediate -producer -related -inexpensive -independent

related

If an increase in supply is larger than a decrease in demand, the equilibrium quantity will ______. -not change -fall -rise

rise

Producer expectations of future prices are a determinant of ____

supply

The number of sellers or competitors in a market is a determinant or shifter of the ____ curve

supply

The prices of substitute goods in production is a determinant of ____

supply

The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______. -equilibrium price -the rationing function of prices -equilibrium allocation -perfect pricing

the rationing function of prices

Diminishing marginal ______ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed. -utility -demand -returns -incentives

utility

True or false: A price at or above the price floor is illegal.

False

True or false: A shortage occurs when quantity supplied exceeds quantity demanded.

False

Which of the following is a complement to hamburger patties? -Chicken -Hot dogs -Paper cups -Hamburger buns

Hamburger buns

A decrease in demand while holding supply constant results in _______. -an increase in both equilibrium price and quantity -an increase in equilibrium price and decline in equilibrium quantity -a decrease in both equilibrium price and quantity -a decrease in equilibrium price and an increase in equilibrium quantity

a decrease in both equilibrium price and quantity

An increase in the equilibrium price of a good and an indeterminate change in the equilibrium quantity is the result of ______. -a decrease in demand and decrease in supply -an increase in demand and decrease in supply -a decrease in supply and no change in demand -an increase in demand and no change in supply

an increase in demand and decrease in supply

If the birthrate increases, the purchase of baby products is likely to ______. -decrease -stay the same -increase

increase

If costs of production rise, the producer has an incentive to produce ____ output.

less

The determinants of the supply of a good are any factors other than the product's ______ that cause the supply curve of the good to shift. -price -cost

price

If the increase in demand is greater than the decrease in supply, the equilibrium quantity will ______. -fall -not change -rise

rise

When a product's demand varies directly with money income, it is considered a(n) ______ good. -inferior -superior -complementary -abnormal

superior

A surplus is also known as excess ______. -capital -supply -demand -imports

supply

Improvements in technology is a determinant of ______. -supply -demand -quantity demanded -quantity supplied

supply

The ______ is consistent with common sense because people ordinarily do buy more of a product at a lower price. -budget line -law of one price -law of demand -law of supply

law of demand

Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields ______, consumers will buy additional units only if the price of those units is progressively ______. -more and more utility; reduced -less and less utility; reduced -less and less utility; increased -more and more utility; increased

less and less utility; reduced

A change in demand is represented by a ______ the demand curve while a change in quantity demanded is represented by a _______ the demand curve. -shift of; movement along -movement along; movement along -shift of; shift of -movement along; shift of

shift of; movement along

The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis. -demanded; price -price; demanded -supplied; price -price; supplied

supplied; price

Market ____ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.

supply

What determines market price and equilibrium output in a market? -Quantity demanded -Input prices -Quantity supplied -The interaction of buyers and sellers -The number of sellers in a market

The interaction of buyers and sellers

Select all that apply Which of the following illustrate the relationship between a good and its complement? -When the price of tuition decreases, the demand for textbooks increases. -When the price of lettuce increases, the demand for salad dressing decreases. -When the price of hamburger decreases, the demand for hot dogs decreases. -When the price of Nike increases, the demand for Reebok increases.

When the price of tuition decreases, the demand for textbooks increases. When the price of lettuce increases, the demand for salad dressing decreases.

Other things equal, if consumers believe that gas prices will rise in a week, the demand for gas today will ______. -be lower than next week -increase -not change -decrease

increase

When the price of Coke rises, the demand for Pepsi is likely to ______. -increase -stay the same -decrease

increase

A favorable change in consumer tastes and preferences for a product will ____ demand, shifting the demand curve to the ____.

increase, right

Government subsidies of the production of a good has the effect of ______. -reducing demand -minimizing supply -increasing supply

increasing supply

The vast majority of goods that are not related to one another are called ______ goods. -dependent -independent -substitute -complementary

independent

A demand curve shows the ______. -positive relationship between price and quantity demanded for a product -inverse relationship between price and quantity supplied for a product -positive relationship between price and quantity supplied for a product -inverse relationship between price and quantity demanded for a product

inverse relationship between price and quantity demanded for a product

Select all that apply Which of the following are the characteristics of a competitive market? -A large number of buyers but small number of sellers -A large number of buyers and sellers -Standardized products -A surplus of narrow range of products

A large number of buyers and sellers Standardized products

Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply? -A subsidy -A loan -A bailout -A tax

A subsidy

In the marketplace, what is a good that can be used in place of another good called? -An inferior good -A superior good -A substitute good -A complementary good

A substitute good

The prices of the ____ used in the production process help determine the costs of production incurred by firms.

resources

Which of the following would most likely lead to a decrease in demand? -A large-scale immigration -An aging population -A decrease in the number of buyers -An increase in the number of buyers

A decrease in the number of buyers

Select all that apply In which of the following cases the demand for a normal good would likely increase? -An increase in the price of the good -A decrease in the price of complementary goods -A decrease in consumer income -An increase in the number of buyers

A decrease in the price of complementary goods An increase in the number of buyers

Which exemplifies a pair of complementary goods? -A Toyota truck and a Ford truck -A hot dog and relish -Home Depot and Lowe's

A hot dog and relish

Which statement about demand and supply is true? -An increase in consumer income shifts the demand curve to the left. -An increase in the price of a good is likely to decrease the supply of the good. -An increase in consumer income is likely to increase the demand for a normal good. -An increase in the price of a good shifts the supply curve to the left.

An increase in consumer income is likely to increase the demand for a normal good.

Which of the following exemplifies a change in buyers' tastes? -An increase in the number of buyers in a market. -A decrease in the average price of gasoline during the winter. -An increase in demand for digital cameras over 35mm cameras. -A decrease in national income because of a recession.

An increase in demand for digital cameras over 35mm cameras.

Which of the following is likely to cause an increase in the demand for a good or service? -An increase in the number of buyers -An increase in the price of a complementary good -An increase in the number of sellers -An increase in income and the good is inferior

An increase in the number of buyers

Which of the following causes consumers to buy larger quantities of a product at each possible price? -An increase in the number of buyers. -A decrease in the price of a substitute good. -An unfavorable change in consumer tastes. -An increase in the price of a complementary good.

An increase in the number of buyers.

Select all that apply Which of the following statements are true? -An increase in the price of a normal good would decrease the quantity demanded of the good. -An increase in consumers' income would decrease the demand for a normal good. -A decrease in consumers' income would decrease the demand for a normal good. -A decrease in consumers' income would decrease the demand for an inferior good.

An increase in the price of a normal good would decrease the quantity demanded of the good. A decrease in consumers' income would decrease the demand for a normal good.

Select all that apply Which of the following factors increase the demand for any good or service? -An increase in the price of a substitute good -Consumer expectations that either prices or income will fall in the future -An unfavorable change in consumer tastes for the product -An increase in the number of buyers -A rise in consumer income if the product is a normal good

An increase in the price of a substitute good An increase in the number of buyers A rise in consumer income if the product is a normal good

How do improvements in productive technology enable firms to produce more units of output? -By utilizing more resources, thereby lowering costs -By utilizing more resources, thereby raising costs -By utilizing fewer resources, thereby raising costs -By utilizing fewer resources, thereby lowering costs

By utilizing fewer resources, thereby lowering costs

True or false: For many people, Coke and Pepsi are complements.

False

______ resource prices raise production costs and, assuming a fixed product price, ______ profits. -Higher; higher -Lower; reduce -Lower; higher -Higher; reduce

Higher; reduce

Which of the following statements correctly describes the relationship between the price and quantity demanded of a good or service? -Holding all else constant, as price increases, quantity demanded decreases and as price decreases, quantity demanded increases. -Holding all else constant, as price increases, quantity demanded increases and as price decreases, quantity demanded increases. -Holding all else constant, as price increases, quantity demanded increases and as price decreases, quantity demanded decreases. -Holding all else constant, as price increases, quantity demanded decreases and as price decreases, quantity demanded decreases.

Holding all else constant, as price increases, quantity demanded decreases and as price decreases, quantity demanded increases.

What are two goods called when a change in the price of one good has little or no effect on the demand for the other? -Independent goods -Substitute goods -Superior goods -Complementary goods

Independent goods

Select all that apply Which of the following exemplify a decrease in the demand for goods due to a decrease in the number of buyers? -People leaving the small towns where they grew up to look for job opportunities -People moving into a new subdivision with luxury homes -People retiring and leaving the cities where they worked -People graduating from high school and accepting jobs instead of going to college

People leaving the small towns where they grew up to look for job opportunities People retiring and leaving the cities where they worked

Which of the following are substitutes? -Bleach and cheese -Guns and bullets -Peanut butter and crackers -Pepsi and Coca-Cola

Pepsi and Coca-Cola

Select all that apply All competitive markets involve which of the following? -Price -Quantity -Government regulators -Demand -Supply

Price Quantity Demand Supply

Select all that apply Which of the following will cause a change in supply and not quantity supplied? -Producer expectations -Number of sellers -Technology -Consumer expectations -Product price

Producer expectations Number of sellers Technology

Consumers will only buy additional units of a good if the price of the good is reduced is an example of ______. -the ceteris paribus assumption -diminishing marginal returns -diminishing marginal utility -increasing marginal utility

diminishing marginal utility

According to the law of supply, price and quantity supplied have a(n) ______ relationship. -negative -direct -exponential -inverse

direct

The interaction between buyers and sellers determines the equilibrium price and the ____ quantity

equilibrium

If the government subsidizes the production of a good, it in effect ______ the producers' costs and ______ supply. Multiple choice question. lowers; decreases raises; increases raises; decreases lowers; increases

lowers; increases

On a simple supply model, a change in quantity supplied is illustrated by a ______ and a change in supply is illustrated by a ______. -movement along the supply curve; shift of the supply curve -shift of the demand curve; shift of the supply curve -shift of the supply curve; movement along the supply curve

movement along the supply curve; shift of the supply curve

Other things equal, when price falls, the quantity demanded rises. This represents the ______ relationship between the price and quantity demanded. -negative, or inverse, -positive, or inverse, -indirect -constant

negative, or inverse,

When drawing a supply curve, _____ is labeled on the vertical axis. -price -cost -product -quantity

price

The supply curve illustrates the relationship between ______. -cost and price -price and quantity demanded -price and quantity supplied -product and quantity supplied

price and quantity supplied

All the following are the determinants of demand except ______. -consumer expectations -consumer tastes -the prices of related goods -price of substitutes in production -consumers' incomes

price of substitutes in production

The determinant of supply dealing with alternative products that can be produced by firms is called ______. -price of substitutes in production -producer expectations -number of producers or competitors in a market -taxes and subsidies -resource prices

price of substitutes in production