MICRO chap 3 practice questions

A movement along a demand curve from one price-quantity combination to another is called A) a change in quantity demanded. B) a shift in the demand curve. C) a change in demand. D) a change in quantity supplied. E) a change in supply.

A

The most important determinant of the supply of good X is A) the price of good X. B) the price of labor used in the production of good X. C) the amount of technology used in the production good X. D) the cost of the plant used to produce good X. E) the price of fuel used in the production of good X.

A

1. The demand curve illustrates that consumers A) tend to purchase more of a good as its price rises. B) purchase name brand products more frequently than generic products. C) tend to purchase more of a good as its price falls. D) purchase more of a good as their incomes fall. E) purchase more of a good as their incomes rise.

C.

An increase in the demand for coal with no concurrent change in the supply of coal will result in a ________ equilibrium price and a(n) ________ equilibrium quantity. A) higher; lower B) lower; lower C) higher; unchanged D) higher; higher E) lower; higher

D

For two goods, X and Y, to be classified as substitutes, it must be the case that A) X and Y are identical. B) consumers tend to purchase both items. C) when the price of X rises, the demand for Y decreases. D) when the price of X rises, the demand for Y increases. E) X and Y taste alike.

D

Which of following is not true of a market equilibrium? A) Quantity demanded equals quantity supplied. B) There is no tendency for price to change. C) The supply curve intersects the demand curve. D) Buyers can purchase exactly the amount they are willing to purchase at the equilibrium price. E) Supply equals demand.

E.

47. "Holding all other relevant factors constant, consumers will purchase more of a good as its price falls." This statement reflects the behavior underlying A) the demand curve. B) an increase in demand. C) the supply curve. D) a decrease in the demand curve. E) the production possibilities curve.

a

72. A decrease in supply, holding demand constant, will always result in a(n) A) higher equilibrium price. B) lower equilibrium price. C) larger equilibrium quantity. D) larger quantity demanded. E) indeterminate change in the equilibrium quantity.

a

91. If the price of tea increases and the demand for sugar decreases, then A) tea and sugar are complements. B) tea is a normal good and sugar is inferior. C) tea and sugar are substitutes. D) tea is an inferior good and sugar is normal. E) tea and sugar are unrelated to each other.

a

93. "Improvements in personal computer technology and its widespread adoption in the workplace have served to increase productivity." Assuming the statement is true, one would expect this to cause A) an increase in supply. B) an increase in quantity supplied. C) a decrease in supply. D) a decrease in quantity supplied. E) no change in the marketplace.

a

94. Which of the following is not a characteristic of governmental rent controls? A) Equitable distribution of apartments. B) Excess demand for apartments. C) Fewer newly built apartment building. D) Deteriorating quality of existing apartment buildings. E) Very low vacancy rates.

a

95. Assume the demand for 7200 RPM hard disks increases while the supply decreases. which of the following outcomes is certain to occur? A) The equilibrium price of 7200 RPM hard disks will rise. B) The equilibrium quantity of 7200 RPM hard disks will rise. C) The equilibrium price of 7200 RPM hard disks will fall. D) The equilibrium quantity of 7200 RPM hard disks will fall. E) Neither the equilibrium price nor the equilibrium quantity of 7200 RPM hard disks can be predicted.

a

97. Which of the following would result in an increase in supply? A) A reduction in the premiums firms pay for liability insurance. B) A reduction in the quality of technology used by firms. C) An increase in demand. D) An increase in consumers' incomes. E) An increase in the population of consumers.

a

99. Suppose that both the equilibrium price and quantity of ketchup fall. The most consistent explanation for these observations is A) a decrease in demand for ketchup with no change in supply. B) an increase in demand for ketchup with no change in supply. C) an increase in demand for ketchup and a decrease in the supply of ketchup. D) an increase in the supply of ketchup with no change in demand. E) an decrease in the supply of ketchup with no change in demand.

a

Assume that Joe is willing to produce another hamburger that costs $1 to make. Mary is hungry and is willing to buy a hamburger for $3. According to the No Cash on the Table principle, Joe and Mary A) will make a trade. B) will only make a trade if Joe can get Mary to spend more than $3 for the hamburger. C) will only make a trade if Mary can get Joe to charge less than $1 for the hamburger. D) may or may not make a trade. E) will never trade; they will look for better deals.

a

Nineteenth century economist Stanley Jevons argued the price of a good was determined by A) its value to the consumer. B) its value to the supplier. C) the expense involved in producing it. D) custom and tradition. E) government decree.

a

When a market is not in equilibrium then A) it is always possible to identify unexploited opportunities. B) demanders are dissatisfied with the market. C) suppliers are dissatisfied with the market. D) government intervention is necessary. E) it will have a tendency to remain in disequilibrium.

a

When the price of a good is below its equilibrium value, A) consumers will bid the price up. B) excess supply will occur. C) it will tend to stay below the equilibrium value. D) suppliers will notice their inventories are growing. E) suppliers will lower the price.

a

Which of the following would cause an increase in quantity supplied? A) The price farmers receive for their crops rises. B) The United Auto Workers negotiates a wage increase for its union members. C) The price firms pay for liability insurance falls. D) New, faster computer processors are introduced. E) OPEC limits the production of crude oil.

a

41. An increase in the demand for GM automobiles results in A) a lower equilibrium price for GM automobiles. B) an increase in the quantity of GM automobiles supplied. C) an increase in the supply of GM automobiles. D) a lower equilibrium quantity of GM automobiles. E) an increase in the quantity of GM automobiles demanded.

b

45. The supply curve illustrates that firms A) increase the supply of a good when its price rises. B) increase the quantity supplied of a good when its price rises. C) decrease the quantity supplied of a good when input prices fall. D) increase the quantity supplied of a good when input prices rise. E) decrease the quantity supplied to earn higher profits.

b

46. According to the text, government price controls fail because A) they are not enforced. B) legislation can not repeal basic economic motives. C) bureaucrats lack accurate market data. D) firms ignore the restrictions. E) the penalties for violations are not large enough.

b

52. Without the aid of a graph, one can say definitively that if supply increases while demand decreases simultaneously, the new equilibrium price is ___________ _________________. A) lower; lower B) lower; indeterminate C) indeterminate; higher D) indeterminate; lower E) higher; indeterminate. and the new equilibrium quantity is

b

82. Suppose that the production of oranges reduces global warming by .1%. The equilibrium price of oranges is _______ because not all of the _________ are accounted for in the marketplace. A) too high; benefits B) too low; benefits C) too high; costs D) too low; costs E) optimal; costs

b

89. As the price of cookies increases, firms that produce cookies will A) increase the supply of cookies. B) increase the quantity of cookies supplied. C) decrease the supply of cookies. D) decrease the quantity of cookies supplied. E) leave their production unchanged.

b

90. If the price of an item falls, then one would expect to see a(n) A) increase in demand. B) increase in quantity demanded. C) decrease in quantity supplied. D) decrease in supply. E) fewer consumers.

b

98. As the price of a good rises, A) firms earn larger profits. B) more firms can cover their opportunity costs of producing the good. C) firms find they can raise price by even more. D) consumers become more willing to purchases the good. E) government regulation becomes more justified.

b

Assume both the demand and the supply of Athlon 700 Mhz processors increase. Which of the following outcomes is certain to occur? A) The equilibrium price of Athlon 700 Mhz processors will rise. B) The equilibrium quantity of Athlon 700 Mhz processors will rise. C) The equilibrium price of Athlon 700 Mhz processors will fall. D) The equilibrium quantity of Athlon 700 Mhz processors will fall. E) Neither the equilibrium price nor the equilibrium quantity of Athlon 700 Mhz processors can be predicted.

b

If, in a particular market, all unexploited opportunities have been realized one can conclude that A) government regulation has proven successful. B) the market is in equilibrium. C) demanders are unable to find adequate amounts of the good. D) excess demand is present. E) excess supply is present.

b

Suppose the price of beer increases. One would expect to see in the wine market a(n) A) increase in the quantity of wine demanded. B) increase in the demand for wine. C) decrease in the quantity of wine demanded. D) decrease in the demand for wine. E) indeterminate change in the wine market.

b

If the demand for a good increases as consumers' incomes rise, the good is termed a(n) A) inferior good. B) complement good. C) normal good. D) substitute good. E) typical good.

c

. The entire group of demanders and suppliers of a particular good or service defines A) only the demand curve. B) only the supply curve. C) a market. D) excess supply. E) excess demand.

c

53. The essential difference between a change in quantity demanded and a change in demand is A) the first is a shift of the curve while the second is a movement along the curve. B) nothing; the terms are interchangeable. C) the first is a movement along the curve while the second is a shift of the curve. D) the first is caused by changes in income while the second is caused by a change in price. E) the first is caused by a change in price and the second is caused by a change in price.

c

55. Which of following is not true of an equilibrium price? A) Consumers who are willing to pay the equilibrium price can acquire the good. B) It measures the value of the last unit sold to consumers. C) It is always a fair and just price. D) Firms who are willing to accept the equilibrium price can sell what they produce. E) It measures the cost of resources required to produce the last unit.

c

57. A shift to either the left or right of a demand curve is called A) a change in quantity demanded. B) a movement along a demand curve. C) a change in demand. D) a change in quantity supplied. E) a change in supply.

c

58. In a free market, if the price of a good is below the equilibrium price, then A) government needs to set a higher price. B) suppliers, dissatisfied with growing inventories, will raise the price. C) demanders, wanting to ensure they acquire the good, will bid the price higher. D) government needs to set a lower price. E) suppliers, dissatisfied with growing inventories, will lower the price.

c

63. Eighteenth century economist Adam Smith believed the price of a good was determined by A) its value to the consumer. B) its value to the supplier. C) the expense involved in producing it. D) custom and tradition. E) government decree.

c

80. Assume the demand for 16 MB graphics cards decreases while the supply increases. outcomes is certain to occur? A) The equilibrium price of 16 MB graphics cards will rise. B) The equilibrium quantity of 16 MB graphics cards will rise. Which of the following C) The equilibrium price of 16 MB graphics cards will fall. D) The equilibrium quantity of 16 MB graphics cards will fall. E) Neither the equilibrium price nor the equilibrium quantity of 16 MB graphics cards can be predicted.

c

86. If a market is in equilibrium and then demand increases while supply decreases, the change in the equilibrium price is ________ and the change in the equilibrium quantity is _________. A) positive; positive B) positive; negative C) positive; indeterminate D) indeterminate; positive E) negative; negative

c

92. For two goods, X and Y, to be classified as complements, it must be the case that A) X and Y are indistinguishable. B) consumers tend to purchase either X or Y. C) when the price of X rises, the demand for Y decreases. D) when the price of X rises, the demand for Y increases. E) X and Y look alike.

c

A graph with price on the vertical axis and quantity on the horizontal axis depicting a positive relationship between price and quantity is a A) demand curve. B) production possibilities curve. C) supply curve. D) equilibrium curve. E) shortage curve.

c

As the price of flour (an input into the cookie production process) increases, firms that produce cookies will A) increase the supply of cookies. B) increase the quantity of cookies supplied. C) decrease the supply of cookies. D) decrease the quantity of cookies supplied. E) leave their production unchanged.

c

At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n) A) increase in the quantity of apartments demanded. B) increase in the supply of apartments. C) increase in the demand for apartments. D) decrease in the quantity of apartments supplied. E) decrease in the supply of apartments.

c

If the price of network servers increases, the impact on the supply curves of e-commerce firms will be to A) shift the supply curve to the right. B) move down along the supply curve. C) shift the supply curve to the left. D) move up along the supply curve. E) shift the supply curve down.

c

In the 1970's, OPEC increased the price of crude oil significantly. This should have caused A) a decrease in the demand for gasoline B) an increase in the demand for automobiles with V8 engines. C) the supply curves of firms using crude oil as an input to shift to the left. D) the price of gasoline to fall. E) the price of fuel efficient cars to fall.

c

The most likely explanation for the continued rise in the price of Pokemon trading cards is A) a decrease in the price of baseball trading cards. B) an increase in the price of Pokemon cups. C) an increase in children's preferences for Pokemon. D) a decrease in the incomes of parents. E) a reduction in the amount of Pokemon advertising.

c

Without the aid of a graph, one can say definitively that if both supply and demand increase simultaneously, the new equilibrium price is ___________ and the new equilibrium quantity is ___________. A) lower; lower B) lower; indeterminate C) indeterminate; higher D) indeterminate; lower E) higher; indeterminate.

c

40. Which of the following is not true of a demand curve? A) It has negative slope. B) It shows the amount consumers are willing and able to purchase at various prices, holding other factors constant. C) It relates the price of an item to the quantity demanded of that item. D) It relates the price of an item to the demand for that item. E) It shows that consumers tend to purchase less of a good as its price rises.

d

44. When a market is not in equilibrium A) government intervention is required to achieve equilibrium. B) consumers will organize into special interest groups to promote their agenda. C) firms will increase contributions to political action committees. D) the economic motives of sellers and buyers will move the market to its equilibrium. E) it will simply stay in a state of disequilibrium.

d

48. Increases in the prices firms pay for inputs causes a(n) A) decrease in quantity supplied. B) increase in supply. C) increase in quantity supplied. D) decrease in supply. E) output prices to fall.

d

51. "As the price of personal computers continue to fall, demand increases." This headline is inaccurate because A) a change in the price of personal computers shifts the demand curve. B) a change in the price of personal computers shifts the supply curve. C) the statement is backwards: increased demand leads to lower prices. D) falling prices for personal computers increases quantity demanded, not demand. E) falling prices for personal computers increases quantity supplied.

d

65. Suppose bad weather destroys the coca crop in Columbia. This means that the A) quantity of cocaine supplied decreases. B) demand for cocaine will decrease. C) price of cocaine will remain unchanged. D) supply of cocaine will decrease. E) number of property crimes will fall.

d

74. Suppose that both the equilibrium price and quantity of mustard rise. The most consistent explanation for these observations is A) a decrease in demand for mustard with no change in supply. B) a decrease in the supply of mustard with no change in demand. C) a decrease in demand for mustard and a decrease in the supply of mustard. D) an increase in demand for mustard with no change in supply. E) an increase in the supply of mustard with no change in demand.

d

81. One observes that the equilibrium price of coffee falls and the equilibrium quantity falls. Which of the following best fits the observed data? A) An increase in demand with supply constant. B) An increase in demand coupled with a decrease in supply. C) An increase in demand coupled with an increase in supply. D) A decrease in demand with supply constant. E) Demand constant and an increase in supply.

d

87. Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most consistent explanation for these observations is A) a decrease in demand for french fries with no change in supply. B) an increase in demand for french fries with no change in supply. C) a increase in the supply of french fries and a increase in the demand for french fries. D) a decrease in the supply of french fries with no change in demand. E) an increase in the supply of french fries with no change in demand.

d

88. If the full marginal costs of producing a certain good are greater than the sellers' marginal costs, then A) the market will produce the socially optimal outcome. B) the equilibrium price will reflect the true cost of production. C) too little of the good will be produced. D) too much of the good will be produced. E) the total economic surplus will be maximized.

d

96. In general, when the supply curve shifts to the left and demand is constant then A) the market cannot reestablish an equilibrium. B) the equilibrium price will fall. C) the equilibrium quantity will rise. D) the equilibrium price will rise. E) quantity supplied falls.

d

A market in disequilibrium would feature A) a stable price. B) consumers able to purchase all they wish at the market price. C) a stable quantity. D) either excess supply or excess demand. E) firms able to sell all they wish at the market price.

d

Assume that government imposes a price control on butter, i.e., the price of butter cannot rise above a certain amount. The most likely outcome of this policy is A) the quality of butter will rise. B) farmers and ranchers will increase their holdings of dairy cows. C) more individuals will be motivated to enter diary farming. D) the butter market will exhibit chronic excess demand. E) the butter market will exhibit chronic excess supply.

d

If a good or service is labeled normal, then A) as income falls, demand for the item increases. B) as income rises, quantity demanded for the item decreases. C) as income rises, quantity demanded for the item increases. D) as income rises, demand for the item increases. E) as income falls, quantity demanded for the item increases.

d

If price is below the equilibrium value, A) producers can't sell all they make. B) neither buyer nor seller wishes to alter their behavior. C) government must enforce a price control. D) buyers will start to bid the price up. E) a surplus develops.

d

Suppose government attempts to provide assistance to blacksmiths by establishing a minimum prices that can be charged for horseshoe repair. One would expect to observe A) a market achieving equilibrium. B) excess demand for horseshoe repairs. C) consumers arranging for "black market" repairs, paying more than the regulated price. D) excess supply of horseshoe repairs. E) blacksmiths choosing to become silversmiths.

d

Suppose that both supply and demand for beer decrease. One can predict that the A) equilibrium price will rise but the equilibrium quantity can increase or decrease. B) equilibrium price and quantity will decrease. C) equilibrium price and quantity will rise. D) equilibrium quantity will fall but the equilibrium price can rise or fall. E) change in price and quantity are both unknown.

d

Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _______ because not all of the _________ are accounted for in the marketplace. A) too high; benefits B) too low; benefits C) too high; costs D) too low; costs E) an equilibrium; costs

d

The equilibrium price and quantity of any good or service is established by A) only demanders. B) only suppliers. C) government regulations. D) both demanders and suppliers. E) custom and tradition.

d

Which of the following will not cause a shift in the demand curve for Athlon processors? A) An increase in the price of memory. B) A decrease in the price of Pentium III processors. C) A decrease in the price of motherboards. D) A decrease in the price of Athlon processors. E) An increase in consumers' incomes.

d

100. In a free market, if the price of a good is above the equilibrium price, then A) government needs to set a higher price. B) suppliers, dissatisfied with growing inventories, will raise the price. C) demanders, wanting to ensure they acquire the good, will bid the price lower. D) government needs to set a lower price. E) suppliers, dissatisfied with growing inventories, will lower the price.

e

59. A market comprised of a downward sloping demand curve and an upward sloping supply curve is said to be stable because A) price will never change. B) quantity will never change. C) demand will never change. D) supply will never change. E) at any price other than equilibrium, forces in the market move price towards the equilibrium.

e

61. An increase in the price of Tomko toothpaste, a substitute for Durrell toothpaste, will cause A) the quantity of Durrell toothpaste demanded to increase. B) the quantity of Tomko toothpaste demanded to increase. C) the demand for Tomko toothpaste to decrease. D) the demand for Tomko toothpaste to increase. E) the demand for Durrell toothpaste to increase.

e

83. As consumers incomes increase, the demand for some goods decreases. These types of goods are called A) normal goods. B) complement goods. C) substitute goods. D) defective goods. E) inferior goods.

e

The No Cash on the Table principle asserts that A) in equilibrium, many unexploited opportunities exist. B) in equilibrium, a few unexploited opportunities exist. C) sometimes tips aren't picked up. D) in disequilibrium, no opportunities exist. E) in equilibrium, all opportunities have been exploited.

e

When the price of a good is above its equilibrium value, A) consumers will bid the price up. B) excess demand will occur. C) it will tend to stay above the equilibrium value. D) suppliers will notice their inventories are shrinking. E) suppliers will lower the price.

e