MACRO EXAM 2 REVIEW

Suppose that the table shown shows the demand and supply schedules for pork bellies. There is a shortage of 15,000 pounds at a price of: $0.20. $0.75. $0.95. $0.50.

$0.20.

A price ceiling would be binding, resulting in a market shortage if it is set at: $1.50. either $3.00 or $1.50. $3.00. $2.25.

$1.50.

A price ceiling would be binding, resulting in a market shortage if it is set at: either $3.00 or $1.50. $2.25. $3.00. $1.50.

$1.50.

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the total market expenditures on prescription drugs? $30 $270 $540 $90

$270

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the total market expenditures on prescription drugs? $540 $270 $90 $30

$270

Refer to the graph shown. With a tariff on lumber imported from Canada of $6 per ton, the revenue the government would collect from the import of lumber would be: $4,200. $3,600. $4,800. $0.

$3,600.

Refer to the graph shown. With a tariff on lumber imported from Canada of $6 per ton, the revenue the government would collect from the import of lumber would be: $4,800. $3,600. $4,200. $0.

$3,600.

Demand for single occupancy apartments is Qd = 400,000 - 250P. Supply is given by Qs = 200,000 + 250P. Price of an apartment is measured in hundreds of dollars and quantity is measured in thousands of apartments. What is equilibrium rent and quantity of apartments rented? $400 and 300,000 apartments, respectively $800 and 200,000 apartments, respectively $800 and 400,000 apartments, respectively $1,200 and 500,000 apartments, respectively

$400 and 300,000 apartments, respectively

Refer to the graph shown. Given supply, S0, and demand, D, what tariff would the government have to impose on lumber imported from Canada to reduce imports to 600 tons? $7 a ton $6 a ton $2 a ton $13 a ton

$6 a ton

With a tariff of $10 a blouse on imported silk blouses from China, the revenue the government would collect from the import of silk blouses from China would be: $0. $20,000. $7,000. $2,800.

$7,000.

With a tariff of $10 a blouse on imported silk blouses from China, the revenue the government would collect from the import of silk blouses from China would be: $20,000. $0. $7,000. $2,800.

$7,000.

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The equilibrium price and quantity is: $100 and 80, respectively. $80 and 100, respectively. $100 and 130, respectively. $40 and 200, respectively.

$80 and 100, respectively.

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The equilibrium price and quantity is: $40 and 200, respectively. $100 and 80, respectively. $80 and 100, respectively. $100 and 130, respectively.

$80 and 100, respectively.

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. The government has passed a law that subsidizes wages by $1 per hour. The equilibrium quantity of labor with the subsidy is: 12.5 workers 15 workers 17.5 workers 10 workers

17.5 workers

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 − 5W. The government has passed a law that subsidizes wages by $1 per hour. The equilibrium quantity of labor with the subsidy is: 17.5 workers 10 workers 12.5 workers 15 workers

17.5 workers

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the quantity demanded? 30 60 15 45

45

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the quantity demanded? 45 30 15 60

45

Which of the following would be expected to cause the quantity of wool supplied to decrease? A decrease in the number of wool producers An increase in wages paid to workers in the wool industry An increase in the cost of raising sheep A decrease in the price of wool

A decrease in the price of wool

Suppose caviar sales soars at the same time price increases. What would lead to both a higher quantity sold and higher price of caviar? A shift in demand to the right and a shift in supply to the left. A shift in demand to the right and a larger shift in supply to the right. A shift in demand to the left and a smaller shift in supply to the right. A shift in demand to the left and a smaller shift in supply to the left.

A shift in demand to the right and a shift in supply to the left.

Suppose caviar sales soars at the same time price increases. What would lead to both a higher quantity sold and higher price of caviar? A shift in demand to the right and a shift in supply to the left. A shift in demand to the right and a larger shift in supply to the right. A shift in demand to the left and a smaller shift in supply to the right. A shift in demand to the left and a smaller shift in supply to the left.

A shift in demand to the right and a shift in supply to the left.

Which of the following is the best example of an excise tax? A tax on all capital gains (the amount by which the value of an asset has risen between the time it was purchased and the time it was sold) A tax paid by employers on income paid to workers A tax that is levied on the value of land and buildings A tax collected on each gallon of gasoline sold

A tax collected on each gallon of gasoline sold

Which of the following is not likely to change the supply of laptops? A technological breakthrough that makes it much less costly to produce computer chips An increase in consumers' incomes A decrease in the wage paid to electrical engineers An increase in taxes on computer chips paid by producers

An increase in consumers' incomes

Which of the following would best explain a decrease in the supply of squash? A decrease in the price of An increase in the price of squash A decrease in the cost of growing squash An increase in the price of other vegetables

An increase in the price of other vegetables

Refer to the graphs shown. An increase in quantity demanded is best shown by which arrow? C D A B

C

How would a decline in demand for imported commodities by the Chinese affect the market for cargo transportation to China? Supply of cargo transportation shifts to the right causing an increase in demand and equilibrium quantity and a decrease in equilibrium price. Demand for cargo transportation shifts to the left causing a decline in supply and equilibrium quantity and price. Supply of cargo transportation shifts to the right causing an increase in quantity demanded and decline in equilibrium price. Demand for cargo transportation shifts to the left causing a decline in quantity supplied and price.

Demand for cargo transportation shifts to the left causing a decline in quantity supplied and price.

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to expenditures by consumers in this market if a $2 co-pay is established compared to a free-market equilibrium? Expenditures fall by $120 Expenditures rise by $90 Expenditures fall by $30 Expenditures remain at $150

Expenditures fall by $30

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to total expenditures in this market if a $2 co-pay is established compared to a free-market equilibrium? Expenditures fall by $120 Expenditures rise to $270 Expenditures rise to $240 Expenditures remain at $120

Expenditures rise to $270

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to total expenditures in this market if a $2 co-pay is established compared to a free-market equilibrium? Expenditures rise to $240 Expenditures fall by $120 Expenditures remain at $120 Expenditures rise to $270

Expenditures rise to $270

Which of the following situations best demonstrates the law of demand? Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures. An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices. Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year. A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.

Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year.

U.S. baby boomers are beginning to retire and withdraw their savings for retirement. What effect should we expect this to have on equilibrium price and quantity of financial assets? Price falls and quantity rises Price falls and quantity also falls Price rises and quantity also rises Price rises and quantity falls

Price falls and quantity also falls

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. What would be the resulting market distortion? Surplus of 120 tons of fish Surplus of 175 tons of fish Shortage of 120 tons of fish Shortage of 175 tons of fish

Shortage of 120 tons of fish

Three hurricanes, combined with the already high real-estate prices, have made people reconsider whether to retire to Florida. The cost of homeownership has increased due to stricter building codes. The influx of retirees is expected to rise. Which of the following factors is tending to move the demand curve for Florida housing to the right? The current high construction costs The already high real-estate prices The increase in the cost of insurance The aging of the baby boomers, increasing the number of people who are retiring

The aging of the baby boomers, increasing the number of people who are retiring

Which of the following is not held constant as you move along the demand curve? The price of that good The price of other goods The preferences of consumers for the good The incomes of consumers

The price of that good

European Union subsidizes its farmers. How do these subsidies make it difficult for farmers in developing economies to compete in the world farm market? The subsidies set a price ceiling for EU farm goods, keeping prices below the market equilibrium, and lowering the price developing country farmers can receive for their produce. The subsidies function as a tariff, causing imports from developing countries to become artificially expensive, thus denying European consumers the benefits of cheap imported food The subsidies shift the supply of EU farm goods to the right, lowering world prices of farm goods and the price developing country farmers can receive for their produce.

The subsidies shift the supply of EU farm goods to the right, lowering world prices of farm goods and the price developing country farmers can receive for their produce.

European Union subsidizes its farmers. How do these subsidies make it difficult for farmers in developing economies to compete in the world farm market? The subsidies set a price ceiling for EU farm goods, keeping prices below the market equilibrium, and lowering the price developing country farmers can receive for their produce. The subsidies shift the supply of EU farm goods to the right, lowering world prices of farm goods and the price developing country farmers can receive for their produce. The subsidies function as a tariff, causing imports from developing countries to become artificially expensive, thus denying European consumers the benefits of cheap imported food The subsidies create ethical problems for Europeans who want to buy farm products from developing countries since the subsidies are raising the price of developing country produce.

The subsidies shift the supply of EU farm goods to the right, lowering world prices of farm goods and the price developing country farmers can receive for their produce.

Suppose that the table shown shows the demand and supply schedules for pork bellies. Which of the following statements is true? There would be a surplus of pork bellies if the price were $0.50 per pound. There would be a shortage of pork bellies if the price were $0.20 per pound. There would be a surplus of pork bellies if the price were $0.25 per pound. There would be a shortage of pork bellies if the price were $0.50 per pound.

There would be a shortage of pork bellies if the price were $0.20 per pound.

In the early 2000s, the number of Eastern Europeans moving to England to join the labor force increased. This has led to fears by British citizens that Eastern Europeans will steal jobs from Western Europeans. What best describes their fear? Wages in Britain will fall as the demand for immigrants increases. Wages in Britain will fall since the quantity of labor supplied is increasing. Wages in Britain will fall since the supply of labor is increasing. Cost of living in Britain will increase as the demand for goods increases.

Wages in Britain will fall as the demand for immigrants increases.

An increase in equilibrium price and a decrease in equilibrium quantity is most likely the result of: a decrease in supply. a decrease in demand. an increase in demand. an increase in supply.

a decrease in supply.

An increase in equilibrium price and a decrease in equilibrium quantity is most likely the result of: an increase in supply. an increase in demand. a decrease in demand. a decrease in supply.

a decrease in supply.

Suppose a price floor is imposed on eggs above their equilibrium price. The likely result will be: a higher equilibrium price for eggs as the supply curve for eggs shifts left. a decrease in the quantity of eggs demanded. an increase in the quantity of eggs demanded. a lower equilibrium price for eggs as the demand curve for eggs shifts left.

a decrease in the quantity of eggs demanded.

The law of supply states that, other things constant, there is: a direct relation between price and supply. an inverse relation between price and the quantity supplied. an inverse relation between price and supply. a direct relation between price and the quantity supplied.

a direct relation between price and the quantity supplied.

If the quantity of burgers supplied increases from 2 to 4 when the price of burgers increases from $2.00 to $5.00, the response by producers would be shown by: a rightward shift in the supply curve. a movement upward and to the right along the supply curve. a leftward shift in the supply curve. a movement downward and to the left along the supply curve.

a movement upward and to the right along the supply curve.

The explanation for the law of demand involves: suppliers' ability to substitute inputs. the market's ability to equate supply and demand. consumers' ability to substitute different goods. the government's ability to set prices.

consumers' ability to substitute different goods.

According to the law of demand an increase in the price of gasoline will: decrease the demand for gasoline. decrease the quantity demanded of gasoline, other things constant. increase the quantity demanded of gasoline, other things constant. increase the demand for gasoline.

decrease the quantity demanded of gasoline, other things constant.

According to the law of demand an increase in the price of gasoline will: decrease the demand for gasoline. increase the quantity demanded of gasoline, other things constant. decrease the quantity demanded of gasoline, other things constant. increase the demand for gasoline.

decrease the quantity demanded of gasoline, other things constant.

A decrease in the number of consumers in a market causes market demand to: decrease, resulting in a surplus which will be eliminated as price rises. decrease, resulting in a surplus which will be eliminated as price falls. increase, resulting in a shortage which will be eliminated as price rises. increase, resulting in a shortage which will be eliminated as price falls.

decrease, resulting in a surplus which will be eliminated as price falls.

When the number of Alaskan fishermen increased, salmon prices fell to record lows. This could be shown graphically by a shift in the: supply curve right. demand curve left. supply curve left. demand curve right.

demand curve right.

Quantity restrictions become more valuable to those holding the rights to sell the good when: demand increases. supply increases. demand decreases. supply decreases.

demand increases.

The distinction between demand and the quantity demanded is best made by saying that: the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation. the quantity demanded is represented graphically by a curve and demand is a point on that curve. the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation. demand is represented graphically by a curve and quantity demanded is a point on that curve.

demand is represented graphically by a curve and quantity demanded is a point on that curve.

The distinction between demand and the quantity demanded is best made by saying that: demand is represented graphically by a curve and quantity demanded is a point on that curve. the quantity demanded is represented graphically by a curve and demand is a point on that curve. the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation. the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation.

demand is represented graphically by a curve and quantity demanded is a point on that curve.

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied: exceeds quantity demanded, prices have a tendency to rise. is less than quantity demanded, prices tend to fall. equals quantity demanded, prices don't change. equals quantity demanded, prices will fall.

equals quantity demanded, prices don't change.

The price of a ticket to the Beyoncé concert is set at $55. All the tickets for the concert sell out one hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that the: quantity of tickets demanded is equal to the quantity supplied at the $55 price. equilibrium price of tickets to the concert is $55. equilibrium price of tickets to the concert is less than $55. equilibrium price of tickets to the concert is more than $55.

equilibrium price of tickets to the concert is more than $55.

The point at which the supply curve and the demand curve intersect is called: equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus. irrelevant, because real-world prices never reach this point.

equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change.

The point at which the supply curve and the demand curve intersect is called: irrelevant, because real-world prices never reach this point. equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus.

equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change.

The false assumption that what is true for a part will also be true for the whole is called the: post hoc fallacy. ceteris paribus assumption. fallacy of composition. paradox of thrift.

fallacy of composition.

The more the current price exceeds the equilibrium price, the: greater the resulting shortage will be. greater the resulting surplus will be. smaller the resulting surplus will be. smaller the resulting shortage will be.

greater the resulting surplus will be.

An effective price ceiling is best defined as a price: higher than any consumer is willing to pay. imposed by government below equilibrium price. imposed by government above equilibrium price. lower than any supplier is willing to sell.

imposed by government below equilibrium price.

A decrease in quantity and price are consistent with a: leftward shift in demand keeping supply constant. leftward shift in supply keeping demand constant. rightward shift in demand and a leftward shift in supply. rightward shift in supply and demand.

leftward shift in demand keeping supply constant.

An increase in price and an indeterminate change in quantity are consistent with a: leftward shift in supply and no shift in demand. leftward shift in demand and no shift in supply. leftward shift in supply and a rightward shift in demand. rightward shift in supply and a leftward shift in demand.

leftward shift in supply and a rightward shift in demand.

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: $10 million. less than $10 million. greater than $10 million. zero.

less than $10 million.

A government-imposed price floor of $2 will result in: an excess supply of 2. neither excess supply nor excess demand since it is not binding. neither excess supply nor excess demand since it is binding. an excess demand of 2.

neither excess supply nor excess demand since it is not binding.

According to the law of demand, an increase in the price of baseball trading cards causes: people to buy fewer trading cards. the scarcity of baseball trading cards to increase. baseball trading cards to grow in abundance. people to buy more trading cards.

people to buy fewer trading cards.

Refer to the table that presents Mike and Janet's demand for apples by the bushel. If they are the only two in the market, which of the following represents a point on the market demand curve? price = $4, quantity = 21 price = $1, quantity = 18 price = $4, quantity = 0 price = $2, quantity = 21

price = $2, quantity = 21

If quantity supplied exceeds quantity demanded, there is a tendency for: price to fall to restore equilibrium. the demand curve to shift to the left to restore equilibrium. the demand curve to shift to the right to restore equilibrium. price to rise to restore equilibrium.

price to fall to restore equilibrium.

If quantity supplied exceeds quantity demanded, there is a tendency for: the demand curve to shift to the right to restore equilibrium. the demand curve to shift to the left to restore equilibrium. price to fall to restore equilibrium. price to rise to restore equilibrium.

price to fall to restore equilibrium.

If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that equilibrium: price will fall with little change in equilibrium quantity. quantity will fall with little change in equilibrium price. quantity will rise with little change in equilibrium price. price will rise with little change in equilibrium quantity.

price will rise with little change in equilibrium quantity.

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the: quantity of apartment units supplied will fall. supply of apartment units will shift rightward. supply of apartment units will shift leftward. quantity of apartment units supplied will rise.

quantity of apartment units supplied will fall.

If the price of steel rises, the law of supply predicts that, other things constant, the: quantity supplied of steel will decrease. quantity supplied of steel will increase. supply of steel will increase. supply of steel will decrease.

quantity supplied of steel will increase.

Refer to the graph shown. A quantity restriction of QR will: raise market price to P0. have no effect in the market depicted. maintain a market price of P1. lower market price to P2.

raise market price to P0.

Demand for healthy kidneys is high in both India and Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will: lower price and lower quantity. raise price and raise quantity. raise price but lower quantity. lower price but raise quantity.

raise price but lower quantity.

A decrease in price and an indeterminate change in quantity are consistent with a: rightward shift in supply and a leftward shift in demand. leftward shift in demand and no shift in supply. leftward shift in supply and a rightward shift in demand. leftward shift in supply and no shift in demand.

rightward shift in supply and a leftward shift in demand.

When workers are paid higher wages, production costs: rise, supply shifts rightward, and product prices rise. rise, supply shifts leftward, and product prices fall. fall, supply shifts rightward, and product prices fall. rise, supply shifts leftward, and product prices rise.

rise, supply shifts leftward, and product prices fall.

If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will: shift downward and the price will decrease by $0.25 per gallon. shift downward and the price will decrease by less than $0.25 per gallon. shift upward and the price will increase by less than $0.25 per gallon. shift upward and the price will increase by $0.25 per gallon.

shift upward and the price will increase by less than $0.25 per gallon.

If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will: shift downward and the price will decrease by $0.25 per gallon. shift upward and the price will increase by $0.25 per gallon. shift downward and the price will decrease by less than $0.25 per gallon. shift upward and the price will increase by less than $0.25 per gallon.

shift upward and the price will increase by less than $0.25 per gallon.

Tariffs can be thought of as indirect: subsidies to domestic producers. special taxes on domestic producers. subsidies to foreign producers. subsidies to domestic consumers.

subsidies to domestic producers.

If Argentina imposes a 20 percent tax on natural gas exports to be paid by suppliers. Other things equal, this causes the: demand for natural gas exports to shift to the right. supply of natural gas exports to shift to the right. supply of natural gas exports to shift to the left. quantity of natural gas exports produced to increase.

supply of natural gas exports to shift to the left.

If Argentina imposes a 20 percent tax on natural gas exports to be paid by suppliers. Other things equal, this causes the: supply of natural gas exports to shift to the left. demand for natural gas exports to shift to the right. supply of natural gas exports to shift to the right. quantity of natural gas exports produced to increase.

supply of natural gas exports to shift to the left.

If the price in a market is above its equilibrium level, there will be a: surplus and upward pressure on price. shortage and downward pressure on price. surplus and downward pressure on price. shortage and upward pressure on price.

surplus and downward pressure on price.

If the price in a market is above its equilibrium level, there will be a: surplus and downward pressure on price. shortage and upward pressure on price. shortage and downward pressure on price. surplus and upward pressure on price.

surplus and downward pressure on price.

The price of a ticket to the Maroon 5 concert is set at $35. All the tickets for the concert sell out one hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that: the quantity of tickets demanded is equal to the quantity supplied at the $35 price. the equilibrium price of tickets to the concert is $35. the equilibrium price of tickets to the concert is more than $35. the equilibrium price of tickets to the concert is less than $35.

the equilibrium price of tickets to the concert is more than $35.

Refer to the graph shown. If government establishes a minimum wage at $7.25 per hour: there will be a shortage in this labor market. employers will be forced to hire 900 workers, resulting in reduced profits. employers will be unable to find enough qualified applicants to fill the available positions. the number of job seekers will exceed the number of job vacancies, resulting in some unemployment.

the number of job seekers will exceed the number of job vacancies, resulting in some unemployment.

Refer to the graph shown. At a price of $0.60 per dozen: there is a surplus of 2,000 dozen eggs per week. there is a shortage of 2,000 dozen eggs per week. the market is in equilibrium. there is a shortage of 3,000 dozen eggs per week.

there is a shortage of 2,000 dozen eggs per week.

In a third-party payer system: total expenditures generally fall. total expenditures generally rise. quantity demanded generally falls. quantity supplied generally falls.

total expenditures generally rise.

The law of supply states that, other things equal, as the price of a good goes: up, the quantity supplied goes up. up, the supply goes down. down, the supply goes down. down, the quantity supplied goes up.

up, the quantity supplied goes up.

Suppose when you are offered $8.00 per hour to work in the campus library, you choose not to work, but when you are offered $12.00 per hour, you accept a part-time position. Your behavior can best be explained by the fact that your supply of labor curve is: vertical. downward-sloping. horizontal. upward-sloping.

upward-sloping.

The use of the phrase "other things constant" in supply and demand analysis indicates that: we are considering changes in just one factor. an equilibrium quantity has been reached. an equilibrium price has been reached. we are considering all the changes which might take place in actual markets.

we are considering changes in just one factor.