ECON Ch 3 Exam Study Questions

There are 100 customers, each of whom values a concert ticket at a unique whole number dollar amount between $1 and $100. One customer is willing to pay $1, a second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number of concert tickets are on sale for $15 each. Create a simple demand curve to represent this scenario and using that curve calculate the total consumer surplus. A. $3,612.50 B. $4,250.00 C. $4,887.50 D. $5,000.00

A. $3,612.50

As the price of lead falls (a key input in the production of automobile batteries), the costs of producing batteries decreases, shifting the supply curve of batteries: A. Down and to the right. B. Down and to the left. C. Up and to the right. D. Up and to the left.

A. Down and to the right.

The demand curve: A. Shows how much buyers are willing and able to buy at different prices. B. Is the amount that buyers are willing and able to buy at a particular price. C. Is the amount sellers are willing and able to sell at a particular price D. Shows how much sellers are willing and able to sell at different prices.

A. Shows how much buyers are willing and able to buy at different prices.

Imagine that millions of refugees move out of country A and into country X. This would cause the demand for housing in country A to _____ and the demand for housing in country X to _____. A. decrease; increase B. increase; increase C. increase; decrease D. decrease; decrease

A. decrease; increase

Which of the following choices contains only factors that cause the supply curve to shift to the right? A. A fall in production costs, a rise in technology, an increase in taxes on output. B. A rise in technology, a fall in the costs of production, a fall in taxes on output. C. A fall in tastes and preferences for the product, economic growth, a rise in technology. D. A decrease in taxes on production, a fall in subsidies on production, a rise in costs of production.

B. A rise in technology, a fall in the costs of production, a fall in taxes on output.

Quantity Demanded: A. Shows how much sellers are willing and able to sell at different prices. B. Is the amount that buyers are willing and able to buy at a particular price. C. Shows how much buyers are willing and able to buy at different prices. D. Is the amount sellers are willing and able to sell at a particular price.

B. Is the amount that buyers are willing and able to buy at a particular price.

Which of the following would cause the demand for hot dog buns to increase? A. A rise in the price of hot dogs. B. A rise in the price of hot dog buns. C. A fall in the price of hot dogs. D. A fall in the price of hot dog buns.

C. A fall in the price of hot dogs.

The difference between the market price and the minimum price at which a seller is willing to sell a certain quantity of a good is: A. Consumer shortage. B. Consumer surplus. C. Producer surplus. D. Producer shortage.

C. Producer surplus.

Which of the following statements is TRUE? A. Total consumer surplus is represented graphically by the area above the demand curve. B. Total consumer surplus is represented graphically by the area beneath the demand curve. C. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. D. Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2.

C. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

Firms are willing and able to sell 100 guitars per day at a price of $250 per guitar. What price will firms require to sell 100 guitars per day if there is a tax of $15 per guitar? A. $250 B. $235 C. Between $235 and $250 D. $265

D. $265

The quantity supplied is the: A. Incremental cost of producing one more unit of output, holding all other things constant. B. Change in the sellers' output multiplied by the change in price. C. Amount of inputs that a firm earns profit on. D. Amount of a good that firms are willing and able to sell at a particular price during a given period of time.

D. Amount of a good that firms are willing and able to sell at a particular price during a given period of time.

The quantity of DVDs that people plan to buy this month will increase when: A. Cable television prices decrease. B. The price of movies for download decreases. C. The price of DVD payers increases. D. Movie theater ticket prices increase.

D. Movie theater ticket prices increase.