Macroeconomics Ch 3

If an economy produces its most wanted goods but uses outdated production methods, it is: A) achieving productive efficiency but not allocation efficiency B) not achieving productive efficiency C) achieving both productive and allocation efficiency D) engaged in roundabout production

B) not achieving productive efficiency

If there is a surplus of a product, its price A) is below the equilibrium level B) is above the equilibrium level C) will rise in the near future D) is in equilibrium

B) is above the equilibrium level

If the demand curve for product B shifts to the right as the price of product A declines then: A) both A and B are inferior goods B) A is superior good and B is an inferior good C) A in an inferior good and B is a superior good C) a change in the price of product K

C) a change in the price of product K

Which of the following will not cause the demand for product K to change? A) a change in the price of close-substitute of product J B) an increase in incomes of buyers of product K C) a change in the price of product K D) a change in consumer tastes for product K

C) a change in the price of product K

An increase in the price of product A will: A) reduce the demand for resources used in the production of A B) increase the demand for complementary product C C) increase the demand for substitute product B

B) increase the demand for complementary product C

When an economist says that the demand for a product has increased this means that: A) consumers are now willing to purchase more of this product at each possible price B) the product has become particularly scarce for some reason C) product price has fallen and as a consequence consumers are buying a larger quantity of the product D) the demand curve has shifted to the left

A) consumers are now willing to purchase more of this product at each possible price

The law of supply indicates that, other things equal: A) producers will offer more of a product at high prices than at low prices B) the product supply curve is down-sloping C) consumers will purchase less of a good at high prices than at low prices D) producers will offer more of a product at low prices than at high prices

A) producers will offer more of a product at high prices than at low prices

The location of the product supply curve depends on the: A) production technology B) number of buyers in the market C) tastes of buyers D) location of the demand curve

A) production technology

Assume that the demand curve for product C is down-sloping. If the price of C falls from $2.00 to $1.75: A) a smaller quantity of C will be demanded B) a larger quantity of C will be demanded C) the demand for C will increase D) the demand for C will decrease

B) a larger quantity of C will be demanded

Digital cameras and memory cards are: A) substitute goods B) complementary goods C) independent goods D) inferior goods

B) complementary goods

(consider this) Ticket scalping: A) imposes economic losses on both buyers and sellers B) creates economic gains for both buyers and sellers C) imposes losses on buyers but creates gains for sellers D) imposes looses on sellers but creates gains for buyers

B) creates economic gains for both buyers and sellers

An effective price floor will: A) force some firms in this industry to go out of business B) result in a product surplus C) result in a product shortage D) clear the market

B) result in a product surplus

"In the corn market demand often exceeds supply and supply sometimes exceeds demand" "the price of corn rises and falls in response to changes in supply and demand" which of these two statements are the terms demand and supply being used correctly A) neither B) second statement C) first statement D) both statements

B) second statement

Other things equal which of the following might shift the demand curve for gasoline to the left? A) the discovery of vast new oil reserves in Montana B) the development of a low-cost electric automobile C) an increase in the price of train and air transportation D) a large decline in the price of automobiles

B) the development of a low-cost electric automobile

The income and substitution effects account for: A) the upward-sloping supply curve B) the downward-sloping demand curve C) movements along a given supply curve D) shifts in the demand curve

B) the downward-sloping demand curve

by an "increase in demand" economics mean that: A) product price has fallen so consumers move down to a new point on the demand curve B) the quantity demanded at each price in a set of prices is greater C) the quantity demanded at each price in a set of prices is smaller D) a leftward shift of the demand curve has occured

B) the quantity demanded at each price in a set of prices is greater

An effective ceiling price will: A) induce new firms to enter the industry B) result in a product surplus C) result is a product shortage D) clear the market

C) result is a product shortage

Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that: A) higher education is an exception to the law of demand B) the supply of education provided by GSU has also increased over the 20-year period C) school-aged population, incomes, and preferences for education have changes over the 20-year period D) GSU's supply curve of education is down-sloping

C) school-aged population, incomes, and preferences for education have changes over the 20-year period

An improvement in production technology: A) increase equilibrium price B) shift the supply curve to the left C) shift the supply curve to the right D) shift the demand curve to the left

C) shift the supply curve to the right

Increasing marginal cost of production explains: A) the law of demand B) the income effect C) why the supply curve is up-sloping D) why the demand curve is down-sloping

C) why the supply curve is up-sloping

Which of the following is a consequence of rent controls established to keep housing affordable for the poor? A) less rental housing is available as prospective landlords find in unprofitable to rent at restricted prices B) the quality of rental housing declines as landlords lack the funds and incentive to maintain properties C) apartment buildings are torn down in favor of office buildings, shopping malls, and other buildings where rents are not controlled D) all of these are consequences of rent control

D) all of these are consequences of rent control

A firms supply curve is up-sloping because: A) the expansion of production necessitates the use of qualitatively inferior inputs B) mass production economies are associated with larger levels of output C) consumers envision a positive relationship between price and quality D) beyond some point the production costs of additional units of output will rise

D) beyond some point the production costs of additional units of output will rise

There will be a surplus of a product when: A) price is below the equilibrium level B) the supply curve is downward sloping and the demand curve is upward sloping C) the demand and supply curves fail to intersect D) consumers want to buy less than producers offer for sale

D) consumers want to buy less than producers offer for sale

If X is a normal good, a rise in money income will shift the: A) supply curve for X to the left B) supply curve for X to the right C) demand curve for X to the left D) demand curve for X to the right

D) demand curve for X to the right

(last word) A market for human organs would be expected to: A) reduce the price of organs B) create a surplus of organs C) reduce the supply of organs D) eliminate the shortage of organs

D) eliminate the shortage of organs

Tennis rackets and ballpoint pens are: A) substitute goods B) complementary goods C) inferior goods D) independent goods

D) independent goods

In moving along a supply curve, which of the following is not held constant? A) the number of firms producing this good B) expectations about the future price of the market C) techniques used in producing this product D) the price of the product for which the supply curve is relevant

D) the price of the product for which the supply curve is relevant

A product market is in equilibrium: A) whenever there is no surplus of the product B) whenever there is no shortage of the product C) when consumers want to buy more of the product than producers offer for sale D) where the demand and supply curves intersect

D) where the demand and supply curves intersect