Question 1

Suppose the price of tomatoes dramatically increases.Which of the following could cause this change?

Accepted Answer

A)  Hurricanes during the late summer damages the Florida crop, shifting supply left
B)  A reduction in tariffs of tomatoes from Central American, shifting supply right
C)  Anews report stating that a pesticide used on tomatoes might cause cancer, shifting the demand to the right
D)  Advertising for catsup increases demand for catsup, shifting the demand curve to the left

Question 2

Refer to the graph shown that depicts a third-party payer market for prescription drugs.If the co-payment is $6 per pill, total expenditures under the third-party payer system will be:

Accepted Answer

A)  greater than if the market were left alone.
B)  less than if the market were left alone.
C)  the same as if the market were left alone.
D)  undetermined.

Question 3

Online music stores such as Apple's iTunes provide an alternative to buying CDs.The introduction of online music stores has shifted:

Accepted Answer

A)  the supply curve of CDs to the right.
B)  the supply curve of CDs to the left.
C)  the demand curve of CDs to the right.
D)  the demand curve of CDs to the left.

Question 4

A decrease in price and an indeterminate change in quantity are consistent with a:

Accepted Answer

A)  leftward shift in demand and no shift in supply.
B)  leftward shift in supply and no shift in demand.
C)  rightward shift in supply and a leftward shift in demand.
D)  leftward shift in supply and a rightward shift in demand. C

Question 5

Helped by desktop publishing, the number of vintage baseball card forgeries has flooded the market for vintage baseball cards.Dealers left the market for fear of purchasing a phony.What was the effect on the market for vintage baseball cards assuming phonies cannot be detected?

Accepted Answer

A)  Demand shifted to the left, supply did not change, price declined, and quantity traded declined
B)  Supply shifted to the right, demand did not change, price declined, and quantity traded rose
C)  Supply shifted to the right, demand shifted to the left, and price rose
D)  Supply shifted to the right, demand shifted to the left, and price declined

Question 6

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Accepted Answer

A) True 
 B)False

Question 7

The effect of successful compliance with recycling regulation by homeowners on the market for recycled paper along with a concurrent rise in demand for products made with recycled paper is best shown by a shift to the right in the supply of and demand for recyclable paper and a certain drop in its price.

Accepted Answer

A) True 
 B)False  False

Question 8

When the polio vaccine first became available in the United States, the government controlled the price with an effective price ceiling.Production of the vaccine was not sufficient to fill all orders and the government had to regulate its distribution.Had the vaccine been sold without government intervention, the shortage would have been eliminated by price:

Accepted Answer

A)  falling, quantity demanded decreasing, and supply increasing.
B)  falling, demand decreasing, and supply increasing.
C)  rising, demand decreasing, and quantity supplied increasing.
D)  rising, quantity demanded decreasing, and quantity supplied increasing.

Question 9

The most likely impact of an effective price floor is:

Accepted Answer

A)  the supply curve will shift to the right.
B)  the demand curve will shift to the left.
C)  a surplus will develop.
D)  a shortage will develop.

Question 10

Suppose a price floor is imposed on eggs above their equilibrium price.The likely result will be:

Accepted Answer

A)  a lower equilibrium price for eggs as the demand curve for eggs shifts left.
B)  a higher equilibrium price for eggs as the supply curve for eggs shifts left.
C)  a decrease in the quantity of eggs demanded.
D)  an increase in the quantity of eggs demanded.

Question 11

Suppose that initially, the equations for demand and supply are Qd = 48 - 4P and Qs = 4P - 16, respectively.If the quantity demanded increases by 12 at every price (so that the demand curve shifts to the right) , the equilibrium price will change from:

Accepted Answer

A)  $8 to $9.50.
B)  $8 to$12.2.2.2.
C)  $12 to $9.5.
D)  $9.50 to$8.

Question 12

Refer to the graph shown.If buyers must pay $5, quantity demanded will equal:

Accepted Answer

A)  2.5.
B)  50.
C)  75.
D)  100.

Question 13

Given a downward sloping demand curve, a tax on the supply of a good will result in an increase in equilibrium price that is less than the amount of the tax.

Accepted Answer

A) True 
 B)False

Question 14

What events most likely explain the following Wall Street Journal headline, "Cities Couldn't Give Away Their Trash; Now They Get Top Dollar?"

Accepted Answer

A)  Quantity supplied initially exceeded quantity demanded, but a subsequent increase in the demand for trash not only eliminated the surplus, but led to a rise in the price of trash.
B)  Supply initially exceeded demand, but a subsequent increase in the quantity of trash demanded not only eliminated the surplus, but led to a rise in the price of trash.
C)  Quantity supplied initially exceeded quantity demanded, but a subsequent increase in the supply of trash not only eliminated the surplus, but led to a rise in the price of trash.
D)  Supply initially exceeded demand, but a subsequent increase in the quantity of trash supplied not only eliminated the surplus, but led to a rise in the price of trash.

Question 15

Refer to the graph shown.If government establishes a price floor of $7.25 per hour, there will be a:

Accepted Answer

A)  shortage of 400 labor hours.
B)  surplus of 400 labor hours.
C)  shortage of 300 labor hours.
D)  surplus of 300 labor hours.

Question 16

Suppose the equilibrium price of oranges is $0.79 an orange, but government takes steps to prevent the price from exceeding $0.60 an orange.The likely result will be a:

Accepted Answer

A)  lower equilibrium price for oranges as the supply curve for oranges shifts to the right.
B)  higher equilibrium price for oranges as the demand curve for oranges shifts to the right.
C)  shortage of oranges as the price ceiling keeps the market from reaching equilibrium.
D)  surplus of oranges as the price ceiling keeps the market from reaching equilibrium.

Question 17

Stricter environmental regulations and increased demand for energy have caused an increase in the demand for relatively clean natural gas.In the last several years, improved extraction technologies and new discoveries have increased the availability of natural gas.What has been the net effect on price and quantity for natural gas?

Accepted Answer

A)  Quantity sold and price both fell with certainty.
B)  Quantity sold fell and the effect on price is ambiguous.
C)  Quantity sold and price both rose with certainty.
D)  Quantity sold rose while the effect on price is ambiguous. D

Question 18

Refer to the graph shown.A quantity restriction of QR will: R will:   A) reduce quantity supplied toQ2. B) reduce quantity supplied to QR. C) have no effect on quantity supplied. D) create excess demand represented by Q2 - QR." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  reduce quantity supplied toQ2.
B)  reduce quantity supplied to QR.
C)  have no effect on quantity supplied.
D)  create excess demand represented by Q2 - QR.

Question 19

Refer to the table shown that depicts a third-party payer market.What is the price the supplier will charge for the quantity consumers demand if a $1 co-pay is established?

Accepted Answer

A)  $1
B)  $2
C)  $4
D)  $7

Question 20

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Accepted Answer

A)  upward and the price will increase by.
B)  upward and the price will increase by less than.
C)  downward and the price will decrease by.
D)  downward and the price will decrease by less than.

Exam 5: Using Supply and Demand

Suppose the price of tomatoes dramatically increases.Which of the following could cause this change?

Correct Answer
verified

Refer to the graph shown that depicts a third-party payer market for prescription drugs.If the co-payment is $6 per pill, total expenditures under the third-party payer system will be:

Correct Answer
verified

Online music stores such as Apple's iTunes provide an alternative to buying CDs.The introduction of online music stores has shifted:

Correct Answer
verified

A decrease in price and an indeterminate change in quantity are consistent with a:

Correct Answer
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C

Helped by desktop publishing, the number of vintage baseball card forgeries has flooded the market for vintage baseball cards.Dealers left the market for fear of purchasing a phony.What was the effect on the market for vintage baseball cards assuming phonies cannot be detected?

Correct Answer
verified

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Correct Answer
verified

Correct Answer
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False

Correct Answer
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The most likely impact of an effective price floor is:

Correct Answer
verified

Suppose a price floor is imposed on eggs above their equilibrium price.The likely result will be:

Correct Answer
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Suppose that initially, the equations for demand and supply are Qd = 48 - 4P and Qs = 4P - 16, respectively.If the quantity demanded increases by 12 at every price (so that the demand curve shifts to the right) , the equilibrium price will change from:

Correct Answer
verified

Refer to the graph shown.If buyers must pay $5, quantity demanded will equal:

Correct Answer
verified

Given a downward sloping demand curve, a tax on the supply of a good will result in an increase in equilibrium price that is less than the amount of the tax.

Correct Answer
verified

What events most likely explain the following Wall Street Journal headline, "Cities Couldn't Give Away Their Trash; Now They Get Top Dollar?"

Correct Answer
verified

Refer to the graph shown.If government establishes a price floor of $7.25 per hour, there will be a:

Correct Answer
verified

Suppose the equilibrium price of oranges is $0.79 an orange, but government takes steps to prevent the price from exceeding $0.60 an orange.The likely result will be a:

Correct Answer
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Correct Answer
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D

Refer to the graph shown.A quantity restriction of Q_R will:

Correct Answer
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Refer to the table shown that depicts a third-party payer market.What is the price the supplier will charge for the quantity consumers demand if a $1 co-pay is established?

Correct Answer
verified

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Correct Answer
verified

Exam 5: Using Supply and Demand

Suppose the price of tomatoes dramatically increases.Which of the following could cause this change?

Correct AnswerverifiedShow Answer

Refer to the graph shown that depicts a third-party payer market for prescription drugs.If the co-payment is $6 per pill, total expenditures under the third-party payer system will be:

Correct AnswerverifiedShow Answer

Online music stores such as Apple's iTunes provide an alternative to buying CDs.The introduction of online music stores has shifted:

Correct AnswerverifiedShow Answer

A decrease in price and an indeterminate change in quantity are consistent with a:

Correct AnswerverifiedC

Helped by desktop publishing, the number of vintage baseball card forgeries has flooded the market for vintage baseball cards.Dealers left the market for fear of purchasing a phony.What was the effect on the market for vintage baseball cards assuming phonies cannot be detected?

Correct AnswerverifiedShow Answer

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

The most likely impact of an effective price floor is:

Correct AnswerverifiedShow Answer

Suppose a price floor is imposed on eggs above their equilibrium price.The likely result will be:

Correct AnswerverifiedShow Answer

Suppose that initially, the equations for demand and supply are Qd = 48 - 4P and Qs = 4P - 16, respectively.If the quantity demanded increases by 12 at every price (so that the demand curve shifts to the right) , the equilibrium price will change from:

Correct AnswerverifiedShow Answer

Refer to the graph shown.If buyers must pay $5, quantity demanded will equal:

Correct AnswerverifiedShow Answer

Given a downward sloping demand curve, a tax on the supply of a good will result in an increase in equilibrium price that is less than the amount of the tax.

Correct AnswerverifiedShow Answer

What events most likely explain the following Wall Street Journal headline, "Cities Couldn't Give Away Their Trash; Now They Get Top Dollar?"

Correct AnswerverifiedShow Answer

Refer to the graph shown.If government establishes a price floor of $7.25 per hour, there will be a:

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of oranges is $0.79 an orange, but government takes steps to prevent the price from exceeding $0.60 an orange.The likely result will be a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

Refer to the graph shown.A quantity restriction of QR will:

Correct AnswerverifiedShow Answer

Refer to the table shown that depicts a third-party payer market.What is the price the supplier will charge for the quantity consumers demand if a $1 co-pay is established?

Correct AnswerverifiedShow Answer

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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D

Refer to the graph shown.A quantity restriction of Q_R will:

Correct Answer
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Correct Answer
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Correct Answer
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