1.When quantity demanded exceeds quantity supplied, a shortage occurs and prices are pushed down toward equilibrium.

False

True

2.Which enterprise is NOT an example of a market?

painting one's house

a neighborhood lemonade stand

the New York Stock Exchange

ticket scalping

3.The main role of a market is to:

allocate resources.

make everyone happy.

guarantee equity.

keep prices low.

4.The law of demand states that:

the lower a product's price, the more of that product consumers will purchase during a given period.

higher prices will lead producers to offer more of their products for sale during a given period.

higher prices will lead producers to offer less of their products for sale during a given period.

the lower a product's price, the less of that product consumers will purchase during a given period.

5.In the market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even larger increase in the demand for online tutors. These events will cause the equilibrium price of online tutoring to _____ and the equilibrium quantity to _____.

rise; fall

fall; fall

rise; rise

fall; rise

6.Which factor would NOT cause the demand curve for green tea to shift to the right?

new research showing that drinking green tea reduces the risk of illnesses

a decrease in the price of green tea

a decrease in the price of lemons, a complement to green tea

All of these will shift the demand for green tea to the right.

7.If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n):

upward movement along the supply curve.

shift of the supply curve to the right.

downward movement along the supply curve.

shift of the supply curve to the left.

8.Which factor would shift the supply of skateboards to the right?

a large reduction in the price of wheels used to produce skateboards

an increase in incomes among skateboard enthusiasts

a decrease in the price of skateboards

a new rule banning all skateboards on college campuses

9.Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. Ashanti's opportunity cost for each additional dog walked is:

2.5 lawns mowed.

0.5 lawn mowed.

1.5 lawns mowed.

2.0 lawns mowed.

10.(Figure: Individual and Market Demand Curves) According to the graph, the market quantity demanded at $20 is:

10.

3.

1.

6.

11.Suppose that quantity supplied of a product equals 5 units and quantity demanded equals 8 units. In this market, there is a _____ of this product and the price should _____.

surplus; fall

shortage; rise

shortage; fall

surplus; rise

12.Which factor would NOT change the demand for sea kayak tours?

news reports of whales in the harbor

the onset of sunny, summer beach weather

a decrease in the price of a sea kayak tour

an increase in the price of bicycle tours, a substitute activity

13.The equation for the demand curve for bags of Doritos isP= 6 + (-1) Q. Which graph shows the CORRECT demand curve?

14.The price of apples has recently fallen in the marketplace. From this information, we can safely predict that:

a surplus of apples must have existed.

a shortage of apples must have existed.

the supply of apples recently decreased.

the demand for apples recently increased.

15.The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a _____ of _____ units.

shortage; 400

surplus; 400

surplus; 200

shortage; 200

16.Prices do NOT help consumers decide:

how much of a product to purchase.

how much of a product to substitute for another.

how much of a product to produce.

whether to buy a certain product.

17.Imagine two countries with identical endowments of resources. Using all its resources, Broland can produce 5,000 books or 8,000 forks. Using the same resources, Nomia can produce 4,000 books or 7,000 forks. Which country has a comparative advantage producing books?

Nomia, because it gives up 1.75 forks for each book produced

Nomia, because it gives up 0.57 of a fork for each book produced

Broland, because it gives up 1.6 forks for each book produced

Broland, because it gives up 0.63 of a fork for each book produced

18.In the market for coffee, consumers expect the price of coffee beans to rise next week. This would make the demand for coffee this week:

shift right.

shift left.

stay the same since the effects of this week and next week will cancel each other out.

stay the same since demand is not affected by price changes.

19.Which statement is TRUE about markets?

They can contain legal or illegal activity conducted by any individual or business.

They can contain legal or illegal activity conducted by incorporated businesses.

They only contain legal activity conducted by incorporated businesses.

They only contain legal activity conducted by any individual or business.

20.Carmax is a national chain that sells used cars. The likely impact of its arrival in the market would be to _____. Everything else held constant, this would likely _____ the price of used cars.

shift the supply of used cars to the right; raise

increase the quantity supplied of used cars; lower

shift the supply of used cars to the right; lower

shift the supply of used cars to the left; raise

21.An individual's valuation of a good or service:

is lower than the maximum value the individual will pay.

can be expressed in the marketplace.

is generally the same for most people.

is known as the market price.

22.Suppose that the price of pork rises. We would expect that the supply of beef will:fall because farmers will shift resources from beef production to pork production.rise because farmers will shift resources from beef production to pork production.rise because pork is a resource used in beef production.fall because pork is a resource used in beef production.

23.(Figure: PPF of Econia (a small nation)) Looking at the production possibilities frontier (PPF) of Econia, what is the opportunity cost of moving production from pointB(350 tons of wheat and 400 bales of cotton) to pointG(190 tons of wheat and 700 bales of cotton)?

1.875 tons of wheat per bale of cotton.

700 bales of cotton per 400 tons of wheat.

300 tons of wheat per 160 bales of cotton.

0.53 ton of wheat per bale of cotton.

24.In the market for gasoline, more consumers will begin driving at the onset of nicer weather, while the price of public transportation, a substitute, rises. The demand for gasoline should:

stay the same since demand is not affected by price changes.

stay the same since the effects will cancel each other out.

shift right.

shift left.

25.(Figure: Interpreting a Market Graph) If the price of leather used to make shoes falls in price such that the supply of shoes increases by 20 shoes at every price, then the amount of shoes supplied at a price of $60 before the change would be _____ pairs, and after the change, it would be _____ pairs.

20; 40

10; 30

40; 60

30; 50

26.(Table) The table shows the demand schedules for three individuals. Which table would be the CORRECT market demand schedule?

27.Suppliers of Chia Pets have reduced supply since the gift-giving season has passed. Suppliers are MOST likely responding to:

higher prices of clay, used to make Chia Pets.

a decrease in the number of suppliers of Chia Pets and similar products.

their expectation that the price of Chia Pets will fall in the marketplace.

a tax placed on Chia Pets.

28.In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, since the impact on the market is the same for both events, we can expect:

an increase in the equilibrium price and quantity of cable television.

no change in the equilibrium price but a decrease in the equilibrium quantity of cable television.

a decrease in the equilibrium price and quantity of cable television.

an unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television.

29.One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

The supply of bubble tea will increase dramatically.

The supply of bubble tea will increase modestly.

The supply of bubble tea will decrease.

The supply of bubble tea will not change.

30.Uvaldo is deciding which brand of energy drink to buy. According to market economics, he would benefit MOST from basing his decision on which brand has the most:

attractive packaging.

innovative marketing campaign.

availability in his local market.

value relative to its price.

31.In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, we can expect a(n):

unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television.

unknown change in the equilibrium quantity but a decrease in the equilibrium price of cable television.

decrease in the equilibrium price and quantity of cable television.

increase in the equilibrium price and quantity of cable television.

32.(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

cause quantity demanded to fall from 30 units to 20 units.

have no impact on sales.

make buyers angry.

cause quantity demanded to rise from 20 units to 30 units.

33.Willingness to pay _____ from person to person and _____ under varying circumstances.

differs; is the same

differs; differs

is the same; differs

is the same; is the same

34.Suppose that a major drought causes a 30 percent reduction in the peanut harvest. If there is no change in demand, this event would cause a _____ at the original equilibrium price, and the equilibrium price will therefore _____ and the equilibrium quantity will _____.

surplus; fall; fall

surplus; fall; rise

shortage; rise; fall

shortage; rise; rise

35.Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. According to trade theory, _____ should walk dogs because ____.

Paolo; he enjoys an absolute advantage in dog-walking

Ashanti; she produces more than Paolo does in a two-hour period

Ashanti; she enjoys a comparative advantage in dog-walking

Paolo; he faces a lower opportunity cost for walking dogs

36.Which statement illustrates the law of demand?

Marcus offers to sell more sticks of chewing gum at $1 than at $2.

Lindsay offers to buy more sticks of chewing gum at $1 than at $2.

Lindsay offers to buy more sticks of chewing gum at $2 than at $1.

Marcus offers to sell more sticks of chewing gum at $2 than at $1.

37.In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, since the drop in cable subscribers has had a bigger impact on the market, we can expect a(n):

unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television.

unknown change in the equilibrium quantity but a decrease in the equilibrium price of cable television.

decrease in the equilibrium price and quantity of cable television.

increase in the equilibrium price and quantity of cable television.

38.An individual's valuation of a good or service is:

impossible for individuals to express.

known as willingness to pay.

lower than the maximum value the individual will pay.

generally the same from person to person.

39.(Table) If Jake and Sue are the only buyers of the local pizzeria's pizza, what is the market demand for pizzas at each of the prices listed, starting at the market price of $5?Q_Jis the quantity demanded at each price by Jake, andQ_Sis the quantity demanded at each price by Sue.

6, 4, 0, 0, respectively

6, 4, 2, 1, respectively

4, 3, 2, 1, respectively

11, 14, 17, 21, respectively

40.Prices typically contain useful information:

more for sellers than for buyers.

both for buyers and for sellers.

more for buyers than for sellers.

for neither buyers nor sellers.

41.The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _____ and result in the equilibrium price of solar panel installations to _____.

right; fall

left; rise

right; rise

left; fall

42.Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed?

We would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand.

We would expect demand to shift to the left.

We would expect demand to shift to the right.

We would expect demand not to change.

43.Imagine two countries with identical endowments of resources. Using all its resources, Broland can produce 5,000 books or 8,000 forks. Using the same resources, Nomia could produce 4,000 books or 7,000 forks. Which country has a comparative advantage producing forks?

Broland, because it gives up 0.63 of a book for each fork produced

Nomia, because it gives up 0.57 of a book for each fork produced

Broland, because it gives up 1.6 books for each fork produced

Nomia, because it gives up 1.75 books for each fork produced

44.Bus tickets are often considered _____ goods because _____.

inferior; as the price of a related good falls, demand for bus tickets increases

substitute; as income rises, demand for bus tickets falls

substitute; as the price of a related good falls, demand for bus tickets decreases

inferior; as income rises, demand for bus tickets falls

45.The price of automobiles is rising because more people want to purchase cars.

As a result,supply shifts to the right.

supply shifts to the left.

quantity supplied increases.

quantity demanded decreases.

46.Luz sells cupcakes. According to market economics, which is the BEST signal that consumers value her product highly?

the glowing Yelp reviews they often write

the many competing companies that imitate her business

that they readily pay the full price per cupcake

the line out the door every Sunday morning

47.(Table) The table shows the demand of three individuals in a market. Assuming they are the only buyers, what is total market demand if the price is $20?

5 units

20 units

1 unit

7 units

48.The supply of coffee has increased twice as much as the demand for coffee. As a result, we can predict a(n):

decrease in equilibrium price and equilibrium quantity.

increase in equilibrium price, but equilibrium quantity decreases.

decrease in equilibrium price, but equilibrium quantity is indeterminate.

decrease in equilibrium price, but equilibrium quantity increases.

49.Suppose that an artist has priced his painting at $150, but it remains unsold. We can conclude that the price of $150 is too:

high for this painting but it should not be lowered.

low for this painting and it should be raised.

low for this painting but it should not be raised.

high for this painting and it should be lowered.

50.Which statement about markets is CORRECT?

I) All markets require a physical location.

II) All markets involve a transaction of some type.

III) Markets operate independently of laws and regulations.

II only

I, II, and III

III only

I and II