According to the text, economics is the study of how: governments allocate resources in the face of constraints.

government policies can be used to meet individuals' wants and desires. human beings coordinate their wants and desires in the face of constraints. scarce resources are allocated to their most productive uses. View Feedback Question 2 Any economic system: can eliminate scarcity. addresses the questions what is produced, how it is produced, and for whom it is produced. provides all the goods people want and desire. provides equal distribution of well-being among its participants. View Feedback Question 3 0 / 1 point 1 / 1 point

An economist develops a model of consumption by gathering data about consumption and 100 other variables. After looking at the patterns in the data she develops a model to explain consumption. This economist is using which approach to modeling? Induction. Abduction. Reduction. Deduction. Hide Feedback

Induction is developing principles by looking at patterns.

Question 4

1 / 1 point

Alexandra has determined that studying an hour for her economics quiz will improve her grade on the quiz from 75 to 100. She also determines that this improvement is worth $20. In order to study for an hour for her economics quiz, however, she will have to work one less hour at her part-time job. Alexandra should: study for the quiz as long as her hourly wage rate is less than $20. study for the quiz as long as her hourly wage rate is more than $20. study for the quiz only if her hourly wage rate is exactly $20. not study for the quiz because earning a higher grade cannot have a dollar value. View Feedback Question 5 1 / 1 point

The marginal benefit from consuming another unit of a good: must equal the marginal cost or the unit will not be consumed. must be less than the marginal cost or the unit will not be consumed. equals the increase in total benefits from consuming the unit. equals the total benefit obtained from the consumption of all prior units. View Feedback Question 6 1 / 1 point

Refer to the graph above. If the marginal cost of each weekend trip this year is $600 no matter how many trips Rodney takes, then assuming he is rational, Rodney will: take 3 trips this year. take 2 trips this year. take 1 trip this year. not take any trips this year. View Feedback Question 7 1 / 1 point

Your opportunity cost of taking this course is: the tuition you paid for the course. the net benefit of the activity you would have chosen if you had not taken the course. the net benefit of taking this course. the cost of the activity you would have chosen if you had not taken the course. View Feedback Question 8 Opportunity cost: includes only monetary outlays. is the net benefit foregone by not undertaking the next best alternative. is nonexistent for some choices. is the same as sunk cost. View Feedback Question 9 0 / 1 point 1 / 1 point

The opportunity cost of attending college is likely to be highest for a high school graduate: whose next-best option is to flip hamburgers and has access to no student loans. whose next-best option is to be a retail salesperson and whose family is extremely wealthy. whose next-best option is to drive a school bus but has the promise of a six-figure salary after college. who is capable of competing successfully in professional tennis. Hide Feedback

Opportunity cost is the benefit forgone by undertaking an activity. Everyone except the potential tennis player has a relatively low opportunity cost since his/her next-best options don't pay well.

Question 10

0 / 1 point

Deion Sanders is a two sport athlete who plays both pro football and baseball. He could earn $1,000,000 playing either. Troy Aikman is also a two sport athlete who plays both football and auto racing. He could earn $1,000,000 playing football or $200,000 racing cars. Garo Yepremian can play both football and soccer. He could earn $1,000,000 playing football or $50,000 playing soccer. Assuming that all three men have only two options for work, and can only pursue one sport full-time, who has the highest opportunity cost of playing football? Deion Sanders Troy Aikman Garo Yepremian Their opportunity costs are the same Hide Feedback

Opportunity cost is the benefit forgone of the next best alternative. The opportunity cost of playing football is $1,000,000 for Sanders, $200,000 for Aikman and $50,000 for Yepremian. The highest opportunity cost of playing football is for Sanders earning $1,000,000 playing baseball.

Question 11

1 / 1 point

Nepalese villagers sell their kidneys as a way to earn much-needed money. Unfortunately, while the demand for such kidneys in developed economies is high and the medical facilities are available to conduct kidney transplants, the selling and buying of organs is illegal. What idea from Chapter 1 of the text does this situation best illustrate? Sunk costs do not matter in making decisions. Marginal revenue should equal marginal cost. Social and political forces sometimes rein in market forces. Microeconomics and macroeconomics are very much interrelated. View Feedback Question 12 Political forces: affect the price mechanism through cultural norms. 1 / 1 point

affect the price mechanism through the legal system. affect the price mechanism through scarcity. do not affect the price mechanism. View Feedback Question 13 1 / 1 point

Experimental economics is: a naturally occurring event that approximates a controlled experiment. not possible given that economists study real-world events. a branch of economics that studies the economy through controlled lab experiments. what all economists do when they develop their models. View Feedback Question 14 Macroeconomics is: the study of individual choice and how that choice is influenced by economic forces. the study of the pricing policies of firms and the purchasing decisions of households. the study of aggregate economic relationships. an analysis of economic reality that proceeds from the parts to the whole. View Feedback Question 15 1 / 1 point 1 / 1 point

Who would likely argue that you need to study the trees before you can understand the forest? A microeconomist. A macroeconomist. A positive economist. A Marshallian economist. View Feedback

Question 16

1 / 1 point

The invisible hand theorem relates mostly to: microeconomics. macroeconomics. normative economics. Marshallian economics. View Feedback Question 17 An economic policy is: a generalization about the workings of an abstract economy. a physical or mental structure that significantly influences economic decisions. an action taken to influence the course of economic events. a standard people use when they determine whether a particular activity or behavior is acceptable. View Feedback Question 18 1 / 1 point 1 / 1 point

Normative economics seeks to: determine the most appropriate economic goals for a society. determine how government policies affect the economy. objectively explain how the economy functions. objectively explain economic problems such as inflation and unemployment. View Feedback Question 19 1 / 1 point

Which of the following is the best example of a positive question? How should the government deal with the next recession? Should the government reduce inflation?

How are price and quantity demanded related? Should government allow two large companies to merge? View Feedback Question 20 Positive economics is: subjective. neither objective nor subjective. more objective than normative economics. more subjective than normative economics. View Feedback Question 21 The art of economics is: the application of the knowledge gained by positive economics to the goals set in normative economics. purely technical and therefore more objective than positive or normative economics. purely subjective, so that the economist as artist does not have to strive for the same level of objectivity that positive or normative economists do. the branch of economics farthest removed from practical application, since its goal is to create the most elegant mathematical models. View Feedback Question 22 1 / 1 point 1 / 1 point 1 / 1 point

"We should support the market because it is efficient" is an example of: positive economics. normative economics. objective economics. negative economics. View Feedback

Question 23

1 / 1 point

"Price controls in competitive markets cause shortages" is an example of: positive economics. normative economics. the art of economics. Classical economics. View Feedback Question 24 1 / 1 point

"Government should not use price controls" is an example of: positive economics. normative economics. the art of economics. Marshallian economics. View Feedback Question 25 1 / 1 point

The price mechanism that guides our actions is called the: invisible market force. invisible hand. invisible handshake. invisible foot. View Feedback Chapter 2 Adam Smith argued that greater specialization and division of labor are likely to: improve standards of living. reduce standards of living.

reduce worker productivity. replace workers with machines, resulting in massive unemployment. View Feedback Question 2 1 / 1 point

Which of the following cannot be determined using a production possibility table? What combination of outputs can be produced. How much less of one output must be produced if more of another output is produced. What combination of outputs is best. How much output can be produced from a given level of inputs. View Feedback Question 3 1 / 1 point

Evan can grow both roses and carnations in his garden. His production possibility table is given below. If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is:

20 carnations. 26 carnations. 31 carnations. 78 carnations. View Feedback Question 4 0 / 1 point

Consider the table below, where each production choice represents a point on a production possibility curve.

This production possibility table could be graphed as a: straight line with negative slope. curved line with negative slope. straight line with zero slope. curved line with positive slope. Hide Feedback

Graph each point and find out that the graph of the table is a straight line or realize that the opportunity cost of 10 Rye is always 2 eggs. Constant opportunity costs are represented by a straight-line production possibility curve.

Question 5

1 / 1 point

The principle of increasing marginal opportunity costs states that the initial opportunity costs are: high but they decrease the more you concentrate on the activity. low but they increase the more you concentrate on the activity. high but they increase the more you concentrate on the activity. low but they decrease the more you concentrate on the activity. View Feedback Question 6 1 / 1 point

Because you can only get more of one good by giving up some of another good, the shape of a production possibilities curve is: upward sloping. perfectly vertical. perfectly horizontal. downward sloping. View Feedback Question 7 0 / 1 point

Refer to the graph below.

Laura's production possibility curve for math and economics problems in one night is shown in the graph. Her opportunity cost of finishing 6 math problems instead of 4 math problems is: 1 economics problem. 2 economics problems. 3 economics problems. 4 economics problems. Hide Feedback

Finishing 2 more math problems means not finishing 1 (4-3) economics problems.

Question 8

1 / 1 point

Refer to the graph below.

As you move from point A to point B: production efficiency is increased because we have more of good X. production efficiency is decreased because we have less of good Y. production efficiency is decreased because we are no longer on the production possibility curve. the change in efficiency is unclear. View Feedback

Question 9

1 / 1 point

Refer to the graph below.

Productive efficiency is achieved at what points? A, B, and M. C, D and N. A, C and F. M, D and E. View Feedback Question 10 1 / 1 point

If you move from a point inside the production possibility curve to a point on the production possibility curve, it follows that efficiency is: increased because the economy is now on the production possibility curve. increased only if production of both goods increases. increased as long as the combined output of both goods increases. reduced if less of one good is produced. View Feedback Question 11 0 / 1 point

Refer to the graph below.

If the production possibility curve shifts along the Good Y axis which point will remain as a point of efficiency?

A B C D Hide Feedback

If the production possibility curve shifts along its y-axis the x-intercept will still remain the same. Point D will remain efficient. Point B may become efficient, but was originally unobtainable.

Question 12

1 / 1 point

Two countries that specialize their production along the lines of comparative advantage and then trade with one another will be able to: both produce and consume more. produce more and consume less. produce less and consume more. both produce and consume less. View Feedback Question 13 0 / 1 point

Refer to the graphs above. The discovery of a new supply of resources used only in the production of guns can be shown by which movement? From A-B to C-D in diagram a. From C-D to A-B in diagram a. From X-Y to X-Z in diagram b. From X-Z to X-Y in diagram b. Hide Feedback

Since the new resources will not increase the maximum amount of butter that can be increased but will increase the maximum number of guns, the production possibility curve will rotate up staying anchored at X.

Question 14

1 / 1 point

When you produce cars, it is enormously expensive to produce one car, but then the costs per car decrease as more are produced. This would be an example of: increasing marginal opportunity costs. decreasing marginal opportunity costs. constant marginal opportunity costs. increasing returns to scale. View Feedback Question 15 1 / 1 point

Refer to the graphs below.

In the 1980s, desktop publishing reduced the costs of producing books. Assuming no change in the cost of producing CDs, which of the shifts reflects this change in technology? I II III IV View Feedback Question 16 1 / 1 point

An inverse relationship occurs between two variables when as one goes:

up the other goes up. up the other goes down. up the other does not change. down the other goes down. View Feedback Question 17 0 / 1 point

Supposed that each of the following rows represents the choice faced by policy makers given the current set of U.S. institutions and technology. What is the opportunity cost of reducing unemployment from 8 percent to 4 percent?

4 percentage points of unemployment. 6 percentage points of unemployment. 6 percentage points of inflation. 4 percentage points of inflation. Hide Feedback

The opportunity cost is what must be given up. In this case, to reduce unemployment from 8 to 4%, inflation must rise from 4 to 10%. The change in the inflation rate is the opportunity cost of lowering unemployment.

Question 18

1 / 1 point

Which of the following is an example of the law of one price? Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.

Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China leaving the U.S. to import all goods at one price. Because their countries have similar institutions, computer programmers in Germany and the United States are paid about the same. View Feedback Question 19 1 / 1 point

To graphically demonstrate the principle of increasing marginal opportunity cost the production possibility curve must be: flat. straight. bowed out. bowed in. View Feedback Question 20 0 / 1 point

Given the production possibility tables for First and Second Bakeries presented above, we know that the opportunity cost of producing cookies: is higher at First Bakery. is higher at Second Bakery. is the same at both bakeries. cannot be computed without further information. Hide Feedback

The opportunity cost of producing cookies at First Bakery is 6 pies for every 10 cookies, or 0.6 pies for each cookie. At Second Bakery, the opportunity cost of producing cookies is 3 pies for every 30 cookies, or 0.1 pies per cookie.

Question 21

0 / 1 point

Mexico has a comparative advantage in producing corn: if its opportunity cost of producing corn is higher than the opportunity cost in other countries. if its opportunity cost of producing corn is the same as the opportunity cost in other countries. if its opportunity cost of producing corn is lower than the opportunity cost in other countries. regardless of the opportunity cost in other countries. Hide Feedback

A country has a comparative advantage in the production of a good if its opportunity cost of producing that good is less than that of other countries.

Question 22

0 / 1 point

Countries gain from trade by producing: the goods they produce at the highest opportunity cost. the goods they can produce at the lowest opportunity cost. where the production possibility curve has a slope of -1. all goods in equal amounts. Hide Feedback

The principle that the lowest cost rules is the basis for the gains from trade because countries that produce a good at the lowest cost have a comparative advantage in the production of that good.

Question 23

1 / 1 point

Trade based on comparative advantage benefits: consumers in all countries.

consumers in some countries but hurts consumers in other countries. neither producers nor consumers. producers in all countries but not consumers. View Feedback Question 24 1 / 1 point

The Apple iPod was designed by Apple in the U.S., manufactured in factories in Asia, and sold throughout the world. Apple's use of Asian manufacturers to produce the iPod is an example of: insourcing. outsourcing. the law of one price. nanotechnology. View Feedback Question 25 1 / 1 point

The text argues that the U.S. has had a comparative advantage in goods and services that: require creativity and innovation. are artistic and well-crafted. are mass produced. are luxury goods. View Feedback Question 26 1 / 1 point

How does the text define the law of one price? It is illegal to pay different people different amounts for the same work. It is illegal to charge different people different amounts for the same product. Competition, combined with transferable goods and resources, drives prices of similar goods toward equality. There is a tendency for companies to keep prices fixed because the cost of making changes is often high.

View Feedback Question 27 0 / 1 point

Which of the following factors will help the United States regain comparative advantages in industries where it has lost comparative advantages? The value of the U.S. dollar falls. The value of the U.S. dollar rises. The U.S. imports more goods. Wages in the United States rise. View Feedback Question 28 1 / 1 point

Refer to the graphs below.

Which of the shifts explains what would happen to the production possibility curve if the cost of producing books goes down while the cost of producing CDs goes up? I II III IV View Feedback Question 29 1 / 1 point

If there is a direct relationship between two variables, then the graph relating these two variables will be: upward sloping. downward sloping. vertical.

horizontal. View Feedback Question 30 1 / 1 point

The production-possibilities frontiers of Northland and Southland are given above. If these countries trade, which of the following points would be on their combined or joint production-possibilities frontier? 60 apples and 0 bananas 60 apples and 5 bananas 60 apples and 10 bananas 60 apples and 20 bananas View Feedback Chapter 3 Which of the following is not an example of government's role as a referee? Equal opportunity and labor laws that restrict businesses' freedom to hire and fire whomever they want. Regulations governing safety in the workplace, wages, overtime, and hours of work. Laws prohibiting businesses from meeting to fix prices. Laws that require states and the federal government to balance their budgets. View Feedback Question 2 1 / 1 point

Which of the following is a good example of government's attempt to correct for macroeconomic externalities? Preventing excessive amounts of pollution. Providing public goods. Maintaining full employment.

Providing for smoke-free public spaces. View Feedback Question 3 1 / 1 point

The tax revenues of federal, state, and local governments have different sources, in that the federal government relies primarily on: income taxes; state and local governments rely to a greater extent on sales and property taxes. sales and property taxes; state and local governments rely to a greater extent on income taxes. excise and property taxes; state and local governments rely on sales taxes. sales taxes; state and local governments rely on excise and property taxes. View Feedback Question 4 Capitalism: is based on private property and the market. does not have a rationing mechanism. gives private property rights to government. relies on market forces to establish initial property rights. View Feedback Question 5 1 / 1 point 1 / 1 point

A primary goal of the World Bank is to: channel low-interest loans to developing countries to foster economic growth. work out repayment plans for developing countries with large international debt. finance private investment projects around the world. negotiate trade agreements between nations. View Feedback Question 6 1 / 1 point

In the goods market: households supply factors of production to business and are paid by business for doing so. households supply goods to business and are paid by businesses for doing so. business produces goods and services and sells them to households and government. government produces goods and services and supplies them to households and business. View Feedback Question 7 1 / 1 point

Which of the following was one of Marx's predictions? Capitalism would evolve into feudalism. Competition among capitalists would benefit workers. Firms would become larger and larger. Capitalism in its pure form was benevolent. View Feedback Question 8 1 / 1 point

Enron executives were charged with numerous counts of corporate fraud and corruption. Among the charges was "insider trading", which involves the trading of a corporation's stock by insiders who may have access to information that the public does not. Which role is the government playing when it makes insider trading illegal? Providing for public goods. Promoting effective and workable competition. Correcting for externalities. Adjusting for undesirable market results. View Feedback Question 9 1 / 1 point

In the United States, government performs all of the following functions except: redistributing income. purchasing goods and services.

regulating the economy. determining production levels. View Feedback Question 10 1 / 1 point

Markets coordinate economic activity through: the price mechanism. commanding individuals what to do. asking individuals what to do. the legal mechanism. View Feedback Question 11 0 / 1 point

Most economies today are: pure market economies. differentiated primarily by the degree to which they depend on markets. differentiated primarily by who owns the means of production. socialist. Hide Feedback

Virtually all economies in the world today rely on markets to allocate resources. What differentiates modern economies is the degree of reliance on markets, not whether or not markets are present.

Question 12

1 / 1 point

In principle, socialism is: less concerned about fairness than capitalism. just as concerned about fairness as capitalism. more concerned about fairness than capitalism.

not concerned about fairness at all. View Feedback Question 13 1 / 1 point

Suppose that at the current price consumers would like to purchase 10 million large-screen televisions and 15 million are available. When the market coordinates the demand and supply for large-screen televisions, the price of large-screen televisions will: rise. fall. stay the same. be fixed by the government. View Feedback Question 14 1 / 1 point

A firm's profits equal $100 if: its total revenue is $100. the sum of its total revenue and its total cost is $100. the difference between its total revenue and its total cost is $100. its total cost is $100. View Feedback Question 15 0 / 1 point

Business decisions about what and how much to produce are based on what: maximizes market share. consumers want. the government wants. maximizes profits. Hide Feedback

Businesses decisions are based primarily on how they affect profits.

Question 16

1 / 1 point

One advantage of a corporation over a sole proprietorship is: greater accountability. avoidance of double taxation. ease of formation. greater ability to obtain funds. View Feedback Question 17 1 / 1 point

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act? Preventing large fluctuations in exchange rates. Maintaining a constant level of consumer expenditure. Providing an economic environment conducive to growth. Ensuring that employers pay workers a minimum wage sufficient to escape poverty. View Feedback Question 18 1 / 1 point

A business is likely a sole proprietorship if: it has two or more owners, with each owner liable for every other owner's actions. it has only one owner who has unlimited liability. it is legally treated as a person and owned by stockholders who are liable for the actions of the corporate "person." multiple owners are liable only to the extent of their own investment. View Feedback Question 19 1 / 1 point

The Marxist critique of capitalism was based on the notion that:

a capitalist system ignored traditional class roles. efficient allocation of resources was not a worthwhile goal. the proletariat class exploited the capitalist class, which created all the value inherent in goods. the capitalist class exploited the proletariat class, which created all the value inherent in goods. View Feedback Question 20 0 / 1 point

New developments in computer monitors have made flat panel LCD's cheaper and better than the older CRT models. Given that monitors can contain as much as 8 pounds of lead. Disposing of the old monitors creates a: Negative externality Positive externality Neutral externality Limited liability Hide Feedback

An externality is a cost or benefit from an economic transaction that affects other parties. Externalities can be either positive or negative, and in this case it is a negative externality.

Question 21

0 / 1 point

Suppose a single firm gains control of an industry by preventing other firms from entering the industry. As a result, the price charged by the single firm is much higher than the price that would be charged by many different firms producing this product in a competitive market. This situation can best be described as: a market failure. a government failure. an efficient outcome. a competitive outcome.

Hide Feedback

One of the justifications for government's role in the economy is to promote competition. The reason for this is that the monopoly equilibrium (in which price exceeds marginal cost) is inefficient, resulting in market failure.

Question 22

1 / 1 point

Assuming government's goal is to benefit society as much as possible: actions with negative and positive externalities should be encouraged. actions with negative and positive externalities should be restricted. actions with negative externalities should be encouraged and actions with positive externalities should be restricted. actions with negative externalities should be restricted and actions with positive externalities should be encouraged. View Feedback Question 23 Households are on the: supply side of factor markets and the demand side of goods markets. demand side of factor markets and the supply side of goods markets. supply side of both factor markets and goods markets. demand side of both factor markets and goods markets. Hide Feedback 0 / 1 point

Households supply labor to business in the factor market and demand goods and services from business in the goods market.

Question 24

1 / 1 point

A market economy: requires government to set prices. allocates according to need. distributes property rights. expects people to be self-interested. View Feedback Question 25 1 / 1 point

Socialism in theory is based on the principle that individuals should: look out for their own interests and let the government look out for the public interest. rely on the government to meet their needs. cooperate with one another to meet their needs. compete with one another to meet their needs. View Feedback Question 26 1 / 1 point

"Welfare capitalism" is an economic system in which: markets operate without government regulation. government owns all of the means of production. markets operate, but government regulates markets significantly. laissez-faire operates unimpeded. View Feedback Question 27 1 / 1 point

Market economies are based upon: private property and individual good will towards others. government planning and individual good will towards others. government planning and individual self-interest.

private property and individual planning. View Feedback Question 28 1 / 1 point

Behavioral economists have found that: people weigh only costs and benefits when making decisions. people's decisions are affected by how the choice is presented. people react negatively when a choice is framed. government's attempt to frame choices cannot overcome the cost/benefit method of making decisions. View Feedback Question 29 1 / 1 point

A public good is a good that: is owned by the public. when consumed by one individual, can still be consumed by others. when consumed by one individual, cannot be consumed by another. is available only to those people who help to pay for it. View Feedback Question 30 1 / 1 point

Which of the following would most likely generate a positive externality? Roller coaster rides. Pollution. Alcoholic beverages. Education.

Quiz: chapter four

Question 1

1 / 1 point

Refer to the graphs above. The market is caviar. Which graph best represents the impact of an increase in consumer incomes on the market for caviar? Graph A Graph B Graph C Graph D View Feedback Question 2 1 / 1 point

According to the law of supply, what will motivate firms to increase their quantity supplied of a product? production cost fixed cost price supply View Feedback Question 3 1 / 1 point

If the price in a market is above its equilibrium level, there will be a: surplus and downward pressure on price. surplus and upward pressure on price. shortage and downward pressure on price. shortage and upward pressure on price. View Feedback Question 4 0 / 1 point

In the early 2000s car sales in China had slowed in part caused by the government's actions to limit businesses from lending funds to consumers. Assuming the car market in China can be analyzed with demand and supply curves, what best reflects the change in the market? Demand curve shifts to the left with no change in supply. Supply curve shifts to the left with no change in demand. Both the supply and demand curves shift to the left. Both the supply and demand curves shift to the right. Hide Feedback

The impact is from the buyers. The demand curve has moved left. Sellers are now reacting to that change, but their reaction is a movement along their supply curves, not a change in the curve. (It is not clear that this market has a supply curve because it is not all that competitive a market.). Source-BusinessWeek Online, September 13, 2004.

Question 5

1 / 1 point

Refer to the graphs above. The arrow that best shows an increase in supply is: W X Y Z View Feedback Question 6 0 / 1 point

Refer to the graph above. If price changes from $.50 to $2.00, what will be the change in the market quantity supplied?

1 CDs per week. 6 CDs per week. 7 CDs per week. 8 CDs per week. Hide Feedback

Market quantity is the sum of individual quantities supplied at each price. At price of $0.50, Ann supplies 1, Barry supplies 0, Charlie supplies 0. Market supply is 1. At price of $2.00, Ann supplies 4, Barry supplies 3, Charlie supplies 0. Change in market supply is 6.

Question 7

1 / 1 point

Refer to the graph above. If the price is changed from $12.00 to $4.00, the quantity demanded increases by: 2 CDs per week. 4 CDs per week. 6 CDs per week. 8 CDs per week. View Feedback Question 8 1 / 1 point

According to the law of demand, only the price of a good influences the amount people will choose to purchase. True False View Feedback Question 9 1 / 1 point

Suppose a market has an excess demand and price starts to rise. What will the rise in price cause? A fall in both quantity supplied and quantity demanded. A rise in both quantity supplied and quantity demanded. A rise in quantity supplied and a fall in quantity demanded. A fall in quantity supplied and a rise in quantity demanded. View Feedback Question 10 0 / 1 point

Refer to the graph above. A shift from S0 to S1 would most likely occur for what reason? A decrease in the number of suppliers in the market. An increase in taxes levied on producers of CDs. An increase in the price of CDs. A decrease in the cost of producing CDs. Hide Feedback

An increase in the number of suppliers causes supply to shift rightward. Higher taxes and higher production costs cause supply to shift leftward. A change in price causes a movement along supply, not a shift.

Question 11

0 / 1 point

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

C D View Feedback Question 12 1 / 1 point

Refer to the table above that presents Mike and Janet's demand for apples by the peck. If they are the only two in the market, which of the following represents a point on the market demand curve? Price = $1, Quantity = 18 Price = $2, Quantity = 21 Price = $4, Quantity = 0 Price = $4, Quantity = 21 View Feedback Question 13 1 / 1 point

To derive a market demand curve from individual demand curves, it would be necessary to: take the maximum quantity of each demand curve as the market quantity demanded at each price. sum the curves horizontally, adding quantities demanded at each price. take the demand curve that is the furthest to the right as the market demand curve. multiply the quantities demanded on each demand curve at each price to find the market quantity demanded at each price. View Feedback Question 14 0 / 1 point

If the price of movies on DVD rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will: substitute movies on DVD for movies on the Internet. substitute movies on the Internet for movies on DVD.

buy only movies on DVD. buy only movies on the Internet. Hide Feedback

The law of demand is based on the principle that consumers will substitute away from products that have become relatively more expensive; this does not mean that they will necessarily stop buying more expensive products.

Question 15

0 / 1 point

Refer to the graphs above. The market is computers. Which graph best represents the impact of cheaper memory chips on the computer market? Graph A Graph B Graph C Graph D Hide Feedback

A cheaper memory chip would lower the cost of producing computers, shifting the supply curve for computers to the right. Graph (d) shows this.

Question 16

1 / 1 point

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 quantity supplied goes up.

down, the supply goes down. View Feedback Question 17 1 / 1 point

Graphically, a change in price causes: both supply and demand to shift. the demand curve to shift. a movement along a given supply curve, not a shift. the supply curve to shift. View Feedback Question 18 1 / 1 point

The use of the phrase "other things constant" in supply and demand analysis indicates that: an equilibrium price has been reached. an equilibrium quantity has been reached. we are considering changes in just one factor. we are considering all the changes which might take place in actual markets. View Feedback Question 19 1 / 1 point

When the number of Alaskan fishermen increased, salmon prices fell to record lows. This could be shown graphically by a shift in: the demand curve right the supply curve left the demand curve left the supply curve right View Feedback Question 20 1 / 1 point

If quantity supplied exceeds quantity demanded, there is a tendency for:

price to fall to restore equilibrium. price to rise 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. View Feedback Question 21 0 / 1 point

Given the following supply table, an increase in the price of pants from $30 to $50 per pair will increase the:

supply of pants by 200 pairs. quantity of pants supplied by 200 pairs. supply of pants by 700 pairs. quantity supplied by 500 pairs. Hide Feedback

A supply table tells you the quantity of goods supplied at various prices. To read the table, find the price on the left and read the corresponding quantity supplied on the right. At $30 quantity supplied is 500 pairs per week. At $50 a pair, quantity supplied is 700 pairs per week. Quantity supplied increases by 200 pairs.

Question 22

1 / 1 point

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

View Feedback Question 23 1 / 1 point

Tuition and fees for four year colleges in the United States have risen over five percent per year in the recent past. One cause for the increase in price has been an increase in demand for college education. In the standard model, what could be a possible explanation for the increase in the demand for college education? More colleges have been established. The cost of two-year colleges has declined over the same period. Income in the United States has risen. The price of all other goods in the economy has risen 3 percent over the same period. View Feedback Question 24 1 / 1 point

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied: equals quantity demanded, prices don't change. exceeds quantity demanded, prices have a tendency to rise. is less than quantity demanded, prices tend to fall. equals quantity demanded, prices will fall. View Feedback Question 25 1 / 1 point

Refer to the graphs above. The effect of an increase in price is best shown by which arrow? A B C D View Feedback

Question 26

1 / 1 point

Consider the following demand table and the graph below.

Which of the demand curves best reflects the demand table? A. B. C. D. View Feedback Question 27 1 / 1 point

Which of the following would cause quantity demanded to change without changing the demand curve? A change in income. A change in the price of the good. A change in tastes and preferences. A change in the price of a substitute good. View Feedback Question 28 0 / 1 point

The price of a ticket to the Grateful Dead concert is set at $35. All the tickets for the concert sell out one hour after they go on sale and there are still 1000 fans who want to buy tickets. It follows that: 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 quantity of tickets demanded is equal to the quantity supplied at the $35 price. Hide Feedback

At $35 per ticket, quantity demanded exceeds quantity supplied, so $35 cannot be equilibrium price. To eliminate the shortage, price would have to rise.

Question 29

0 / 1 point

The law of supply states that, other things constant, there is: 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 supply. Hide Feedback

The law of supply states that more of a good will be supplied the higher its price, other things constant, and less of a good will be supplied the lower its price, other things constant. That is, there is a direct relationship between price and quantity supplied. The relationship is between quantities supplied, NOT supply.

Question 30

1 / 1 point

Suppose the above supply and demand tables reflect the supply and demand for milk per week. What is the equilibrium price and quantity of milk? $1 per gallon and 2,000 gallons per week. $2 per gallon and 1,500 gallons per week. $3 per gallon and 2,000 gallons per week. $4 per gallon and 2,000 gallons per week. View Feedback

Question 31

1 / 1 point

Refer to the graph above. At a price of $1.20 per dozen: there is a surplus of 2,000 dozen eggs per week. there is a surplus of 3,000 dozen eggs per week. there is a shortage of 2,000 dozen eggs per week. the market is in equilibrium. View Feedback Question 32 1 / 1 point

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 incomes of consumers. The preferences of consumers for the good. View Feedback Question 33 0 / 1 point

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to: increase the demand for diesel cars. decrease the demand for gasoline. decrease the demand for diesel cars. increase the demand for gasoline. Hide Feedback

The change in the price of gasoline causes a movement along the demand for gasoline curve, not a shift. Higher gasoline price lead to an increase in the demand for diesel cars as consumers seek to take advantage of better gas mileage. In a third-party payer system: total expenditures generally fall. total expenditures generally rise. quantity demanded generally falls. quantity supplied generally falls. View Feedback Question 2 0 / 1 point

When a country imposes a tariff: the domestic price of the imported good falls. domestic consumption of the imported good falls. domestic production of the good falls. domestic production of the good is unchanged. Hide Feedback

A tariff shifts the supply of the imported good to the left resulting in a higher price and lower quantity consumed. Domestic production rises.

Question 3

1 / 1 point

The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result? Excess demand for milk. Excess supply of milk. Neither a shortage nor a surplus of milk.

A decline in the price of milk. View Feedback Question 4 1 / 1 point

Taxi medallions were issued in New York City to: help commuters afford transportation. increase the wages of taxi drivers. help new immigrants find jobs. raise revenue for the city. View Feedback Question 5 0 / 1 point

Refer to the graph below.

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

A price floor is a government-imposed limit on how low a price can be charged. To be effective, a price floor must be above equilibrium price. Since $2 is below equilibrium price, the price floor is not effective and quantity demanded equals quantity supplied at $3.

Question 6

1 / 1 point

Honus Wagner, a major league baseball player from 1897 to 1917 and one of the first five men inducted into the Baseball Hall of fame, had his baseball card pulled from cigarette packs because he wasn't being paid for their distribution. What best describes the effect of his action on the market for his baseball card? Supply shifted to the left, price rose, and quantity demanded fell. Supply shifted to the left, price rose, and demand shifted to the left. Demand shifted to the left, price fell, and quantity supplied fell. Demand shifted to the left, price fell, and supply fell. View Feedback Question 7 1 / 1 point

The U.S. postal service printed 150,000 sheets of a stamp depicting Bill Pickett, but recalled them when the postal service realized the image on the stamp was Bill's brother, Ben instead. They were unable to recall 183 sheets that had already been sold. The effect of this recall was to: drastically reduce the demand for the stamps, causing their equilibrium price to fall. have no effect on either supply of or demand for the Bill Pickett stamps because there is no market for them. drastically reduce the supply of the Bill Pickett stamps, causing their equilibrium price to rise. drastically reduce the supply of the Bill Pickett stamps, causing their equilibrium price to fall. View Feedback Question 8 1 / 1 point

Which price ceiling will cause the greatest excess demand?

$1 $2 $3 $4

View Feedback Question 9 0 / 1 point

Season tickets to the Chicago Bulls games are sold out at $30 a game and some people who wanted to get tickets couldn't buy them. As the season progresses, it is clear that the Bulls will make it to the playoffs. What is the effect on resale price of tickets to Chicago Bulls games, assuming resale is legal? Resale price will remain at $30 a game. Resale price will rise and quantity supplied will rise. Resale price will rise and supply will rise. Resale price will decline as supply rises. View Feedback Question 10 0 / 1 point

Refer to the graph above. If sellers receive a price of $15, quantity supplied will equal: 25 50 75 100 Hide Feedback

Read the quantity supplied from the supply curve.

Question 11

1 / 1 point

An increase in price and decrease in quantity are consistent with a: leftward shift in demand and no shift in supply. leftward shift in supply and no shift in demand.

rightward shift in supply and a rightward shift in demand. rightward shift in supply and a leftward shift in demand. View Feedback Question 12 1 / 1 point

To keep the price of gas from rising quickly after Katrina, the government instituted price ceilings on the price of gasoline in some states. These price ceilings caused ______ in the gasoline market. surpluses movement of the demand curve movement along the demand curve shortages View Feedback Question 13 1 / 1 point

Refer to the graph below.

A price ceiling would be binding, resulting in a market shortage if it is set at. $3.00 $2.25 $1.50 either $3.00 or $1.50 View Feedback Question 14 1 / 1 point

New York City has been experiencing a housing emergency for quite some time. Apartments are difficult to come by. In fact, the vacancy rate has been below 5 percent since World War II. The most likely cause of the housing emergency is: a price floor on rent higher than equilibrium price.

a price ceiling on rent lower than equilibrium price. too high incomes in New York City. a lack of a rationing mechanism to distribute existing apartments. View Feedback Question 15 1 / 1 point

Online music stores such as Apple's iTunes provide an alternative to buying CDs. The introduction of online music stores has shifted: the supply curve of CDs to the right. the supply curve of CDs to the left. the demand curve of CDs to the right. the demand curve of CDs to the left. Hide Feedback

The development of a substitute for CDs affects the buyers and makes them less willing to buy CDs. The demand curve for CDs shifts left.

Question 16

1 / 1 point

A Wall Street Journal headline reads: "Cigar Shortage Draws New Brands into Market." The shortage resulted from a renewed interest in smoking cigars. What best describes the facts behind the headline? Price is too low, demand exceeds supply. Price is too low, quantity demanded exceeds quantity supplied. The cigar market is in equilibrium. A shift in supply has equilibrated supply and demand. View Feedback Question 17 1 / 1 point

A company switches from a medical plan that covered all medical costs to a medical plan with a high deductible, making employees responsible for the first $1,500 of healthcare costs. Other things the same, a higher deductible is expected to: reduce both medical claims and hospital admissions. increase both medical claims and hospital admissions. reduce medical claims and increase hospital admissions. increase medical claims and reduce hospital admissions. View Feedback Question 18 0 / 1 point

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 collected on each gallon of gasoline sold. A tax that is levied on the value of land and buildings. Hide Feedback

An excise tax is a tax that is levied on a specific good, like gasoline. Taxes on capital gains, employment taxes, and export taxes are not good examples of an excise tax.

Question 19

1 / 1 point

Suppose that a consumer has a health insurance program with co-payments of $10 per doctor visit. If the consumer purchases 6 doctor visits and the bill charged by the doctor for 6 visits is $360, the portion of this cost covered by a third-party payer is:

$60 $300 $360

$420 View Feedback Question 20 0 / 1 point

Refer to the graph above that depicts a third-party payer market for prescription drugs. If the copayment is $2 per pill, what will be the total market expenditures on prescription drugs? $30 $90 $270 $540 View Feedback Question 21 1 / 1 point

Suppose the price of tomatoes dramatically increases. Which of the following could cause this change? Hurricanes during the late summer damage the Florida crop, shifting supply left. A reduction in tariffs of tomatoes from Central American, shifting supply right. A news report stating that a pesticide used on tomatoes might cause cancer, shifting the demand to the right. Advertising for catsup increases demand for catsup, shifting the demand curve to the left. View Feedback Question 22 1 / 1 point

A number of states have a minimum wage that is higher than the federal minimum. In those states that impose a minimum wage above $7.25 an hour, it is more likely that the minimum wage acts as a binding: price floor, causing excess supply in the market. price floor, causing excess demand in the market. price ceiling, causing excess supply in the market.

price ceiling, causing excess demand in the market. View Feedback Question 23 1 / 1 point

Recently Stuyvesant Town and Peter Cooper Village in Manhattan were sold for redevelopment. These villages had been rent controlled, but now that these neighborhoods are no longer rent controlled, one would expect: the houses to be not as well maintained since rent will be so high. the housing shortage in the neighborhood to worsen. the rent to rise in those neighborhoods. the quantity of rentals demanded to rise. View Feedback Question 24 1 / 1 point

Refer to the graphs below.

A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs? I II III IV View Feedback Question 25 1 / 1 point

Refer to the graph above. A quantity restriction of QR will: raise market price to P0. maintain a market price of P1. lower market price to P2. have no effect in the market depicted. View Feedback Question 26 0 / 1 point

At a Chicago Bulls game 20,000 tickets were sold at $30 apiece. The game was sold out and some people did not get tickets. This suggests that the selling price: was at equilibrium. was below equilibrium. was above equilibrium. could not have been any higher. View Feedback Question 27 1 / 1 point

A surplus of a good could possibly be eliminated by: the removal of a price floor. the removal of a price ceiling. a sufficient decrease in demand keeping price constant. a sufficient increase in supply keeping price constant. View Feedback Question 28 1 / 1 point

Refer to the graph above. If government establishes a price floor of $7.25 per hour, there will be a: shortage of 400 labor hours.

surplus of 400 labor hours. shortage of 300 labor hours. surplus of 300 labor hours. View Feedback Question 29 1 / 1 point

Quantity restrictions benefit which group the most? Consumers. Suppliers wanting to enter the market. Existing suppliers. Government. View Feedback Question 30 0 / 1 point

Suppose that a consumer has a health insurance program with $10 co-payment per doctor visit. If the consumer purchases 6 doctor visits and the bill charged by the doctor for 6 visits is $360, the cost per visit paid by a third party is: $40 $50 $60 $70 Hide Feedback

Since 6 visits cost $360, one visit costs $60, with $10 of this paid by the consumer.