ECON 202 Test Answers
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
295.
Refer to the above diagram for themilkmarket. In this market, the equilibrium price is and equilibrium quantity is .
A. $1.50 per gallon; 28 million gallons
$1.50 per gallon; 30 million gallons
$28 per gallon; 150 million gallons
$1.00 per gallon; 35 million gallons
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
296.
Refer to the above diagram for themilkmarket. If the price were $2 per gallon,thenthere would be a
shortage of 20 million gallons.
shortage of 10 milliongallons.
C. surplus of 10 milliongallons.
D. surplus of 30 milliongallons.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
297.
Refer to the above diagram for themilkmarket. There would be a shortageof milk wheneverthe price is
higher than $1.50 per gallon.
higher than $2.00 per gallon.
C. lower than $1.50 per gallon.
D. lower than $2.00 per gallon.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
298.
Refer to the above diagram of the market for corn. If theprice in this market is at $4 per bushel, then there will be a
surplus and the price will tendto rise.
shortage and the price will tend to rise.
C. surplus and the price will tendto fall.
D. shortage and the price will tend to fall.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
299.
Refer to the above diagram illustrating the market for corn.Ifthe price in this market is fixed at $2 per bushel, then
A. sellers will not be able to sell all the corn that they intended to sell.
B. sellers will quickly run out of corn that they bring to market.
buyers will find too much corn in the market.
buyers will be able togetas much corn as they wish to buy.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
300.
Refer to the above diagram of the market for corn. Therewillbe a surplus of 8 thousandbushels at the price of
A. $4/bushel.
$3/bushel.
$2/bushel.
$5/bushel.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
Price Per UnitQuantity Demanded Per YearQuantity Supplied Per Year$ 52,0000101,800300151,600600201,400900251,2001,200301,0001,500 301.
Refer to the above table. In this competitive market, the price and quantity will settle at
$10 and 2,000 units.
$15 and 1,600 units.
$20 and 900 units.
D. $25 and 1,200 units.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
Price Per UnitQuantity Demanded Per YearQuantity Supplied Per Year$ 52,0000101,800300151,600600201,400900251,2001,200301,0001,500 302.
Refer to the above table. At a price of $15 per unit, whichof the following would exist?
a shortageof 1,600 units
a surplus of 1,000 units
C. ashortage of 1,000 units
D. a surplus of 600 units
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
Price Per UnitQuantity Demanded Per YearQuantity Supplied Per Year$ 52,0000101,800300151,600600201,400900251,2001,200301,0001,500 303.
Refer to the above table. A surplus of 500 units will occur when the price is
$10 per unit.
$15 per unit.
$20 per unit.
D. $30 per unit.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
The market system automatically correctsa surplus conditionin a competitive market by
raising the price of the commodity in question while increasing the quantitydemanded.
raising the price of the commodity in question while decreasing the quantity demanded.
C. reducing theprice of the commodity in question while increasing the quantity demanded.
D. reducing theprice of the commodity in question whiledecreasing the quantity demanded.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
Which of the following statements about ticket scalping is correct?
A. Scalping tends to be prevalentwhen there is a surplus of tickets.
B. Scalping tends to be prevalent when there is a shortage of tickets.
Scalping benefits only oneparty—the sellers—but not the buyers.
Scalping benefits only one party—the buyers—but not the sellers.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
If an economyis being "productively efficient," then that means the economyis
producing the products most wanted by society.
fully employing all economic resources.
maximizing the returns to factors of production.
D. using theleast costly production techniques.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
Attaining "allocative efficiency" means that
the law of increasing opportunity costs has reached a maximum.
the least costlymethods are being usedto produce a product.
C. resources are being devoted to the production of productsmost desired by society.
D. the gap betweenmarginal benefits and marginal costs of the product is biggest.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
When central planners in a command economy enduphaving a huge surplus of shoes andwidespread shortages of bread intheir economy, they have failed toattain
A. productiveefficiency.
B. allocative efficiency.
minimum opportunity costs.
maximum processand revenues.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
A decrease in supply, holding demand constant, will cause
A. higher prices and a larger quantity sold.
B. higher prices and a smallerquantity sold.
lower prices and a smallerquantity sold.
lower prices and a larger quantity sold.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 01 Easy
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Which of the following statements is correct?(Assume demand is interacting with an upward sloping supplycurve.)
A. If demand increases, then price will decrease.
B. If demand decreases, then price will decrease.
If price increases, thendemand will decrease.
If price decreases, thendemand will decrease.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
An increase in the equilibrium quantity of hybrid cars would be caused by which of the following?
A. anincrease in the demand for hybrid cars
a decrease in the demandforhybrid cars
higher prices of car batteries
lower prices for gasoline
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
A news story states that "DVDs lose their appeal as consumers switchto online streaming for movies." In a competitive market for DVDs,this situation wouldlead to a(n)
A. increase in theprice and the quantitysold of DVDs.
B. decrease in the price and thequantity sold of DVDs.
increase in the price and a decrease in thequantity sold of DVDs.
decrease in the price and an increase in thequantity sold of DVDs.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Last year the price of corn was $3 a bushel and the quantity of corn demandedwas 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demandedwas9 million bushels.Isthis evidence that the law of demand does not apply tocorn?
Yes, because thereis a direct relationship between the price of corn and the quantitysupplied.
Yes, because there is an inverserelationship between the price ofcorn and the quantitydemanded.
C. No,because the other-things-equal assumption was violated over the two-yearperiod.
D. No,because the evidenceindicates that there is a shortageof corn.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
A decrease in the price ofdigital cameras would lead to a(n)
A. increase in theprice and quantitysold of memorycards.
decrease in the price and quantity sold of memorycards.
increase in the price and a decrease in quantity sold of memorycards.
decrease in the price and an increasein quantity sold of memorycards.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
A headline reads, "Lumber Prices UpSharply." In a competitive market, this situation wouldleadto a(n)
increase in theprice and quantityof new homes.
decrease in the price and quantity of new homes.
C. increase in theprice of new homes and decrease in quantity.
D. decreasein the price of new homes andincrease in quantity.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Sometimes, we observecases where the price of a product rose and the quantitybought by buyers also increased. Such cases occur due to a violationof the
Law of Demand.
Law of Supply.
allocative efficiencyrule.
D. ceteris paribus assumption.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: II Topic: Market Equilibrium
A television station reportsthat the price of coffee has increasedand thequantity traded in the market has decreased. This situationwould be caused by a(n)
increase in demand.
increase in supply.
decrease in demand.
D. decrease in supply.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
A newspaperreports that the average price ofnew homes in a certain city had decreased, and the number of new homes sold had also decreased. Thissituation is probablycaused by
A. declining costs of construction materials and services in that city.
B. declining incomes of people in that city.
higher government subsidiesto new homebuyers in that city.
a rising population in that city.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Two months ago,theMaryville Shirt company sold 2,000 shirts at $30 pershirt. Last month the companyraised its price to $35 per shirt and sold 3,000 shirts. Evidently the company experienced a(n)
A. decreasein demand.
B. increase in demand.
decrease in supply.
increase in supply.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
320.
Refer to the above graph showing themarket for a product. Which of the following couldnot explainthe indicated increase in equilibrium price from P1 toP2?
A. an increase in consumer incomes
B. anincrease in production costs
a decrease in the price ofa complementary product
an increase in the price ofa substitute product
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
321.
Refer to the above graph showing the market for a product. Which of the following would best explain why the shift in demand from D1 to D2
would cause price to rise from P1 to P2?
After the shift in the demand,there would be a surplus at price P2.
After the shift in the demand,there would be a shortageat price P2.
C. After the shift in the demand,there would be a shortage at price P1.
D. After the shift in the demand, there would be a surplus at price P1.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
322.
Refer to the above graph,which shows themarket for beef where demandshifted from D1 toD2. The change in equilibrium from E1 toE2 is most likelyto result from
A. adecrease in consumerincomes.
an increasein the cost of cattle feed.
an increasein the price ofpork.
a decrease in thetaxon beef products.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
323.
Refer to the above graph,which shows themarket for beef where demandshifted from D1 to D2. The change in equilibrium from E1 toE2 cannot be a result of
buyers’ expectations of lower prices for beef in the verynear future.
a health reportwarning of the dangers of beef consumption
a widespread concernabout mad-cow disease.
D. adecrease in the productivity of cattle farms.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
324.
Assume that the graphs show a competitive market for theproduct stated in the question.
Select the graph above thatbest shows the change in the market specified in the following situation: themarket for leather coats, when leather coats become more fashionable among young consumers.
A. Graph A
Graph B
Graph C
Graph D
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
325.
Assume that the graphs show a competitive market for theproduct stated in the question.
Select the graph above thatbest shows the change in the market specified in the following situation: themarket for chicken,whenthe price of a substitute, such as beef, decreases.
A. Graph A
B. Graph B
Graph C
Graph D
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
326.
Assume that the graphs show a competitive market for theproduct stated in the question.
Select the graph above thatbest shows the change in the market specified in the following situation: themarket for digital cameras,whenthe productivity of workers in the digital camera industryincreases.
Graph A
Graph B
C. Graph C
D. Graph D
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
327.
Assume that the graphs show a competitive market for theproduct stated in the question.
Select the graph above thatbest shows the change in the market specified in the following situation: themarket for houses, when consumers experience a substantial fall in income due to a serious economic recession.
A. Graph A
B. Graph B
Graph C
Graph D
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Quantity DemandedPriceQuantity Supplied5$7966875784693510241113 328.
Refer to the above table. If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?
A. $3and 5 units
$4 and 6 units
$5 and 7 units
$6 and 8 units
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Quantity DemandedPriceQuantity Supplied5$7966875784693510241113 329.
Refer to the above table. If supplydecreased by 2 units at each price,whatwould the new equilibrium price and quantitybe?
$3 and 5 units
$4 and 4 units
$5 and 5 units
D. $6and 6 units
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
Quantity DemandedPriceQuantity Supplied5$7966875784693510241113 330.
Refer to the above table. If demand decreased by 4 units at each priceand supply decreased by 2 units at each price, what would thenewequilibrium price and quantity be?