This quiz consists of multiple choice, true/false, and fill-in-the-blank questio

ID: 1220319 • Letter: T

Question

This quiz consists of multiple choice, true/false, and fill-in-the-blank questions. All ten fill-in-the-blank questions, are on supply and demand analysis. for these questions, you may want to draw out the supply and demand curves to help you with your answers. For each blank, enter+ if the variable rises, - if the variable falls, or 0 if there is no change. For example, assume that I wish to describe the change in the widget market if there is an increase in the number of consumers. The answer would look like this:

1. Demand: + (indicating the demand for widgets would go up)

2. Supply: 0 <<< this is a zero, not an o or O. (indicating that the supply of widgets would be unaffected)

3. Equilibrium Price: +(indicating that the equilibrium price of widgets would rise)

4. Equilibrium Quantity Exchanged: + (indicating that the equilibrium quantity of widgets would rise)

5. Determinant that changed: 3 <--- This number refers to the list of Determinants of Demand and Supply as they are listed below. They are numbered differently than the list in the COURSE CONTENTS section. The difference in numbering is for the purposes of this test. The correct answer in this case is 3 because it corresponds to Change in Number of Consumers.

Use this list of Determinants of Demand & Supply to fill in the fifth blank of each of the supply and demand question on the quiz. Enter the number rather than writing out the determinant.

1) Change in consumer tastes and preferences

2) Chance in consumers’ incomes

3) Change in Number of Consumers

* ) Change in the Price of a Related Goods

4) A change in the price of a product that the consumer considers to be a substitute

5) A change in the price of a product that the consumer considers to be a complement

6) The Consumers Expect the Price of the Product to Change in the Near Future

Determinants of Supply

7) Technological change

* ) Change in Cost of Production

8) prices of resources

9) business taxes

10) Change in Number of Producers

* ) Change in Prices of Related Goods

11) A change in the price of a product that firms consider to be a substitute

12) A change in the price of a jointly produced good (see lecture note on this subject in Module II).

13) The Firms expect the Price of the Product is Expectated to Change in the Near Future

There are ten of these problems, each with five answers. Each answer is worth 1 point, so please think each supply and demand problem out thoroughly. Only one curve shifts per problem. If, say, demand is + or -, supply will be 0. Or, if supply is + or -, demand will be 0. In reality, of course, both are constantly changing, but in our model, only one curve shifts at a time. All other questions are worth 3 points each.

Example: What will happen in the widget market if people start liking widgets more?

Answer:

Demand: +

Supply: 0

Equilibrium Price: +

Equilibrium Quantity: +

Determinant: 1

Another example: What will happen in the zerc market if there is an increase in the price that consumers are willing to pay for widgets (a substitute in production)?

Answer:

Demand: 0

Supply: - (firms will switch from zercs to widgets because they are now more profitable)

Equilibrium Price (of zercs): +

Equilibrium Quantity: -

Determinant: 11

Test Information

Description

Quiz 2 covers the material in chapter 3 -- Demand, Supply and Market Equilibrium . Once you've begun the quiz, you can log out and come back one time -- but just once. I suggest you start the quiz early, read the entire quiz, take notes on questions that seem vague or you don't understand, log out, post your questions or comments to the Quiz 2 forum on the DISCUSSION BOARD, and then come back at some point (before midnight Monday 6/20) to complete and submit it. Some of the questions will require you to distinguish between Demand and Quantity Demanded, as well as Supply and Quantity Supplied. Make sure you understand that distinction before you start.

Instructions

This quiz consists of multiple choice, true/false, and fill-in-the-blank questions. All ten fill-in-the-blank questions, are on supply and demand analysis. for these questions, you may want to draw out the supply and demand curves to help you with your answers. For each blank, enter + if the variable rises, - if the variable falls, or 0 if there is no change. For example, assume that I wish to describe the change in the widget market if there is an increase in the number of consumers. The answer would look like this:

1. Demand: + (indicating the demand for widgets would go up)

2. Supply: 0 <<< this is a zero, not an o or O. (indicating that the supply of widgets would be unaffected)

3. Equilibrium Price: +(indicating that the equilibrium price of widgets would rise)

4. Equilibrium Quantity Exchanged: + (indicating that the equilibrium quantity of widgets would rise)

Use this list of Determinants of Demand & Supply to fill in the fifth blank of each of the supply and demand question on the quiz. Enter the number rather than writing out the determinant.

1) Change in consumer tastes and preferences

2) Chance in consumers’ incomes

3) Change in Number of Consumers

* ) Change in the Price of a Related Goods

4) A change in the price of a product that the consumer considers to be a substitute

5) A change in the price of a product that the consumer considers to be a complement

6) The Consumers Expect the Price of the Product to Change in the Near Future

Determinants of Supply

7) Technological change

* ) Change in Cost of Production

8) prices of resources

9) business taxes

10) Change in Number of Producers

* ) Change in Prices of Related Goods

11) A change in the price of a product that firms consider to be a substitute

12) A change in the price of a jointly produced good (see lecture note on this subject in Module II).

13) The Firms expect the Price of the Product is Expectated to Change in the Near Future

There are ten of these problems, each with five answers. Each answer is worth 1 point, so please think each supply and demand problem out thoroughly. Only one curve shifts per problem. If, say, demand is + or -, supply will be 0. Or, if supply is + or -, demand will be 0. In reality, of course, both are constantly changing, but in our model, only one curve shifts at a time. All other questions are worth 3 points each.

Example: What will happen in the widget market if people start liking widgets more?

Answer:

Demand: +

Supply: 0

Equilibrium Price: +

Equilibrium Quantity: +

Determinant: 1

Another example: What will happen in the zerc market if there is an increase in the price that consumers are willing to pay for widgets (a substitute in production)?

Answer:

Demand: 0

Supply: - (firms will switch from zercs to widgets because they are now more profitable)

Equilibrium Price (of zercs): +

Equilibrium Quantity: -

Determinant: 11

Multiple Attempts

This test allows 2 attempts. This is attempt number 1.

Force Completion

This test can be saved and resumed later.

Question Completion Status:

QUESTION 1

1. Which of the following statements is true?

When the price of an item goes up, the demand for that item will go down.

An increase in the demand for an item will cause the price of that item to go up.

An increase in the supply of an item will cause the price of that item to go up.

When the price of an item goes up, the supply of that item will go down.

4 points

QUESTION 2

1. Which of the following statements is false?

There is a direct (possitive) relationship between price and quantity supplied.

There is a direct (positive) relationship between price and supply.

When the price of an item goes down, the quantity supplied will go down, but the supply will not change.

A change in the supply of an item will cause a change in its price, but a change in the price of an item will not cause a change in its supply.

4 points

QUESTION 3

1. Which of the following statements is true?

A price ceiling set above the equilibrium price, in a particular market, will cause a surplus.

A price floor set below the equilibrium price in a particular market will cause a shortage.

A price ceiling set below the equilibrium price in a particular market will cause a shortage.

A price floor set above the equilibrium price, in a particular market, will have no effect on that market.

4 points

QUESTION 4

1. Which of the following is true?

A price ceiling on gasoline, set below its current equilibrium price, would assure that everyone would be able to buy gasoline at an affordable price.

A price floor for a resource, such as the minimum wage, set above its equilibrium price, would increase the demand for that resource.

A price ceiling on some item, set below its equilibrium price, creates rationing problems.

Rent control is an example of a price floor.

4 points

QUESTION 5

1. In the factor market, as shown in the circular flow diagram on page 43 in the textbook, the household does the supplying and the firm does the demanding.

True

False

4 points

QUESTION 6

1. A decrease in the price of an item, say a widget, will cause:

The demand for an item to ris

The quantity demanded to rise.

The demand for an item to fall.

The supply of an item to rise.

4 points

QUESTION 7

1. Which of the following is not a determinant of demand?

The price of the item

Consumers’ expectations about their income, wealth and/or the price of the item

Changes in the price of a related good

Household’s income and wealth.

4 points

QUESTION 8

1. Which of the following would cause the supply curve for widgets to shift to the left?

An increase in the price of widgets

An increase in the cost of producing widgets

A decrease in the price of widgets

An increase in the price of zercs, a jointly produced good.

4 points

QUESTION 9

1. Which of the following is not correct? A price ceiling set below the equilibrium price of an item, say a zerc, could result:

A black market where zercs are sold for a price higher than the price ceiling

A shortage of zercs

A surplus of zercs

Queuing for favoritism to replace the price mechanism as a rationing device

4 points

QUESTION 10

1. An argument that some economists make against the minimum wage is that:

If it is too high, it will cause fewer workers to be demanded.

It will decrease production costs and ultimately make the price of the product they produce too low.

It will cause too many workers to be demanded.

All of the above are valid arguments against the minimum wage.

4 points

QUESTION 11

1. A good example of a price floor is rent control.

True

False

4 points

QUESTION 12

1. Suppose you were shopping and saw a widget you’d like to buy – but there was no price tag. After some consideration, you determined that you’d spend as much as $25 to buy the widget. When you inquired about the price to a sales clerk, he said the price was $7. The difference between the two values is known as:

Producer surplus

Consumer surplus

Deadweight loss

None of the above

4 points

QUESTION 13

1. The society as a whole is better off when:

Producer surplus has been maximized and consumer surplus has been minimized

The sum of producer and consumer surplus is zero.

Consumer surplus has been mazimized and producer surplus has been minimized.

The sum of producer and consumer surplus has been maximized

4 points

QUESTION 14

1. In this and the remainder of the questions on this quiz, only one curve shifts per problem. What would happen in the beef market if the government issued a report that red meat can increase the risk of heart attacks?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant: (1-13)

5 points

QUESTION 15

1. What would happen in the beef market if the price of chicken goes down (beef and chicken are considered substitutes by the consumer)?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 16

1. What would happen in the beef market if there was an increase in the price of grain that was used to feed the beef?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 17

1. What would happen in the beef market if there was a technological innovation that allowed slaughter houses to become more efficient and process cattle faster.

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 18

1. What would happen in the beef market (now) if consumers expected the price of beef to rise dramatically on July 1, 2016?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 19

1. What would happen in the American beef market if the Chinese government has decided to feed its people (1.4 billion) American beef?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 20

1. What would happen in the beef market if the government raises taxes on cattle ranchers?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 21

1. What would happen in the beef market if the government reduces income taxes on households?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 22

1. What would happen in the beef market if the vegetarian movement became more popular in America?

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

5 points

QUESTION 23

1. Think this one through carefully. What would happen in the beef market if it became more stylish, and very popular, to wear clothing, carry luggage and purchase furniture made of leather? Keep in mind the explanation of Joint Goods in the ASSIGNMENTS section.

Demand ( + , - , 0 )

Supply ( + , - , 0 )

Equilibrium Price ( + , - , 0 )

Equilibrium Quantity Exchanged ( + , - , 0 )

Determinant (1-13)

Description

Instructions

This quiz consists of multiple choice, true/false, and fill-in-the-blank questions. All ten fill-in-the-blank questions, are on supply and demand analysis. for these questions, you may want to draw out the supply and demand curves to help you with your answers. For each blank, enter + if the variable rises, - if the variable falls, or 0 if there is no change. For example, assume that I wish to describe the change in the widget market if there is an increase in the number of consumers. The answer would look like this:

1. Demand: + (indicating the demand for widgets would go up)

2. Supply: 0 <<< this is a zero, not an o or O. (indicating that the supply of widgets would be unaffected)

3. Equilibrium Price: +(indicating that the equilibrium price of widgets would rise)

4. Equilibrium Quantity Exchanged: + (indicating that the equilibrium quantity of widgets would rise)

Use this list of Determinants of Demand & Supply to fill in the fifth blank of each of the supply and demand question on the quiz. Enter the number rather than writing out the determinant.

1) Change in consumer tastes and preferences

2) Chance in consumers’ incomes

3) Change in Number of Consumers

* ) Change in the Price of a Related Goods

4) A change in the price of a product that the consumer considers to be a substitute

5) A change in the price of a product that the consumer considers to be a complement

6) The Consumers Expect the Price of the Product to Change in the Near Future

Determinants of Supply

7) Technological change

* ) Change in Cost of Production

8) prices of resources

9) business taxes

10) Change in Number of Producers

* ) Change in Prices of Related Goods

11) A change in the price of a product that firms consider to be a substitute

12) A change in the price of a jointly produced good (see lecture note on this subject in Module II).

13) The Firms expect the Price of the Product is Expectated to Change in the Near Future

Example: What will happen in the widget market if people start liking widgets more?

Answer:

Demand: +

Supply: 0

Equilibrium Price: +

Equilibrium Quantity: +

Determinant: 1

Another example: What will happen in the zerc market if there is an increase in the price that consumers are willing to pay for widgets (a substitute in production)?

Answer:

Demand: 0

Supply: - (firms will switch from zercs to widgets because they are now more profitable)

Equilibrium Price (of zercs): +

Equilibrium Quantity: -

Determinant: 11

Multiple Attempts

This test allows 2 attempts. This is attempt number 1.

Force Completion

This test can be saved and resumed later.

Explanation / Answer

(1) (B)

Increase in demand will shift the demand curve to right, resulting in higher price.

(2) (C)

If price falls, quantity supplied falls as well as supply falls.

(3) (C)

If ceiling price is below equilibrium price, quantity demanded is higher than quantity supplied, so there is a shortage.

(4) (C)

If ceiling price is below equilibrium price, quantity demanded is higher than quantity supplied, so there is a shortage. Not every intended beneficiary can buy the good at the ceiling price and it creates a rationing problem.

(5) True

In circular flow model, households supply the factors of production and firms demand the factors of production.

(6) (B)

Quantity demanded rises if own price of the good falls.

(7) (A)

Change in own price is a determinant of quantity demanded, not of demand.

(8) (B)

Higher cost of production reduces supply and shifts supply curve to left.

(9) (C)

A binding price ceiling means quantity demanded exceeds quantity supplied, leading to a shortage & not surplus.

(10) (A)

(11) False

Rent control is example of price ceiling.

(12) Consumer surplus

Consumer surplus = Difference between maximum willingness to pay and actual market price

(13) (D)

When sum of consumer and producer surplus, known as total surplus, is maximized, the society is better off.

Note: First 13 questions are answered.

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