Understanding Economics International Edition 13th Edition by Russell S. Sobel – Test Bank

a.

a decrease in the price of jelly, a good that is often used with peanut butter

b.

the discovery that excessive consumption of peanut butter is harmful to one’s health

c.

crop failures that raise the price of peanuts

d.

the invention of a new product that consumers think is a good substitute for peanut butter

a.

they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses

b.

they will decrease their profits by expanding production at higher prices

c.

the government orders them to do so

d.

lower prices attract new firms, which have higher costs of production

e.

they hire superior quality, higher-priced resources as production expands

a.

Harry is an irrational consumer.

b.

The seller earned a $10,000 profit on the sale of the car.

c.

Harry reaped $10,000 of consumer surplus from the transaction.

d.

The seller received $10,000 worth of producer surplus on the transaction.

a.

higher than the equilibrium price.

b.

equal to the equilibrium price since the number of tickets bought equals the number sold.

c.

lower than the equilibrium price.

d.

higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.

a.

are essentially correct.

b.

contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.

c.

contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand.

d.

contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand) for large cars.

a.

The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price.

b.

The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase.

c.

The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase.

d.

The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them.

a.

consumer surplus will equal producer surplus.

b.

the total value created for consumers will equal the total cost of production for business firms.

c.

all units valued more highly than the opportunity cost of production will be supplied.

d.

all units that have value will be produced, regardless of their cost of production.

a.

increase the supply of corn.

b.

increase the supply of soybeans.

c.

decrease the supply of soybeans.

d.

decrease the supply of corn.

e.

have no effect on the supplies of corn and soybeans.

a.

a decrease in the price of cable will decrease the demand for satellite TV.

b.

an increase in the price of cable will decrease the demand for satellite TV.

c.

an increase in the price of cable will generally have no effect on the demand for satellite TV.

d.

an increase in the price of cable will shift the demand curve for satellite TV to the left.

a.

only if buyers and sellers really care, personally, about economic efficiency.

b.

even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use.

c.

even if business firms fail to produce goods efficiently.

d.

if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely.

a.

supply curve.

b.

demand curve.

c.

production possibilities curve.

d.

consumption curve.

a.

indicates the relationship between the price of the good and the price of other goods.

b.

indicates the quantities of the good that people will buy at various prices.

c.

illustrates the quantity producers will provide at alternative prices.

d.

is determined primarily by the cost of producing the good.

a.

the demand for cookies will fall.

b.

the demand for cookies will rise.

c.

a larger quantity of cookies will be demanded.

d.

a smaller quantity of cookies will be demanded.

a.

the demand for the product.

b.

the quantity demanded at that price.

c.

the amount that people need.

d.

the amount people want to buy at different income levels.

a.

only price and quantity matter in determining demand.

b.

people always want a certain amount of a product.

c.

demand is too important to be left to the economists.

d.

all other determinants of demand are held constant.

e.

demand has a positive slope.

a.

measures the value that a buyer places on a good.

b.

is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.

c.

is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.

d.

is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

a.

If the product price increases, quantity demanded will decrease.

b.

If consumer income increases, quantity demanded will increase.

c.

If the product price increases, quantity demanded will increase.

d.

If consumer income increases, quantity demanded will decrease.

e.

If supply increases, demand will increase.

a.

number of tickets the box office is willing to sell at various prices.

b.

number of people who need tickets.

c.

quality of people who want to buy these concert tickets.

d.

number of tickets that will be purchased at various prices.

a.

Sam’s demand has decreased.

b.

Sam’s demand has increased.

c.

Sam’s quantity demanded has decreased, and his demand has not changed.

d.

Sam’s quantity demanded has increased, and his demand has increased.

e.

Sam’s demand has increased, and his quantity demanded has decreased.

a.

law of comparative advantage.

b.

production possibilities curve.

c.

work of Alfred Marshall who formulated the law.

d.

basic principle of economics: Incentives influence behavior in a predictable fashion.

a.

decrease in price that can be expected as more units of a product are demanded.

b.

increase in price that results from an increase in demand for a good of limited supply.

c.

inverse relationship between the price of a good and the quantity demanded.

d.

increase in the quantity of a good available when its price increases.

a.

would like to have if the good were free.

b.

are willing to buy at various prices.

c.

need to achieve a minimum standard of living.

d.

will buy at alternative income levels.

a.

inverse relationship between the price of a good and the willingness of consumers to buy it.

b.

price increase that results from an increase in demand for a good of limited supply.

c.

inverse relationship between the price of a good and the quantity offered for sale.

d.

increase in the quantity of a good available when its price increases.

a.

every physical good has a use.

b.

when people want a good badly enough, they will find a way to pay for it.

c.

the desire for a good is unrelated to its price.

d.

the quantity of a good that people will buy is inversely related to the price of the good.

a.

producers sell less of it.

b.

producers sell more of it.

c.

consumers buy less of it.

d.

consumers buy more of it.