Macro Final PASSED Actual Exam
Questions and CORRECT Answers
"Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the
demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for
Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the
following correctly comments on this statement? - CORRECT ANSWER✔✔- The statement
is false because a change in the price of Coke would not change the demand for Coke
The substitution effect of a price change refers to - CORRECT ANSWER✔✔- the change in
quantity demanded that results from a change in price making a good more or less expensive
relative to other goods that are substitutes
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S1 (point A). If there is a surplus of motorcycles
how will the equilibrium point change? - CORRECT ANSWER✔✔- There will be no
change in the equilibrium point
A decrease in the price of pork will result in - CORRECT ANSWER✔✔- a smaller quantity
of pork supplied
Assume that the graphs in this figure represent the demand and supply curves for blu-ray
discs. Which panel best describes what happens in this market if there is a substantial
increase in the price of blu-ray players? - CORRECT ANSWER✔✔- Panel (d)
Which of the following would shift the supply curve for energy drinks to the left? -
CORRECT ANSWER✔✔- a decrease in the number of firms that produce energy drinks
A technological advancement would be represented by a movement from - CORRECT
ANSWER✔✔- S1 to S2
Assume that the graphs in this figure represent the demand and supply curves for frozen
yogurt. Which panel describes what happens in the market for frozen yogurt when the price
of ice cream, a substitute product, increases? - CORRECT ANSWER✔✔- Panel (c)
,At market equilibrium - CORRECT ANSWER✔✔- quantity demanded equals quantity
supplied
When the price of a good rises, consumers buy a smaller quantity because of the ______
effect and the ______ effect - CORRECT ANSWER✔✔- substitution; income
If the price is $25 - CORRECT ANSWER✔✔- there is a surplus of 300 units
Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over
this same period, the price of the components used to produce smartphones has also fallen
and consumer incomes have risen. Which of the following best explains the falling prices of
smartphones? - CORRECT ANSWER✔✔- The supply curve for smartphones has shifted to
the right more than the demand curve has shifted to the right.
If the price of smartphones was to increase, then - CORRECT ANSWER✔✔- the demand
for smartphone apps would decrease
The income effect of a price change results in a - CORRECT ANSWER✔✔- movement
along the demand curve due to a change in purchasing power brought about by the price
change.
At a price of $25, how many units will be sold? - CORRECT ANSWER✔✔- 500
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S2 (point B). If there is an increase in number of
companies producing motorcycles and a decrease in income (assume motorcycles are a
normal good), the equilibrium could move to which point? - CORRECT ANSWER✔✔- C
Several studies have shown promising links between green tea consumption and cancer
prevention. How does this affect the market for green tea? - CORRECT ANSWER✔✔- The
green tea demand curve shifts to the right because of a change in tastes in favor of green tea.
The table above shows the demand schedules for Kona coffee of two individuals (Luke and
Ravi) and the rest of the market. At a price of $6, the quantity demanded in the market would
be - CORRECT ANSWER✔✔- 89 lbs.
, The law of demand implies, holding everything else constant, that as the price of yogurt -
CORRECT ANSWER✔✔- increases, the quantity of yogurt demanded will decrease
A supply curve - CORRECT ANSWER✔✔- is a curve that shows the relationship between
the price of a product and the quantity of the product supplied
The sum of consumer surplus and producer surplus is equal to - CORRECT ANSWER✔✔-
the economic surplus
Deadweight loss refers to - CORRECT ANSWER✔✔- the reduction in economic surplus
resulting from not being in competitive equilibrium
The difference between the lowest price a firm would have been willing to accept and the
price it actually receives from the sale of a product is called - CORRECT ANSWER✔✔-
producer surplus
The difference between the __________ for a good and the __________ is called consumer
surplus - CORRECT ANSWER✔✔- highest price a consumer is willing to pay; price the
consumer actually pays
Because minimum wage is a price floor - CORRECT ANSWER✔✔- it will create a
deadweight loss
To affect the market outcome, a price floor - CORRECT ANSWER✔✔- must be set above
the equilibrium price
A supply curve shows - CORRECT ANSWER✔✔- the marginal cost of producing one more
unit of a good or service
FICA is a payroll tax imposed on employers and workers that is used to fund Social Security
and Medicare. Which of the following statements regarding the tax is true? - CORRECT
ANSWER✔✔- Most economists believe the burden of the tax falls almost entirely on
workers
Questions and CORRECT Answers
"Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the
demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for
Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the
following correctly comments on this statement? - CORRECT ANSWER✔✔- The statement
is false because a change in the price of Coke would not change the demand for Coke
The substitution effect of a price change refers to - CORRECT ANSWER✔✔- the change in
quantity demanded that results from a change in price making a good more or less expensive
relative to other goods that are substitutes
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S1 (point A). If there is a surplus of motorcycles
how will the equilibrium point change? - CORRECT ANSWER✔✔- There will be no
change in the equilibrium point
A decrease in the price of pork will result in - CORRECT ANSWER✔✔- a smaller quantity
of pork supplied
Assume that the graphs in this figure represent the demand and supply curves for blu-ray
discs. Which panel best describes what happens in this market if there is a substantial
increase in the price of blu-ray players? - CORRECT ANSWER✔✔- Panel (d)
Which of the following would shift the supply curve for energy drinks to the left? -
CORRECT ANSWER✔✔- a decrease in the number of firms that produce energy drinks
A technological advancement would be represented by a movement from - CORRECT
ANSWER✔✔- S1 to S2
Assume that the graphs in this figure represent the demand and supply curves for frozen
yogurt. Which panel describes what happens in the market for frozen yogurt when the price
of ice cream, a substitute product, increases? - CORRECT ANSWER✔✔- Panel (c)
,At market equilibrium - CORRECT ANSWER✔✔- quantity demanded equals quantity
supplied
When the price of a good rises, consumers buy a smaller quantity because of the ______
effect and the ______ effect - CORRECT ANSWER✔✔- substitution; income
If the price is $25 - CORRECT ANSWER✔✔- there is a surplus of 300 units
Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over
this same period, the price of the components used to produce smartphones has also fallen
and consumer incomes have risen. Which of the following best explains the falling prices of
smartphones? - CORRECT ANSWER✔✔- The supply curve for smartphones has shifted to
the right more than the demand curve has shifted to the right.
If the price of smartphones was to increase, then - CORRECT ANSWER✔✔- the demand
for smartphone apps would decrease
The income effect of a price change results in a - CORRECT ANSWER✔✔- movement
along the demand curve due to a change in purchasing power brought about by the price
change.
At a price of $25, how many units will be sold? - CORRECT ANSWER✔✔- 500
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S2 (point B). If there is an increase in number of
companies producing motorcycles and a decrease in income (assume motorcycles are a
normal good), the equilibrium could move to which point? - CORRECT ANSWER✔✔- C
Several studies have shown promising links between green tea consumption and cancer
prevention. How does this affect the market for green tea? - CORRECT ANSWER✔✔- The
green tea demand curve shifts to the right because of a change in tastes in favor of green tea.
The table above shows the demand schedules for Kona coffee of two individuals (Luke and
Ravi) and the rest of the market. At a price of $6, the quantity demanded in the market would
be - CORRECT ANSWER✔✔- 89 lbs.
, The law of demand implies, holding everything else constant, that as the price of yogurt -
CORRECT ANSWER✔✔- increases, the quantity of yogurt demanded will decrease
A supply curve - CORRECT ANSWER✔✔- is a curve that shows the relationship between
the price of a product and the quantity of the product supplied
The sum of consumer surplus and producer surplus is equal to - CORRECT ANSWER✔✔-
the economic surplus
Deadweight loss refers to - CORRECT ANSWER✔✔- the reduction in economic surplus
resulting from not being in competitive equilibrium
The difference between the lowest price a firm would have been willing to accept and the
price it actually receives from the sale of a product is called - CORRECT ANSWER✔✔-
producer surplus
The difference between the __________ for a good and the __________ is called consumer
surplus - CORRECT ANSWER✔✔- highest price a consumer is willing to pay; price the
consumer actually pays
Because minimum wage is a price floor - CORRECT ANSWER✔✔- it will create a
deadweight loss
To affect the market outcome, a price floor - CORRECT ANSWER✔✔- must be set above
the equilibrium price
A supply curve shows - CORRECT ANSWER✔✔- the marginal cost of producing one more
unit of a good or service
FICA is a payroll tax imposed on employers and workers that is used to fund Social Security
and Medicare. Which of the following statements regarding the tax is true? - CORRECT
ANSWER✔✔- Most economists believe the burden of the tax falls almost entirely on
workers
