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Principles of Economics International Edition 10th Edition by Roger A. Arnold – Test Bank
Chapter 5—Supply, Demand, and Price: Applications
MULTIPLE CHOICE
1.Colleges and universities use such things as grade point averages and standardized test scores as
| a. | a measure of consumer utility. |
| b. | non-price rationing devices. |
| c. | a means to shift the supply curve for a college education. |
| d. | solely to frustrate prospective students. |
ANS: B PTS: 1 DIF: Easy NAT: Analytic
LOC:Supply and demandMSC:Application #5
2.If the purchase and sale of a currently illegal drug, such as marijuana, were decriminalized, we would expect
| a. | an increase in demand and supply of this drug. |
| b. | an increase in demand and a decrease in supply of this drug. |
| c. | a decrease in demand and an increase in supply of this drug. |
| d. | a decrease in demand and supply of this drug. |
ANS: A PTS: 1 DIF: Moderate NAT: Analytic
LOC:Supply and demandMSC:Application #11
3.If the purchase and sale of marijuana become legalized
| a. | the equilibrium price and quantity will both rise. |
| b. | the equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts more or the supply curve shifts more. |
| c. | the equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts more or the supply curve shifts more. |
| d. | the equilibrium price and quantity will both fall. |
ANS: C PTS: 1 DIF: Difficult NAT: Analytic
LOC:Supply and demandMSC:Application #11
4.If the government decided to legalize the purchase and sale of marijuana, the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased.
| a. | fall; fall; more |
| b. | fall; rise; more |
| c. | rise; fall; more |
| d. | rise; fall; less |
| e. | none of the above |
ANS: C PTS: 1 DIF: Difficult NAT: Analytic
LOC:Supply and demandMSC:Application #11
5.Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,
| a. | the schools must develop some type of non-price rationing device. |
| b. | it follows that all classes will have a shortage of seats. |
| c. | it follows that all classes will have a surplus of seats. |
| d. | it follows that some classes will likely have a shortage of seats while other classes may have a surplus of seats. |
| e. | a and d |
ANS: E PTS: 1 DIF: Moderate NAT: Analytic
LOC:Supply and demandMSC:Application #10
6.The space on the freeway is fixed at any instant of time. A supply curve that shows this is
| a. | perfectly horizontal. |
| b. | upward sloping. |
| c. | downward sloping. |
| d. | perfectly vertical. |
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC:Supply and demandMSC:Application #6
7.When congestion occurs on the freeway (because of a shortage of freeway space), the economist would say that it is because
| a. | the freeway is too small. |
| b. | there are too many cars. |
| c. | the price of driving on the freeway is below the equilibrium price. |
| d. | a and c |
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC:Supply and demandMSC:Application #6
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