Question 1

Exhibit 4-3   If the price of the good described in Exhibit 4-3 is $1.20, then there is a

Accepted Answer

A) shortage of 30 units 
B) surplus of 30 units 
C) shortage of 60 units 
D) surplus of 60 units 
E) surplus of 20 units 
A) shortage of 30 units 
B) surplus of 30 units 
C) shortage of 60 units 
D) surplus of 60 units 
E) surplus of 20 units

Question 2

The sum of the individual demands of all consumers in the market is called

Accepted Answer

A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded 
A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded

Question 3

If the supply of a product increases, then

Accepted Answer

A) more will be purchased at the same price 
B) the price of the product must have declined 
C) demand for the good must have increased 
D) producers are willing to accept a lower price for each unit sold 
E) producers offer less for sale at each possible price 
A) more will be purchased at the same price 
B) the price of the product must have declined 
C) demand for the good must have increased 
D) producers are willing to accept a lower price for each unit sold 
E) producers offer less for sale at each possible price

Question 4

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Accepted Answer

A) True 
 B)False

Question 5

Producers are willing and able to offer greater quantities for sale at higher prices because

Accepted Answer

A) they have the incentive to pay the increasing opportunity cost of resources 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) they have the incentive to pay the increasing opportunity cost of resources 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

Question 6

Exhibit 4-3   If the price of the good described in Exhibit 4-3 is $1.40, then there is a

Accepted Answer

A) shortage of 30 units 
B) surplus of 30 units 
C) shortage of 20 units 
D) surplus of 20 units 
E) surplus of 10 units 
A) shortage of 30 units 
B) surplus of 30 units 
C) shortage of 20 units 
D) surplus of 20 units 
E) surplus of 10 units

Question 7

Which of the following would be most likely to increase the demand for downtown parking in a large city?

Accepted Answer

A) improved bus service to the downtown area 
B) lower downtown parking fees 
C) more downtown parking lots 
D) more freeways leading to the downtown area 
E) a major employer moves to the suburbs 
A) improved bus service to the downtown area 
B) lower downtown parking fees 
C) more downtown parking lots 
D) more freeways leading to the downtown area 
E) a major employer moves to the suburbs

Question 8

The income effect of a decrease in the price of legal services (a normal good)is a(n)

Accepted Answer

A) decrease in the demand for legal services 
B) decrease in the quantity demanded of legal services 
C) increase in the demand for legal services 
D) increase in the quantity demanded of legal services 
E) new demand curve because everything else is no longer constant 
A) decrease in the demand for legal services 
B) decrease in the quantity demanded of legal services 
C) increase in the demand for legal services 
D) increase in the quantity demanded of legal services 
E) new demand curve because everything else is no longer constant

Question 9

Economists

Accepted Answer

A) believe that tastes are the major influence on consumers' income expectations 
B) have observed that tastes vary with changes in the number of consumers 
C) recognize that tastes have an important impact on demand 
D) can say a great deal about the origin of tastes 
E) suspect that tastes can cause a movement along the demand curve 
A) believe that tastes are the major influence on consumers' income expectations 
B) have observed that tastes vary with changes in the number of consumers 
C) recognize that tastes have an important impact on demand 
D) can say a great deal about the origin of tastes 
E) suspect that tastes can cause a movement along the demand curve

Question 10

A leftward shift of a supply curve represents a decrease in supply.

Accepted Answer

A) True 
 B)False

Question 11

A shortage of textbooks will cause

Accepted Answer

A) a decrease in the supply of textbooks 
B) a decrease in the demand for textbooks 
C) both an increase in the supply of textbooks and a decrease in the demand for textbooks 
D) an increase in the price of textbooks, caused by a shift of either the supply curve or the demand curve 
E) an increase in the price of textbooks 
A) a decrease in the supply of textbooks 
B) a decrease in the demand for textbooks 
C) both an increase in the supply of textbooks and a decrease in the demand for textbooks 
D) an increase in the price of textbooks, caused by a shift of either the supply curve or the demand curve 
E) an increase in the price of textbooks

Question 12

Exhibit 4-13   Refer to Exhibit 4-13.If the price increases from P to P', the result will be a(n)

Accepted Answer

A) shortage 
B) equilibrium 
C) clearing of the market 
D) surplus 
E) excess quantity demanded 
A) shortage 
B) equilibrium 
C) clearing of the market 
D) surplus 
E) excess quantity demanded

Question 13

Which of the following is the reason supply curves typically slope upward?

Accepted Answer

A) Opportunity cost of production increases as quantity supplied increases. 
B) Supply increases as opportunity cost decreases. 
C) Price increases as supply decreases. 
D) Quantity supplied is unrelated to price. 
E) The income and substitution effects of a price change. 
A) Opportunity cost of production increases as quantity supplied increases. 
B) Supply increases as opportunity cost decreases. 
C) Price increases as supply decreases. 
D) Quantity supplied is unrelated to price. 
E) The income and substitution effects of a price change.

Question 14

If a certain type of clothing becomes more fashionable, we would expect that its price

Accepted Answer

A) will decrease and quantity will remain constant 
B) and quantity will both decrease 
C) will increase and quantity will decrease 
D) will decrease and quantity will increase 
E) and quantity will both increase 
A) will decrease and quantity will remain constant 
B) and quantity will both decrease 
C) will increase and quantity will decrease 
D) will decrease and quantity will increase 
E) and quantity will both increase

Question 15

The substitution effect of a change in the price of bananas refers to the way in which a change in the

Accepted Answer

A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas 
A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas

Question 16

The market supply curve of a particular product indicates the total quantities

Accepted Answer

A) that are actually sold during a given time period 
B) that buyers are willing to purchase at alternative prices 
C) that sellers are willing and able to offer at alternative prices 
D) that sellers are willing to offer for sale 
E) of complements offered for sale 
A) that are actually sold during a given time period 
B) that buyers are willing to purchase at alternative prices 
C) that sellers are willing and able to offer at alternative prices 
D) that sellers are willing to offer for sale 
E) of complements offered for sale

Question 17

Exhibit 4-3   If the price of the good described in Exhibit 4-3 is $1.60, then an economist would expect the

Accepted Answer

A) price to decrease to $1.40 
B) price to decrease to $1.50 
C) quantity supplied to increase to 50 units 
D) quantity demanded to increase to 80 units 
E) quantity demanded to increase to 90 units 
A) price to decrease to $1.40 
B) price to decrease to $1.50 
C) quantity supplied to increase to 50 units 
D) quantity demanded to increase to 80 units 
E) quantity demanded to increase to 90 units

Question 18

Exhibit 4-7   In Exhibit 4-7, which of the following is true at the price ceiling, P?

Accepted Answer

A) The excess quantity supplied equals 300 gallons. 
B) The excess quantity demanded equals 300 gallons. 
C) The excess quantity supplied equals 500 gallons. 
D) The excess quantity demanded equals 800 gallons. 
E) Sales will be equal to 800 gallons. 
A) The excess quantity supplied equals 300 gallons. 
B) The excess quantity demanded equals 300 gallons. 
C) The excess quantity supplied equals 500 gallons. 
D) The excess quantity demanded equals 800 gallons. 
E) Sales will be equal to 800 gallons.

Question 19

Which of the following is most likely to be a normal good?

Accepted Answer

A) trips to the laundromat 
B) macaroni-and-cheese dinners 
C) tickets to major league baseball games 
D) bus rides 
E) used paperback books 
A) trips to the laundromat 
B) macaroni-and-cheese dinners 
C) tickets to major league baseball games 
D) bus rides 
E) used paperback books

Question 20

Exhibit 4-2   Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

Accepted Answer

A) a decrease in the price cattle feed 
B) the expectation of a lower price in the near future 
C) an increase in the price of milk 
D) an increase in the price of beef 
E) a decrease in the number of dairy farmers 
A) a decrease in the price cattle feed 
B) the expectation of a lower price in the near future 
C) an increase in the price of milk 
D) an increase in the price of beef 
E) a decrease in the number of dairy farmers

Exam 4: Demand, Supply, and Markets

Exhibit 4-3 If the price of the good described in Exhibit 4-3 is $1.20, then there is a

The sum of the individual demands of all consumers in the market is called

If the supply of a product increases, then

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Producers are willing and able to offer greater quantities for sale at higher prices because

Exhibit 4-3 If the price of the good described in Exhibit 4-3 is $1.40, then there is a

Which of the following would be most likely to increase the demand for downtown parking in a large city?

The income effect of a decrease in the price of legal services (a normal good)is a(n)

Economists

A leftward shift of a supply curve represents a decrease in supply.

A shortage of textbooks will cause

Exhibit 4-13 Refer to Exhibit 4-13.If the price increases from P to P', the result will be a(n)

Which of the following is the reason supply curves typically slope upward?

If a certain type of clothing becomes more fashionable, we would expect that its price

The substitution effect of a change in the price of bananas refers to the way in which a change in the

The market supply curve of a particular product indicates the total quantities

Exhibit 4-3 If the price of the good described in Exhibit 4-3 is $1.60, then an economist would expect the

Exhibit 4-7 In Exhibit 4-7, which of the following is true at the price ceiling, P?

Which of the following is most likely to be a normal good?

Exhibit 4-2 Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exhibit 4-2 Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S₁ to S₂?