Question 1

Which of the following could shift the demand for a good to the right?

Accepted Answer

A) a decrease in income, if the good is a normal good 
B) an increase in the price of a complementary good 
C) a decrease in the good's price, if the good is normal 
D) an increase in the good's price, if the good is inferior 
E) an expectation of a future price increase 
A) a decrease in income, if the good is a normal good 
B) an increase in the price of a complementary good 
C) a decrease in the good's price, if the good is normal 
D) an increase in the good's price, if the good is inferior 
E) an expectation of a future price increase

Question 2

The law of demand says that the lower the price of a good, other things constant,

Accepted Answer

A) the smaller the demand for that good 
B) the larger the demand for that good 
C) the smaller the quantity demanded of that good 
D) the larger the quantity demanded of that good 
E) the smaller the real income of consumers and the lower the quantity demanded of that good 
A) the smaller the demand for that good 
B) the larger the demand for that good 
C) the smaller the quantity demanded of that good 
D) the larger the quantity demanded of that good 
E) the smaller the real income of consumers and the lower the quantity demanded of that good

Question 3

The effect of a decrease in the price of personal computers, other things constant, is likely to be best represented by which of the following?

Accepted Answer

A) a leftward shift of the demand curve 
B) a movement leftward along the demand curve 
C) a rightward shift of the demand curve 
D) a movement rightward along the demand curve 
E) a rightward shift of the supply curve 
A) a leftward shift of the demand curve 
B) a movement leftward along the demand curve 
C) a rightward shift of the demand curve 
D) a movement rightward along the demand curve 
E) a rightward shift of the supply curve

Question 4

Which of the following events is likely to reduce the demand for on-campus student housing?

Accepted Answer

A) a rise in rents for off-campus housing 
B) more students enrolling at the university 
C) it becomes less fashionable to live "on campus" 
D) a rise in dorm fees 
E) a rise in the incomes of students 
A) a rise in rents for off-campus housing 
B) more students enrolling at the university 
C) it becomes less fashionable to live "on campus" 
D) a rise in dorm fees 
E) a rise in the incomes of students

Question 5

Exhibit 4-3   If the price of the good described in Exhibit 4-3 is $1.50, then

Accepted Answer

A) there is a shortage 
B) there is a surplus 
C) the market is in equilibrium 
D) the quantity supplied is 30 units 
E) the quantity demanded is 30 units 
A) there is a shortage 
B) there is a surplus 
C) the market is in equilibrium 
D) the quantity supplied is 30 units 
E) the quantity demanded is 30 units

Question 6

Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price.Which of the following will happen?

Accepted Answer

A) quantity demanded will decrease 
B) a surplus will develop 
C) a shortage will develop 
D) the quantity sold will rise 
E) the market will remain in equilibrium 
A) quantity demanded will decrease 
B) a surplus will develop 
C) a shortage will develop 
D) the quantity sold will rise 
E) the market will remain in equilibrium

Question 7

As the price of milk increases, producers are normally willing to supply greater quantities.This is known as the law of

Accepted Answer

A) demand 
B) gravity 
C) variable proportions 
D) profitability 
E) supply 
A) demand 
B) gravity 
C) variable proportions 
D) profitability 
E) supply

Question 8

Exhibit 4-1   Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D0 to D1?

Accepted Answer

A) a report that eating corn flakes increases the risk of cancer 
B) a decrease in consumer incomes if corn flakes is a normal good 
C) a decrease in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) a decrease in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession 
A) a report that eating corn flakes increases the risk of cancer 
B) a decrease in consumer incomes if corn flakes is a normal good 
C) a decrease in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) a decrease in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession

Question 9

Disequilibrium occurs when quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 4-8   Based on Exhibit 4-8, a rent ceiling of $750 per month would result in a number of units rented of

Accepted Answer

A) There is not enough information to determine the answer. 
B) 50, 000 
C) greater than 50, 000 but less than 90, 000 
D) 90, 000 
E) 130, 000 
A) There is not enough information to determine the answer. 
B) 50, 000 
C) greater than 50, 000 but less than 90, 000 
D) 90, 000 
E) 130, 000

Question 11

The demand curve for spinach shows the quantity demanded of spinach

Accepted Answer

A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good 
A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good

Question 12

When a market is in equilibrium,

Accepted Answer

A) producers earn profits 
B) the minimum possible price is achieved 
C) there is no incentive for consumers or producers to change their current behavior 
D) excess demand is less than excess supply 
E) the maximum possible price is achieved 
A) producers earn profits 
B) the minimum possible price is achieved 
C) there is no incentive for consumers or producers to change their current behavior 
D) excess demand is less than excess supply 
E) the maximum possible price is achieved

Question 13

The law of demand assumes that as the price of a good increases,

Accepted Answer

A) people recognize that its price may be even higher in the future, so they buy now rather than later 
B) consumers tend to shift their purchases to relatively cheaper substitutes 
C) people will buy less of it in the hope that the good will be cheaper in the future 
D) the consumer's money income increases, and he or she is less able to buy all goods, including the good whose price has increased 
E) the consumer's money income decreases, and if the product is a normal good, more will be purchased 
A) people recognize that its price may be even higher in the future, so they buy now rather than later 
B) consumers tend to shift their purchases to relatively cheaper substitutes 
C) people will buy less of it in the hope that the good will be cheaper in the future 
D) the consumer's money income increases, and he or she is less able to buy all goods, including the good whose price has increased 
E) the consumer's money income decreases, and if the product is a normal good, more will be purchased

Question 14

Exhibit 4-16   Refer to exhibit 4-16.If the market demand for baby formula is given by demand curve D2 and the supply is given by supply curve S2, which of the following is the market equilibrium?

Accepted Answer

A) P1, Q1 
B) P3, Q4 
C) P4, Q3 
D) P2, Q1 
A) P1, Q1 
B) P3, Q4 
C) P4, Q3 
D) P2, Q1

Question 15

Exhibit 4-8   As shown in Exhibit 4-8, when a government sets a rent ceiling at $750 per month, the result is a(n)

Accepted Answer

A) equilibrium 
B) increase in supply 
C) shortage 
D) price floor 
E) surplus 
A) equilibrium 
B) increase in supply 
C) shortage 
D) price floor 
E) surplus

Question 16

Rent controls mean that tenants end up with the best possible housing choices over the long run.

Accepted Answer

A) True 
 B)False

Question 17

The impact of a $200 increase in income on quantity demanded would be called an income effect.

Accepted Answer

A) True 
 B)False

Question 18

The explanation for the law of demand begins with

Accepted Answer

A) a small number of wants satisfied by scarce resources 
B) finite wants satisfied by infinite resources 
C) unlimited wants confronting scarce resources 
D) unlimited wants matching up with unlimited resources 
E) prices acting as signals to existing and potential suppliers 
A) a small number of wants satisfied by scarce resources 
B) finite wants satisfied by infinite resources 
C) unlimited wants confronting scarce resources 
D) unlimited wants matching up with unlimited resources 
E) prices acting as signals to existing and potential suppliers

Question 19

Exhibit 4-1   Consider Exhibit 4-1.Which of the following best represents an increase in quantity demanded?

Accepted Answer

A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from B to D 
A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from B to D

Question 20

Exhibit 4-10   Refer to Exhibit 4-10.A shift from demand curve D to demand curve D' would be caused by a(n)

Accepted Answer

A) decrease in the price of the product under consideration 
B) significant decrease in population because of emigration 
C) increase in consumer income 
D) decrease in the number of producers of the product 
E) increase in the price of a relevant resource 
A) decrease in the price of the product under consideration 
B) significant decrease in population because of emigration 
C) increase in consumer income 
D) decrease in the number of producers of the product 
E) increase in the price of a relevant resource

Exam 4: Demand, Supply, and Markets

Which of the following could shift the demand for a good to the right?

The law of demand says that the lower the price of a good, other things constant,

The effect of a decrease in the price of personal computers, other things constant, is likely to be best represented by which of the following?

Which of the following events is likely to reduce the demand for on-campus student housing?

Exhibit 4-3 If the price of the good described in Exhibit 4-3 is $1.50, then

Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price.Which of the following will happen?

As the price of milk increases, producers are normally willing to supply greater quantities.This is known as the law of

Exhibit 4-1 Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D0 to D1?

Disequilibrium occurs when quantity demanded equals quantity supplied.

Exhibit 4-8 Based on Exhibit 4-8, a rent ceiling of $750 per month would result in a number of units rented of

The demand curve for spinach shows the quantity demanded of spinach

When a market is in equilibrium,

The law of demand assumes that as the price of a good increases,

Exhibit 4-16 Refer to exhibit 4-16.If the market demand for baby formula is given by demand curve D2 and the supply is given by supply curve S2, which of the following is the market equilibrium?

Exhibit 4-8 As shown in Exhibit 4-8, when a government sets a rent ceiling at $750 per month, the result is a(n)

Rent controls mean that tenants end up with the best possible housing choices over the long run.

The impact of a $200 increase in income on quantity demanded would be called an income effect.

The explanation for the law of demand begins with

Exhibit 4-1 Consider Exhibit 4-1.Which of the following best represents an increase in quantity demanded?

Exhibit 4-10 Refer to Exhibit 4-10.A shift from demand curve D to demand curve D' would be caused by a(n)

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 4-1 Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D₀ to D₁?