Question 1

Recently it has been discovered that lobsters grown on lobster farms can feed on algae, which is a cheaper lobster food.As a result of this discovery,

Accepted Answer

A) the supply curve for lobster will shift to the left 
B) the supply curve for lobster will shift to the right 
C) there will be an increase in the quantity of lobsters supplied 
D) there will be a decrease in the quantity of lobsters supplied 
E) both supply and demand curves will shift to the right 
A) the supply curve for lobster will shift to the left 
B) the supply curve for lobster will shift to the right 
C) there will be an increase in the quantity of lobsters supplied 
D) there will be a decrease in the quantity of lobsters supplied 
E) both supply and demand curves will shift to the right

Question 2

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes.What should happen to the equilibrium price and quantity for shoelaces as a result?

Accepted Answer

A) Both price and quantity should increase. 
B) Both price and quantity should decrease. 
C) Price should increase and quantity decrease. 
D) Price should decrease and quantity increase. 
E) Nothing. 
A) Both price and quantity should increase. 
B) Both price and quantity should decrease. 
C) Price should increase and quantity decrease. 
D) Price should decrease and quantity increase. 
E) Nothing.

Question 3

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100, 000 packs.Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80, 000 packs?

Accepted Answer

A) an increase in the price of other kinds of candy 
B) an increase in the price of the ingredients used to make chewing gum 
C) a decrease in the number of young people in the population 
D) an agreement by workers in the chewing gum industry to work for lower wages 
E) an improvement in chewing gum production technology 
A) an increase in the price of other kinds of candy 
B) an increase in the price of the ingredients used to make chewing gum 
C) a decrease in the number of young people in the population 
D) an agreement by workers in the chewing gum industry to work for lower wages 
E) an improvement in chewing gum production technology

Question 4

Which of the following is not true regarding a change in quantity demanded?

Accepted Answer

A) A change in quantity demanded is shown by a movement along a given demand curve. 
B) The demand curve shifts whenever the quantity demanded changes. 
C) A change in the price of a good, other things constant, will lead to a change in quantity demanded. 
D) The lower the price of a product, other things constant, the higher the quantity demanded. 
E) A shift of the supply curve might cause a change in quantity demanded. 
A) A change in quantity demanded is shown by a movement along a given demand curve. 
B) The demand curve shifts whenever the quantity demanded changes. 
C) A change in the price of a good, other things constant, will lead to a change in quantity demanded. 
D) The lower the price of a product, other things constant, the higher the quantity demanded. 
E) A shift of the supply curve might cause a change in quantity demanded.

Question 5

If supply decreases along a given demand curve,

Accepted Answer

A) an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall 
B) an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise 
C) an excess quantity demanded will be created, raising the equilibrium price and quantity 
D) an excess quantity supplied will be created, lowering the equilibrium price and quantity 
E) price will fall, shifting the demand curve outward, raising the equilibrium quantity 
A) an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall 
B) an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise 
C) an excess quantity demanded will be created, raising the equilibrium price and quantity 
D) an excess quantity supplied will be created, lowering the equilibrium price and quantity 
E) price will fall, shifting the demand curve outward, raising the equilibrium quantity

Question 6

Assume that corn and soybeans are alternatives that could be grown by most farmers.An increase in the price of corn will

Accepted Answer

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) 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

Question 7

If both demand and supply increase, price will

Accepted Answer

A) always increase 
B) always decrease 
C) increase only if supply increases more than demand does 
D) increase only if demand increases more than supply does 
E) decrease only if supply increases less than demand does 
A) always increase 
B) always decrease 
C) increase only if supply increases more than demand does 
D) increase only if demand increases more than supply does 
E) decrease only if supply increases less than demand does

Question 8

An increase in demand for chocolate chips would usually result in a(n)

Accepted Answer

A) higher equilibrium price and a lower equilibrium quantity 
B) lower equilibrium price and a lower equilibrium quantity 
C) lower equilibrium price and a higher equilibrium quantity 
D) higher equilibrium price and a higher equilibrium quantity 
E) increase in the supply of chocolate chips 
A) higher equilibrium price and a lower equilibrium quantity 
B) lower equilibrium price and a lower equilibrium quantity 
C) lower equilibrium price and a higher equilibrium quantity 
D) higher equilibrium price and a higher equilibrium quantity 
E) increase in the supply of chocolate chips

Question 9

Which of the following statements about the substitution effect of a price change is true?

Accepted Answer

A) It is caused by a change in relative prices. 
B) It affects the consumer's ability, rather than willingness, to purchase a good. 
C) It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases. 
D) It is usually equal to the income effect. 
E) It may cause the consumer to buy less of the good when its price falls. 
A) It is caused by a change in relative prices. 
B) It affects the consumer's ability, rather than willingness, to purchase a good. 
C) It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases. 
D) It is usually equal to the income effect. 
E) It may cause the consumer to buy less of the good when its price falls.

Question 10

Which of the following is not likely to cause a change in the supply of wheat?

Accepted Answer

A) a government subsidy to farmers who do not grow wheat 
B) an increase in the price of soybeans 
C) a decrease in the price of fertilizer 
D) a fall in the price of wheat 
E) producers expect product prices to rise 
A) a government subsidy to farmers who do not grow wheat 
B) an increase in the price of soybeans 
C) a decrease in the price of fertilizer 
D) a fall in the price of wheat 
E) producers expect product prices to rise

Question 11

Exhibit 4-16   Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D1 and the supply curve S1, what is the equilibrium price and quantity?

Accepted Answer

A) P1, Q2 
B) P3, Q4 
C) P4, Q3 
D) P2, Q1 
E) P1, Q1 
A) P1, Q2 
B) P3, Q4 
C) P4, Q3 
D) P2, Q1 
E) P1, Q1

Question 12

In the case of a normal good, an increase in consumers' incomes would shift the

Accepted Answer

A) demand curve inward 
B) supply curve inward 
C) supply curve outward 
D) supply and demand curves inward 
E) demand curve outward 
A) demand curve inward 
B) supply curve inward 
C) supply curve outward 
D) supply and demand curves inward 
E) demand curve outward

Question 13

If the price of vanilla ice cream decreases, it is likely that

Accepted Answer

A) demand for vanilla ice cream will increase 
B) demand for vanilla ice cream will decrease 
C) demand for chocolate ice cream will increase 
D) demand for chocolate ice cream will decrease 
E) the quantity demanded of vanilla ice cream will decrease 
A) demand for vanilla ice cream will increase 
B) demand for vanilla ice cream will decrease 
C) demand for chocolate ice cream will increase 
D) demand for chocolate ice cream will decrease 
E) the quantity demanded of vanilla ice cream will decrease

Question 14

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

Accepted Answer

A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs 
A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs

Question 15

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 S0?

Accepted Answer

A) an increase in the price cattle feed 
B) the expectation of a higher price in the near future 
C) an increase in the price of milk 
D) a decrease in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow 
A) an increase in the price cattle feed 
B) the expectation of a higher price in the near future 
C) an increase in the price of milk 
D) a decrease in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow

Question 16

Exhibit 4-16   Refer to exhibit 4-16.The market demand curve is given by D1 and the supply by S1.Equilibrium price is P2 and equilibrium quantity is Q1.What will the new equilibrium price and quantity be if there is an increase in the birth rate?

Accepted Answer

A) P2 and Q1 
B) P1 and Q2 
C) P3 and Q4 
D) P2 and Q2 
E) P4 and Q3 
A) P2 and Q1 
B) P1 and Q2 
C) P3 and Q4 
D) P2 and Q2 
E) P4 and Q3

Question 17

As the price of ballpoint pens increases, the demand for felt-tip pens can be expected to decrease.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would shift the supply curve for a good to the left?

Accepted Answer

A) an increase in the price of that good 
B) a decrease in the price of an alternative good 
C) an improvement in technology for producing that good 
D) an increase in the cost of an important resource used to make that good 
E) an increase in the number of producers 
A) an increase in the price of that good 
B) a decrease in the price of an alternative good 
C) an improvement in technology for producing that good 
D) an increase in the cost of an important resource used to make that good 
E) an increase in the number of producers

Question 19

Which of the following would not cause the demand curve for peaches to shift?

Accepted Answer

A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers 
A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers

Question 20

In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate?

Accepted Answer

A) supply decreases and demand increases 
B) demand decreases and supply increases 
C) demand remains constant and supply increases 
D) supply decreases and demand decreases 
E) supply remains constant and demand increases 
A) supply decreases and demand increases 
B) demand decreases and supply increases 
C) demand remains constant and supply increases 
D) supply decreases and demand decreases 
E) supply remains constant and demand increases

Exam 4: Demand, Supply, and Markets

Recently it has been discovered that lobsters grown on lobster farms can feed on algae, which is a cheaper lobster food.As a result of this discovery,

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes.What should happen to the equilibrium price and quantity for shoelaces as a result?

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100, 000 packs.Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80, 000 packs?

Which of the following is not true regarding a change in quantity demanded?

If supply decreases along a given demand curve,

Assume that corn and soybeans are alternatives that could be grown by most farmers.An increase in the price of corn will

If both demand and supply increase, price will

An increase in demand for chocolate chips would usually result in a(n)

Which of the following statements about the substitution effect of a price change is true?

Which of the following is not likely to cause a change in the supply of wheat?

Exhibit 4-16 Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D1 and the supply curve S1, what is the equilibrium price and quantity?

In the case of a normal good, an increase in consumers' incomes would shift the

If the price of vanilla ice cream decreases, it is likely that

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

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 S0?

Exhibit 4-16 Refer to exhibit 4-16.The market demand curve is given by D1 and the supply by S1.Equilibrium price is P2 and equilibrium quantity is Q1.What will the new equilibrium price and quantity be if there is an increase in the birth rate?

As the price of ballpoint pens increases, the demand for felt-tip pens can be expected to decrease.

Which of the following would shift the supply curve for a good to the left?

Which of the following would not cause the demand curve for peaches to shift?

In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate?

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 4-16 Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D₁ and the supply curve S₁, what is the equilibrium price and quantity?

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 S₀?

Exhibit 4-16 Refer to exhibit 4-16.The market demand curve is given by D₁ and the supply by S₁.Equilibrium price is P₂ and equilibrium quantity is Q₁.What will the new equilibrium price and quantity be if there is an increase in the birth rate?