Question 1

An improvement in technology would shift

Accepted Answer

A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead, there is movement along both of them 
E) the supply curve rightward 
A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead, there is movement along both of them 
E) the supply curve rightward

Question 2

If demand decreases and supply increases, price will

Accepted Answer

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

Question 3

A decrease in supply will cause a(n)

Accepted Answer

A) increase in demand 
B) decrease in demand 
C) increase in quantity demanded 
D) decrease in quantity demanded 
E) decrease in equilibrium price 
A) increase in demand 
B) decrease in demand 
C) increase in quantity demanded 
D) decrease in quantity demanded 
E) decrease in equilibrium price

Question 4

A simultaneous increase in supply and demand will always lead to an increase in the prices of a good.

Accepted Answer

A) True 
 B)False

Question 5

If suppliers expect an increase in price, they will reduce the current supply of a good.

Accepted Answer

A) True 
 B)False

Question 6

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) an increase 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 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 lower price in the near future 
C) an increase in the price of milk 
D) an increase in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow

Question 7

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100, 000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125, 000?

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) an agreement by workers in the chewing gum industry to work for lower wages 
D) a decrease in the number of young people in the population 
E) a decrease in income 
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) an agreement by workers in the chewing gum industry to work for lower wages 
D) a decrease in the number of young people in the population 
E) a decrease in income

Question 8

A change in the composition of the population will generally

Accepted Answer

A) change demand only if there is a change in the size of the population 
B) change demand only if there is no change in the size of the population 
C) change demand even if there is no change in the size of the population 
D) have absolutely no effect on demand 
E) result in a movement along the demand curve 
A) change demand only if there is a change in the size of the population 
B) change demand only if there is no change in the size of the population 
C) change demand even if there is no change in the size of the population 
D) have absolutely no effect on demand 
E) result in a movement along the demand curve

Question 9

If demand increases and supply decreases,

Accepted Answer

A) equilibrium price will fall and equilibrium quantity will rise 
B) equilibrium price and quantity will both rise 
C) equilibrium quantity will rise; equilibrium price will either rise or fall 
D) equilibrium price will fall; equilibrium quantity will either rise or fall 
E) equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged 
A) equilibrium price will fall and equilibrium quantity will rise 
B) equilibrium price and quantity will both rise 
C) equilibrium quantity will rise; equilibrium price will either rise or fall 
D) equilibrium price will fall; equilibrium quantity will either rise or fall 
E) equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged

Question 10

The income effect of an increase in the price of hominy grits (an inferior good)is a(n)

Accepted Answer

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

Question 11

Which of the following would most likely increase the supply of college textbooks?

Accepted Answer

A) five major publishers go out of business 
B) paper costs double 
C) the wage rate of printers increases 
D) producers expect the price to rise in the future 
E) technology of book production improves 
A) five major publishers go out of business 
B) paper costs double 
C) the wage rate of printers increases 
D) producers expect the price to rise in the future 
E) technology of book production improves

Question 12

Exhibit 4-2   Consider Exhibit 4-2.Which of the following represents a decrease in the quantity supplied?

Accepted Answer

A) a movement from C to D 
B) a movement from C to B 
C) a movement from E to D 
D) a movement from F to E 
E) none of the above represents an increase in the quantity supplied 
A) a movement from C to D 
B) a movement from C to B 
C) a movement from E to D 
D) a movement from F to E 
E) none of the above represents an increase in the quantity supplied

Question 13

The income effect of a decrease in the price of potatoes (an inferior good)is a(n)

Accepted Answer

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

Question 14

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) remain constant; increase 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) remain constant; increase

Question 15

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises, we would expect

Accepted Answer

A) the demand for honey to increase 
B) the demand for honey to decrease 
C) the quantity demanded of honey to decrease 
D) the price of honey to decrease 
E) the quantity demanded of honey to increase 
A) the demand for honey to increase 
B) the demand for honey to decrease 
C) the quantity demanded of honey to decrease 
D) the price of honey to decrease 
E) the quantity demanded of honey to increase

Question 16

Many people argue against increasing the minimum wage because they believe the result would be increased unemployment.Which of the following best summarizes this argument? A higher minimum wage would

Accepted Answer

A) increase the supply of labor while decreasing the demand for labor 
B) decrease the supply of labor while increasing the demand for labor 
C) increase the quantity supplied of labor while decreasing the quantity demanded of labor 
D) decrease the quantity supplied of labor while increasing the quantity demanded of labor 
E) increase the supply of labor while decreasing the quantity demanded of labor 
A) increase the supply of labor while decreasing the demand for labor 
B) decrease the supply of labor while increasing the demand for labor 
C) increase the quantity supplied of labor while decreasing the quantity demanded of labor 
D) decrease the quantity supplied of labor while increasing the quantity demanded of labor 
E) increase the supply of labor while decreasing the quantity demanded of labor

Question 17

The slope of the demand curve for a normal good must be positive.

Accepted Answer

A) True 
 B)False

Question 18

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Accepted Answer

A) the price of aspartame will increase 
B) the price of sugar will decrease 
C) the price of saccharin will increase 
D) the demand curves for aspartame and sugar will shift leftward 
E) aspartame and sugar will be complements 
A) the price of aspartame will increase 
B) the price of sugar will decrease 
C) the price of saccharin will increase 
D) the demand curves for aspartame and sugar will shift leftward 
E) aspartame and sugar will be complements

Question 19

The basic reason that supply curves slope upward is that

Accepted Answer

A) demand curves slope downward 
B) production is characterized by increasing costs 
C) profits decline as product prices rise 
D) greater output can only result from improved technology 
E) price and quantity supplied are inversely related 
A) demand curves slope downward 
B) production is characterized by increasing costs 
C) profits decline as product prices rise 
D) greater output can only result from improved technology 
E) price and quantity supplied are inversely related

Question 20

A new hormone will increase the amount of milk each cow produces.If this hormone is adopted by many dairies, what will be the effect on the milk market?

Accepted Answer

A) an increase in supply, higher equilibrium price, and lower equilibrium quantity 
B) a decrease in supply, lower equilibrium price, and lower equilibrium quantity 
C) an increase in supply, lower equilibrium price, and higher equilibrium quantity 
D) an increase in supply, higher equilibrium price, and higher equilibrium quantity 
E) a decrease in supply, lower equilibrium price, and higher equilibrium quantity 
A) an increase in supply, higher equilibrium price, and lower equilibrium quantity 
B) a decrease in supply, lower equilibrium price, and lower equilibrium quantity 
C) an increase in supply, lower equilibrium price, and higher equilibrium quantity 
D) an increase in supply, higher equilibrium price, and higher equilibrium quantity 
E) a decrease in supply, lower equilibrium price, and higher equilibrium quantity

Exam 4: Demand, Supply, and Markets

An improvement in technology would shift

If demand decreases and supply increases, price will

A decrease in supply will cause a(n)

A simultaneous increase in supply and demand will always lead to an increase in the prices of a good.

If suppliers expect an increase in price, they will reduce the current supply of a 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 market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100, 000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125, 000?

A change in the composition of the population will generally

If demand increases and supply decreases,

The income effect of an increase in the price of hominy grits (an inferior good)is a(n)

Which of the following would most likely increase the supply of college textbooks?

Exhibit 4-2 Consider Exhibit 4-2.Which of the following represents a decrease in the quantity supplied?

The income effect of a decrease in the price of potatoes (an inferior good)is a(n)

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises, we would expect

Many people argue against increasing the minimum wage because they believe the result would be increased unemployment.Which of the following best summarizes this argument? A higher minimum wage would

The slope of the demand curve for a normal good must be positive.

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

The basic reason that supply curves slope upward is that

A new hormone will increase the amount of milk each cow produces.If this hormone is adopted by many dairies, what will be the effect on the milk market?

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?

An increase in supply will cause equilibrium price to and equilibrium quantity to .