Question 1

Exhibit 4-8   In a rental market like the one in Exhibit 4-8, a government-imposed rule that rent cannot exceed $750 per month would be called a

Accepted Answer

A) surplus of supply 
B) quantity demanded 
C) price ceiling 
D) price floor 
E) market equilibrium 
A) surplus of supply 
B) quantity demanded 
C) price ceiling 
D) price floor 
E) market equilibrium

Question 2

Other things equal, the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

Accepted Answer

A) the price of wood pulp used in the production of index cards 
B) the technology in the index card production process 
C) the price of index cards 
D) the price of packaging material (a substitute in production) 
E) the future price of index cards expected by producers 
A) the price of wood pulp used in the production of index cards 
B) the technology in the index card production process 
C) the price of index cards 
D) the price of packaging material (a substitute in production) 
E) the future price of index cards expected by producers

Question 3

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one.Which is the exception?

Accepted Answer

A) an increase in the number of new apartment complexes being built 
B) long waiting lists for apartment seekers 
C) lower maintenance of existing apartments 
D) conversion of some apartment complexes to condos 
E) a shortage 
A) an increase in the number of new apartment complexes being built 
B) long waiting lists for apartment seekers 
C) lower maintenance of existing apartments 
D) conversion of some apartment complexes to condos 
E) a shortage

Question 4

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) a decrease 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) an increase in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow 
A) a decrease 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) an increase in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow

Question 5

An increase in professors' salaries increases the supply of college education.

Accepted Answer

A) True 
 B)False

Question 6

An increase in the price of butter, a substitute good, would be most likely to cause

Accepted Answer

A) a rightward shift of the demand curve for margarine 
B) a leftward shift of the demand curve for margarine 
C) the quantity of margarine demanded to increase 
D) the quantity of margarine demanded to decrease 
E) a decrease in the price of margarine 
A) a rightward shift of the demand curve for margarine 
B) a leftward shift of the demand curve for margarine 
C) the quantity of margarine demanded to increase 
D) the quantity of margarine demanded to decrease 
E) a decrease in the price of margarine

Question 7

A decrease in the price of peanut butter will cause a leftward shift of the supply curve of peanut butter.

Accepted Answer

A) True 
 B)False

Question 8

The law of demand is illustrated by a demand curve that is

Accepted Answer

A) horizontal 
B) vertical 
C) upward sloping 
D) constant 
E) downward sloping 
A) horizontal 
B) vertical 
C) upward sloping 
D) constant 
E) downward sloping

Question 9

If the demand for bicycles increases,

Accepted Answer

A) the quantity demanded decreases 
B) equilibrium price increases and equilibrium quantity decreases 
C) equilibrium price decreases and equilibrium quantity increases 
D) quantity supplied increases 
E) quantity supplied decreases 
A) the quantity demanded decreases 
B) equilibrium price increases and equilibrium quantity decreases 
C) equilibrium price decreases and equilibrium quantity increases 
D) quantity supplied increases 
E) quantity supplied decreases

Question 10

Exhibit 4-15   Refer to exhibit 4-15.An increase in the number of firms producing baby formula will cause which of the following to happen?

Accepted Answer

A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2 
A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2

Question 11

Which of the following is correct when a price floor is set above the equilibrium price?

Accepted Answer

A) quantity supplied is less than quantity demanded at the set price 
B) quantity supplied is equal to quantity demanded at the set price 
C) at the set price there will be a shortage 
D) The market price is greater than the price floor 
E) quantity supplied exceeds quantity demanded at the set price 
A) quantity supplied is less than quantity demanded at the set price 
B) quantity supplied is equal to quantity demanded at the set price 
C) at the set price there will be a shortage 
D) The market price is greater than the price floor 
E) quantity supplied exceeds quantity demanded at the set price

Question 12

If there is a shortage in the market for athletic shoes,

Accepted Answer

A) the price should rise to eliminate the shortage 
B) inventories of athletic shoes will grow 
C) demand will decrease to restore equilibrium 
D) firms will reduce production to restore equilibrium 
E) supply will increase to restore equilibrium 
A) the price should rise to eliminate the shortage 
B) inventories of athletic shoes will grow 
C) demand will decrease to restore equilibrium 
D) firms will reduce production to restore equilibrium 
E) supply will increase to restore equilibrium

Question 13

Exhibit 4-14   Refer to exhibit 4-14.A decrease in the price of baby formula would cause which of the following to happen?

Accepted Answer

A) a movement from a to b on demand curve D1 
B) demand shift from D1 to D2 
C) movement from c to d on demand curve D2 
D) demand shift from D2 to D1 
E) either a or b 
A) a movement from a to b on demand curve D1 
B) demand shift from D1 to D2 
C) movement from c to d on demand curve D2 
D) demand shift from D2 to D1 
E) either a or b

Question 14

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) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase 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) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession

Question 15

Supply and demand curves both

Accepted Answer

A) have negative slopes 
B) have positive slopes 
C) relate quantities to prices 
D) reflect the actions of producers 
E) reflect the actions of consumers 
A) have negative slopes 
B) have positive slopes 
C) relate quantities to prices 
D) reflect the actions of producers 
E) reflect the actions of consumers

Question 16

Larger quantities of any good will be supplied at higher prices because

Accepted Answer

A) consumers will be more satisfied 
B) higher prices attract resources from other uses 
C) people are naturally lazy and have to be bribed to give up their leisure 
D) price and quantity supplied are inversely related 
E) of the law of decreasing opportunity cost 
A) consumers will be more satisfied 
B) higher prices attract resources from other uses 
C) people are naturally lazy and have to be bribed to give up their leisure 
D) price and quantity supplied are inversely related 
E) of the law of decreasing opportunity cost

Question 17

Which of the following will increase the supply of vanilla ice cream?

Accepted Answer

A) an increase in the price of vanilla beans (an ingredient in ice cream) 
B) a decrease in the sales tax on restaurant bills 
C) an increase in the price of chocolate ice cream 
D) a decrease in the price of milk (an ingredient in ice cream) 
E) an increase in the price of hot fudge 
A) an increase in the price of vanilla beans (an ingredient in ice cream) 
B) a decrease in the sales tax on restaurant bills 
C) an increase in the price of chocolate ice cream 
D) a decrease in the price of milk (an ingredient in ice cream) 
E) an increase in the price of hot fudge

Question 18

Exhibit 4-7   Exhibit 4-7 depicts the milk market.The horizontal line, P, represents a price ceiling imposed by the government.Which of the following is true?

Accepted Answer

A) In equilibrium, the quantity demanded is 800 gallons. 
B) At the ceiling price, there is a surplus. 
C) The quantity demanded at the price ceiling will equal the quantity supplied. 
D) The equilibrium price would be $1 per unit without the price ceiling. 
E) The quantity supplied at the price ceiling will equal the quantity sold. 
A) In equilibrium, the quantity demanded is 800 gallons. 
B) At the ceiling price, there is a surplus. 
C) The quantity demanded at the price ceiling will equal the quantity supplied. 
D) The equilibrium price would be $1 per unit without the price ceiling. 
E) The quantity supplied at the price ceiling will equal the quantity sold.

Question 19

If a surplus exists in the market for swimwear, an economist would predict that

Accepted Answer

A) the price of swimwear will rise 
B) producers will increase the production of swimwear 
C) the supply of swimwear will increase 
D) the price of swimwear at retail outlets will begin to fall 
E) buyers will react to the surplus by increasing their demand for swimwear 
A) the price of swimwear will rise 
B) producers will increase the production of swimwear 
C) the supply of swimwear will increase 
D) the price of swimwear at retail outlets will begin to fall 
E) buyers will react to the surplus by increasing their demand for swimwear

Question 20

Which of the following causes the supply of leather jackets to decrease?

Accepted Answer

A) an increase in the price of leather jackets 
B) an increase in the price of leather 
C) a decrease in the price of zippers 
D) an increase in the number of motorcycles 
E) a decrease in consumer income 
A) an increase in the price of leather jackets 
B) an increase in the price of leather 
C) a decrease in the price of zippers 
D) an increase in the number of motorcycles 
E) a decrease in consumer income

Exam 4: Demand, Supply, and Markets

Exhibit 4-8 In a rental market like the one in Exhibit 4-8, a government-imposed rule that rent cannot exceed $750 per month would be called a

Other things equal, the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one.Which is the exception?

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?

An increase in professors' salaries increases the supply of college education.

An increase in the price of butter, a substitute good, would be most likely to cause

A decrease in the price of peanut butter will cause a leftward shift of the supply curve of peanut butter.

The law of demand is illustrated by a demand curve that is

If the demand for bicycles increases,

Exhibit 4-15 Refer to exhibit 4-15.An increase in the number of firms producing baby formula will cause which of the following to happen?

Which of the following is correct when a price floor is set above the equilibrium price?

If there is a shortage in the market for athletic shoes,

Exhibit 4-14 Refer to exhibit 4-14.A decrease in the price of baby formula would cause which of the following to happen?

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?

Supply and demand curves both

Larger quantities of any good will be supplied at higher prices because

Which of the following will increase the supply of vanilla ice cream?

Exhibit 4-7 Exhibit 4-7 depicts the milk market.The horizontal line, P, represents a price ceiling imposed by the government.Which of the following is true?

If a surplus exists in the market for swimwear, an economist would predict that

Which of the following causes the supply of leather jackets to decrease?

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 S₀?

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?