Question 1

A demand curve usually has a

Accepted Answer

A) negative slope because price and quantity demanded are inversely related 
B) negative slope because as price rises, demand falls 
C) positive slope because price and quantity demanded are positively related 
D) positive slope because price and quantity demanded are inversely related 
E) slope of zero because there is no change along a demand curve when everything else is held constant 
A) negative slope because price and quantity demanded are inversely related 
B) negative slope because as price rises, demand falls 
C) positive slope because price and quantity demanded are positively related 
D) positive slope because price and quantity demanded are inversely related 
E) slope of zero because there is no change along a demand curve when everything else is held constant

Question 2

If income rises and a good is inferior, then demand for that good will decrease.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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

Question 4

Exhibit 4-2   Consider Exhibit 4-2.Which of the following represents an increase in supply?

Accepted Answer

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

Question 5

A rightward shift of a supply curve

Accepted Answer

A) represents a decrease in supply 
B) might be caused by an increase in demand 
C) might be caused by a price ceiling 
D) would cause an excess quantity supplied at the previous equilibrium price 
E) might be caused by a decrease in demand 
A) represents a decrease in supply 
B) might be caused by an increase in demand 
C) might be caused by a price ceiling 
D) would cause an excess quantity supplied at the previous equilibrium price 
E) might be caused by a decrease in demand

Question 6

A decrease in demand will result in a(n)

Accepted Answer

A) increase in equilibrium price and quantity 
B) decrease in equilibrium price and quantity 
C) decrease in equilibrium price and an increase in equilibrium quantity 
D) increase in equilibrium price and a decrease in equilibrium quantity 
E) change in equilibrium price and quantity only if supply changes too 
A) increase in equilibrium price and quantity 
B) decrease in equilibrium price and quantity 
C) decrease in equilibrium price and an increase in equilibrium quantity 
D) increase in equilibrium price and a decrease in equilibrium quantity 
E) change in equilibrium price and quantity only if supply changes too

Question 7

If supply increases and demand decreases, then equilibrium price will fall.

Accepted Answer

A) True 
 B)False

Question 8

A decrease in the demand for peanut butter could be caused by a(n)

Accepted Answer

A) increase in the supply of peanut butter 
B) increase in the price of peanut butter 
C) doubling of the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) increase in consumer income 
A) increase in the supply of peanut butter 
B) increase in the price of peanut butter 
C) doubling of the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) increase in consumer income

Question 9

A surplus of wheat

Accepted Answer

A) is impossible if people are hungry 
B) is impossible if the price of wheat is below equilibrium 
C) will result in an increase the price of wheat 
D) is unlikely to result in any change in the price of wheat 
E) indicates that the problem of scarcity of wheat has been solved 
A) is impossible if people are hungry 
B) is impossible if the price of wheat is below equilibrium 
C) will result in an increase the price of wheat 
D) is unlikely to result in any change in the price of wheat 
E) indicates that the problem of scarcity of wheat has been solved

Question 10

Exhibit 4-6   In Exhibit 4-6, suppose a price floor is established at $20.00.What is the result?

Accepted Answer

A) a shortage of 10 units 
B) a surplus of 10 units 
C) a shortage of 20 units 
D) a surplus of 20 units 
E) there is no change from the situation that exists at the equilibrium price 
A) a shortage of 10 units 
B) a surplus of 10 units 
C) a shortage of 20 units 
D) a surplus of 20 units 
E) there is no change from the situation that exists at the equilibrium price

Question 11

A decrease in demand will cause a(n)

Accepted Answer

A) increase in supply 
B) decrease in supply 
C) increase in quantity supplied 
D) increase in equilibrium price 
E) decrease in equilibrium price 
A) increase in supply 
B) decrease in supply 
C) increase in quantity supplied 
D) increase in equilibrium price 
E) decrease in equilibrium price

Question 12

Suppose demand decreases and supply decreases.Which of the following will happen?

Accepted Answer

A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change 
A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change

Question 13

Tax preparation services and IRS tax publications can be considered substitutes.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of the relationship between price and quantity supplied?

Accepted Answer

A) There is always an inverse relationship. 
B) More is supplied at lower prices. 
C) Producers work harder and sell more when the price decreases. 
D) There is a direct relationship between price and quantity supplied. 
E) It is always true that a higher price leads to a decrease in quantity supplied. 
A) There is always an inverse relationship. 
B) More is supplied at lower prices. 
C) Producers work harder and sell more when the price decreases. 
D) There is a direct relationship between price and quantity supplied. 
E) It is always true that a higher price leads to a decrease in quantity supplied.

Question 15

Which of the following might cause the demand for ice cream, a normal good, to increase?

Accepted Answer

A) an increase in the price of ice cream 
B) an increase in the price of sherbet 
C) cooler weather 
D) a decrease in the number of consumers 
E) a decrease in consumer income 
A) an increase in the price of ice cream 
B) an increase in the price of sherbet 
C) cooler weather 
D) a decrease in the number of consumers 
E) a decrease in consumer income

Question 16

An improvement in technology shifts the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the price of a good normally increases the

Accepted Answer

A) demand for its substitutes 
B) supply of complements for the good 
C) purchasing power of consumers' dollar incomes 
D) money income of the consumer 
E) quantity demanded of all goods that are unrelated to the good in question 
A) demand for its substitutes 
B) supply of complements for the good 
C) purchasing power of consumers' dollar incomes 
D) money income of the consumer 
E) quantity demanded of all goods that are unrelated to the good in question

Question 18

Exhibit 4-4   In Exhibit 4-4, which of the following could not cause the shift from D to D'?

Accepted Answer

A) a decrease in the price of a complement 
B) an increase in the price of a substitute 
C) a decrease in the price of the good in question 
D) an increase in the number of consumers 
E) a decrease in income if the good in question is an inferior good 
A) a decrease in the price of a complement 
B) an increase in the price of a substitute 
C) a decrease in the price of the good in question 
D) an increase in the number of consumers 
E) a decrease in income if the good in question is an inferior good

Question 19

Which of the following would shift the supply curve for a product to the right?

Accepted Answer

A) an increase in the price of a resource used in the good's production 
B) the expectation of a higher price in the near future 
C) an increase in the price of the product 
D) an increase in the price of an alternative good 
E) an improvement in the technology for producing the good 
A) an increase in the price of a resource used in the good's production 
B) the expectation of a higher price in the near future 
C) an increase in the price of the product 
D) an increase in the price of an alternative good 
E) an improvement in the technology for producing the good

Question 20

Which of the following statements about demand is true?

Accepted Answer

A) Since most college students want a Mercedes sports coupe, their demand for it is high. 
B) If price increases, the demand curve shifts to the right. 
C) The demand curve for bacon will not shift when the price of bacon changes. 
D) If a supply curve shifts, thereby changing the price, the demand curve will shift as well. 
E) If a demand curve shifts, the supply curve will shift as well, whether or not the price changes. 
A) Since most college students want a Mercedes sports coupe, their demand for it is high. 
B) If price increases, the demand curve shifts to the right. 
C) The demand curve for bacon will not shift when the price of bacon changes. 
D) If a supply curve shifts, thereby changing the price, the demand curve will shift as well. 
E) If a demand curve shifts, the supply curve will shift as well, whether or not the price changes.

Exam 4: Demand, Supply, and Markets

A demand curve usually has a

If income rises and a good is inferior, then demand for that good will decrease.

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

Exhibit 4-2 Consider Exhibit 4-2.Which of the following represents an increase in supply?

A rightward shift of a supply curve

A decrease in demand will result in a(n)

If supply increases and demand decreases, then equilibrium price will fall.

A decrease in the demand for peanut butter could be caused by a(n)

A surplus of wheat

Exhibit 4-6 In Exhibit 4-6, suppose a price floor is established at $20.00.What is the result?

A decrease in demand will cause a(n)

Suppose demand decreases and supply decreases.Which of the following will happen?

Tax preparation services and IRS tax publications can be considered substitutes.

Which of the following is true of the relationship between price and quantity supplied?

Which of the following might cause the demand for ice cream, a normal good, to increase?

An improvement in technology shifts the supply curve rightward.

An increase in the price of a good normally increases the

Exhibit 4-4 In Exhibit 4-4, which of the following could not cause the shift from D to D'?

Which of the following would shift the supply curve for a product to the right?

Which of the following statements about demand is true?

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

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