Question 1

Suppose that the price of compact disks (CDs)increases, other things equal.Which of the following in the most likely effect in the market for DVDs?

Accepted Answer

A) a decrease in demand for DVDs 
B) an increase in demand for DVDs 
C) an increase in quantity demanded of DVDs 
D) a decrease in quantity demanded of DVDs 
E) a decrease in the quantity supplied of DVDs 
A) a decrease in demand for DVDs 
B) an increase in demand for DVDs 
C) an increase in quantity demanded of DVDs 
D) a decrease in quantity demanded of DVDs 
E) a decrease in the quantity supplied of DVDs

Question 2

Exhibit 4-15   Refer to exhibit 4-15.The development of more efficient production technologies for baby formula will cause which of the following to happen?

Accepted Answer

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

Question 3

If the tea harvest is bad in a particular year, what will happen in the market for coffee?

Accepted Answer

A) increased price and decreased quantity 
B) increased price and increased quantity 
C) decreased price and increased quantity 
D) decreased price and decreased quantity 
E) no change in equilibrium price and quantity 
A) increased price and decreased quantity 
B) increased price and increased quantity 
C) decreased price and increased quantity 
D) decreased price and decreased quantity 
E) no change in equilibrium price and quantity

Question 4

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 an inferior good 
C) a decrease 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 an inferior good 
C) a decrease 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 5

Exhibit 4-11   Refer to the supply curve in Exhibit 4-11.If the price increases from P to P', quantity supplied will

Accepted Answer

A) increase 
B) The answer can only be determined with numbers to analyze. 
C) stay the same 
D) drop to zero 
E) decrease 
A) increase 
B) The answer can only be determined with numbers to analyze. 
C) stay the same 
D) drop to zero 
E) decrease

Question 6

If the price of potato chips increases, other things constant, demand for potato-chip dip will

Accepted Answer

A) not change; only quantity demanded will change 
B) increase because the goods are substitutes 
C) decrease because the goods are substitutes 
D) decrease because the goods are complements 
E) increase because the goods are complements 
A) not change; only quantity demanded will change 
B) increase because the goods are substitutes 
C) decrease because the goods are substitutes 
D) decrease because the goods are complements 
E) increase because the goods are complements

Question 7

An increase in the number of producers of a good will

Accepted Answer

A) increase the market supply because the price will rise 
B) increase the market supply only if market demand increases too 
C) increase the market supply because market supply is the sum of all individual supply curves 
D) increase the market supply only if all suppliers have an identical supply curves 
E) decrease the market supply because firms compete with each other and each firm will supply more 
A) increase the market supply because the price will rise 
B) increase the market supply only if market demand increases too 
C) increase the market supply because market supply is the sum of all individual supply curves 
D) increase the market supply only if all suppliers have an identical supply curves 
E) decrease the market supply because firms compete with each other and each firm will supply more

Question 8

If demand increases and supply decreases, quantity will

Accepted Answer

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

Question 9

An increase in the demand for peanut butter could be caused by a(n)

Accepted Answer

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

Question 10

Which of the following is the best example of complements?

Accepted Answer

A) milk and cheese 
B) coffee and tea 
C) CDs and DVDs 
D) hiking boots and athletic shoes 
E) film and film processing (developing) 
A) milk and cheese 
B) coffee and tea 
C) CDs and DVDs 
D) hiking boots and athletic shoes 
E) film and film processing (developing)

Question 11

Which of the following is true of an increase in quantity supplied of a given good?

Accepted Answer

A) It is represented by a rightward shift in the supply curve. 
B) It could result from a technological improvement. 
C) The price of a key resource used to produce the good may have decreased. 
D) It is caused by an increase in the price of the good. 
E) The price of an alternative good has increased. 
A) It is represented by a rightward shift in the supply curve. 
B) It could result from a technological improvement. 
C) The price of a key resource used to produce the good may have decreased. 
D) It is caused by an increase in the price of the good. 
E) The price of an alternative good has increased.

Question 12

If good B is a complement to good A, then a decrease in the price of B

Accepted Answer

A) increases the quantity demanded of A 
B) decreases the demand for A 
C) increases the demand for A 
D) decreases the quantity demanded of A 
E) will cause the demand for B to increase 
A) increases the quantity demanded of A 
B) decreases the demand for A 
C) increases the demand for A 
D) decreases the quantity demanded of A 
E) will cause the demand for B to increase

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 4-14   Refer to exhibit 4-14.An increase in the birth rate would cause which of the following to happen?

Accepted Answer

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

Question 15

If demand decreases, then quantity supplied will increase.

Accepted Answer

A) True 
 B)False

Question 16

Markets reduce transactions costs

Accepted Answer

A) by decreasing the time spent searching for information about goods and services 
B) only when they have a highly structured set of rules like the New York Stock Exchange 
C) because each market uses the same set of rules for buying and selling goods and services 
D) only when the government can coordinate the plans of many buyers and sellers 
E) when prices are set by the sellers and are not determined by negotiation between the buyers and the sellers 
A) by decreasing the time spent searching for information about goods and services 
B) only when they have a highly structured set of rules like the New York Stock Exchange 
C) because each market uses the same set of rules for buying and selling goods and services 
D) only when the government can coordinate the plans of many buyers and sellers 
E) when prices are set by the sellers and are not determined by negotiation between the buyers and the sellers

Question 17

What is the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles?

Accepted Answer

A) Both equilibrium price and equilibrium quantity rise. 
B) Both equilibrium price and equilibrium quantity fall. 
C) Equilibrium price rises and equilibrium quantity falls. 
D) Equilibrium price falls and equilibrium quantity rises. 
E) Both equilibrium price and equilibrium quantity remain unchanged. 
A) Both equilibrium price and equilibrium quantity rise. 
B) Both equilibrium price and equilibrium quantity fall. 
C) Equilibrium price rises and equilibrium quantity falls. 
D) Equilibrium price falls and equilibrium quantity rises. 
E) Both equilibrium price and equilibrium quantity remain unchanged.

Question 18

Exhibit 4-4   Refer to Exhibit 4-4.A shift from demand curve D to D' illustrates a(n)

Accepted Answer

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

Question 19

Two events occur simultaneously in the market for automobiles: (1)an improvement in assembly line technology and (2)the economy enters a recession (which decreases consumers' income).An economist would predict with certainty that

Accepted Answer

A) equilibrium quantity will rise 
B) equilibrium quantity will fall 
C) equilibrium price will rise 
D) equilibrium price will fall 
E) the equilibrium price will remain the same 
A) equilibrium quantity will rise 
B) equilibrium quantity will fall 
C) equilibrium price will rise 
D) equilibrium price will fall 
E) the equilibrium price will remain the same

Question 20

For a given supply curve, an increase in demand will typically

Accepted Answer

A) increase price, but quantity could change in either direction 
B) increase quantity, but price could change in either direction 
C) increase price but leave quantity unchanged 
D) decrease both quantity and price 
E) increase both quantity and price 
A) increase price, but quantity could change in either direction 
B) increase quantity, but price could change in either direction 
C) increase price but leave quantity unchanged 
D) decrease both quantity and price 
E) increase both quantity and price

Exam 4: Demand, Supply, and Markets

Suppose that the price of compact disks (CDs)increases, other things equal.Which of the following in the most likely effect in the market for DVDs?

Exhibit 4-15 Refer to exhibit 4-15.The development of more efficient production technologies for baby formula will cause which of the following to happen?

If the tea harvest is bad in a particular year, what will happen in the market for coffee?

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?

Exhibit 4-11 Refer to the supply curve in Exhibit 4-11.If the price increases from P to P', quantity supplied will

If the price of potato chips increases, other things constant, demand for potato-chip dip will

An increase in the number of producers of a good will

If demand increases and supply decreases, quantity will

An increase in the demand for peanut butter could be caused by a(n)

Which of the following is the best example of complements?

Which of the following is true of an increase in quantity supplied of a given good?

If good B is a complement to good A, then a decrease in the price of B

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

Exhibit 4-14 Refer to exhibit 4-14.An increase in the birth rate would cause which of the following to happen?

If demand decreases, then quantity supplied will increase.

Markets reduce transactions costs

What is the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles?

Exhibit 4-4 Refer to Exhibit 4-4.A shift from demand curve D to D' illustrates a(n)

Two events occur simultaneously in the market for automobiles: (1)an improvement in assembly line technology and (2)the economy enters a recession (which decreases consumers' income).An economist would predict with certainty that

For a given supply curve, an increase in demand will typically

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?