Question 1

The model of supply and demand is the most important tool of economic analysis.

Accepted Answer

A) True 
 B)False

Question 2

Lettuce and spinach are substitute goods.All else equal,if a spinach beetle destroys half of the nation's spinach crop,we predict that the equilibrium price of lettuce will ________ and the equilibrium price of spinach will ________.

Accepted Answer

A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall 
A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall

Question 3

Excess demand in an unregulated market will cause the price of a product to fall.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that consumers expect the price of a product to decrease in the future.The result is that:

Accepted Answer

A) the current demand for the product increases. 
B) the current demand for the product decreases. 
C) the current supply of the product increases. 
D) the current supply of the product decreases. 
A) the current demand for the product increases. 
B) the current demand for the product decreases. 
C) the current supply of the product increases. 
D) the current supply of the product decreases.

Question 5

The market demand curve is:

Accepted Answer

A) negatively sloped. 
B) upward sloping. 
C) always vertical 
D) always horizontal. 
A) negatively sloped. 
B) upward sloping. 
C) always vertical 
D) always horizontal.

Question 6

As the price of a product rises,the demand for the product falls.

Accepted Answer

A) True 
 B)False

Question 7

A decrease in supply will cause the equilibrium price and quantity of a good to fall.

Accepted Answer

A) True 
 B)False

Question 8

If incomes increase and Honda Civics are considered normal goods,then:

Accepted Answer

A) the demand for Honda Civics will increase. 
B) the quantity demanded for Honda Civics will increase. 
C) the demand for Honda Civics will decrease. 
D) the quantity demanded for Honda Civics will decrease. 
A) the demand for Honda Civics will increase. 
B) the quantity demanded for Honda Civics will increase. 
C) the demand for Honda Civics will decrease. 
D) the quantity demanded for Honda Civics will decrease.

Question 9

Explain how an excess demand would lead to an increase in prices in an unregulated market.

Accepted Answer

With an excess demand,the quantity avail

Question 10

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer.As a result of the study,we could predict that the demand curve for orange juice will ________ and the equilibrium price will ________.

Accepted Answer

A) increase;increase 
B) increase;decrease 
C) decrease;decrease 
D) decrease;increase 
A) increase;increase 
B) increase;decrease 
C) decrease;decrease 
D) decrease;increase

Question 11

People will buy more of an inferior good when their income decreases.

Accepted Answer

A) True 
 B)False

Question 12

Figure 4.7
-If demand and supply decrease in Figure 4.7,then the equilibrium:

Accepted Answer

A) price rises. 
B) price falls. 
C) quantity rises. 
D) quantity falls. 
A) price rises. 
B) price falls. 
C) quantity rises. 
D) quantity falls.

Question 13

A normal good is defined as a good for which demand decreases when:

Accepted Answer

A) the price increases. 
B) income increases. 
C) the price decreases. 
D) income decreases. 
A) the price increases. 
B) income increases. 
C) the price decreases. 
D) income decreases.

Question 14

Figure 4.4
-Figure 4.4 illustrates the demand for guitars.If people expect the price of guitars to decrease in the near future,this would most likely bring about a movement from:

Accepted Answer

A) point B to point C. 
B) point B to point A. 
C) D1 to D0. 
D) D1 to D2. 
A) point B to point C. 
B) point B to point A. 
C) D1 to D0. 
D) D1 to D2.

Question 15

From the Application,we can infer that the presence of wine lakes indicate that the market is experiencing:

Accepted Answer

A) an equilibrium. 
B) a shortage. 
C) a surplus. 
D) All of the above are correct. 
A) an equilibrium. 
B) a shortage. 
C) a surplus. 
D) All of the above are correct.

Question 16

When a demand curve is drawn,which of the following is held constant?

Accepted Answer

A) people's income 
B) people's preferences 
C) prices of related goods 
D) All of the above are held constant when constructing a demand curve. 
A) people's income 
B) people's preferences 
C) prices of related goods 
D) All of the above are held constant when constructing a demand curve.

Question 17

A change in the quantity demanded of a product cannot be the result of a change in:

Accepted Answer

A) the buyer's preference. 
B) the price of related goods. 
C) consumer income. 
D) All of the above are correct. 
A) the buyer's preference. 
B) the price of related goods. 
C) consumer income. 
D) All of the above are correct.

Question 18

Figure 4.6
-Figure 4.6 illustrates a set of supply and demand curves for a product.When the economy moves from point B to point C,there has been:

Accepted Answer

A) a decrease in supply and a decrease in demand. 
B) a decrease in supply and a decrease in quantity demanded. 
C) a decrease in quantity supplied and a decrease in demand. 
D) a decrease in quantity supplied and a decrease in quantity demanded. 
A) a decrease in supply and a decrease in demand. 
B) a decrease in supply and a decrease in quantity demanded. 
C) a decrease in quantity supplied and a decrease in demand. 
D) a decrease in quantity supplied and a decrease in quantity demanded.

Question 19

Excess supply in an unregulated market will cause the price of a product to fall.

Accepted Answer

A) True 
 B)False

Question 20

Why do the demand curves for inferior goods slope downward,even though the law of demand is driven in part by the income effect?

Accepted Answer

Remember that there are two effects of a

The model of supply and demand is the most important tool of economic analysis.

Lettuce and spinach are substitute goods.All else equal,if a spinach beetle destroys half of the nation's spinach crop,we predict that the equilibrium price of lettuce will and the equilibrium price of spinach will .

Excess demand in an unregulated market will cause the price of a product to fall.

Suppose that consumers expect the price of a product to decrease in the future.The result is that:

The market demand curve is:

As the price of a product rises,the demand for the product falls.

A decrease in supply will cause the equilibrium price and quantity of a good to fall.

If incomes increase and Honda Civics are considered normal goods,then:

Explain how an excess demand would lead to an increase in prices in an unregulated market.

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer.As a result of the study,we could predict that the demand curve for orange juice will and the equilibrium price will .

People will buy more of an inferior good when their income decreases.

Figure 4.7 -If demand and supply decrease in Figure 4.7,then the equilibrium:

A normal good is defined as a good for which demand decreases when:

Figure 4.4 -Figure 4.4 illustrates the demand for guitars.If people expect the price of guitars to decrease in the near future,this would most likely bring about a movement from:

From the Application,we can infer that the presence of wine lakes indicate that the market is experiencing:

When a demand curve is drawn,which of the following is held constant?

A change in the quantity demanded of a product cannot be the result of a change in:

Figure 4.6 -Figure 4.6 illustrates a set of supply and demand curves for a product.When the economy moves from point B to point C,there has been:

Excess supply in an unregulated market will cause the price of a product to fall.

Why do the demand curves for inferior goods slope downward,even though the law of demand is driven in part by the income effect?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 4: Demand, supply, and Market Equilibrium

The model of supply and demand is the most important tool of economic analysis.

Lettuce and spinach are substitute goods.All else equal,if a spinach beetle destroys half of the nation's spinach crop,we predict that the equilibrium price of lettuce will ________ and the equilibrium price of spinach will ________.

Excess demand in an unregulated market will cause the price of a product to fall.

Suppose that consumers expect the price of a product to decrease in the future.The result is that:

The market demand curve is:

As the price of a product rises,the demand for the product falls.

A decrease in supply will cause the equilibrium price and quantity of a good to fall.

If incomes increase and Honda Civics are considered normal goods,then:

Explain how an excess demand would lead to an increase in prices in an unregulated market.

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer.As a result of the study,we could predict that the demand curve for orange juice will ________ and the equilibrium price will ________.

People will buy more of an inferior good when their income decreases.

Figure 4.7 -If demand and supply decrease in Figure 4.7,then the equilibrium:

A normal good is defined as a good for which demand decreases when:

Figure 4.4 -Figure 4.4 illustrates the demand for guitars.If people expect the price of guitars to decrease in the near future,this would most likely bring about a movement from:

From the Application,we can infer that the presence of wine lakes indicate that the market is experiencing:

When a demand curve is drawn,which of the following is held constant?

A change in the quantity demanded of a product cannot be the result of a change in:

Figure 4.6 -Figure 4.6 illustrates a set of supply and demand curves for a product.When the economy moves from point B to point C,there has been:

Excess supply in an unregulated market will cause the price of a product to fall.

Why do the demand curves for inferior goods slope downward,even though the law of demand is driven in part by the income effect?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Lettuce and spinach are substitute goods.All else equal,if a spinach beetle destroys half of the nation's spinach crop,we predict that the equilibrium price of lettuce will and the equilibrium price of spinach will .

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer.As a result of the study,we could predict that the demand curve for orange juice will and the equilibrium price will .