Question 1

What happens at the equilibrium price?

Accepted Answer

A)  Buyers have an incentive to buy more. 
B)  It is possible for there to be a shortage. 
C)  Firms have an incentive to increase production. 
D)  Everyone in the market has been satisfied. 
A)  Buyers have an incentive to buy more. 
B)  It is possible for there to be a shortage. 
C)  Firms have an incentive to increase production. 
D)  Everyone in the market has been satisfied.

Question 2

What impact would a higher price for golf clubs tend to have?

Accepted Answer

A)  increase the demand for golf green fees 
B)  increase the demand for tennis rackets 
C)  decrease the demand for tennis rackets 
D)  increase the demand for golf clubs 
A)  increase the demand for golf green fees 
B)  increase the demand for tennis rackets 
C)  decrease the demand for tennis rackets 
D)  increase the demand for golf clubs

Question 3

What will a country with an aging population generally experience?

Accepted Answer

A)  no change in either market demand or individual demand for prescription drugs 
B)  a decrease in the market demand for prescription drugs 
C)  an increase in individual demand for prescription drugs, but no change in market demand 
D)  an increase in the market demand for prescription drugs 
A)  no change in either market demand or individual demand for prescription drugs 
B)  a decrease in the market demand for prescription drugs 
C)  an increase in individual demand for prescription drugs, but no change in market demand 
D)  an increase in the market demand for prescription drugs

Question 4

Figure 4-5  
-Refer to the Figure 4-5. Which of the following is shown in Graph A?

Accepted Answer

A)  an increase in demand 
B)  an increase in quantity demanded 
C)  a decrease in the number of buyers 
D)  a decrease in consumer income 
A)  an increase in demand 
B)  an increase in quantity demanded 
C)  a decrease in the number of buyers 
D)  a decrease in consumer income

Question 5

It is not possible for demand and supply to shift at the same time.

Accepted Answer

A) True 
 B)False

Question 6

What is one reason that government taxes on cigarettes reduce smoking?

Accepted Answer

A)  Cigarette companies are successful in passing much of the tax on to consumers. 
B)  Cigarette companies do not pass much of the tax on to consumers. 
C)  There are many good substitutes for cigarettes. 
D)  Higher prices suggest less harmful cigarettes. 
A)  Cigarette companies are successful in passing much of the tax on to consumers. 
B)  Cigarette companies do not pass much of the tax on to consumers. 
C)  There are many good substitutes for cigarettes. 
D)  Higher prices suggest less harmful cigarettes.

Question 7

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Accepted Answer

A)  price will rise 
B)  price will fall 
C)  price will stay exactly the same 
D)  price change will be ambiguous 
A)  price will rise 
B)  price will fall 
C)  price will stay exactly the same 
D)  price change will be ambiguous

Question 8

Figure 4-6  
-Refer to the Figure 4-6. What could cause the shift from D1 to D?

Accepted Answer

A)  an increase in price 
B)  a decrease in the price of a complement 
C)  an increase in technology 
D)  a decrease in the price of a substitute 
A)  an increase in price 
B)  a decrease in the price of a complement 
C)  an increase in technology 
D)  a decrease in the price of a substitute

Question 9

What happens in a market economy?

Accepted Answer

A)  Demand is determined by supply. 
B)  Supply is determined by demand. 
C)  Price is determined by quantity. 
D)  Quantity is determined by price. 
A)  Demand is determined by supply. 
B)  Supply is determined by demand. 
C)  Price is determined by quantity. 
D)  Quantity is determined by price.

Question 10

You love grapes. You hear on the news that 50% of the world's grape crop has been wiped out because of a virus, which will cause the price to double by the end of the year. What happens as a result?

Accepted Answer

A)  Your demand for grapes will increase at the end of the year. 
B)  Your demand for grapes increases today. 
C)  Your demand for grapes falls as you look for a substitute good. 
D)  Your demand for grapes falls because the price increases today. 
A)  Your demand for grapes will increase at the end of the year. 
B)  Your demand for grapes increases today. 
C)  Your demand for grapes falls as you look for a substitute good. 
D)  Your demand for grapes falls because the price increases today.

Question 11

Which of the following cause and effect events are in order for a seller?

Accepted Answer

A)  an input price falls, profit falls, the supply curve shifts left 
B)  an input price falls, profit rises, the supply curve shifts right 
C)  an input price rises, profit falls, the supply curve shifts right 
D)  an input price rises, profit rises, the supply curve shifts left 
A)  an input price falls, profit falls, the supply curve shifts left 
B)  an input price falls, profit rises, the supply curve shifts right 
C)  an input price rises, profit falls, the supply curve shifts right 
D)  an input price rises, profit rises, the supply curve shifts left

Question 12

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

Accepted Answer

A) True 
 B)False

Question 13

If the number of buyers in the housing market decreases, what will happen?

Accepted Answer

A)  Demand in the market will increase. 
B)  Demand in the market will decrease. 
C)  Supply in the market will increase. 
D)  Supply in the market will decrease. 
A)  Demand in the market will increase. 
B)  Demand in the market will decrease. 
C)  Supply in the market will increase. 
D)  Supply in the market will decrease.

Question 14

Which of the following would NOT shift the demand curve for a good or service?

Accepted Answer

A)  a change in income 
B)  a change in the price of the good or service 
C)  a change in expectations about the price of the good or service 
D)  a change in the price of a related good 
A)  a change in income 
B)  a change in the price of the good or service 
C)  a change in expectations about the price of the good or service 
D)  a change in the price of a related good

Question 15

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Accepted Answer

A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton 
A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton

Question 16

What will happen in the rice market if buyers are expecting higher prices in the near future?

Accepted Answer

A)  Demand increases and supply decreases. 
B)  Both demand and supply increase. 
C)  Demand decreases and supply increases. 
D)  Both demand and supply decrease. 
A)  Demand increases and supply decreases. 
B)  Both demand and supply increase. 
C)  Demand decreases and supply increases. 
D)  Both demand and supply decrease.

Question 17

What would happen to the equilibrium price and quantity of golf club memberships if the price of landscaping and grass maintenance went up, the price of golf clubs increased, fewer golf courses decided to offer memberships, and health officials announced that playing golf was bad for you?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous

Question 18

Which of the following is NOT one of the steps in analyzing how an event affects a market?

Accepted Answer

A)  Determine the number of market participants. 
B)  Decide whether the curve shifts to the right or to the left. 
C)  Determine whether the event shifts the supply, the demand, or both curves. 
D)  Use a supply-demand diagram to examine how the shift(s) affect the equilibrium. 
A)  Determine the number of market participants. 
B)  Decide whether the curve shifts to the right or to the left. 
C)  Determine whether the event shifts the supply, the demand, or both curves. 
D)  Use a supply-demand diagram to examine how the shift(s) affect the equilibrium.

Question 19

-Refer to the Table 4-3. When the price of the good is $1.50, what is the quantity demanded in this market?

Accepted Answer

A)  18 units 
B)  28 units 
C)  35 units 
D)  46 units 
A)  18 units 
B)  28 units 
C)  35 units 
D)  46 units

Question 20

What happens when the price of a good or service changes?

Accepted Answer

A)  Supply shifts in the opposite direction. 
B)  Demand shifts in the opposite direction. 
C)  Demand shifts in the same direction. 
D)  There is a movement along a stable demand curve. 
A)  Supply shifts in the opposite direction. 
B)  Demand shifts in the opposite direction. 
C)  Demand shifts in the same direction. 
D)  There is a movement along a stable demand curve.

What happens at the equilibrium price?

What impact would a higher price for golf clubs tend to have?

What will a country with an aging population generally experience?

Figure 4-5 -Refer to the Figure 4-5. Which of the following is shown in Graph A?

It is not possible for demand and supply to shift at the same time.

What is one reason that government taxes on cigarettes reduce smoking?

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Figure 4-6 -Refer to the Figure 4-6. What could cause the shift from D1 to D?

What happens in a market economy?

You love grapes. You hear on the news that 50% of the world's grape crop has been wiped out because of a virus, which will cause the price to double by the end of the year. What happens as a result?

Which of the following cause and effect events are in order for a seller?

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

If the number of buyers in the housing market decreases, what will happen?

Which of the following would NOT shift the demand curve for a good or service?

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

What will happen in the rice market if buyers are expecting higher prices in the near future?

What would happen to the equilibrium price and quantity of golf club memberships if the price of landscaping and grass maintenance went up, the price of golf clubs increased, fewer golf courses decided to offer memberships, and health officials announced that playing golf was bad for you?

Which of the following is NOT one of the steps in analyzing how an event affects a market?

-Refer to the Table 4-3. When the price of the good is $1.50, what is the quantity demanded in this market?

What happens when the price of a good or service changes?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 4: The Market Forces of Supply and Demand

What happens at the equilibrium price?

What impact would a higher price for golf clubs tend to have?

What will a country with an aging population generally experience?

Figure 4-5 -Refer to the Figure 4-5. Which of the following is shown in Graph A?

It is not possible for demand and supply to shift at the same time.

What is one reason that government taxes on cigarettes reduce smoking?

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Figure 4-6 -Refer to the Figure 4-6. What could cause the shift from D1 to D?

What happens in a market economy?

You love grapes. You hear on the news that 50% of the world's grape crop has been wiped out because of a virus, which will cause the price to double by the end of the year. What happens as a result?

Which of the following cause and effect events are in order for a seller?

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

If the number of buyers in the housing market decreases, what will happen?

Which of the following would NOT shift the demand curve for a good or service?

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

What will happen in the rice market if buyers are expecting higher prices in the near future?

What would happen to the equilibrium price and quantity of golf club memberships if the price of landscaping and grass maintenance went up, the price of golf clubs increased, fewer golf courses decided to offer memberships, and health officials announced that playing golf was bad for you?

Which of the following is NOT one of the steps in analyzing how an event affects a market?

-Refer to the Table 4-3. When the price of the good is $1.50, what is the quantity demanded in this market?

What happens when the price of a good or service changes?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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