Question 1

A decrease in price of a certain good most likely will lead to

Accepted Answer

A)  an increase in quantity demanded and an increase in demand. 
B)  an increase in quantity demanded but no change in demand. 
C)  an increase in demand but no change in quantity demanded. 
D)  no change in demand and no change in quantity demanded. 
A)  an increase in quantity demanded and an increase in demand. 
B)  an increase in quantity demanded but no change in demand. 
C)  an increase in demand but no change in quantity demanded. 
D)  no change in demand and no change in quantity demanded.

Question 2

A demand schedule's position is determined partly by the supply of a good.

Accepted Answer

A) True 
 B)False

Question 3

In high schools,all teachers were paid the same based on years of service and regardless of specialization.Beginning in the 1970s,a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer.At the same time,a decline in the number of school-age children tended to reduce the demand for all other teachers,which led to a surplus.The economist's solution to this problem would be

Accepted Answer

A)  merit pay to reward the best teachers. 
B)  recognition that all teachers do comparable work and should be paid the same. 
C)  to raise the wages of all teachers. 
D)  to raise the wages of teachers in fields that are in short supply and lower those of others. 
A)  merit pay to reward the best teachers. 
B)  recognition that all teachers do comparable work and should be paid the same. 
C)  to raise the wages of all teachers. 
D)  to raise the wages of teachers in fields that are in short supply and lower those of others.

Question 4

Any change that shifts the supply curve outward to the right,and does not affect ​the demand durve will lower the equilibrium price and raise the equilibrium.

Accepted Answer

A) True 
 B)False

Question 5

The quantity of newspapers sold will decline if

Accepted Answer

A)  newsprint becomes more expensive. 
B)  the printers' union makes wage concessions. 
C)  prices are reduced. 
D)  magazine prices rise. 
A)  newsprint becomes more expensive. 
B)  the printers' union makes wage concessions. 
C)  prices are reduced. 
D)  magazine prices rise.

Question 6

Firms often seek to borrow money to expand their capital stock,and the price they pay for the money is the interest rate.What happens to supply of money if the interest rate increases?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain-economic theory has no answer to this question. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain-economic theory has no answer to this question.

Question 7

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-6  
-How much the quantity of a good traded changes after a shift of the supply curve depends on

Accepted Answer

A)  the size of the shift. 
B)  the slope of the demand curve. 
C)  whether the market is subject to price controls. 
D)  All of the above are correct. 
A)  the size of the shift. 
B)  the slope of the demand curve. 
C)  whether the market is subject to price controls. 
D)  All of the above are correct.

Question 9

Which of the following is the correct way to describe equilibrium in a market?

Accepted Answer

A)  At equilibrium,demand equals supply. 
B)  At equilibrium,quantity demanded equals quantity supplied. 
C)  At equilibrium,market forces are no longer at work. 
D)  Equilibrium is a tendency,a state of perpetual motion. 
E)  Equilibrium is the best combination of price and quantity. 
A)  At equilibrium,demand equals supply. 
B)  At equilibrium,quantity demanded equals quantity supplied. 
C)  At equilibrium,market forces are no longer at work. 
D)  Equilibrium is a tendency,a state of perpetual motion. 
E)  Equilibrium is the best combination of price and quantity.

Question 10

An important assumption that is made when constructing a supply schedule is

Accepted Answer

A)  only price and quantity matter in determining supply. 
B)  firms always want to sell a certain amount of a product. 
C)  supply is too important to be left to the marketplace. 
D)  all other determinants of supply are held constant. 
E)  demand has a positive slope. 
A)  only price and quantity matter in determining supply. 
B)  firms always want to sell a certain amount of a product. 
C)  supply is too important to be left to the marketplace. 
D)  all other determinants of supply are held constant. 
E)  demand has a positive slope.

Question 11

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports,the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  opportunity cost. 
D)  shortage. 
E)  efficiency move. 
A)  price ceiling. 
B)  price floor. 
C)  opportunity cost. 
D)  shortage. 
E)  efficiency move.

Question 12

Refer to Exhibit 4-1.If consumers decide that they want 20 percent fewer weezils at every price,the equation for the new demand curve for weezils will be

Accepted Answer

A)  Qd = 20 − 1.6P. 
B)  Qd = 0.2(20 − 2P). 
C)  Qd = 0.8(20 − 2P). 
D)  Qd = 80(20 − 2P). 
A)  Qd = 20 − 1.6P. 
B)  Qd = 0.2(20 − 2P). 
C)  Qd = 0.8(20 − 2P). 
D)  Qd = 80(20 − 2P).

Question 13

Which of the following is not a symptom associated with a price floor?

Accepted Answer

A)  Excess of quantity demanded over quantity supplied. 
B)  Sellers offering discounts in disguised forms. 
C)  Problem of disposal created by excess supply. 
D)  Survival of inefficient businesses. 
A)  Excess of quantity demanded over quantity supplied. 
B)  Sellers offering discounts in disguised forms. 
C)  Problem of disposal created by excess supply. 
D)  Survival of inefficient businesses.

Question 14

Why do airlines tend to lower ticket prices in the winter?

Accepted Answer

A)  Supply is relatively variable,and a drop in demand lowers equilibrium price. 
B)  Demand is relatively variable,and a drop in supply lowers equilibrium price. 
C)  A drop in both supply and demand lowers equilibrium price. 
D)  Supply is relatively fixed,and a drop in demand lowers equilibrium price. 
E)  Demand is relatively fixed,and a drop in supply lowers equilibrium price. 
A)  Supply is relatively variable,and a drop in demand lowers equilibrium price. 
B)  Demand is relatively variable,and a drop in supply lowers equilibrium price. 
C)  A drop in both supply and demand lowers equilibrium price. 
D)  Supply is relatively fixed,and a drop in demand lowers equilibrium price. 
E)  Demand is relatively fixed,and a drop in supply lowers equilibrium price.

Question 15

Figure 4-9  
-"Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation.Ten pounds of sugar are necessary to make a gallon of moonshine.In the mid-1970s,the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon.Which graph in Figure 4-9 best illustrates this?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 16

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4-16  
-Assume that Figure 4-16 shows the supply of new houses.An improvement in the technology for building houses will shift supply from

Accepted Answer

A)  S1 to S2. 
B)  S2 to S1. 
C)  S3 to S2. 
D)  S3 to S1. 
A)  S1 to S2. 
B)  S2 to S1. 
C)  S3 to S2. 
D)  S3 to S1.

Question 18

Figure 4-20  
-If there are empty seats at the university basketball game when the price per ticket is P*,then this situation can best be represented by which graph in Figure 4-20?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 19

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 20

A price above equilibrium always yields a surplus.

Accepted Answer

A) True 
 B)False

A decrease in price of a certain good most likely will lead to

A demand schedule's position is determined partly by the supply of a good.

Any change that shifts the supply curve outward to the right,and does not affect the demand durve will lower the equilibrium price and raise the equilibrium.

The quantity of newspapers sold will decline if

Firms often seek to borrow money to expand their capital stock,and the price they pay for the money is the interest rate.What happens to supply of money if the interest rate increases?

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Figure 4-6 -How much the quantity of a good traded changes after a shift of the supply curve depends on

Which of the following is the correct way to describe equilibrium in a market?

An important assumption that is made when constructing a supply schedule is

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports,the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

Refer to Exhibit 4-1.If consumers decide that they want 20 percent fewer weezils at every price,the equation for the new demand curve for weezils will be

Which of the following is not a symptom associated with a price floor?

Why do airlines tend to lower ticket prices in the winter?

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

Figure 4-16 -Assume that Figure 4-16 shows the supply of new houses.An improvement in the technology for building houses will shift supply from

Figure 4-20 -If there are empty seats at the university basketball game when the price per ticket is P*,then this situation can best be represented by which graph in Figure 4-20?

Price floors lead to market surpluses.

A price above equilibrium always yields a surplus.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 4: Supply and Demand An Initial Look

A decrease in price of a certain good most likely will lead to

A demand schedule's position is determined partly by the supply of a good.

Any change that shifts the supply curve outward to the right,and does not affect ​the demand durve will lower the equilibrium price and raise the equilibrium.

The quantity of newspapers sold will decline if

Firms often seek to borrow money to expand their capital stock,and the price they pay for the money is the interest rate.What happens to supply of money if the interest rate increases?

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Figure 4-6 -How much the quantity of a good traded changes after a shift of the supply curve depends on

Which of the following is the correct way to describe equilibrium in a market?

An important assumption that is made when constructing a supply schedule is

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports,the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

Refer to Exhibit 4-1.If consumers decide that they want 20 percent fewer weezils at every price,the equation for the new demand curve for weezils will be

Which of the following is not a symptom associated with a price floor?

Why do airlines tend to lower ticket prices in the winter?

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

Figure 4-16 -Assume that Figure 4-16 shows the supply of new houses.An improvement in the technology for building houses will shift supply from

Figure 4-20 -If there are empty seats at the university basketball game when the price per ticket is P*,then this situation can best be represented by which graph in Figure 4-20?

Price floors lead to market surpluses.

A price above equilibrium always yields a surplus.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Any change that shifts the supply curve outward to the right,and does not affect the demand durve will lower the equilibrium price and raise the equilibrium.