Question 1

Sometimes price cuts can have an unintended result of consumers waiting for deeper discounts. What does this waiting suggest about supply and demand?

Accepted Answer

A)  The demand curve slopes the wrong way because price cuts have lead to smaller sales. 
B)  If buyers are buying less when price falls, the supply curve must have moved left. 
C)  If buyers are buying less when price falls, the supply curve must have moved right. 
D)  Price cuts have changed buyers' expectations, and the change in expectations has moved the demand curve left. 
A)  The demand curve slopes the wrong way because price cuts have lead to smaller sales. 
B)  If buyers are buying less when price falls, the supply curve must have moved left. 
C)  If buyers are buying less when price falls, the supply curve must have moved right. 
D)  Price cuts have changed buyers' expectations, and the change in expectations has moved the demand curve left.

Question 2

If you observe a market where quantity demanded doesn't equal quantity supplied, a logical conclusion is that:

Accepted Answer

A)  the law of demand and supply do not hold in the market. 
B)  the fallacy of composition is not operative in the market. 
C)  the invisible hand is the only force at work in the market. 
D)  social and political forces are likely to exist. 
A)  the law of demand and supply do not hold in the market. 
B)  the fallacy of composition is not operative in the market. 
C)  the invisible hand is the only force at work in the market. 
D)  social and political forces are likely to exist.

Question 3

For which of the following markets would the fallacy of composition least likely apply?

Accepted Answer

A)  Labor market 
B)  Market for savings and investment 
C)  World market for oil 
D)  Poultry market 
A)  Labor market 
B)  Market for savings and investment 
C)  World market for oil 
D)  Poultry market

Question 4

Refer to the graphs shown. The curve that best illustrates the law of supply is:

Accepted Answer

A)  I. 
B)  II. 
C)  III. 
D)  IV. 
A)  I. 
B)  II. 
C)  III. 
D)  IV.

Question 5

Refer to the graphs shown. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?

Accepted Answer

A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d

Question 6

Refer to the graphs shown. Higher costs of production combined with an expectation on the part of consumers of higher prices in the future would result in the shifts depicted in:

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  d. 
A)  a. 
B)  b. 
C)  c. 
D)  d.

Question 7

People have become more concerned about the negative health effects of eating carbohydrates and fat. Considering these effects only, which of the following best describes the likely effect of this trend on the market for high-carb, high-fat snacks?

Accepted Answer

A)  Demand shifted to the left leading to a decline in equilibrium price and quantity. 
B)  Quantity demanded fell leading to a decline in equilibrium price and quantity. 
C)  Supply shifted to the left leading to a rise in equilibrium price and a decline in equilibrium quantity. 
D)  Demand and supply both shifted to the left leading to a decline in equilibrium price and quantity. 
A)  Demand shifted to the left leading to a decline in equilibrium price and quantity. 
B)  Quantity demanded fell leading to a decline in equilibrium price and quantity. 
C)  Supply shifted to the left leading to a rise in equilibrium price and a decline in equilibrium quantity. 
D)  Demand and supply both shifted to the left leading to a decline in equilibrium price and quantity.

Question 8

If the quantity of burgers supplied increases from 2 to 4 when the price of burgers increases from $2.00 to $5.00, the response by producers would be shown by:

Accepted Answer

A)  a rightward shift in the supply curve. 
B)  a leftward shift in the supply curve. 
C)  a movement upward and to the right along the supply curve. 
D)  a movement downward and to the left along the supply curve. 
A)  a rightward shift in the supply curve. 
B)  a leftward shift in the supply curve. 
C)  a movement upward and to the right along the supply curve. 
D)  a movement downward and to the left along the supply curve.

Question 9

The price of a ticket to the Beyoncé concert is set at $55. All the tickets for the concert sell out one hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that the:

Accepted Answer

A)  equilibrium price of tickets to the concert is $55. 
B)  equilibrium price of tickets to the concert is more than $55. 
C)  equilibrium price of tickets to the concert is less than $55. 
D)  quantity of tickets demanded is equal to the quantity supplied at the $55 price. 
A)  equilibrium price of tickets to the concert is $55. 
B)  equilibrium price of tickets to the concert is more than $55. 
C)  equilibrium price of tickets to the concert is less than $55. 
D)  quantity of tickets demanded is equal to the quantity supplied at the $55 price.

Question 10

If market supply increases, equilibrium price will:

Accepted Answer

A)  fall and demand will shift to the right. 
B)  fall, causing a movement along the demand curve. 
C)  rise and demand will shift to the left. 
D)  rise, causing a movement along the demand curve. 
A)  fall and demand will shift to the right. 
B)  fall, causing a movement along the demand curve. 
C)  rise and demand will shift to the left. 
D)  rise, causing a movement along the demand curve.

Question 11

Refer to the graph showing the supply of books. A shift from S1 to S0 would most likely occur for what reason?

Accepted Answer

A)  An increase in the number of suppliers in the market 
B)  A decrease in taxes levied on producers of books 
C)  An increase in the price of books 
D)  An increase in the cost of producing books 
A)  An increase in the number of suppliers in the market 
B)  A decrease in taxes levied on producers of books 
C)  An increase in the price of books 
D)  An increase in the cost of producing books

Question 12

Refer to the graph showing the demand for books. A movement from point E to point D is caused by:

Accepted Answer

A)  an increase in the price of books from $12.00 to $16.00. 
B)  a decrease in the price of books from $16.00 to $12.00. 
C)  an increase in consumer income. 
D)  an increase in the price of movies. 
A)  an increase in the price of books from $12.00 to $16.00. 
B)  a decrease in the price of books from $16.00 to $12.00. 
C)  an increase in consumer income. 
D)  an increase in the price of movies.

Question 13

In the early 2000s, the number of Eastern Europeans moving to England to join the labor force increased. This has led to fears by British citizens that Eastern Europeans will steal jobs from Western Europeans. What best describes their fear?

Accepted Answer

A)  Wages in Britain will fall as the demand for immigrants increases. 
B)  Cost of living in Britain will increase as the demand for goods increases. 
C)  Wages in Britain will fall since the quantity of labor supplied is increasing. 
D)  Wages in Britain will fall since the supply of labor is increasing. 
A)  Wages in Britain will fall as the demand for immigrants increases. 
B)  Cost of living in Britain will increase as the demand for goods increases. 
C)  Wages in Britain will fall since the quantity of labor supplied is increasing. 
D)  Wages in Britain will fall since the supply of labor is increasing.

Question 14

Refer to the graphs shown. The relevant market is corn. The impact of a poor corn harvest on the market for corn would most likely be demonstrated by which graph?

Accepted Answer

A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d

Question 15

If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that equilibrium:

Accepted Answer

A)  price will fall with little change in equilibrium quantity. 
B)  price will rise with little change in equilibrium quantity. 
C)  quantity will fall with little change in equilibrium price. 
D)  quantity will rise with little change in equilibrium price. 
A)  price will fall with little change in equilibrium quantity. 
B)  price will rise with little change in equilibrium quantity. 
C)  quantity will fall with little change in equilibrium price. 
D)  quantity will rise with little change in equilibrium price.

Question 16

The growing popularity of a commercial weight-loss diet that includes reducing the amount of carbohydrates consumed will cause:

Accepted Answer

A)  an increase in the demand for bread. 
B)  a decrease in the demand for bread. 
C)  a movement down and to the right along the demand for bread curve. 
D)  a movement up and to the left along the demand for bread curve. 
A)  an increase in the demand for bread. 
B)  a decrease in the demand for bread. 
C)  a movement down and to the right along the demand for bread curve. 
D)  a movement up and to the left along the demand for bread curve.

Question 17

Demand for healthy kidneys is high in both India in Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will:

Accepted Answer

A)  raise price and raise quantity. 
B)  raise price but lower quantity. 
C)  lower price but raise quantity. 
D)  lower price and lower quantity. 
A)  raise price and raise quantity. 
B)  raise price but lower quantity. 
C)  lower price but raise quantity. 
D)  lower price and lower quantity.

Question 18

The false assumption that what is true for a part will also be true for the whole is called the:

Accepted Answer

A)  fallacy of composition. 
B)  paradox of thrift. 
C)  post hoc fallacy. 
D)  ceteris paribus assumption. 
A)  fallacy of composition. 
B)  paradox of thrift. 
C)  post hoc fallacy. 
D)  ceteris paribus assumption.

Question 19

If the price of chicken rises and the price of beef does not rise, consumers will respond by:

Accepted Answer

A)  substituting beef for chicken. 
B)  substituting chicken for beef. 
C)  reducing purchases of beef and chicken. 
D)  increasing purchases of beef and chicken. 
A)  substituting beef for chicken. 
B)  substituting chicken for beef. 
C)  reducing purchases of beef and chicken. 
D)  increasing purchases of beef and chicken.

Question 20

If quantity supplied exceeds quantity demanded, there is a tendency for:

Accepted Answer

A)  price to fall to restore equilibrium. 
B)  price to rise to restore equilibrium. 
C)  the demand curve to shift to the left to restore equilibrium. 
D)  the demand curve to shift to the right to restore equilibrium. 
A)  price to fall to restore equilibrium. 
B)  price to rise to restore equilibrium. 
C)  the demand curve to shift to the left to restore equilibrium. 
D)  the demand curve to shift to the right to restore equilibrium.

Exam 4: Supply and Demand

Sometimes price cuts can have an unintended result of consumers waiting for deeper discounts. What does this waiting suggest about supply and demand?

If you observe a market where quantity demanded doesn't equal quantity supplied, a logical conclusion is that:

For which of the following markets would the fallacy of composition least likely apply?

Refer to the graphs shown. The curve that best illustrates the law of supply is:

Refer to the graphs shown. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?

Refer to the graphs shown. Higher costs of production combined with an expectation on the part of consumers of higher prices in the future would result in the shifts depicted in:

People have become more concerned about the negative health effects of eating carbohydrates and fat. Considering these effects only, which of the following best describes the likely effect of this trend on the market for high-carb, high-fat snacks?

If the quantity of burgers supplied increases from 2 to 4 when the price of burgers increases from $2.00 to $5.00, the response by producers would be shown by:

The price of a ticket to the Beyoncé concert is set at $55. All the tickets for the concert sell out one hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that the:

If market supply increases, equilibrium price will:

Refer to the graph showing the supply of books. A shift from S1 to S0 would most likely occur for what reason?

Refer to the graph showing the demand for books. A movement from point E to point D is caused by:

In the early 2000s, the number of Eastern Europeans moving to England to join the labor force increased. This has led to fears by British citizens that Eastern Europeans will steal jobs from Western Europeans. What best describes their fear?

Refer to the graphs shown. The relevant market is corn. The impact of a poor corn harvest on the market for corn would most likely be demonstrated by which graph?

If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that equilibrium:

The growing popularity of a commercial weight-loss diet that includes reducing the amount of carbohydrates consumed will cause:

The false assumption that what is true for a part will also be true for the whole is called the:

If the price of chicken rises and the price of beef does not rise, consumers will respond by:

If quantity supplied exceeds quantity demanded, there is a tendency for:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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