Question 1

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied:

Accepted Answer

A) equals quantity demanded, prices don't change. 
B) exceeds quantity demanded, prices have a tendency to rise. 
C) is less than quantity demanded, prices tend to fall. 
D) equals quantity demanded, prices will fall. 
A) equals quantity demanded, prices don't change. 
B) exceeds quantity demanded, prices have a tendency to rise. 
C) is less than quantity demanded, prices tend to fall. 
D) equals quantity demanded, prices will fall.

Question 2

Three hurricanes, combined with the already high real-estate prices, have made people reconsider whether to retire to Florida. The cost of homeownership has increased due to stricter building codes. The influx of retirees is expected to rise. Which of the following factors is tending to move the demand curve for Florida housing to the right?

Accepted Answer

A) The aging of the baby boomers, increasing the number of people who are retiring 
B) The increase in the cost of insurance 
C) The already high real-estate prices 
D) The current high construction costs 
A) The aging of the baby boomers, increasing the number of people who are retiring 
B) The increase in the cost of insurance 
C) The already high real-estate prices 
D) The current high construction costs

Question 3

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

Accepted Answer

A) Labor market 
B) Orange market in Florida 
C) Gasoline market 
D) Poultry market 
A) Labor market 
B) Orange market in Florida 
C) Gasoline market 
D) Poultry market

Question 4

The more the current price exceeds the equilibrium price, the:

Accepted Answer

A) greater the resulting shortage will be. 
B) smaller the resulting shortage will be. 
C) greater the resulting surplus will be. 
D) smaller the resulting surplus will be. 
A) greater the resulting shortage will be. 
B) smaller the resulting shortage will be. 
C) greater the resulting surplus will be. 
D) smaller the resulting surplus will be.

Question 5

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

Accepted Answer

A) True 
 B)False

Question 6

The supply of leather jackets would be expected to increase as a result of:

Accepted Answer

A) a decrease in the cost of producing leather jackets. 
B) an increase in the price of leather jackets. 
C) an increase in the popularity of leather jackets. 
D) the expectation that the price of leather jackets will rise in the future. 
A) a decrease in the cost of producing leather jackets. 
B) an increase in the price of leather jackets. 
C) an increase in the popularity of leather jackets. 
D) the expectation that the price of leather jackets will rise in the future.

Question 7

Refer to the graphs showing the demand for music downloads. What arrow shows the effect of an increase in the number of consumers in the market on the demand for music downloads?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

The statement, "Assuming that if it is rational for one person to stand at a football game to get a better view then it is rational for everyone to stand at a football game to get a better view" is an example of:

Accepted Answer

A) economic reasoning. 
B) the fallacy of division. 
C) the fallacy of composition. 
D) the ceteris paribus assumption. 
A) economic reasoning. 
B) the fallacy of division. 
C) the fallacy of composition. 
D) the ceteris paribus assumption.

Question 9

Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that:

Accepted Answer

A) the law of demand is invalid. 
B) despite the increase in price, quantity demanded rose due to some other factor changing. 
C) this situation has nothing to do with the law of demand. 
D) the demand for a college education is positively sloped. 
A) the law of demand is invalid. 
B) despite the increase in price, quantity demanded rose due to some other factor changing. 
C) this situation has nothing to do with the law of demand. 
D) the demand for a college education is positively sloped.

Question 10

Given the following individual demand tables for individuals A-D,construct a market demand curve. $$\begin{array} { | r | r | r | r | r | } 
\hline \text { Price } & \text { A } & { \mathrm { B } } & { \mathrm { C } } &  { \mathrm { D } } \
\hline .50 & 5 & 6 & 10 & 8 \
\hline 1.00 & 5 & 5 & 8 & 7 \
\hline 1.50 & 5 & 4 & 6 & 6 \
\hline 2.00 & 0 & 3 & 4 & 5 \
\hline 2.50 & 0 & 2 & 2 & 4 \
\hline 3.00 & 0 & 1 & 0 & 3 \
\hline
\end{array}$$

Accepted Answer

The market demand table is the

Question 11

Consider the following supply and demand picture of the market for Oreos.Note that the market is currently in equilibrium,with a price of P* and a quantity exchanged of Q*.   For each of the scenarios below,draw a picture that illustrates the impact on price and quantity exchanged.Explain each of your pictures by describing what is happening to the supply side of the market.
(a)The price of Hydrox cookies goes down.
(b)Due to a disastrous growing season,the price of cocoa triples.

Accepted Answer

(a)The diagram: @#IMG-DLM& Oreos and Hydrox are co

Question 12

Which of the following would likely result in an increase in the demand for beef?

Accepted Answer

A) A decrease in the supply of beef 
B) An increase in family incomes 
C) An increase in the price of feed grains for cattle 
D) A decrease in the price of pork 
A) A decrease in the supply of beef 
B) An increase in family incomes 
C) An increase in the price of feed grains for cattle 
D) A decrease in the price of pork

Question 13

When the going rate is $10.00 per hour, Ann wants to babysit 6 hours each week and Pat wants to babysit 4 hours each week. If the rate goes up to $12.00, Ann and Pat both double the number of hours they are willing to babysit each week. Based on this information, a combined supply curve will pass through the points:

Accepted Answer

A) price = $10.00, quantity supplied = 20 and price = $12.00, quantity supplied = 10. 
B) price = $10.00, quantity supplied = 10 and price = $12.00, quantity supplied = 20. 
C) price = $10.00, quantity supplied = 6 and price = $12.00, quantity supplied = 4. 
D) price = $10.00, quantity supplied = 4 and price = $12.00, quantity supplied = 6. 
A) price = $10.00, quantity supplied = 20 and price = $12.00, quantity supplied = 10. 
B) price = $10.00, quantity supplied = 10 and price = $12.00, quantity supplied = 20. 
C) price = $10.00, quantity supplied = 6 and price = $12.00, quantity supplied = 4. 
D) price = $10.00, quantity supplied = 4 and price = $12.00, quantity supplied = 6.

Question 14

Refer to the graphs shown. Assume the graph reflects demand in the egg market. Which arrow best captures the impact of increased consumer concern about cholesterol on the egg market?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 15

The following graph shows the supply of movie downloads. What is the market quantity that would be supplied at a price of $2.00?

Accepted Answer

A) 2 movies per week 
B) 3 movies per week 
C) 4 movies per week 
D) 7 movies per week 
A) 2 movies per week 
B) 3 movies per week 
C) 4 movies per week 
D) 7 movies per week

Question 16

When applied to labor markets, the law of supply suggests that:

Accepted Answer

A) an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase. 
B) a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase. 
C) an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase. 
D) a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase. 
A) an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase. 
B) a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase. 
C) an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase. 
D) a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase.

Question 17

The model of supply and demand leads to the prediction that low interest rates cause:

Accepted Answer

A) an increase in housing prices, especially in cities with plenty of room for expansion. 
B) an increase in housing prices, especially in cities with limited land. 
C) a decrease in housing prices, especially in cities with plenty of room for expansion. 
D) a decrease in housing prices, especially in cities with limited land. 
A) an increase in housing prices, especially in cities with plenty of room for expansion. 
B) an increase in housing prices, especially in cities with limited land. 
C) a decrease in housing prices, especially in cities with plenty of room for expansion. 
D) a decrease in housing prices, especially in cities with limited land.

Question 18

Which of the following would be expected to cause the quantity of wool supplied to decrease?

Accepted Answer

A) A decrease in the price of wool 
B) A decrease in the number of wool producers 
C) An increase in the cost of raising sheep 
D) An increase in wages paid to workers in the wool industry 
A) A decrease in the price of wool 
B) A decrease in the number of wool producers 
C) An increase in the cost of raising sheep 
D) An increase in wages paid to workers in the wool industry

Question 19

At a price of $3.50, the quantity supplied by the market will be 14.
 $$\begin{array} { | r | c | c | c | c | } 
\hline \text { Price } & \text { Ann's Supply } & \text { Barry's Supply } & \text { Charlie's Supply } & \begin{array} { c } 
\text { Market } \
\text { Supply }
\end{array} \
\hline \$ 0.00 & 0 & 0 & 0 & 0 \
\hline 0.50 & 1 & 0 & 0 & 1 \
\hline 1.00 & 2 & 1 & 0 & 3 \
\hline 1.50 & 3 & 2 & 0 & 5 \
\hline 2.00 & 4 & 3 & 0 & 7 \
\hline 2.50 & 5 & 4 & 0 & - \
\hline 3.00 & 6 & 5 & 0 & - \
\hline 3.50 & 7 & 5 & 2 & - \
\hline 4.00 & 8 & 5 & 2 & - \
\hline
\end{array}$$

Accepted Answer

A) True 
 B)False

Question 20

Explain what it means to say that the cotton market is in "equilibrium." What forces (other than market forces)can be involved in determining the equilibrium price of cotton?

Accepted Answer

Equilibrium is a concept in which opposi

Exam 4: Supply and Demand

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied:

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

The more the current price exceeds the equilibrium price, the:

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

The supply of leather jackets would be expected to increase as a result of:

Refer to the graphs showing the demand for music downloads. What arrow shows the effect of an increase in the number of consumers in the market on the demand for music downloads?

The statement, "Assuming that if it is rational for one person to stand at a football game to get a better view then it is rational for everyone to stand at a football game to get a better view" is an example of:

Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that:

Given the following individual demand tables for individuals A-D,construct a market demand curve. Price A .50 5 6 10 8 1.00 5 5 8 7 1.50 5 4 6 6 2.00 0 3 4 5 2.50 0 2 2 4 3.00 0 1 0 3

Which of the following would likely result in an increase in the demand for beef?

Refer to the graphs shown. Assume the graph reflects demand in the egg market. Which arrow best captures the impact of increased consumer concern about cholesterol on the egg market?

The following graph shows the supply of movie downloads. What is the market quantity that would be supplied at a price of $2.00?

When applied to labor markets, the law of supply suggests that:

The model of supply and demand leads to the prediction that low interest rates cause:

Which of the following would be expected to cause the quantity of wool supplied to decrease?

At a price of $3.50, the quantity supplied by the market will be 14. Price Ann's Supply Barry's Supply Charlie's Supply Market Supply \ 0.00 0 0 0 0 0.50 1 0 0 1 1.00 2 1 0 3 1.50 3 2 0 5 2.00 4 3 0 7 2.50 5 4 0 - 3.00 6 5 0 - 3.50 7 5 2 - 4.00 8 5 2 -

Explain what it means to say that the cotton market is in "equilibrium." What forces (other than market forces)can be involved in determining the equilibrium price of cotton?

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

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Microeconomic Policy, Economic Reasoning, and Beyond

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Measuring and Describing the Aggregate Economy

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Deficits and Debt: the Austerity Debate

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Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

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