Question 1

Which of the following would not move either the supply or the demand curve in the market for housing?

Accepted Answer

A) An increase in the number of people who are retiring 
B) An increase in the cost of home insurance 
C) An increase in real-estate prices 
D) A possibility of higher construction costs 
A) An increase in the number of people who are retiring 
B) An increase in the cost of home insurance 
C) An increase in real-estate prices 
D) A possibility of higher construction costs

Question 2

Consider the supply and demand schedules below to answer the questions that follow: $\begin{array}{rcc}
 \underline { \text { Price   }}& \underline { \text { Qty. }} & \underline { \text { Qty. }}  \
& \underline { \text { Demanded  }} & \underline { \text { Supplied }} \
\$ 10 & 0 & 10 \
9 & 1 & 9 \
8 & 2 & 8 \
7 & 3 & 7 \
6 & 4 & 6 \
5 & 5 & 5 \
4 & 6 & 4 \
3 & 7 & 3 \
2 & 8 & 2 \
1 & 9 & 1
\end{array}$ (a)In a free market,what will the equilibrium price be?
(b)What will the equilibrium quantity demanded and quantity supplied be?
(c)If price were $2,what would happen? (Discuss in terms of adjustment to equilibrium. )
(d)If price were $7,what would happen? (Discuss in terms of adjustment to equilibrium. )
(e)If price were $5,what would happen? (Discuss in terms of adjustment to equilibrium. )

Accepted Answer

(a)$5.00,where quantity demanded equals

Question 3

Which statement is not consistent with the law of supply?

Accepted Answer

A) More of a good will be supplied, the higher the price, other things constant. 
B) Less of a good will be supplied, the lower the price, other things constant. 
C) Quantity supplied of a good is directly related to the good's price. 
D) Quantity supplied of a good is inversely related to the good's price. 
A) More of a good will be supplied, the higher the price, other things constant. 
B) Less of a good will be supplied, the lower the price, other things constant. 
C) Quantity supplied of a good is directly related to the good's price. 
D) Quantity supplied of a good is inversely related to the good's price.

Question 4

Demonstrate graphically and explain the difference between a decrease in the quantity supplied and a decrease in supply.Describe what might have caused each to occur.

Accepted Answer

A decrease in the quantity supplied refe

Question 5

The use of the phrase "other things constant" in supply and demand analysis indicates that:

Accepted Answer

A) an equilibrium price has been reached. 
B) an equilibrium quantity has been reached. 
C) we are considering changes in just one factor. 
D) we are considering all the changes which might take place in actual markets. 
A) an equilibrium price has been reached. 
B) an equilibrium quantity has been reached. 
C) we are considering changes in just one factor. 
D) we are considering all the changes which might take place in actual markets.

Question 6

According to the law of supply, what will motivate firms to increase their quantity supplied of a product?

Accepted Answer

A) Production cost 
B) Fixed cost 
C) Price 
D) Supply 
A) Production cost 
B) Fixed cost 
C) Price 
D) Supply

Question 7

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 8

To derive a market demand curve from individual demand curves, it would be necessary to:

Accepted Answer

A) take the maximum quantity of each demand curve as the market quantity demanded at each price. 
B) sum the curves horizontally, adding quantities demanded at each price. 
C) take the demand curve that is the furthest to the right as the market demand curve. 
D) multiply the quantities demanded on each demand curve at each price to find the market quantity demanded at each price. 
A) take the maximum quantity of each demand curve as the market quantity demanded at each price. 
B) sum the curves horizontally, adding quantities demanded at each price. 
C) take the demand curve that is the furthest to the right as the market demand curve. 
D) multiply the quantities demanded on each demand curve at each price to find the market quantity demanded at each price.

Question 9

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 10

The law of supply states that more of a good will be supplied the lower its price, other things constant.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Consider the following demand table,which represents the demand for comic books by John,Liz,and Alex. $$\begin{array} { | c | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Price } \
\text { (in } \$ \text { ) }
\end{array} & \begin{array} { c } 
\text { John's } \
\text { Demand }
\end{array} & \begin{array} { c } 
\text { Liz's } \
\text { Demand }
\end{array} & \begin{array} { c } 
\text { Alex's } \
\text { Demand }
\end{array} & \begin{array} { c } 
\text { Market } \
\text { Demand }
\end{array} \
\hline \mathrm { A } & \$ 2 & 4 & 10 & 6 & \
\hline \mathrm { B } & 4 & 4 & 9 & 5 & \
\hline \mathrm { C } & 6 & 0 & 8 & 4 & \
\hline \mathrm { D } & 8 & 0 & 7 & 3 & \
\hline \mathrm { E } & 10 & 0 & 6 & 2 & \
\hline \mathrm { F } & 12 & 0 & 5 & 1 & \
\hline \mathrm { G } & 14 & 0 & 4 & 0 & \
\hline \mathrm { H } & 16 & 0 & 3 & 0 & \
\hline
\end{array}$$ (a)Fill in the "market demand" column of the above table.
(b)Use the grid below to draw the demand curves for comic books of John,Liz,and Alex.Then draw in the market demand curve.   (c)Notice that Liz's demand is everywhere to the right of Alex's demand.Can you conclude from this that Liz likes comic books more than Alex does? Explain.

Accepted Answer

(a)To fill in the "market demand" column

Question 13

Bob's Burgers charged $3.50 for a quarter-pound hamburger with all the fixin's,and sold 7,500 of them.The following year,although Bob raised the price to $3.75,sales of his burgers rose to 8,200.Use the concepts of a shift in the demand curve versus a movement along the demand curve to explain why this increase in sales does not represent a violation of the law of demand.

Accepted Answer

Most likely,the assumption of other thin

Question 14

Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane. )

Accepted Answer

A) Supply curve shifted to the right, demand curve did not shift. 
B) Demand curve shifted to the right, supply curve did not shift. 
C) Both supply and demand curves shifted to the right. 
D) Supply curve moved right and demand curve shifted to the left. 
A) Supply curve shifted to the right, demand curve did not shift. 
B) Demand curve shifted to the right, supply curve did not shift. 
C) Both supply and demand curves shifted to the right. 
D) Supply curve moved right and demand curve shifted to the left.

Question 15

In a market where there are strong social and political forces:

Accepted Answer

A) quantity demanded will be expected to equal quantity supplied. 
B) quantity demanded might not equal quantity supplied. 
C) the market will be in disequilibrium. 
D) the invisible hand will overcome all other forces. 
A) quantity demanded will be expected to equal quantity supplied. 
B) quantity demanded might not equal quantity supplied. 
C) the market will be in disequilibrium. 
D) the invisible hand will overcome all other forces.

Question 16

Refer to the table that presents Mike and Janet's demand for apples by the bushel. If they are the only two in the market, which of the following represents a point on the market demand curve? $\begin{array} { | c | c | c | } 
\hline \text { Price per pedk } & \text { Mike Quantity in pecks } &\text { Janet Quantity in pecks }\
\hline \$ 1 & 22 & 6 \
\hline \$ 2 & 18 & 3 \
\hline \$ 3 & 14 & 0 \
\hline \$ 4 & 10 & 0 \
\hline \$ 5 & 6 & 0 \
\hline

\end{array}$

Accepted Answer

A) price = $1, quantity = 18 
B) price = $2, quantity = 21 
C) price = $4, quantity = 0 
D) price = $4, quantity = 21 
A) price = $1, quantity = 18 
B) price = $2, quantity = 21 
C) price = $4, quantity = 0 
D) price = $4, quantity = 21

Question 17

If the price of movies on DVD rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will:

Accepted Answer

A) substitute movies on DVD for movies on the Internet. 
B) substitute movies on the Internet for movies on DVD. 
C) buy only movies on DVD. 
D) buy only movies on the Internet. 
A) substitute movies on DVD for movies on the Internet. 
B) substitute movies on the Internet for movies on DVD. 
C) buy only movies on DVD. 
D) buy only movies on the Internet.

Question 18

The diagram below represents the consumer side of the market for skateboards in New York.The current price of skateboards is PA.Each of the events described below will have some impact on the demand for skateboards.For each event,draw a picture to illustrate the effect of the event.Be sure to explain your pictures using pertinent economic terminology ("movement along" or "shift in").   (a)A drop in the price of skateboards.
(b)A drop in the price of kneepads.
(c)A decline in income.

Accepted Answer

(a)The diagram: @#IMG-DLM& A drop in the price of

Question 19

Refer to the graphs shown. If consumers began purchasing more of this product due to a decrease in price, this would be shown by arrow:

Accepted Answer

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

Question 20

If the price of steel rises, the law of supply predicts that, other things constant, the:

Accepted Answer

A) supply of steel will increase. 
B) supply of steel will decrease. 
C) quantity supplied of steel will increase. 
D) quantity supplied of steel will decrease. 
A) supply of steel will increase. 
B) supply of steel will decrease. 
C) quantity supplied of steel will increase. 
D) quantity supplied of steel will decrease.

Exam 4: Supply and Demand

Which of the following would not move either the supply or the demand curve in the market for housing?

Which statement is not consistent with the law of supply?

Demonstrate graphically and explain the difference between a decrease in the quantity supplied and a decrease in supply.Describe what might have caused each to occur.

The use of the phrase "other things constant" in supply and demand analysis indicates that:

According to the law of supply, what will motivate firms to increase their quantity supplied of a product?

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

To derive a market demand curve from individual demand curves, it would be necessary to:

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

The law of supply states that more of a good will be supplied the lower its price, other things constant.

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

Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane. )

In a market where there are strong social and political forces:

Refer to the table that presents Mike and Janet's demand for apples by the bushel. If they are the only two in the market, which of the following represents a point on the market demand curve? Price per pedk Mike Quantity in pecks Janet Quantity in pecks \ 1 22 6 \ 2 18 3 \ 3 14 0 \ 4 10 0 \ 5 6 0

If the price of movies on DVD rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will:

Refer to the graphs shown. If consumers began purchasing more of this product due to a decrease in price, this would be shown by arrow:

If the price of steel rises, the law of supply predicts that, other things constant, the:

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