Question 1

Figure 4-1  
-Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)

Accepted Answer

A) increase in price. 
B) decrease in price. 
C) decrease in the price of a substitute good. 
D) increase in income. 
A) increase in price. 
B) decrease in price. 
C) decrease in the price of a substitute good. 
D) increase in income.

Question 2

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Accepted Answer

A) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B) Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
A) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B) Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 3

An example of a perfectly competitive market would be the

Accepted Answer

A) cable TV market. 
B) soybean market. 
C) breakfast cereal market. 
D) shampoo market. 
A) cable TV market. 
B) soybean market. 
C) breakfast cereal market. 
D) shampoo market.

Question 4

Table 4-13
The demand schedule below pertains to sandwiches demanded per week.  
-Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2.
• The current price of a sandwich is $5.00.
• The market quantity supplied of sandwiches is 10.
• The law of supply applies to the supply of sandwiches.
Then there is a

Accepted Answer

A) shortage of 5 sandwiches, and the price would be expected to rise from its current level of $5.00. 
B) shortage of 5 sandwiches, and the price would be expected to fall from its current level of $5.00. 
C) surplus of 5 sandwiches, and the price would be expected to rise from its current level of $5.00. 
D) surplus of 5 sandwiches, and the price would be expected to fall from its current level of $5.00. 
A) shortage of 5 sandwiches, and the price would be expected to rise from its current level of $5.00. 
B) shortage of 5 sandwiches, and the price would be expected to fall from its current level of $5.00. 
C) surplus of 5 sandwiches, and the price would be expected to rise from its current level of $5.00. 
D) surplus of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.

Question 5

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good 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 6

An increase in the price of pizza will shift the demand curve for pizza to the left.

Accepted Answer

A) True 
 B)False

Question 7

Table 4-12
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:  
-Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $20, then there will be

Accepted Answer

A) a shortage of 300 tickets. 
B) a surplus of 300 tickets. 
C) 300 tickets sold. 
D) 600 tickets unsold. 
A) a shortage of 300 tickets. 
B) a surplus of 300 tickets. 
C) 300 tickets sold. 
D) 600 tickets unsold.

Question 8

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Accepted Answer

A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price. 
A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price.

Question 9

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Accepted Answer

A) fall in six months but not now. 
B) increase in six months when the price goes up. 
C) fall now. 
D) increase now to meet as much demand as possible. 
A) fall in six months but not now. 
B) increase in six months when the price goes up. 
C) fall now. 
D) increase now to meet as much demand as possible.

Question 10

When quantity supplied increases at every possible price, we know that the supply curve has

Accepted Answer

A) shifted to the left. 
B) shifted to the right. 
C) not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D) not shifted; rather, the supply curve has become flatter. 
A) shifted to the left. 
B) shifted to the right. 
C) not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D) not shifted; rather, the supply curve has become flatter.

Question 11

Which of the following might cause the demand curve for an inferior good to shift to the left?

Accepted Answer

A) a decrease in income 
B) an increase in the price of a substitute 
C) an increase in the price of a complement 
D) None of the above is correct. 
A) a decrease in income 
B) an increase in the price of a substitute 
C) an increase in the price of a complement 
D) None of the above is correct.

Question 12

If the demand for a product increases, then we would expect equilibrium price

Accepted Answer

A) to increase and equilibrium quantity to decrease. 
B) to decrease and equilibrium quantity to increase. 
C) and equilibrium quantity both to increase. 
D) and equilibrium quantity both to decrease. 
A) to increase and equilibrium quantity to decrease. 
B) to decrease and equilibrium quantity to increase. 
C) and equilibrium quantity both to increase. 
D) and equilibrium quantity both to decrease.

Question 13

Figure 4-12
Firm A
Firm B    
-Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

Accepted Answer

A) 2 units. 
B) 10 units. 
C) 12 units. 
D) 22 units. 
A) 2 units. 
B) 10 units. 
C) 12 units. 
D) 22 units.

Question 14

If Miguel expects to earn a higher income next month, he may choose to

Accepted Answer

A) save more now and spend less of his current income on goods and services. 
B) save less now and spend more of his current income on goods and services. 
C) decrease his current demand for goods and services. 
D) move along his current demand curves for goods and services. 
A) save more now and spend less of his current income on goods and services. 
B) save less now and spend more of his current income on goods and services. 
C) decrease his current demand for goods and services. 
D) move along his current demand curves for goods and services.

Question 15

A movement upward and to the right along a supply curve is called a(n)

Accepted Answer

A) increase in supply. 
B) decrease in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied. 
A) increase in supply. 
B) decrease in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied.

Question 16

A likely example of substitute goods for most people would be

Accepted Answer

A) peanut butter and jelly. 
B) tennis balls and tennis rackets. 
C) televisions and subscriptions to cable television services. 
D) pencils and pens. 
A) peanut butter and jelly. 
B) tennis balls and tennis rackets. 
C) televisions and subscriptions to cable television services. 
D) pencils and pens.

Question 17

An increase in the price of a good would

Accepted Answer

A) increase the supply of the good. 
B) increase the amount purchased by buyers. 
C) give producers an incentive to produce more. 
D) decrease both the quantity demanded of the good and the quantity supplied of the good. 
A) increase the supply of the good. 
B) increase the amount purchased by buyers. 
C) give producers an incentive to produce more. 
D) decrease both the quantity demanded of the good and the quantity supplied of the good.

Question 18

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Accepted Answer

A) each good she purchases to remain unchanged. 
B) normal goods to decrease. 
C) substitute goods to increase. 
D) inferior goods to decrease. 
A) each good she purchases to remain unchanged. 
B) normal goods to decrease. 
C) substitute goods to increase. 
D) inferior goods to decrease.

Question 19

Surpluses drive price up, while shortages drive price down.

Accepted Answer

A) True 
 B)False

Question 20

In competitive markets, buyers

Accepted Answer

A) are price takers, but sellers are price setters. 
B) are price setters, but sellers are price takers. 
C) and sellers are price takers. 
D) and sellers are price setters. 
A) are price takers, but sellers are price setters. 
B) are price setters, but sellers are price takers. 
C) and sellers are price takers. 
D) and sellers are price setters.

Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

An example of a perfectly competitive market would be the

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

An increase in the price of pizza will shift the demand curve for pizza to the left.

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

When quantity supplied increases at every possible price, we know that the supply curve has

Which of the following might cause the demand curve for an inferior good to shift to the left?

If the demand for a product increases, then we would expect equilibrium price

Figure 4-12 Firm A Firm B -Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

If Miguel expects to earn a higher income next month, he may choose to

A movement upward and to the right along a supply curve is called a(n)

A likely example of substitute goods for most people would be

An increase in the price of a good would

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Surpluses drive price up, while shortages drive price down.

In competitive markets, buyers

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 4: The Market Forces of Supply and Demand

Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

An example of a perfectly competitive market would be the

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

An increase in the price of pizza will shift the demand curve for pizza to the left.

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

When quantity supplied increases at every possible price, we know that the supply curve has

Which of the following might cause the demand curve for an inferior good to shift to the left?

If the demand for a product increases, then we would expect equilibrium price

Figure 4-12 Firm A Firm B -Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

If Miguel expects to earn a higher income next month, he may choose to

A movement upward and to the right along a supply curve is called a(n)

A likely example of substitute goods for most people would be

An increase in the price of a good would

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Surpluses drive price up, while shortages drive price down.

In competitive markets, buyers

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters