Question 1

When a shortage exists in a market, sellers

Accepted Answer

A) raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
B) raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. 
C) lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
D) lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. 
A) raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
B) raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. 
C) lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
D) lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

Question 2

If the demand for a good falls when income falls, then the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 3

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

Accepted Answer

The answer of Studies show that lower cigarette prices are...

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Table 4-11  
-Refer to Table 4-11. If the price were $8, a

Accepted Answer

A) shortage of 20 units would exist, and price would tend to rise. 
B) surplus of 25 units would exist, and price would tend to fall. 
C) shortage of 25 units would exist, and price would tend to rise. 
D) surplus of 45 units would exist, and price would tend to fall. 
A) shortage of 20 units would exist, and price would tend to rise. 
B) surplus of 25 units would exist, and price would tend to fall. 
C) shortage of 25 units would exist, and price would tend to rise. 
D) surplus of 45 units would exist, and price would tend to fall.

Question 6

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Accepted Answer

A) "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply. 
B) increase the supply of its doll now before the other doll hits the market. 
C) increase the price of its doll now. 
D) discontinue its doll. 
A) "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply. 
B) increase the supply of its doll now before the other doll hits the market. 
C) increase the price of its doll now. 
D) discontinue its doll.

Question 7

A decrease in supply is represented by a

Accepted Answer

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

Question 8

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Accepted Answer

A) luxury good. 
B) inferior good. 
C) normal good. 
D) complementary good. 
A) luxury good. 
B) inferior good. 
C) normal good. 
D) complementary good.

Question 9

Figure 4-15  
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Accepted Answer

A) an increase in the price of sailboats 
B) a decrease in the number of firms selling sailboats 
C) a decrease in the price of fiberglass and sail cloth 
D) a decrease in the price of America's Cup sailing t-shirts 
A) an increase in the price of sailboats 
B) a decrease in the number of firms selling sailboats 
C) a decrease in the price of fiberglass and sail cloth 
D) a decrease in the price of America's Cup sailing t-shirts

Question 10

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

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 11

Figure 4-27
Panel (a)
Panel (b)     Panel (c)
Panel (d)    
-Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity demanded?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 12

A rightward shift of a demand curve is called a(n)

Accepted Answer

A) increase in demand. 
B) decrease in demand. 
C) decrease in quantity demanded. 
D) increase in quantity demanded. 
A) increase in demand. 
B) decrease in demand. 
C) decrease in quantity demanded. 
D) increase in quantity demanded.

Question 13

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 14

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A) will increase but not until the end of the year. 
B) increases today. 
C) decreases as you look for a substitute good. 
D) shifts left today. 
A) will increase but not until the end of the year. 
B) increases today. 
C) decreases as you look for a substitute good. 
D) shifts left today.

Question 15

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

Accepted Answer

A) the price of pork increases. 
B) the price of pork decreases. 
C) the price of pork does not change. 
D) there is no longer a market for pork. 
A) the price of pork increases. 
B) the price of pork decreases. 
C) the price of pork does not change. 
D) there is no longer a market for pork.

Question 16

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 17

An early frost in the vineyards of Napa Valley would cause a(n)

Accepted Answer

A) increase in the demand for wine, increasing price. 
B) increase in the supply of wine, decreasing price. 
C) decrease in the demand for wine, decreasing price. 
D) decrease in the supply of wine, increasing price. 
A) increase in the demand for wine, increasing price. 
B) increase in the supply of wine, decreasing price. 
C) decrease in the demand for wine, decreasing price. 
D) decrease in the supply of wine, increasing price.

Question 18

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation   , where   is the quantity demanded and   is the price. Also, suppose the supply schedule can be represented by the equation   , where   is the quantity supplied.
-Refer to Scenario 4-1. Suppose the supply curve shifts to   
. What is the new equilibrium price and quantity in this market?

Accepted Answer

The new eq

Question 19

There is no shortage of scarce resources in a market economy because

Accepted Answer

A) the government makes shortages illegal. 
B) resources are abundant in market economies. 
C) prices adjust to eliminate shortages. 
D) quantity supplied is always greater than quantity demanded in market economies. 
A) the government makes shortages illegal. 
B) resources are abundant in market economies. 
C) prices adjust to eliminate shortages. 
D) quantity supplied is always greater than quantity demanded in market economies.

Question 20

Which of the following events must cause equilibrium quantity to fall?

Accepted Answer

A) demand increases and supply decreases 
B) demand and supply both decrease 
C) demand decreases and supply increases 
D) demand and supply both increase 
A) demand increases and supply decreases 
B) demand and supply both decrease 
C) demand decreases and supply increases 
D) demand and supply both increase

Exam 4: The Market Forces of Supply and Demand

When a shortage exists in a market, sellers

If the demand for a good falls when income falls, then the good is called an inferior good.

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

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

Table 4-11 -Refer to Table 4-11. If the price were $8, a

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

A decrease in supply is represented by a

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity demanded?

A rightward shift of a demand curve is called a(n)

An increase in the price of a good would

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

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

An early frost in the vineyards of Napa Valley would cause a(n)

There is no shortage of scarce resources in a market economy because

Which of the following events must cause equilibrium quantity to fall?

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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