Question 1

In a market economy, prices are the signals that guide the allocation of scarce resources.

Accepted Answer

A) True 
 B)False

Question 2

A newspaper's classified ads are an example of a market.

Accepted Answer

A) True 
 B)False

Question 3

The market demand curve

Accepted Answer

A) shows how quantity demanded changes when the number of sellers changes. 
B) represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. 
C) is found by vertically adding the individual demand curves. 
D) represents the sum of the quantities demanded by all the buyers at each price of the good. 
A) shows how quantity demanded changes when the number of sellers changes. 
B) represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. 
C) is found by vertically adding the individual demand curves. 
D) represents the sum of the quantities demanded by all the buyers at each price of the good.

Question 4

Equilibrium quantity must decrease when

Accepted Answer

A) demand increases and supply decreases. 
B) demand decreases and supply increases. 
C) demand increases and supply does not change. 
D) demand does not change and supply decreases. 
A) demand increases and supply decreases. 
B) demand decreases and supply increases. 
C) demand increases and supply does not change. 
D) demand does not change and supply decreases.

Question 5

Who gets scarce resources in a market economy?

Accepted Answer

A) The government 
B) Whoever the government decides gets them 
C) Whoever wants them 
D) Whoever is willing and able to pay the price 
A) The government 
B) Whoever the government decides gets them 
C) Whoever wants them 
D) Whoever is willing and able to pay the price

Question 6

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Accepted Answer

A) decrease. 
B) increase. 
C) be unaffected. 
D) change but you don't know how without more information. 
A) decrease. 
B) increase. 
C) be unaffected. 
D) change but you don't know how without more information.

Question 7

Figure 4-11
​
   ​
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Accepted Answer

The answer of Figure 4-11
​
   ​
-Refer to Figure...

Question 8

A yard sale is an example of a market.

Accepted Answer

A) True 
 B)False

Question 9

If a surplus exists in a market, then we know that the actual price is

Accepted Answer

A) above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B) above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C) below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D) below the equilibrium price, and quantity supplied is greater than quantity demanded. 
A) above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B) above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C) below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D) below the equilibrium price, and quantity supplied is greater than quantity demanded.

Question 10

Figure 4-9   ​
-Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from

Accepted Answer

A) x to y. 
B) y to x. 
C) Sa to Sb. 
D) Sb to Sa. 
A) x to y. 
B) y to x. 
C) Sa to Sb. 
D) Sb to Sa.

Question 11

A market is a group of buyers and sellers of a particular good or service.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

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

Question 13

Figure 4-4  
-Refer to Figure 4-4. The movement from point A to point B on the graph is called

Accepted Answer

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

Question 14

Since individual buyers and individual sellers in a competitive market have no influence on the market price, what do we call the buyers and sellers in a competitive market?

Accepted Answer

The answer of Since individual buyers and individual sellers in...

Question 15

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Accepted Answer

A) True 
 B)False

Question 16

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation QS1U1P1D S1S1P0= 500 - 10P, where QS1U1P1D S1S1P0 is the quantity demanded and P is the price. Also, suppose the supply schedule can be represented by the equation QS1U1P1S S1S1P0= 200 + 10P, where QS1U1P1S S1S1P0 is the quantity supplied.
-Refer to Scenario 4-1. What is the equilibrium quantity in this market?

Accepted Answer

The answer of Scenario 4-1
Suppose the demand schedule in a...

Question 18

Equilibrium price must increase when

Accepted Answer

A) both demand and supply increase. 
B) both demand and supply decrease. 
C) demand increases and supply does not change. 
D) demand does not change and supply increases. 
A) both demand and supply increase. 
B) both demand and supply decrease. 
C) demand increases and supply does not change. 
D) demand does not change and supply increases.

Question 19

Table 4-9
The following table shows the supply and demand schedules in a market.
 $$\begin{array} { | l | l | l | } 
\hline \text { Price (\$) } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (units) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Supplied } \
\text { (units) }
\end{array} \
\hline 0 & 50 & 0 \
\hline 2 & 40 & 15 \
\hline 4 & 30 & 30 \
\hline 6 & 20 & 45 \
\hline 8 & 10 & 60 \
\hline 10 & 0 & 75 \
\hline
\end{array}$$
-Refer to Table 4-9. At a price of $2, will there be a surplus or shortage of units in this market?

Accepted Answer

The answer of Table 4-9
The following table shows the supply...

Question 20

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

In a market economy, prices are the signals that guide the allocation of scarce resources.

A newspaper's classified ads are an example of a market.

The market demand curve

Equilibrium quantity must decrease when

Who gets scarce resources in a market economy?

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Figure 4-11 ​ ​ -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

A yard sale is an example of a market.

If a surplus exists in a market, then we know that the actual price is

Figure 4-9 ​ -Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from

A market is a group of buyers and sellers of a particular good or service.

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

Figure 4-4 -Refer to Figure 4-4. The movement from point A to point B on the graph is called

Since individual buyers and individual sellers in a competitive market have no influence on the market price, what do we call the buyers and sellers in a competitive market?

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Equilibrium price must increase when

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

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 Nations 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

Filters

Figure 4-11 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Figure 4-9 -Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from