Question 1

What does the term 'equilibrium' mean when applied to a market?

Accepted Answer

The equilibrium in a market is

Question 2

The computer software industry is an example of a perfectly competitive industry.

Accepted Answer

A) True 
 B)False

Question 3

When the price is higher than the equilibrium price:

Accepted Answer

A) suppliers will reduce prices to try to clear the market 
B) suppliers will increase their prices to clear the market 
C) buyers will change their tastes and desire more of the good 
D) more sellers will enter the market as they expect prices to go higher 
A) suppliers will reduce prices to try to clear the market 
B) suppliers will increase their prices to clear the market 
C) buyers will change their tastes and desire more of the good 
D) more sellers will enter the market as they expect prices to go higher

Question 4

What is a normal good? Give an example.How is a normal good different from an inferior good?

Accepted Answer

A normal good is a good for which, other

Question 5

Why is the ceteris paribus assumption so important when constructing a demand or supply curve?

Accepted Answer

Ceteris paribus means 'other things equa

Question 6

The law of demand states that:

Accepted Answer

A) price and quantity demanded are inversely related 
B) the larger the number of buyers in a market, the lower product price 
C) price and quantity demanded are directly related 
D) consumers will buy more of a given product at high prices than they will at low prices 
A) price and quantity demanded are inversely related 
B) the larger the number of buyers in a market, the lower product price 
C) price and quantity demanded are directly related 
D) consumers will buy more of a given product at high prices than they will at low prices

Question 7

Given the graph shown, what will be the result in the market if the price was $6, or $5 or $4?

Accepted Answer

At a price of $6 there will be

Question 8

Suppose you make jewellery.If the price of gold rises, we would expect you to:

Accepted Answer

A) be willing and able to produce more jewellery than before at each possible price 
B) be willing and able to produce less jewellery than before at each possible price 
C) face a greater demand for your jewellery 
D) face a weaker demand for your jewellery 
A) be willing and able to produce more jewellery than before at each possible price 
B) be willing and able to produce less jewellery than before at each possible price 
C) face a greater demand for your jewellery 
D) face a weaker demand for your jewellery

Question 9

Which of the following are the words most commonly used by economists?

Accepted Answer

A) supply and demand 
B) entrepreneurial ability 
C) scarcity and human wants 
D) prices and exchange 
A) supply and demand 
B) entrepreneurial ability 
C) scarcity and human wants 
D) prices and exchange

Question 10

A supply curve slopes upward because:

Accepted Answer

A) an increase in input prices increases supply 
B) a decrease in input prices decreases supply 
C) as more is produced, per unit costs of production fall 
D) an increase in price gives producers incentive to supply a larger quantity 
A) an increase in input prices increases supply 
B) a decrease in input prices decreases supply 
C) as more is produced, per unit costs of production fall 
D) an increase in price gives producers incentive to supply a larger quantity

Question 11

In a free market, the relationship between price and quantity demanded of a good can be called:

Accepted Answer

A) supply and demand 
B) the law of demand 
C) the Phillips curve 
D) market demand 
A) supply and demand 
B) the law of demand 
C) the Phillips curve 
D) market demand

Question 12

The law of supply states that, other things being equal, when the price of a good rises, the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 13

Graph 4-6   
-Refer to the Graph 4-6.At a price of $15:

Accepted Answer

A) quantity demanded  quantity supplied 
D) none of the above is true 
A) quantity demanded  quantity supplied 
D) none of the above is true

Question 14

An increase in the number of buyers in the market will cause a rightward shift in the demand curve if the good is a normal good.

Accepted Answer

A) True 
 B)False

Question 15

The stock market is a monopoly.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would NOT shift the demand curve for a good or service?

Accepted Answer

A) a change in income 
B) a change in the price of a related good 
C) a change in expectations about the price of the good or service 
D) a change in the price of the good or service 
A) a change in income 
B) a change in the price of a related good 
C) a change in expectations about the price of the good or service 
D) a change in the price of the good or service

Question 18

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Accepted Answer

A) an increase in supply and demand 
B) an increase in supply and a decrease in demand 
C) a decrease in supply and demand 
D) a decrease in supply and an increase in demand 
A) an increase in supply and demand 
B) an increase in supply and a decrease in demand 
C) a decrease in supply and demand 
D) a decrease in supply and an increase in demand

Question 19

A leftward shift of a product supply curve might be caused by:

Accepted Answer

A) an improvement in the relevant technique of production 
B) a decline in the prices of needed inputs 
C) an increase in consumer incomes 
D) some firms leaving an industry 
A) an improvement in the relevant technique of production 
B) a decline in the prices of needed inputs 
C) an increase in consumer incomes 
D) some firms leaving an industry

Question 20

A market with just one seller is said to be a monopoly.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

What does the term 'equilibrium' mean when applied to a market?

The computer software industry is an example of a perfectly competitive industry.

When the price is higher than the equilibrium price:

What is a normal good? Give an example.How is a normal good different from an inferior good?

Why is the ceteris paribus assumption so important when constructing a demand or supply curve?

The law of demand states that:

Given the graph shown, what will be the result in the market if the price was $6, or $5 or $4?

Suppose you make jewellery.If the price of gold rises, we would expect you to:

Which of the following are the words most commonly used by economists?

A supply curve slopes upward because:

In a free market, the relationship between price and quantity demanded of a good can be called:

The law of supply states that, other things being equal, when the price of a good rises, the quantity supplied of the good falls.

Graph 4-6 -Refer to the Graph 4-6.At a price of $15:

An increase in the number of buyers in the market will cause a rightward shift in the demand curve if the good is a normal good.

The stock market is a monopoly.

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

Which of the following would NOT shift the demand curve for a good or service?

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

A leftward shift of a product supply curve might be caused by:

A market with just one seller is said to be a monopoly.

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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