Question 1

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 2

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs.As a result of this information,today's demand curve for Mustangs

Accepted Answer

A)  shifts to the right. 
B)  shifts to the left. 
C)  shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information. 
D)  will not shift; rather, the demand curve for Mustangs will shift to the right next month. 
A)  shifts to the right. 
B)  shifts to the left. 
C)  shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information. 
D)  will not shift; rather, the demand curve for Mustangs will shift to the right next month.

Question 3

If a person expects the price of pumpkins to increase next month,then that person's current demand for pumpkins will increase.

Accepted Answer

A) True 
 B)False

Question 4

A surplus exists in a market if

Accepted Answer

A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct. 
A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct.

Question 5

A decrease in quantity supplied

Accepted Answer

A)  results in a movement downward and to the left along a fixed supply curve. 
B)  results in a movement upward and to the right along a fixed supply curve. 
C)  shifts the supply curve to the left. 
D)  shifts the supply curve to the right. 
A)  results in a movement downward and to the left along a fixed supply curve. 
B)  results in a movement upward and to the right along a fixed supply curve. 
C)  shifts the supply curve to the left. 
D)  shifts the supply curve to the right.

Question 6

For a market for a good or service to exist,there must be a

Accepted Answer

A)  group of buyers and sellers. 
B)  specific time and place at which the good or service is traded. 
C)  high degree of organization present. 
D)  All of the above are correct. 
A)  group of buyers and sellers. 
B)  specific time and place at which the good or service is traded. 
C)  high degree of organization present. 
D)  All of the above are correct.

Question 7

A decrease in the price of a good will

Accepted Answer

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

Question 8

The market supply curve

Accepted Answer

A)  is found by vertically adding the individual supply curves. 
B)  slopes downward. 
C)  represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good. 
D)  represents the sum of the quantities supplied by all the sellers at each price of the good. 
A)  is found by vertically adding the individual supply curves. 
B)  slopes downward. 
C)  represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good. 
D)  represents the sum of the quantities supplied by all the sellers at each price of the good.

Question 9

Figure 4-17
  
-Refer to Figure 4-17.If the price is $25,then there would be an excess

Accepted Answer

A)  supply of 100 units, and price would fall. 
B)  supply of 300 units, and price would fall. 
C)  demand of 100 units, and price would fall. 
D)  demand of 300 units, and price would fall. 
A)  supply of 100 units, and price would fall. 
B)  supply of 300 units, and price would fall. 
C)  demand of 100 units, and price would fall. 
D)  demand of 300 units, and price would fall.

Question 10

Which of the following events must cause equilibrium price 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

Question 11

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 12

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
  
-Refer to Figure 4-19.All else equal,a decrease in the price of the grain fed to turkeys would cause a move from

Accepted Answer

A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x. 
A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x.

Question 13

The law of supply states that,other things equal,when the price of a good

Accepted Answer

A)  falls, the supply of the good rises. 
B)  rises, the quantity supplied of the good rises. 
C)  rises, the supply of the good falls. 
D)  falls, the quantity supplied of the good rises. 
A)  falls, the supply of the good rises. 
B)  rises, the quantity supplied of the good rises. 
C)  rises, the supply of the good falls. 
D)  falls, the quantity supplied of the good rises.

Question 14

If the demand for a good falls when income falls,then the good is called a(n)

Accepted Answer

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

Question 15

Economists normally

Accepted Answer

A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. 
A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Question 16

Today's supply curve for gasoline could shift in response to a change in

Accepted Answer

A)  today's price of gasoline. 
B)  the expected future price of gasoline. 
C)  the number of buyers of gasoline. 
D)  All of the above are correct. 
A)  today's price of gasoline. 
B)  the expected future price of gasoline. 
C)  the number of buyers of gasoline. 
D)  All of the above are correct.

Question 17

A decrease in supply will cause an increase in price,which will cause a decrease in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 18

When drawing a demand curve,

Accepted Answer

A)  demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B)  quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C)  price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D)  price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis. 
A)  demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B)  quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C)  price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D)  price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Figure 4-16
  
-Refer to Figure 4-16.In this market,equilibrium price and quantity,respectively,are

Accepted Answer

A)  $10 and 30 units. 
B)  $10 and 50 units. 
C)  $10 and 70 units. 
D)  $4 and 50 units. 
A)  $10 and 30 units. 
B)  $10 and 50 units. 
C)  $10 and 70 units. 
D)  $4 and 50 units.

Exam 4: The Market Forces of Supply and Demand.

Prices allocate a market economy's scarce resources.

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs.As a result of this information,today's demand curve for Mustangs

If a person expects the price of pumpkins to increase next month,then that person's current demand for pumpkins will increase.

A surplus exists in a market if

A decrease in quantity supplied

For a market for a good or service to exist,there must be a

A decrease in the price of a good will

The market supply curve

Figure 4-17 -Refer to Figure 4-17.If the price is $25,then there would be an excess

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

Baseballs and baseball bats are substitute goods.

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,a decrease in the price of the grain fed to turkeys would cause a move from

The law of supply states that,other things equal,when the price of a good

If the demand for a good falls when income falls,then the good is called a(n)

Economists normally

Today's supply curve for gasoline could shift in response to a change in

A decrease in supply will cause an increase in price,which will cause a decrease in quantity demanded.

When drawing a demand curve,

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

Figure 4-16 -Refer to Figure 4-16.In this market,equilibrium price and quantity,respectively,are

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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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