Question 1

Normally, when a governmental price control affects the price, it can be expected to result in a

Accepted Answer

A) reduction in the number of units purchased only when the price is forced down. 
B) reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up. 
C) decrease in the number of units purchased when the price is forced up or down. 
D) increase in the number of units purchased when the price is forced up or down. 
A) reduction in the number of units purchased only when the price is forced down. 
B) reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up. 
C) decrease in the number of units purchased when the price is forced up or down. 
D) increase in the number of units purchased when the price is forced up or down.

Question 2

An increase in the price of gasoline shifts the demand for tires to the

Accepted Answer

A) left, because gasoline and tires are substitutes. 
B) left, because gasoline and tires are normally used together. 
C) right, because gasoline and tires are substitutes. 
D) right, because gasoline and tires are normally used together. 
A) left, because gasoline and tires are substitutes. 
B) left, because gasoline and tires are normally used together. 
C) right, because gasoline and tires are substitutes. 
D) right, because gasoline and tires are normally used together.

Question 3

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to the supply of money (to lend)if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) It depends entirely on the interest rate. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) It depends entirely on the interest rate.

Question 4

Price supports increase the supply of affordable milk for U.S. families.

Accepted Answer

A) True 
 B)False

Question 5

At equilibrium, quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 6

The supply curve of books (which are produced using paper made from trees)will shift to the left in response to

Accepted Answer

A) a decline in college tuition. 
B) an increase in home building. 
C) an increase in the supply of lumberjacks. 
D) an end to government regulations that limit timber harvesting in national forests. 
A) a decline in college tuition. 
B) an increase in home building. 
C) an increase in the supply of lumberjacks. 
D) an end to government regulations that limit timber harvesting in national forests.

Question 7

Pork can be used to produce bacon or sausage, but not both. If the price of bacon rises for some reason, then, everything else equal,

Accepted Answer

A) the price of sausage will rise. 
B) the price of sausage will fall. 
C) the resources used in raising pork will become more expensive. 
D) the resources used in raising pork will become less expensive. 
A) the price of sausage will rise. 
B) the price of sausage will fall. 
C) the resources used in raising pork will become more expensive. 
D) the resources used in raising pork will become less expensive.

Question 8

The quantity of goods exchanged in a market will be below the equilibrium quantity

Accepted Answer

A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising. 
A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising.

Question 9

Assume that Figure 4-16 shows the supply of soda. An increase in the price of syrup used in the production of soda will shift supply from

Accepted Answer

A) S  1  to S  2  . 
B) S  2  to S  1  . 
C) S  2  to S  3  . 
D) S  1  to S  3  . 
A) S  1  to S  2  . 
B) S  2  to S  1  . 
C) S  2  to S  3  . 
D) S  1  to S  3  .

Question 10

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Question 11

A decrease in the price of VCRs will increase demand for video cassettes.

Accepted Answer

A) True 
 B)False

Question 12

American consumers learn that grape consumption can reduce the incidence of heart disease. Everything else being equal, this will cause the

Accepted Answer

A) price of grapes to fall and decrease the quantity supplied. 
B) supply of grapes to fall and the quantity demanded to increase. 
C) quantity supplied of grapes to fall. 
D) demand curve for grapes to shift to the right and increase the quantity supplied. 
A) price of grapes to fall and decrease the quantity supplied. 
B) supply of grapes to fall and the quantity demanded to increase. 
C) quantity supplied of grapes to fall. 
D) demand curve for grapes to shift to the right and increase the quantity supplied.

Question 13

The wage rate is the price of a unit of labor. What happens to the quantity of labor supplied if the wage rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question.

Question 14

Explain the effect of the following changes on equilibrium price and quantity of a commodity: 
a.increase in average incomes. 
B.increase in population.

Accepted Answer

If average incomes rise, consumers will

Question 15

In a move to free the economy from unnecessary regulation, Congress passes legislation to remove sugar price supports. What would most likely happen to the number of producers of sugar?

Accepted Answer

A) It would decrease, because sugar prices would fall. 
B) It would decrease, because sugar prices would rise. 
C) It would increase, because sugar prices would fall. 
D) It would increase, because sugar prices would rise. 
A) It would decrease, because sugar prices would fall. 
B) It would decrease, because sugar prices would rise. 
C) It would increase, because sugar prices would fall. 
D) It would increase, because sugar prices would rise.

Question 16

An upward-sloping supply curve shows that

Accepted Answer

A) buyers are willing to pay more for a scarce product. 
B) suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C) buyers are unaffected by sellers' costs of production. 
D) the price of a product is not influenced by the price buyers are willing to pay. 
E) at higher prices, an envy effect begins to affect the demand curve. 
A) buyers are willing to pay more for a scarce product. 
B) suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C) buyers are unaffected by sellers' costs of production. 
D) the price of a product is not influenced by the price buyers are willing to pay. 
E) at higher prices, an envy effect begins to affect the demand curve.

Question 17

In the late 1980s, some medical authorities announced that an acne medication named Retin-A had previously unknown wrinkle-reducing properties. An economist would predict that, following this announcement, the price of Retin-A ____ and the quantity sold __ .

Accepted Answer

A) would rise; would decrease 
B) would rise; would increase 
C) would fall; would fall 
D) would fall; would rise 
A) would rise; would decrease 
B) would rise; would increase 
C) would fall; would fall 
D) would fall; would rise

Question 18

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect

Accepted Answer

A) a decrease in price and no predictable impact on output. 
B) a definite decrease in price and increase in output. 
C) an increase in output with no predictable change in price. 
D) no predictable changes in either price or output. 
A) a decrease in price and no predictable impact on output. 
B) a definite decrease in price and increase in output. 
C) an increase in output with no predictable change in price. 
D) no predictable changes in either price or output.

Question 19

As the general population has aged, there has been an increase in the number of nursing homes, community health facilities along with the development of home care facilities.  All of these factors have produced an increase in the demand for nurses. Simultaneously, improved job opportunities for women other fields have reduced the supply of nurses. Despite these factors, hospitals, the major employers of nurses, have resisted wage increases. The resulting situation can be described as

Accepted Answer

A) a cost disease in the service sector. 
B) a shortage of nurses. 
C) the problem of auxiliary restrictions. 
D) a wage floor problem. 
A) a cost disease in the service sector. 
B) a shortage of nurses. 
C) the problem of auxiliary restrictions. 
D) a wage floor problem.

Question 20

"Demand" is a series of quantities demanded, one for each person in the market.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

Normally, when a governmental price control affects the price, it can be expected to result in a

An increase in the price of gasoline shifts the demand for tires to the

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to the supply of money (to lend)if the interest rate increases?

Price supports increase the supply of affordable milk for U.S. families.

At equilibrium, quantity demanded equals quantity supplied.

The supply curve of books (which are produced using paper made from trees)will shift to the left in response to

Pork can be used to produce bacon or sausage, but not both. If the price of bacon rises for some reason, then, everything else equal,

The quantity of goods exchanged in a market will be below the equilibrium quantity

Assume that Figure 4-16 shows the supply of soda. An increase in the price of syrup used in the production of soda will shift supply from

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

A decrease in the price of VCRs will increase demand for video cassettes.

American consumers learn that grape consumption can reduce the incidence of heart disease. Everything else being equal, this will cause the

The wage rate is the price of a unit of labor. What happens to the quantity of labor supplied if the wage rate increases?

Explain the effect of the following changes on equilibrium price and quantity of a commodity: a.increase in average incomes. B.increase in population.

In a move to free the economy from unnecessary regulation, Congress passes legislation to remove sugar price supports. What would most likely happen to the number of producers of sugar?

An upward-sloping supply curve shows that

In the late 1980s, some medical authorities announced that an acne medication named Retin-A had previously unknown wrinkle-reducing properties. An economist would predict that, following this announcement, the price of Retin-A ____ and the quantity sold __ .

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect

"Demand" is a series of quantities demanded, one for each person in the market.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

In the late 1980s, some medical authorities announced that an acne medication named Retin-A had previously unknown wrinkle-reducing properties. An economist would predict that, following this announcement, the price of Retin-A __ and the quantity sold .