Question 1

Suppose the number of buyers in a market increases and a technological advancement occurs also.What would we expect to happen in the market?

Accepted Answer

A) The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. 
B) The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. 
C) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
D) Both equilibrium price and equilibrium quantity would increase. 
A) The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. 
B) The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. 
C) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
D) Both equilibrium price and equilibrium quantity would increase.

Question 2

The signals that guide the allocation of resources in a market economy are

Accepted Answer

A) surpluses and shortages. 
B) quantities. 
C) property rights. 
D) prices. 
A) surpluses and shortages. 
B) quantities. 
C) property rights. 
D) prices.

Question 3

Which of the following events will definitely 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

Question 4

Suppose scientists provide evidence to the effect that chocolate pudding increases cholesterol.We would expect to see

Accepted Answer

A) no change in the demand for chocolate pudding. 
B) a decrease in the demand for chocolate pudding. 
C) an increase in the demand for chocolate pudding. 
D) a decrease in the supply of chocolate pudding. 
A) no change in the demand for chocolate pudding. 
B) a decrease in the demand for chocolate pudding. 
C) an increase in the demand for chocolate pudding. 
D) a decrease in the supply of chocolate pudding.

Question 5

Pens are normal goods.What will happen to the equilibrium price of pens if the price of pencils rises,consumers experience an increase in income,writing in ink becomes fashionable,people expect the price of pens to fall in the near future,the population increases,fewer firms manufacture pens,and the wages of pen-makers decrease?

Accepted Answer

A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous. 
A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous.

Question 6

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A) Different sellers sell identical products. 
B) There are many sellers. 
C) Sellers must accept the price the market determines. 
D) All of the above are characteristics of a perfectly competitive market. 
A) Different sellers sell identical products. 
B) There are many sellers. 
C) Sellers must accept the price the market determines. 
D) All of the above are characteristics of a perfectly competitive market.

Question 7

In a competitive market,each seller has limited control over the price of his product because

Accepted Answer

A) other sellers are offering similar products. 
B) buyers exert more control over the price than do sellers. 
C) these markets are highly regulated by government. 
D) sellers usually agree to set a common price that will allow each seller to earn a comfortable profit. 
A) other sellers are offering similar products. 
B) buyers exert more control over the price than do sellers. 
C) these markets are highly regulated by government. 
D) sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

Question 8

A downward-sloping demand curve illustrates the

Accepted Answer

A) relationship between consumers' income and their willingness to purchase the good in question, provided the good is inferior. 
B) negative relationship between quantity demanded and quantity supplied. 
C) idea that the more of one good that a consumer buys, the less income she has to spend on other goods. 
D) law of demand. 
A) relationship between consumers' income and their willingness to purchase the good in question, provided the good is inferior. 
B) negative relationship between quantity demanded and quantity supplied. 
C) idea that the more of one good that a consumer buys, the less income she has to spend on other goods. 
D) law of demand.

Question 9

Suppose you like to make,from scratch,pies filled with banana cream and vanilla pudding.You notice that the price of bananas has increased.How would this price increase affect your demand for vanilla pudding?

Accepted Answer

A) It would decrease. 
B) It would increase. 
C) It would be unaffected. 
D) There is insufficient information given to answer the question. 
A) It would decrease. 
B) It would increase. 
C) It would be unaffected. 
D) There is insufficient information given to answer the question.

Question 10

Which of the following statements is correct?

Accepted Answer

A) Buyers determine supply and sellers determine demand. 
B) Buyers determine demand and sellers determine supply. 
C) Buyers and sellers as one group determine supply, but only buyers determine demand. 
D) Buyers and sellers as one group determine demand, but only sellers determine supply. 
A) Buyers determine supply and sellers determine demand. 
B) Buyers determine demand and sellers determine supply. 
C) Buyers and sellers as one group determine supply, but only buyers determine demand. 
D) Buyers and sellers as one group determine demand, but only sellers determine supply.

Question 11

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

Accepted Answer

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

Question 12

Other things equal,when the price of a good rises,the

Accepted Answer

A) quantity demanded of the good increases. 
B) supply increases. 
C) quantity supplied of the good increases. 
D) demand curve shifts to the left. 
A) quantity demanded of the good increases. 
B) supply increases. 
C) quantity supplied of the good increases. 
D) demand curve shifts to the left.

Question 13

Table 4-3. The demand schedule below pertains to sandwiches demanded per week.
  
-Refer to Table 4-3.Suppose x = 1.Then the slope of the market demand curve is

Accepted Answer

A) -1/3. 
B) -1/2. 
C)  -2. 
D)  -3. 
A) -1/3. 
B) -1/2. 
C)  -2. 
D)  -3.

Question 14

Holding the nonprice determinants of supply constant,a change in price would

Accepted Answer

A) result in either a decrease in supply or an increase in supply. 
B) result in a movement along a stationary supply curve. 
C) result in a shift of demand. 
D) have no effect on the quantity supplied. 
A) result in either a decrease in supply or an increase in supply. 
B) result in a movement along a stationary supply curve. 
C) result in a shift of demand. 
D) have no effect on the quantity supplied.

Question 15

Another term for equilibrium price is

Accepted Answer

A) dynamic price. 
B) market-clearing price. 
C) quantity-defining price. 
D) satisfactory price. 
A) dynamic price. 
B) market-clearing price. 
C) quantity-defining price. 
D) satisfactory price.

Question 16

When the price of a good is higher than the equilibrium price,

Accepted Answer

A) a shortage will exist. 
B) buyers desire to purchase more than is produced. 
C) sellers desire to produce and sell more than buyers wish to purchase. 
D) quantity demanded exceeds quantity supplied. 
A) a shortage will exist. 
B) buyers desire to purchase more than is produced. 
C) sellers desire to produce and sell more than buyers wish to purchase. 
D) quantity demanded exceeds quantity supplied.

Question 17

Figure 4-10
  
-Refer to Figure 4-10.Suppose the events depicted in graphs A and C were illustrated together on a single graph.A definitive result of the two events would be

Accepted Answer

A) an increase in the equilibrium quantity. 
B) an increase in the equilibrium price. 
C) an instance in which the law of demand fails to hold. 
D) All of the above are correct. 
A) an increase in the equilibrium quantity. 
B) an increase in the equilibrium price. 
C) an instance in which the law of demand fails to hold. 
D) All of the above are correct.

Question 18

"Other things equal,when the price of a good rises,the quantity supplied of the good rises also." This is a statement of the law of

Accepted Answer

A) increasing costs. 
B) diminishing returns. 
C) supply. 
D) supply and demand. 
A) increasing costs. 
B) diminishing returns. 
C) supply. 
D) supply and demand.

Question 19

A decrease in the price of a good would

Accepted Answer

A) increase the supply of the good. 
B) increase the quantity demanded of the good. 
C) give producers an incentive to produce more to keep profits from falling. 
D) shift the supply curve for the good to the left. 
A) increase the supply of the good. 
B) increase the quantity demanded of the good. 
C) give producers an incentive to produce more to keep profits from falling. 
D) shift the supply curve for the good to the left.

Question 20

In a given market,how are the equilibrium price and the market-clearing price related?

Accepted Answer

A) There is no relationship. 
B) They are the same price. 
C) The market-clearing price exceeds the equilibrium price. 
D) The equilibrium price exceeds the market-clearing price. 
A) There is no relationship. 
B) They are the same price. 
C) The market-clearing price exceeds the equilibrium price. 
D) The equilibrium price exceeds the market-clearing price.

Exam 4: The Market Forces of Supply and Demand

Suppose the number of buyers in a market increases and a technological advancement occurs also.What would we expect to happen in the market?

The signals that guide the allocation of resources in a market economy are

Which of the following events will definitely cause equilibrium quantity to fall?

Suppose scientists provide evidence to the effect that chocolate pudding increases cholesterol.We would expect to see

Which of the following is not a characteristic of a perfectly competitive market?

In a competitive market,each seller has limited control over the price of his product because

A downward-sloping demand curve illustrates the

Suppose you like to make,from scratch,pies filled with banana cream and vanilla pudding.You notice that the price of bananas has increased.How would this price increase affect your demand for vanilla pudding?

Which of the following statements is correct?

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

Other things equal,when the price of a good rises,the

Table 4-3. The demand schedule below pertains to sandwiches demanded per week. -Refer to Table 4-3.Suppose x = 1.Then the slope of the market demand curve is

Holding the nonprice determinants of supply constant,a change in price would

Another term for equilibrium price is

When the price of a good is higher than the equilibrium price,

Figure 4-10 -Refer to Figure 4-10.Suppose the events depicted in graphs A and C were illustrated together on a single graph.A definitive result of the two events would be

"Other things equal,when the price of a good rises,the quantity supplied of the good rises also." This is a statement of the law of

A decrease in the price of a good would

In a given market,how are the equilibrium price and the market-clearing price related?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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