Question 1

Which would NOT be a role that prices play in a market economy

Accepted Answer

A) Prices guide economic decisions and thereby allocate scarce resources. 
B) Prices ensure that quantities supplied and demanded are in balance. 
C) Prices ensure an equal distribution of goods and services. 
D) Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce. 
A) Prices guide economic decisions and thereby allocate scarce resources. 
B) Prices ensure that quantities supplied and demanded are in balance. 
C) Prices ensure an equal distribution of goods and services. 
D) Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce.

Question 2

Figure 4-3
​
  
-Refer to the Figure 4-3.In this market,what are the equilibrium price and quantity

Accepted Answer

A) $14 and 30 
B) $12 and 60 
C) $10 and 50 
D) $8 and 50 
A) $14 and 30 
B) $12 and 60 
C) $10 and 50 
D) $8 and 50

Question 3

What represents the behaviour of buyers

Accepted Answer

A) demand 
B) supply 
C) a market 
D) competition 
A) demand 
B) supply 
C) a market 
D) competition

Question 4

Figure 4-5
  
-Refer to the Figure 4-5.Which of the following is shown in Graph A

Accepted Answer

A) an increase in demand 
B) an increase in quantity demanded 
C) a decrease in the number of buyers 
D) a decrease in consumer income 
A) an increase in demand 
B) an increase in quantity demanded 
C) a decrease in the number of buyers 
D) a decrease in consumer income

Question 5

When an increase in the price of one good lowers the demand for another good,the two goods are called complements.

Accepted Answer

A) True 
 B)False

Question 6

Market demand is given as QD = 70 - 2P.Market supply is given as QS = P + 10.In a perfectly competitive equilibrium,what will be price and quantity traded in the market

Accepted Answer

A) price will be $20 and quantity will be 30 
B) price will be $40 and quantity will be 30 
C) price will be $30 and quantity will be 40 
D) price will be $35 and quantity will be 30 
A) price will be $20 and quantity will be 30 
B) price will be $40 and quantity will be 30 
C) price will be $30 and quantity will be 40 
D) price will be $35 and quantity will be 30

Question 7

Figure 4-10
  
-Refer to the Figure 4-10.What would cause the movement from point A to point B on the graph

Accepted Answer

A) a decrease in the price of the good 
B) an increase in the price of the good 
C) an increase in technology 
D) a decrease in input prices 
A) a decrease in the price of the good 
B) an increase in the price of the good 
C) an increase in technology 
D) a decrease in input prices

Question 8

What will happen to the equilibrium price and quantity of landline phone services if new technologies lower the costs of providing such services and,at the same time,alternatives such as the Internet or smart phones have become more popular

Accepted Answer

A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous 
A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous

Question 9

What will happen if the price of a good is low

Accepted Answer

A) Firms would increase profit by increasing output. 
B) Quantity supplied could be zero. 
C) The supply curve for the good will shift to the left. 
D) Firms should raise the price of the product. 
A) Firms would increase profit by increasing output. 
B) Quantity supplied could be zero. 
C) The supply curve for the good will shift to the left. 
D) Firms should raise the price of the product.

Question 10

What happens in a competitive market

Accepted Answer

A) Only a few sellers sell the same product. 
B) Each seller has limited control over the price of his product. 
C) If one buyer chooses to purchase a large quantity of the product, the price will rise. 
D) If one seller withholds his product from the market, prices will rise. 
A) Only a few sellers sell the same product. 
B) Each seller has limited control over the price of his product. 
C) If one buyer chooses to purchase a large quantity of the product, the price will rise. 
D) If one seller withholds his product from the market, prices will rise.

Question 11

Suppose both demand and supply decrease.How do the equilibrium price and quantity change

Accepted Answer

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

Question 12

Figure 4-2
  
-Refer to the Figure 4-2.What are the equilibrium price and quantity

Accepted Answer

A) $35 and 200 
B) $15 and 600 
C) $25 and 400 
D) $15 and 200 
A) $35 and 200 
B) $15 and 600 
C) $25 and 400 
D) $15 and 200

Question 13

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.If price increases from $50 to $53,what is the price elasticity of demand

Accepted Answer

A) 0.1 
B) 0.2 
C) 1.1 
D) 2.2 
A) 0.1 
B) 0.2 
C) 1.1 
D) 2.2

Question 14

Which of the following would be most likely to increase the price of a new house

Accepted Answer

A) higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
B) lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
C) lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future 
D) lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future 
A) higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
B) lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
C) lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future 
D) lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future

Question 15

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Accepted Answer

A) True 
 B)False

Question 16

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose

Accepted Answer

A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous 
A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous

Question 17

Market demand is given as QD = 80 - P.Market supply is given as QS = 3P.What would result if the market price were $30

Accepted Answer

A) a shortage of 60 
B) a surplus of 60 
C) a surplus of 40 
D) a shortage of 40 
A) a shortage of 60 
B) a surplus of 60 
C) a surplus of 40 
D) a shortage of 40

Question 18

What happens when the price of a good or service changes

Accepted Answer

A) Supply shifts in the opposite direction. 
B) Demand shifts in the opposite direction. 
C) Demand shifts in the same direction. 
D) There is a movement along a stable demand curve. 
A) Supply shifts in the opposite direction. 
B) Demand shifts in the opposite direction. 
C) Demand shifts in the same direction. 
D) There is a movement along a stable demand curve.

Question 19

What does a 10 percent increase in the price of cigarettes lead to

Accepted Answer

A) 18 percent drop in smoking 
B) 12 percent drop in smoking 
C) 6 percent drop in smoking 
D) 4 percent drop in smoking 
A) 18 percent drop in smoking 
B) 12 percent drop in smoking 
C) 6 percent drop in smoking 
D) 4 percent drop in smoking

Question 20

Which of the following 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

Exam 4: The Market Forces of Supply and Demand

Which would NOT be a role that prices play in a market economy

Figure 4-3 ​ -Refer to the Figure 4-3.In this market,what are the equilibrium price and quantity

What represents the behaviour of buyers

Figure 4-5 -Refer to the Figure 4-5.Which of the following is shown in Graph A

When an increase in the price of one good lowers the demand for another good,the two goods are called complements.

Market demand is given as QD = 70 - 2P.Market supply is given as QS = P + 10.In a perfectly competitive equilibrium,what will be price and quantity traded in the market

Figure 4-10 -Refer to the Figure 4-10.What would cause the movement from point A to point B on the graph

What will happen to the equilibrium price and quantity of landline phone services if new technologies lower the costs of providing such services and,at the same time,alternatives such as the Internet or smart phones have become more popular

What will happen if the price of a good is low

What happens in a competitive market

Suppose both demand and supply decrease.How do the equilibrium price and quantity change

Figure 4-2 -Refer to the Figure 4-2.What are the equilibrium price and quantity

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.If price increases from $50 to $53,what is the price elasticity of demand

Which of the following would be most likely to increase the price of a new house

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose

Market demand is given as QD = 80 - P.Market supply is given as QS = 3P.What would result if the market price were $30

What happens when the price of a good or service changes

What does a 10 percent increase in the price of cigarettes lead to

Which of the following will definitely cause equilibrium quantity to fall

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Figure 4-3 -Refer to the Figure 4-3.In this market,what are the equilibrium price and quantity

Market demand is given as Q_D= 70 - 2P.Market supply is given as Q_S= P + 10.In a perfectly competitive equilibrium,what will be price and quantity traded in the market

Market demand is given as Q_D= 75 - P.Market supply is given as Q_S= 3P + 15.If price increases from $50 to $53,what is the price elasticity of demand

Market demand is given as Q_D= 80 - P.Market supply is given as Q_S= 3P.What would result if the market price were $30