Question 1

If the demand for a good falls when income falls,the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 2

You love.You hear on the news that 50% of the world's banana crop has been wiped out because of a virus,which will cause the price to double by the end of the year.What happens as a result

Accepted Answer

A) Your demand for bananas will increase at the end of the year. 
B) Your demand for bananas increases today. 
C) Your demand for bananas falls as you look for a substitute good. 
D) Your demand for bananas falls because the price increases today. 
A) Your demand for bananas will increase at the end of the year. 
B) Your demand for bananas increases today. 
C) Your demand for bananas falls as you look for a substitute good. 
D) Your demand for bananas falls because the price increases today.

Question 3

If a car manufacturer purchases new labour-saving technology for its assembly line,what would we NOT expect

Accepted Answer

A) less labour to be used 
B) the supply of cars produced to increase 
C) costs to the firm to fall 
D) the price of cars to be increased by the firm 
A) less labour to be used 
B) the supply of cars produced to increase 
C) costs to the firm to fall 
D) the price of cars to be increased by the firm

Question 4

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Accepted Answer

A) True 
 B)False

Question 5

What is an example of substitute goods

Accepted Answer

A) butter and margarine 
B) tennis balls and tennis rackets 
C) motorhomes and tractors 
D) peanut butter and jelly 
A) butter and margarine 
B) tennis balls and tennis rackets 
C) motorhomes and tractors 
D) peanut butter and jelly

Question 6

Suppose that the number of buyers in a market decreases and a technological advancement occurs.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) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
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) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

Question 7

What will result from an increase in resource costs to firms in a market

Accepted Answer

A) a decrease in equilibrium price and an increase in equilibrium quantity 
B) a decrease in equilibrium price and a decrease in equilibrium quantity 
C) an increase in equilibrium price and no change in equilibrium quantity 
D) an increase in equilibrium price and an decrease in equilibrium quantity 
A) a decrease in equilibrium price and an increase in equilibrium quantity 
B) a decrease in equilibrium price and a decrease in equilibrium quantity 
C) an increase in equilibrium price and no change in equilibrium quantity 
D) an increase in equilibrium price and an decrease in equilibrium quantity

Question 8

Table 4-1
  
-Refer to the Table 4-1.If the price were $12,what would happen

Accepted Answer

A) A surplus of 50 units would exist and the price would tend to fall. 
B) A surplus of 10 units would exist and the price would tend to fall. 
C) A surplus of 25 units would exist and the price would tend to fall. 
D) A shortage of 25 units would exist and the price would tend to rise. 
A) A surplus of 50 units would exist and the price would tend to fall. 
B) A surplus of 10 units would exist and the price would tend to fall. 
C) A surplus of 25 units would exist and the price would tend to fall. 
D) A shortage of 25 units would exist and the price would tend to rise.

Question 9

The behaviour of buyers and sellers drives markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-2
  
-Refer to the Figure 4-2.What would happen at a price of $35

Accepted Answer

A) A shortage would exist and the price would tend to fall. 
B) A shortage would exist and the price would tend to rise. 
C) A surplus would exist and the price would tend to rise. 
D) A surplus would exist and the price would tend to fall. 
A) A shortage would exist and the price would tend to fall. 
B) A shortage would exist and the price would tend to rise. 
C) A surplus would exist and the price would tend to rise. 
D) A surplus would exist and the price would tend to fall.

Question 11

Figure 4-7
  
-Refer to the Figure 4-7.What would cause the movement from point B to point A on the graph

Accepted Answer

A) an increase in price 
B) a decrease in price 
C) a decrease in the price of a substitute good 
D) an increase in income 
A) an increase in price 
B) a decrease in price 
C) a decrease in the price of a substitute good 
D) an increase in income

Question 12

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) increased,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you

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 13

Sugar is a normal good.You observe that both the equilibrium price and quantity of sugar have risen over time.Which of the following would be most consistent with this observation

Accepted Answer

A) Consumers have experienced an increase in income and sugar-production technology has improved. 
B) The price of artificial sweetener has risen and the price of coffee has fallen. 
C) Consumer tastes have changed so as to prefer sugar less than before. 
D) The demand curve for sugar must be positively sloped. 
A) Consumers have experienced an increase in income and sugar-production technology has improved. 
B) The price of artificial sweetener has risen and the price of coffee has fallen. 
C) Consumer tastes have changed so as to prefer sugar less than before. 
D) The demand curve for sugar must be positively sloped.

Question 14

Table 4-3
The table shows individual demand schedules for a market.
 
-Refer to the Table 4-3.What happens if the price decreases from $1.50 to $1.00

Accepted Answer

A) The market demand increases by 20 units. 
B) The quantity demanded in the market decreases by 2 units. 
C) Individual demands will increase. 
D) The quantity demanded in the market increases by 7 units. 
A) The market demand increases by 20 units. 
B) The quantity demanded in the market decreases by 2 units. 
C) Individual demands will increase. 
D) The quantity demanded in the market increases by 7 units.

Question 15

What happens when there is a shortage in a market

Accepted Answer

A) There is downward pressure on price. 
B) There is upward pressure on price. 
C) The market is operating above the equilibrium level. 
D) The price must be above equilibrium. 
A) There is downward pressure on price. 
B) There is upward pressure on price. 
C) The market is operating above the equilibrium level. 
D) The price must be above equilibrium.

Question 16

Wheat is the main input in the production of flour.All else equal,if the price of wheat decreases,what would we expect

Accepted Answer

A) the supply of flour to decrease 
B) the demand for flour to decrease 
C) the supply of flour to increase 
D) the demand for flour to increase 
A) the supply of flour to decrease 
B) the demand for flour to decrease 
C) the supply of flour to increase 
D) the demand for flour to increase

Question 17

What are the forces that make market economies work

Accepted Answer

A) price and quantity 
B) demand and supply 
C) cost and benefit 
D) employment and income 
A) price and quantity 
B) demand and supply 
C) cost and benefit 
D) employment and income

Question 18

Market demand is given as QD = 200 - 3P.Market supply is given as QS = P + 10.If price increases from $12 to $18,what is the price elasticity of demand

Accepted Answer

A) 0.1 
B) 0.3 
C) 1.2 
D) 1.8 
A) 0.1 
B) 0.3 
C) 1.2 
D) 1.8

Question 19

How do the variables price and quantity demanded relate to each other

Accepted Answer

A) Price and quantity demanded are independent of each other. 
B) Price is the dependent variable and quantity demanded is the independent variable. 
C) Price is the independent variable and quantity demanded is the dependent variable. 
D) Price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers. 
A) Price and quantity demanded are independent of each other. 
B) Price is the dependent variable and quantity demanded is the independent variable. 
C) Price is the independent variable and quantity demanded is the dependent variable. 
D) Price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers.

Question 20

Market demand is given as QD = 100 - P.Market supply is given as QS = 4P.If price increases from $70 to $74,what is the price elasticity of demand

Accepted Answer

A) 0.4 
B) 0.7 
C) 2.57 
D) 3.5 
A) 0.4 
B) 0.7 
C) 2.57 
D) 3.5

Exam 4: The Market Forces of Supply and Demand

If the demand for a good falls when income falls,the good is called an inferior good.

You love.You hear on the news that 50% of the world's banana crop has been wiped out because of a virus,which will cause the price to double by the end of the year.What happens as a result

If a car manufacturer purchases new labour-saving technology for its assembly line,what would we NOT expect

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

What is an example of substitute goods

Suppose that the number of buyers in a market decreases and a technological advancement occurs.What would we expect to happen in the market

What will result from an increase in resource costs to firms in a market

Table 4-1 -Refer to the Table 4-1.If the price were $12,what would happen

The behaviour of buyers and sellers drives markets toward equilibrium.

Figure 4-2 -Refer to the Figure 4-2.What would happen at a price of $35

Figure 4-7 -Refer to the Figure 4-7.What would cause the movement from point B to point A on the graph

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) increased,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you

Sugar is a normal good.You observe that both the equilibrium price and quantity of sugar have risen over time.Which of the following would be most consistent with this observation

Table 4-3 The table shows individual demand schedules for a market. -Refer to the Table 4-3.What happens if the price decreases from $1.50 to $1.00

What happens when there is a shortage in a market

Wheat is the main input in the production of flour.All else equal,if the price of wheat decreases,what would we expect

What are the forces that make market economies work

Market demand is given as QD = 200 - 3P.Market supply is given as QS = P + 10.If price increases from $12 to $18,what is the price elasticity of demand

How do the variables price and quantity demanded relate to each other

Market demand is given as QD = 100 - P.Market supply is given as QS = 4P.If price increases from $70 to $74,what is the price elasticity of demand

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

Market demand is given as Q_D= 200 - 3P.Market supply is given as Q_S= P + 10.If price increases from $12 to $18,what is the price elasticity of demand

Market demand is given as Q_D= 100 - P.Market supply is given as Q_S= 4P.If price increases from $70 to $74,what is the price elasticity of demand