Question 1

The demand for home computers has increased, yet the price has fallen.Explain this apparent paradox.

Accepted Answer

Supply has increased by more than demand has increased.The technological advance in computer chips has led to a huge increase in supply, more than enough to counteract any upward pressure on price due to the increase in demand.

Question 2

If the demand curve shifts outward and the supply curve remains the same, price will fall.

Accepted Answer

A) True 
 B)False  False

Question 3

The price for labor is the wage rate.What happens to the demand for labor if wages increase?

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. C

Question 4

Exhibit 4-1
The following are the equations for the supply and demand curves in the market for weezils:
 
where QS1U1B1dS1U1B0 is the quantity demanded, QS1U1B1sS1U1B0 is the quantity supplied, and P is the price per weezil in dollars.

-Refer to Exhibit 4-1.According to the data given, when the market is in Equilibrium, how many weezils are sold?

Accepted Answer

A) 3 
B) 5 
C) 11 
D) 14 
A) 3 
B) 5 
C) 11 
D) 14

Question 5

Drawing the supply curve and the demand curve on the same graph helps show how price is determined.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-1
  
-If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 4-1 is appropriate?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 7

An individual's demand schedule

Accepted Answer

A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule. 
A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule.

Question 8

Figure 4-4
  
-In Figure 4-4, an increase in population will change demand from

Accepted Answer

A) D₁ to D₂. 
B) D₂ to D₁ . 
C) D₃ to D₂. 
D) D₃ to D₁ . 
A) D₁ to D₂. 
B) D₂ to D₁ . 
C) D₃ to D₂. 
D) D₃ to D₁ .

Question 9

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

Accepted Answer

A) True 
 B)False

Question 10

A cold winter will increase the quantity of heating fuel demanded at every price.

Accepted Answer

A) True 
 B)False

Question 11

Studies at Cornell University revealed that chickens grow 2 percent larger when a red mitten is placed in their cage and Vivaldi is played in the coop.Resultant feed savings are estimated at $60 million a year.In the chicken market, the

Accepted Answer

A) demand curve shifts to the right. 
B) supply curve shifts to the right. 
C) price will rise. 
D) quantity sold will fall. 
A) demand curve shifts to the right. 
B) supply curve shifts to the right. 
C) price will rise. 
D) quantity sold will fall.

Question 12

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 demand for money if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) The quantity of money demanded will increase. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) The quantity of money demanded will increase.

Question 13

The United States typically experiences a large surplus of milk annually.This is caused by

Accepted Answer

A) a price ceiling in the market. 
B) not enough demand for milk. 
C) a price floor in the market. 
D) overproduction of milk by the cows. 
A) a price ceiling in the market. 
B) not enough demand for milk. 
C) a price floor in the market. 
D) overproduction of milk by the cows.

Question 14

When a demand schedule is drawn as a graph,

Accepted Answer

A) price is measured on the vertical axis. 
B) quantity is measured on the horizontal axis. 
C) the resulting curve has a negative slope. 
D) the other variables (besides price and quantity) are held constant. 
E) All of the above are correct. 
A) price is measured on the vertical axis. 
B) quantity is measured on the horizontal axis. 
C) the resulting curve has a negative slope. 
D) the other variables (besides price and quantity) are held constant. 
E) All of the above are correct.

Question 15

Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold at $12.The most probable interpretation of these data is that the

Accepted Answer

A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) supply curve has shifted to the left, with no change in demand. 
D) demand curve has shifted to the right, with no change in supply. 
A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) supply curve has shifted to the left, with no change in demand. 
D) demand curve has shifted to the right, with no change in supply.

Question 16

In an attempt to reduce poaching of elephant tusks for ivory, officials in Kenya burned illegally gathered ivory.Economists tend to point out that

Accepted Answer

A) poaching can be reduced with price supports for ivory. 
B) the supply of ivory has fallen, leading to an increase in price and reward for poaching. 
C) burning ivory decreases demand, leading to lower prices and reward for poaching. 
D) the demand for ivory is higher, leading to an increase in price and reward for poaching. 
E) burning ivory raises demand, and controlled prices will lead to even greater poaching. 
A) poaching can be reduced with price supports for ivory. 
B) the supply of ivory has fallen, leading to an increase in price and reward for poaching. 
C) burning ivory decreases demand, leading to lower prices and reward for poaching. 
D) the demand for ivory is higher, leading to an increase in price and reward for poaching. 
E) burning ivory raises demand, and controlled prices will lead to even greater poaching.

Question 17

In relation to prices that would prevail in an uncontrolled market, prices charged by a black market are usually

Accepted Answer

A) lower, since it is hard for the sellers to locate buyers. 
B) lower, since it is hard for the buyers to locate sellers. 
C) higher, since black marketers expect compensation for the risk of being caught. 
D) higher, since most people enjoy goods more if they are illegal. 
A) lower, since it is hard for the sellers to locate buyers. 
B) lower, since it is hard for the buyers to locate sellers. 
C) higher, since black marketers expect compensation for the risk of being caught. 
D) higher, since most people enjoy goods more if they are illegal.

Question 18

A surplus occurs when price is higher than the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

Any ​event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Accepted Answer

A) True 
 B)False

Question 20

The U.S.government banned cigarette advertising on radio and television after January, 1971.You would expect to find that after the ban took effect the price of magazine ads for

Accepted Answer

A) all goods fell. 
B) only cigarettes fell. 
C) all goods rose. 
D) only cigarettes rose. 
A) all goods fell. 
B) only cigarettes fell. 
C) all goods rose. 
D) only cigarettes rose.

Exam 4: Supply and Demand: an Initial Look

The demand for home computers has increased, yet the price has fallen.Explain this apparent paradox.

If the demand curve shifts outward and the supply curve remains the same, price will fall.

The price for labor is the wage rate.What happens to the demand for labor if wages increase?

Drawing the supply curve and the demand curve on the same graph helps show how price is determined.

Figure 4-1 -If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 4-1 is appropriate?

An individual's demand schedule

Figure 4-4 -In Figure 4-4, an increase in population will change demand from

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

A cold winter will increase the quantity of heating fuel demanded at every price.

Studies at Cornell University revealed that chickens grow 2 percent larger when a red mitten is placed in their cage and Vivaldi is played in the coop.Resultant feed savings are estimated at $60 million a year.In the chicken market, 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 demand for money if the interest rate increases?

The United States typically experiences a large surplus of milk annually.This is caused by

When a demand schedule is drawn as a graph,

Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold at $12.The most probable interpretation of these data is that the

In an attempt to reduce poaching of elephant tusks for ivory, officials in Kenya burned illegally gathered ivory.Economists tend to point out that

In relation to prices that would prevail in an uncontrolled market, prices charged by a black market are usually

A surplus occurs when price is higher than the market equilibrium.

Any ​event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

The U.S.government banned cigarette advertising on radio and television after January, 1971.You would expect to find that after the ban took effect the price of magazine ads for

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.