Question 1

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

Accepted Answer

A) True 
 B)False

Question 2

Distinguish the terms price ceiling and price floor.

Accepted Answer

A price ceiling is a governmen

Question 3

A severe freeze has once again damaged the Florida orange crop.The impact on the market for oranges will be a leftward shift in

Accepted Answer

A) demand as consumers try to economize because of the shortage. 
B) both the supply and demand curves. 
C) the supply curve. 
D) the supply curve and a rightward shift in the demand curve, which will result in a higher price. 
A) demand as consumers try to economize because of the shortage. 
B) both the supply and demand curves. 
C) the supply curve. 
D) the supply curve and a rightward shift in the demand curve, which will result in a higher price.

Question 4

Regulations are sometimes used to "correct" the failures of a market mechanism.

Accepted Answer

A) True 
 B)False

Question 5

Very few societies have used price controls.

Accepted Answer

A) True 
 B)False

Question 6

The following price-quantity coordinates for gold used by U.S.dentists were observed: P = $875/ounce, Q = 342,000; P = $200/ounce, Q = 706,000.These points most likely lie along the

Accepted Answer

A) supply curve for gold for dental use. 
B) demand curve for dental use. 
C) equilibrium curve for dental use. 
D) production possibilities curve for dental use. 
A) supply curve for gold for dental use. 
B) demand curve for dental use. 
C) equilibrium curve for dental use. 
D) production possibilities curve for dental use.

Question 7

A change in the price of a good has no effect on the supply schedule.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-12
  
-The silverware industry has been in serious decline since the 1980s.Family dining habits are less formal so people purchase less silverware.Also, in 2006-2008, the price of silver increased from $5 to $20 per ounce.Which graph in Figure 4-12 best illustrates these developments?

Accepted Answer

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

Question 9

Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist.Why does this occur?

Accepted Answer

A) Many people do not understand the effects that controls cause. 
B) Property owners are politically unpopular. 
C) Many persons tend to benefit from rent controls. 
D) All of the above are correct. 
A) Many people do not understand the effects that controls cause. 
B) Property owners are politically unpopular. 
C) Many persons tend to benefit from rent controls. 
D) All of the above are correct.

Question 10

When there is an increase in demand,

Accepted Answer

A) the demand curve shifts toward the origin of the graph. 
B) the demand curve twists clockwise. 
C) the demand curve shifts away from the origin of the graph. 
D) the demand curve twists counterclockwise. 
E) a lower price has increased the amount of the good that consumers will buy. 
A) the demand curve shifts toward the origin of the graph. 
B) the demand curve twists clockwise. 
C) the demand curve shifts away from the origin of the graph. 
D) the demand curve twists counterclockwise. 
E) a lower price has increased the amount of the good that consumers will buy.

Question 11

Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding

Accepted Answer

A) reduction in the volume of sales only if the price is forced down. 
B) reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) decrease in the volume of sales whether the price is forced up or down. 
D) increase in the volume of sales whether the price is forced up or down. 
A) reduction in the volume of sales only if the price is forced down. 
B) reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) decrease in the volume of sales whether the price is forced up or down. 
D) increase in the volume of sales whether the price is forced up or down.

Question 12

A price ceiling is only effective if it is above the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 13

At an equilibrium price for gasoline,

Accepted Answer

A) everyone with the desire and the income to buy gasoline at that price can do so. 
B) surpluses are inevitable. 
C) inherent market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available. 
A) everyone with the desire and the income to buy gasoline at that price can do so. 
B) surpluses are inevitable. 
C) inherent market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available.

Question 14

Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises.Therefore, we expect that firms will produce more if

Accepted Answer

A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases. 
A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases.

Question 15

The imposition of price ceilings on a market often results in

Accepted Answer

A) an increase in investment in the industry. 
B) a persistent surplus in the market. 
C) the diversion of income toward black-market suppliers. 
D) lower prices being offered on the black market. 
A) an increase in investment in the industry. 
B) a persistent surplus in the market. 
C) the diversion of income toward black-market suppliers. 
D) lower prices being offered on the black market.

Question 16

Figure 4-11
  
-The Russian government has restricted sugar availability to reduce the supply of illegal liquor (sugar is used to increase alcohol content).Russians also like to sweeten their tea with jam, another sugar product.Which graph in Figure 4-11 depicts the impact of sugar rationing on the Russian tea market?

Accepted Answer

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

Question 17

A demand schedule's position is determined partly by the supply of a good.

Accepted Answer

A) True 
 B)False

Question 18

For more than a thousand years, the Catholic Church required its members to abstain from meat on Fridays.Catholics customarily ate fish on Friday.After 1966 abstinence from meat on Fridays was no longer required.Consequently, the

Accepted Answer

A) demand curve for fish shifted to the right. 
B) demand curve for fish shifted to the left. 
C) demand for meat decreased. 
D) price of fish increased. 
A) demand curve for fish shifted to the right. 
B) demand curve for fish shifted to the left. 
C) demand for meat decreased. 
D) price of fish increased.

Question 19

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 20

A change in the price of hamburgers will change the supply of hot dogs.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

Distinguish the terms price ceiling and price floor.

A severe freeze has once again damaged the Florida orange crop.The impact on the market for oranges will be a leftward shift in

Regulations are sometimes used to "correct" the failures of a market mechanism.

Very few societies have used price controls.

The following price-quantity coordinates for gold used by U.S.dentists were observed: P = $875/ounce, Q = 342,000; P = $200/ounce, Q = 706,000.These points most likely lie along the

A change in the price of a good has no effect on the supply schedule.

Figure 4-12 -The silverware industry has been in serious decline since the 1980s.Family dining habits are less formal so people purchase less silverware.Also, in 2006-2008, the price of silver increased from $5 to $20 per ounce.Which graph in Figure 4-12 best illustrates these developments?

Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist.Why does this occur?

When there is an increase in demand,

Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding

A price ceiling is only effective if it is above the market equilibrium.

At an equilibrium price for gasoline,

Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises.Therefore, we expect that firms will produce more if

The imposition of price ceilings on a market often results in

A demand schedule's position is determined partly by the supply of a good.

For more than a thousand years, the Catholic Church required its members to abstain from meat on Fridays.Catholics customarily ate fish on Friday.After 1966 abstinence from meat on Fridays was no longer required.Consequently, the

Price controls usually enhance efficiency in the allocation of resources.

A change in the price of hamburgers will change the supply of hot dogs.

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

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