Question 1

A common misconception about supply is that

Accepted Answer

A) supply depends on many other variables. 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of the above are correct. 
A) supply depends on many other variables. 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of the above are correct.

Question 2

A supply schedule can be plotted on a graph to yield a supply curve.

Accepted Answer

A) True 
 B)False

Question 3

Lines, ration coupons, and black markets are symptoms of a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy. 
A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy.

Question 4

Figure 4-10
  
-The rising minimum wage allegedly has reduced the quantity demanded of teenage labor.However, demographics slightly reduced the supply of teenage labor.The U.S.Department of Labor reported that teenage unemployment is an increasing problem.Which graph in Figure 4-10 is consistent with these facts?

Accepted Answer

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

Question 5

A demand schedule shows the time over which different quantities will be demanded.

Accepted Answer

A) True 
 B)False

Question 6

Firms often seek to borrow money to expand their capital stock, and the price they pay for the money is the interest rate.What happens to the quantity of money supplied if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) It depends entirely on the interest rate. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) It depends entirely on the interest rate.

Question 7

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

Accepted Answer

A) True 
 B)False

Question 8

Equilibrium in a market is

Accepted Answer

A) a situation in which there are no inherent forces that produce change. 
B) the natural state of affairs in the market. 
C) the actual price and quantity that will exist in a market. 
D) the best price and quantity that can exist in a market. 
E) All of the above are correct. 
A) a situation in which there are no inherent forces that produce change. 
B) the natural state of affairs in the market. 
C) the actual price and quantity that will exist in a market. 
D) the best price and quantity that can exist in a market. 
E) All of the above are correct.

Question 9

Firms often seek to borrow money to expand their capital stock, and the price they pay for the money is the interest rate.What happens to supply of money if the interest rate increases?

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.

Question 10

A typical supply curve has

Accepted Answer

A) slope equal to zero. 
B) slope equal to infinity. 
C) negative slope. 
D) positive slope. 
E) constant slope. 
A) slope equal to zero. 
B) slope equal to infinity. 
C) negative slope. 
D) positive slope. 
E) constant slope.

Question 11

List some of the problems that may arise when prices are controlled.

Accepted Answer

Apart from the standard set of

Question 12

The mechanism of supply and demand is

Accepted Answer

A) a fundamental tool in both microeconomics and macroeconomics. 
B) the only real "law" of economics. 
C) a fundamental tool only in microeconomics. 
D) a fundamental tool only in macroeconomics. 
A) a fundamental tool in both microeconomics and macroeconomics. 
B) the only real "law" of economics. 
C) a fundamental tool only in microeconomics. 
D) a fundamental tool only in macroeconomics.

Question 13

On a traditional supply and demand diagram,

Accepted Answer

A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines. 
A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines.

Question 14

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Accepted Answer

A) True 
 B)False

Question 15

Suppose demand can be described with the equation Q = 900 − 5P and supply with the equation Q = 100 + 5P.Complete the following table.Determine the equilibrium price and quantity.

Accepted Answer

The answer of Suppose demand can be described with the...

Question 16

The demand curve for a typical good has

Accepted Answer

A) a negative slope because some consumers switch to other goods as the price of the good rises. 
B) a negative slope because the supply of the good rises as demand rises. 
C) a negative slope because the good has less "snob appeal" as its price falls. 
D) an inverse slope because as the price goes up, the good has more profitability. 
E) a positive slope because price is a clear indicator of need. 
A) a negative slope because some consumers switch to other goods as the price of the good rises. 
B) a negative slope because the supply of the good rises as demand rises. 
C) a negative slope because the good has less "snob appeal" as its price falls. 
D) an inverse slope because as the price goes up, the good has more profitability. 
E) a positive slope because price is a clear indicator of need.

Question 17

Price ceilings will likely result in the growth of black markets.

Accepted Answer

A) True 
 B)False

Question 18

An important assumption that is made when constructing a supply schedule is

Accepted Answer

A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope. 
A) only price and quantity matter in determining supply. 
B) firms always want to sell a certain amount of a product. 
C) supply is too important to be left to the marketplace. 
D) all other determinants of supply are held constant. 
E) demand has a positive slope.

Question 19

Figure 4-4
  
-Assume that Figure 4-4 shows demand for orange juice.An increase in the price of soda 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 20

Price floors are only effective below the market equilibrium.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

A common misconception about supply is that

A supply schedule can be plotted on a graph to yield a supply curve.

Lines, ration coupons, and black markets are symptoms of a

A demand schedule shows the time over which different quantities will be demanded.

Firms often seek to borrow money to expand their capital stock, and the price they pay for the money is the interest rate.What happens to the quantity of money supplied if the interest rate increases?

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

Equilibrium in a market is

Firms often seek to borrow money to expand their capital stock, and the price they pay for the money is the interest rate.What happens to supply of money if the interest rate increases?

A typical supply curve has

List some of the problems that may arise when prices are controlled.

The mechanism of supply and demand is

On a traditional supply and demand diagram,

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Suppose demand can be described with the equation Q = 900 − 5P and supply with the equation Q = 100 + 5P.Complete the following table.Determine the equilibrium price and quantity.

The demand curve for a typical good has

Price ceilings will likely result in the growth of black markets.

An important assumption that is made when constructing a supply schedule is

Figure 4-4 -Assume that Figure 4-4 shows demand for orange juice.An increase in the price of soda will change demand from

Price floors are only effective below the market equilibrium.

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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