Question 1

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 2

Figure 4-20
  
-If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph in Figure 4-20?

Accepted Answer

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

Question 3

Sugar price supports ensure an abundance of sugar, and hence reasonable prices for consumers.

Accepted Answer

A) True 
 B)False

Question 4

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to ____, and quantity sold to ____.

Accepted Answer

A) rise; rise. 
B) fall; fall. 
C) rise; fall. 
D) fall; remain the same. 
A) rise; rise. 
B) fall; fall. 
C) rise; fall. 
D) fall; remain the same.

Question 5

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

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) The whole demand schedule shifts to the left. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) The whole demand schedule shifts to the left.

Question 6

The following are common errors students make when discussing supply and demand.What is the mistake in each?
a.At equilibrium, demand equals supply.
b.The quantity of demand is greater than the quantity of supply.
c.They move along the line from both ends to an equilibrium in the middle.
d.The increase in demand causes an increase in supply.

Accepted Answer

a.Demand never equals supply because the

Question 7

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.If the government imposes a price floor of $4 a weezil, how many weezils will be sold?

Accepted Answer

A) 5 
B) 10 
C) 12 
D) 14 
A) 5 
B) 10 
C) 12 
D) 14

Question 8

A common misperception about consumer demand is that

Accepted Answer

A) demand 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) demand 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 9

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

Accepted Answer

A) True 
 B)False

Question 10

What factors are held constant along a given demand curve for a good?

Accepted Answer

A) the price of the good 
B) the technology used to produce the good 
C) the supply of the good 
D) consumer incomes and the prices of other goods 
A) the price of the good 
B) the technology used to produce the good 
C) the supply of the good 
D) consumer incomes and the prices of other goods

Question 11

How do legal controls on prices lead to corruption?

Accepted Answer

A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of the above are correct. 
A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of the above are correct.

Question 12

Figure 4-19
  
-After a strike against the Financial News in London began, the number of copies of the competing Broad Street Journal sold in England increased dramatically, yet there was no increase in price.Which supply and demand graph in Figure 4-19 represents the situation for the Broad Street Journal before the strike started?

Accepted Answer

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

Question 13

Demand and quantity demanded are the same thing.

Accepted Answer

A) True 
 B)False

Question 14

A black market develops only when quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 15

Demand curves can be affected by the prices of related goods.

Accepted Answer

A) True 
 B)False

Question 16

A shift in the demand curve occurs when

Accepted Answer

A) suppliers place more goods on the market. 
B) the price of a good rises. 
C) consumers want to buy more or less than before at a given price. 
D) the price of the good falls. 
A) suppliers place more goods on the market. 
B) the price of a good rises. 
C) consumers want to buy more or less than before at a given price. 
D) the price of the good falls.

Question 17

Price ceilings set a legal maximum price on a product or commodity.

Accepted Answer

A) True 
 B)False

Question 18

In high schools, all teachers were paid the same based on years of service and regardless of specialization.Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer.At the same time, a decline in the number of school-age children tended to reduce the demand for all other teachers, which led to a surplus.The economist's solution to this problem would be

Accepted Answer

A) merit pay to reward the best teachers. 
B) recognition that all teachers do comparable work and should be paid the same. 
C) to raise the wages of all teachers. 
D) to raise the wages of teachers in fields that are in short supply and lower those of others. 
A) merit pay to reward the best teachers. 
B) recognition that all teachers do comparable work and should be paid the same. 
C) to raise the wages of all teachers. 
D) to raise the wages of teachers in fields that are in short supply and lower those of others.

Question 19

Which of the following is not a symptom associated with a price floor?

Accepted Answer

A) Excess of quantity demanded over quantity supplied. 
B) Sellers offering discounts in disguised forms. 
C) Problem of disposal created by excess supply. 
D) Survival of inefficient businesses. 
A) Excess of quantity demanded over quantity supplied. 
B) Sellers offering discounts in disguised forms. 
C) Problem of disposal created by excess supply. 
D) Survival of inefficient businesses.

Question 20

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price which borrowers pay.As a result, economists expected that the quantity of money supplied would

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) Uncertain-economic theory has no answer to this question. 
A) increase. 
B) decrease. 
C) not change. 
D) Uncertain-economic theory has no answer to this question.

Exam 4: Supply and Demand: an Initial Look

Price floors lead to market surpluses.

Figure 4-20 -If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph in Figure 4-20?

Sugar price supports ensure an abundance of sugar, and hence reasonable prices for consumers.

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to ____, and quantity sold to ____.

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

A common misperception about consumer demand is that

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

What factors are held constant along a given demand curve for a good?

How do legal controls on prices lead to corruption?

Demand and quantity demanded are the same thing.

A black market develops only when quantity demanded exceeds quantity supplied.

Demand curves can be affected by the prices of related goods.

A shift in the demand curve occurs when

Price ceilings set a legal maximum price on a product or commodity.

Which of the following is not a symptom associated with a price floor?

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price which borrowers pay.As a result, economists expected that the quantity of money supplied would

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

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to , and quantity sold to .