Question 1

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

Accepted Answer

A) the supply curve will shift to the left. 
B) the supply curve will remain constant. 
C) the supply curve will shift to the right. 
D) the demand curve will shift to the right. 
A) the supply curve will shift to the left. 
B) the supply curve will remain constant. 
C) the supply curve will shift to the right. 
D) the demand curve will shift to the right.

Question 2

During the Revolutionary War, the Pennsylvania legislature attempted to help the Continental Army by enacting

Accepted Answer

A) wage floors for soldiers in the army. 
B) bonuses for soldiers who re-enlisted. 
C) laws to buy food for the soldiers stationed in Pennsylvania. 
D) price controls on essential commodities. 
E) All of the above are correct. 
A) wage floors for soldiers in the army. 
B) bonuses for soldiers who re-enlisted. 
C) laws to buy food for the soldiers stationed in Pennsylvania. 
D) price controls on essential commodities. 
E) All of the above are correct.

Question 3

Figure 4-8
  
-Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

Accepted Answer

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

Question 4

If price rises, what happens to quantity supplied for a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Quantity supplied is constant, but supply increases. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Quantity supplied is constant, but supply increases.

Question 5

The quantity of goods exchanged in a market will be below the equilibrium quantity

Accepted Answer

A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising. 
A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising.

Question 6

The removal in 1966 of the requirement that Catholics eat fish on Fridays was followed by a 12.5 percent fall in prices of fresh fish.From this it can be deduced that the

Accepted Answer

A) demand curve for fish shifted to the left. 
B) demand curve shifted to the right. 
C) supply curve shifted to the left. 
D) supply curve shifted to the right. 
A) demand curve for fish shifted to the left. 
B) demand curve shifted to the right. 
C) supply curve shifted to the left. 
D) supply curve shifted to the right.

Question 7

Governments of market-oriented economies never tamper with the price mechanism.

Accepted Answer

A) True 
 B)False

Question 8

Advertising has no effect on the demand schedule for a good.

Accepted Answer

A) True 
 B)False

Question 9

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

Accepted Answer

The example used in the text is rent con

Question 10

Figure 4-21
  
-At price P₃ in Figure 4-21, what will tend to happen?

Accepted Answer

A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market. 
A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market.

Question 11

Price floors set a legal minimum price on a product or commodity.

Accepted Answer

A) True 
 B)False

Question 12

The demand by sterile couples for babies to adopt has grown rapidly, while the supply has dwindled because of improved contraception, liberal abortion laws, and an increase in the probability that unwed mothers will keep their children.It violates the law to sell human beings at any age, but for every twenty legal adoptions there seemingly is one baby sale at a price up to $50,000.The generic term economists apply to the market produced by this type of shortage is

Accepted Answer

A) "black market." 
B) "white slave market." 
C) "the adoption market." 
D) "baby market." 
A) "black market." 
B) "white slave market." 
C) "the adoption market." 
D) "baby market."

Question 13

When price is above the equilibrium level, suppliers offer more than demanders wish to buy.

Accepted Answer

A) True 
 B)False

Question 14

Tampering with the price mechanism

Accepted Answer

A) can be efficient for a while. 
B) cannot be attempted in a market economy. 
C) can enhance societal welfare if done properly. 
D) often produces undesired side effects. 
A) can be efficient for a while. 
B) cannot be attempted in a market economy. 
C) can enhance societal welfare if done properly. 
D) often produces undesired side effects.

Question 15

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

Accepted Answer

A) True 
 B)False

Question 16

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4-16
  
-Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

Accepted Answer

A) S₁ to S₂. 
B) S₂ to S₁ . 
C) S₂ to S₃. 
D) S₁ to S₃. 
A) S₁ to S₂. 
B) S₂ to S₁ . 
C) S₂ to S₃. 
D) S₁ to S₃.

Question 18

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

Accepted Answer

A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left. 
A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left.

Question 19

Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

Accepted Answer

A) a decrease in the price of electricity 
B) an increase in the price of air conditioners 
C) an increase in the price of heating oil 
D) a decrease in the price of natural gas 
A) a decrease in the price of electricity 
B) an increase in the price of air conditioners 
C) an increase in the price of heating oil 
D) a decrease in the price of natural gas

Question 20

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Accepted Answer

A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand. 
A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand.

Exam 4: Supply and Demand: an Initial Look

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

During the Revolutionary War, the Pennsylvania legislature attempted to help the Continental Army by enacting

Figure 4-8 -Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

If price rises, what happens to quantity supplied for a product?

The quantity of goods exchanged in a market will be below the equilibrium quantity

The removal in 1966 of the requirement that Catholics eat fish on Fridays was followed by a 12.5 percent fall in prices of fresh fish.From this it can be deduced that the

Governments of market-oriented economies never tamper with the price mechanism.

Advertising has no effect on the demand schedule for a good.

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

Figure 4-21 -At price P₃ in Figure 4-21, what will tend to happen?

Price floors set a legal minimum price on a product or commodity.

When price is above the equilibrium level, suppliers offer more than demanders wish to buy.

Tampering with the price mechanism

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

Figure 4-16 -Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

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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