Question 1

Economists emphasize the importance of ____ in analyzing demand.

Accepted Answer

A) quantity 
B) market potential 
C) wants and needs 
D) price 
E) sales opportunities 
A) quantity 
B) market potential 
C) wants and needs 
D) price 
E) sales opportunities

Question 2

Why does quantity demanded decrease when price increases?

Accepted Answer

A) People choose to reduce consumption of the item. 
B) People "drop out" of the market for the item. 
C) People find substitutes for the item. 
D) All of the above are correct. 
A) People choose to reduce consumption of the item. 
B) People "drop out" of the market for the item. 
C) People find substitutes for the item. 
D) All of the above are correct.

Question 3

In a move to free the economy from unnecessary regulation, Congress decides to remove sugar price supports.What would most likely happen to the number of producers of sugar?

Accepted Answer

A) It would decrease, because sugar prices would fall. 
B) It would decrease, because sugar prices would rise. 
C) It would increase, because sugar prices would fall. 
D) It would increase, because sugar prices would rise. 
A) It would decrease, because sugar prices would fall. 
B) It would decrease, because sugar prices would rise. 
C) It would increase, because sugar prices would fall. 
D) It would increase, because sugar prices would rise.

Question 4

Figure 4-16
  
-In Figure 4-16, an increase in the number of producers will shift supply from

Accepted Answer

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

Question 5

A decrease in demand will have what effect on equilibrium price and quantity?

Accepted Answer

A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease. 
A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease.

Question 6

The laws of supply and demand force prices to an equilibrium.

Accepted Answer

A) True 
 B)False

Question 7

The amount of a good sold in a market at a particular price cannot exceed the quantity

Accepted Answer

A) demanded at that price. 
B) supplied at that price. 
C) sold when there is a price floor. 
D) sold when there is a price ceiling. 
A) demanded at that price. 
B) supplied at that price. 
C) sold when there is a price floor. 
D) sold when there is a price ceiling.

Question 8

If price rises, what happens to demand for a product?

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 9

The major drawback of a price ceiling is

Accepted Answer

A) it causes a surplus. 
B) government regulations of this kind are difficult to enforce. 
C) it causes a shortage. 
D) There is no drawback. 
A) it causes a surplus. 
B) government regulations of this kind are difficult to enforce. 
C) it causes a shortage. 
D) There is no drawback.

Question 10

If both the supply and demand curves shift to the left, then we can conclude that there will be

Accepted Answer

A) an increase in the equilibrium quantity sold. 
B) a decrease in the equilibrium quantity sold. 
C) an increase in the equilibrium price. 
D) a decrease in the equilibrium price. 
A) an increase in the equilibrium quantity sold. 
B) a decrease in the equilibrium quantity sold. 
C) an increase in the equilibrium price. 
D) a decrease in the equilibrium price.

Question 11

If the U.S.government starts to sell off its stockpile of cheese,

Accepted Answer

A) consumers will be less willing to purchase cheese. 
B) the equilibrium quantity demanded will rise. 
C) farmers will hoard the cheese they produce. 
D) the quantity of cheese that spoils before sale will rise. 
A) consumers will be less willing to purchase cheese. 
B) the equilibrium quantity demanded will rise. 
C) farmers will hoard the cheese they produce. 
D) the quantity of cheese that spoils before sale will rise.

Question 12

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal, it is consistent that

Accepted Answer

A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased. 
A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased.

Question 13

If the price of oil, a close substitute for coal, increases then the

Accepted Answer

A) supply curve for coal will shift to the right. 
B) demand curve for coal will shift to the right. 
C) equilibrium price and quantity of coal will not change. 
D) demand curve for coal will shift to the left. 
E) supply curve of coal will shift to the left. 
A) supply curve for coal will shift to the right. 
B) demand curve for coal will shift to the right. 
C) equilibrium price and quantity of coal will not change. 
D) demand curve for coal will shift to the left. 
E) supply curve of coal will shift to the left.

Question 14

Price ceilings are designed to protect sellers, while price floors are designed to protect buyers.

Accepted Answer

A) True 
 B)False

Question 15

Figure 4-13
  
-The drug BGH (bovine growth hormone) dramatically increases the milk output of dairy cows.Farmers in Wisconsin, a big dairy state, vigorously oppose licensing the drug, fearing that excess supply and a consumer reaction on the purity of food issue will put many of them out of business.Which graph in Figure 4-13 best illustrates the farmers' fears?

Accepted Answer

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

Question 16

Draw a graph of a market in equilibrium.Describe what might cause a change in demand or supply and how this would affect the diagram.Indicate how the equilibrium price and quantity will change.

Accepted Answer

The (completed) diagram should look like

Question 17

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Question 18

In 1989, Hurricane Hugo devastated Charleston, South Carolina, leaving residents with no electricity for light or refrigeration, and completely cut off from the outside world by fallen trees and washed-out roads.Consequently, the price of ice rose 1,000 percent and generators 300 percent.Tree removal firms were charging $4,000 to cut up a single tree.Outraged, the city government enacted an emergency law prohibiting price "gouging." This law is an example of

Accepted Answer

A) the cost disease of services. 
B) a price ceiling. 
C) the laissez-faire rule. 
D) the indispensable necessity syndrome. 
A) the cost disease of services. 
B) a price ceiling. 
C) the laissez-faire rule. 
D) the indispensable necessity syndrome.

Question 19

The demand curve for a good connects points describing how much consumers

Accepted Answer

A) actually bought at different prices during a particular period. 
B) actually bought at different prices in different periods. 
C) would have been willing and able to buy at different prices during a particular period. 
D) would have been willing and able to buy at different prices in different periods. 
A) actually bought at different prices during a particular period. 
B) actually bought at different prices in different periods. 
C) would have been willing and able to buy at different prices during a particular period. 
D) would have been willing and able to buy at different prices in different periods.

Question 20

Rent controls are most often designed to protect the investment made by apartment building owners.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

Economists emphasize the importance of ____ in analyzing demand.

Why does quantity demanded decrease when price increases?

In a move to free the economy from unnecessary regulation, Congress decides to remove sugar price supports.What would most likely happen to the number of producers of sugar?

Figure 4-16 -In Figure 4-16, an increase in the number of producers will shift supply from

A decrease in demand will have what effect on equilibrium price and quantity?

The laws of supply and demand force prices to an equilibrium.

The amount of a good sold in a market at a particular price cannot exceed the quantity

If price rises, what happens to demand for a product?

The major drawback of a price ceiling is

If both the supply and demand curves shift to the left, then we can conclude that there will be

If the U.S.government starts to sell off its stockpile of cheese,

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal, it is consistent that

If the price of oil, a close substitute for coal, increases then the

Price ceilings are designed to protect sellers, while price floors are designed to protect buyers.

Draw a graph of a market in equilibrium.Describe what might cause a change in demand or supply and how this would affect the diagram.Indicate how the equilibrium price and quantity will change.

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

The demand curve for a good connects points describing how much consumers

Rent controls are most often designed to protect the investment made by apartment building owners.

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