Question 1

Exhibit 4-5 Supply and demand curves for computers
  
-Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?

Accepted Answer

A)  Lower costs for computer chips and motherboards. 
B)  The failure of several computer manufacturers. 
C)  Higher prices for computer software. 
D)  More features and greater ease of use. 
A)  Lower costs for computer chips and motherboards. 
B)  The failure of several computer manufacturers. 
C)  Higher prices for computer software. 
D)  More features and greater ease of use.

Question 2

A price floor that sets the price of a good above market equilibrium will cause:

Accepted Answer

A)  a decrease in quantity demanded of the good. 
B)  an increase in quantity supplied of the good. 
C)  a surplus of the good. 
D)  all of the above. 
A)  a decrease in quantity demanded of the good. 
B)  an increase in quantity supplied of the good. 
C)  a surplus of the good. 
D)  all of the above.

Question 3

A decrease in demand leads to a(n):

Accepted Answer

A)  increased equilibrium price and an increased equilibrium quantity. 
B)  decreased equilibrium price and a decreased equilibrium quantity. 
C)  decreased equilibrium price and an increased equilibrium quantity. 
D)  increased equilibrium price and a decreased equilibrium quantity. 
A)  increased equilibrium price and an increased equilibrium quantity. 
B)  decreased equilibrium price and a decreased equilibrium quantity. 
C)  decreased equilibrium price and an increased equilibrium quantity. 
D)  increased equilibrium price and a decreased equilibrium quantity.

Question 4

Which of the following is a public good?

Accepted Answer

A)  Pencil. 
B)  Apple. 
C)  Light house. 
D)  Gun. 
A)  Pencil. 
B)  Apple. 
C)  Light house. 
D)  Gun.

Question 5

Rent controls create distortions in the housing market by:

Accepted Answer

A)  increasing rents received by landlords 
B)  raising property values. 
C)  encouraging landlords to overspend for maintenance. 
D)  discouraging new housing construction. 
E)  increasing the supply of housing in the long run. 
A)  increasing rents received by landlords 
B)  raising property values. 
C)  encouraging landlords to overspend for maintenance. 
D)  discouraging new housing construction. 
E)  increasing the supply of housing in the long run.

Question 6

Exhibit 4-9 Data on supply and demand
  
-In Exhibit 4-9,which of the following would occur at a price of $2.00?

Accepted Answer

A)  Inventories would put upward pressure on price. 
B)  Quantity demanded exceeds quantity supplied, putting downward pressure on price. 
C)  Inventories would put downward pressure on price. 
D)  The surplus would be so small that there would be only slight downward pressure on price. 
A)  Inventories would put upward pressure on price. 
B)  Quantity demanded exceeds quantity supplied, putting downward pressure on price. 
C)  Inventories would put downward pressure on price. 
D)  The surplus would be so small that there would be only slight downward pressure on price.

Question 7

If the cost of producing a good rises for sellers,equilibrium price rises because of a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 8

If a price ceiling is imposed,then:

Accepted Answer

A)  the market supply curve will shift to the right. 
B)  the market demand will shift to the left. 
C)  a shortage of product will result. 
D)  the government would be required to buy-up the surplus product. 
E)  the market equilibrium price is below the level the government wishes to achieve. 
A)  the market supply curve will shift to the right. 
B)  the market demand will shift to the left. 
C)  a shortage of product will result. 
D)  the government would be required to buy-up the surplus product. 
E)  the market equilibrium price is below the level the government wishes to achieve.

Question 9

Which of the following is a property of a public good?

Accepted Answer

A)  It is established by legislation. 
B)  Free riders are excluded. 
C)  Users collectively consume benefits. 
D)  It is determined by positive economics. 
A)  It is established by legislation. 
B)  Free riders are excluded. 
C)  Users collectively consume benefits. 
D)  It is determined by positive economics.

Question 10

Exhibit 4-7 Demand and supply schedules for movie tickets
  
-In Exhibit 4-7,a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Accepted Answer

A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $2. 
A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $2.

Question 11

Noise pollution is a serious problem.One major contributor is the recent development of very powerful amplification equipment for automobile radios.Many people complain that the windows in their home vibrate when some cars drive by.Others complain that loud car radios set off very sensitive alarms in nearby parked cars.What do we know about the drivers of cars with loud stereos?

Accepted Answer

A) b,c,and e. 
B) It would be very expensive for them to engage in this behavior if individuals had a right to a nonvibrating home. 
C) The cost of their own hearing loss is less than the benefit they receive from cranking it up. 
D) They realize that there are no ordinances prohibiting loud noise. 
E) Their private costs fall short of the social costs. 
A) b,c,and e. 
B) It would be very expensive for them to engage in this behavior if individuals had a right to a nonvibrating home. 
C) The cost of their own hearing loss is less than the benefit they receive from cranking it up. 
D) They realize that there are no ordinances prohibiting loud noise. 
E) Their private costs fall short of the social costs.

Question 12

The positive externality associated with education is:

Accepted Answer

A)  producers can get higher prices for their goods and services. 
B)  less crowding in the classrooms. 
C)  increases in societal well-being and economic growth. 
D)  technological progress slows as basic research increases. 
E)  the market excludes noncontributors to education from benefits. 
A)  producers can get higher prices for their goods and services. 
B)  less crowding in the classrooms. 
C)  increases in societal well-being and economic growth. 
D)  technological progress slows as basic research increases. 
E)  the market excludes noncontributors to education from benefits.

Question 13

Price ceilings set below the equilibrium create:

Accepted Answer

A)  externalities. 
B)  unemployment. 
C)  shortages. 
D)  surpluses. 
A)  externalities. 
B)  unemployment. 
C)  shortages. 
D)  surpluses.

Question 14

Cindy discovers that when she goes to the beach,she does not have to bring her radio.She can put her blanket near someone who has a radio and listen all day (without having to carry her radio,get sand in her speakers,or buy new batteries).This is an example of:

Accepted Answer

A)  private property abuse. 
B)  external costs. 
C)  a negative externality. 
D)  a positive externality. 
A)  private property abuse. 
B)  external costs. 
C)  a negative externality. 
D)  a positive externality.

Question 15

If the equilibrium price of aspirins is $2.50 and a price ceiling is imposed at $3.00,the eventual result after market adjustment will be a(n):

Accepted Answer

A)  surplus. 
B)  shortage. 
C)  accumulation of inventories. 
D)  equilibrium. 
A)  surplus. 
B)  shortage. 
C)  accumulation of inventories. 
D)  equilibrium.

Question 16

If the supply curve decreases while the demand curve remains unchanged,the equilibrium price would increase.

Accepted Answer

A) True 
 B)False

Question 17

Public goods are usually provided by:

Accepted Answer

A)  private industry. 
B)  the government. 
C)  private citizens. 
D)  internal markets 
E)  local industry. 
A)  private industry. 
B)  the government. 
C)  private citizens. 
D)  internal markets 
E)  local industry.

Question 18

A vaccination shot provides a(n):

Accepted Answer

A)  beneficial opportunity cost. 
B)  positive externality. 
C)  out-resourcing benefit. 
D)  managed-care opportunity benefit. 
A)  beneficial opportunity cost. 
B)  positive externality. 
C)  out-resourcing benefit. 
D)  managed-care opportunity benefit.

Question 19

Assuming supply is held constant,an increase in demand for a product will cause an increase in the equilibrium price and the amount bought and sold.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 4-2 Supply and demand curves
  
-The market shown in Exhibit 4-2 is initially in equilibrium at E₃.Changes in market conditions result in a new equilibrium at E₄.This change is stated as a(n):

Accepted Answer

A)  increase in demand and an increase in supply. 
B)  decrease in demand and a decrease in quantity supplied. 
C)  increase in quantity demanded and an increase in quantity supplied. 
D)  decrease in supply and a decrease in quantity demanded. 
E)  increase in supply and an increase in quantity demanded. 
A)  increase in demand and an increase in supply. 
B)  decrease in demand and a decrease in quantity supplied. 
C)  increase in quantity demanded and an increase in quantity supplied. 
D)  decrease in supply and a decrease in quantity demanded. 
E)  increase in supply and an increase in quantity demanded.

Exam 4: Markets in Action

Exhibit 4-5 Supply and demand curves for computers -Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?

A price floor that sets the price of a good above market equilibrium will cause:

A decrease in demand leads to a(n):

Which of the following is a public good?

Rent controls create distortions in the housing market by:

Exhibit 4-9 Data on supply and demand -In Exhibit 4-9,which of the following would occur at a price of $2.00?

If the cost of producing a good rises for sellers,equilibrium price rises because of a decrease in demand.

If a price ceiling is imposed,then:

Which of the following is a property of a public good?

Exhibit 4-7 Demand and supply schedules for movie tickets -In Exhibit 4-7,a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:

The positive externality associated with education is:

Price ceilings set below the equilibrium create:

Cindy discovers that when she goes to the beach,she does not have to bring her radio.She can put her blanket near someone who has a radio and listen all day (without having to carry her radio,get sand in her speakers,or buy new batteries).This is an example of:

If the equilibrium price of aspirins is $2.50 and a price ceiling is imposed at $3.00,the eventual result after market adjustment will be a(n):

If the supply curve decreases while the demand curve remains unchanged,the equilibrium price would increase.

Public goods are usually provided by:

A vaccination shot provides a(n):

Assuming supply is held constant,an increase in demand for a product will cause an increase in the equilibrium price and the amount bought and sold.

Exhibit 4-2 Supply and demand curves -The market shown in Exhibit 4-2 is initially in equilibrium at E₃.Changes in market conditions result in a new equilibrium at E₄.This change is stated as a(n):

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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