Question 1

The law of supply and demand asserts that

Accepted Answer

A) demand curves and supply curves tend to shift to the right as time goes by. 
B) the price of a good will eventually rise in response to an excess demand for that good. 
C) when the supply curve for a good shifts, the demand curve for that good shifts in response. 
D) the equilibrium price of a good will be rising more often than it will be falling. 
A) demand curves and supply curves tend to shift to the right as time goes by. 
B) the price of a good will eventually rise in response to an excess demand for that good. 
C) when the supply curve for a good shifts, the demand curve for that good shifts in response. 
D) the equilibrium price of a good will be rising more often than it will be falling.

Question 2

If a decrease in income increases the demand for a good, then the good is a(n)

Accepted Answer

A) substitute good. 
B) complementary good. 
C) normal good. 
D) inferior good. 
A) substitute good. 
B) complementary good. 
C) normal good. 
D) inferior good.

Question 3

Price will rise to eliminate a surplus.

Accepted Answer

A) True 
 B)False

Question 4

An increase in demand shifts the demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 5

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

Accepted Answer

A) demand for flour to increase. 
B) demand for flour to decrease. 
C) supply of flour to increase. 
D) supply of flour to decrease. 
A) demand for flour to increase. 
B) demand for flour to decrease. 
C) supply of flour to increase. 
D) supply of flour to decrease.

Question 6

In a market economy, who or what determines who produces each good and how much is produced?

Accepted Answer

A) the government 
B) lawyers 
C) lotteries 
D) prices 
A) the government 
B) lawyers 
C) lotteries 
D) prices

Question 7

Individual demand curves are summed vertically to obtain the market demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Table 4-1
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Qurantit; Demanded } \
\text { by Michelle }
\end{array} & \begin{array} { c } 
\text { Qurintity Demtanded } \
\text { by Laura }
\end{array} & \begin{array} { c } 
\text { Quantity Damanded } \
\text { by Hillary }
\end{array} \
\hline \$ 5 & 5 & 4 & 11 \
\hline \$ 4 & 6 & 6 & 13 \
\hline \$ 3 & 7 & 8 & 15 \
\hline \$ 2 & 8 & 10 & 17 \
\hline 1 & 9 & 12 & 19 \
\hline \$ 0 & 10 & 14 & 21 \
\hline
\end{array}$$
-Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A) 2 units. 
B) 3 units. 
C) 4 units. 
D) 5 units. 
A) 2 units. 
B) 3 units. 
C) 4 units. 
D) 5 units.

Question 9

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

Accepted Answer

A) crystal to be unaffected. 
B) crystal to decrease. 
C) crystal to increase. 
D) lead to increase. 
A) crystal to be unaffected. 
B) crystal to decrease. 
C) crystal to increase. 
D) lead to increase.

Question 10

A decrease in the price of a good will

Accepted Answer

A) increase demand. 
B) decrease demand. 
C) increase quantity demanded. 
D) decrease quantity demanded. 
A) increase demand. 
B) decrease demand. 
C) increase quantity demanded. 
D) decrease quantity demanded.

Question 11

An improvement in production technology will

Accepted Answer

A) increase a firm's costs and increase its supply. 
B) increase a firm's costs and decrease its supply. 
C) decrease a firm's costs and increase its supply. 
D) decrease a firm's costs and decrease its supply. 
A) increase a firm's costs and increase its supply. 
B) increase a firm's costs and decrease its supply. 
C) decrease a firm's costs and increase its supply. 
D) decrease a firm's costs and decrease its supply.

Question 12

Figure 4-21  
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Accepted Answer

A) Point A to Point B 
B) Point C to Point B 
C) Point C to Point D 
D) Point A to Point D 
A) Point A to Point B 
B) Point C to Point B 
C) Point C to Point D 
D) Point A to Point D

Question 13

Figure 4-10  
-Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for tennis racquets?

Accepted Answer

A) an increase in the price of tennis balls 
B) an expectation by firms that the price of tennis racquets will increase in the very near future 
C) a decrease in the price of tennis racquet strings 
D) a decrease in the number of firms selling tennis racquets 
A) an increase in the price of tennis balls 
B) an expectation by firms that the price of tennis racquets will increase in the very near future 
C) a decrease in the price of tennis racquet strings 
D) a decrease in the number of firms selling tennis racquets

Question 14

Which of these statements best represents the law of demand?

Accepted Answer

A) When buyers' tastes for a good increase, they purchase more of the good. 
B) When income levels increase, buyers purchase more of most goods. 
C) When the price of a good decreases, buyers purchase more of the good. 
D) When buyers' demands for a good increase, the price of the good increases. 
A) When buyers' tastes for a good increase, they purchase more of the good. 
B) When income levels increase, buyers purchase more of most goods. 
C) When the price of a good decreases, buyers purchase more of the good. 
D) When buyers' demands for a good increase, the price of the good increases.

Question 15

Table 4-9
The demand schedule below pertains to sandwiches demanded per week. $$\begin{array} { | c | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Harry's } \
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Darby's } \
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Jake's } \
\text { Quantity } \
\text { Denanded }
\end{array} \
\hline \$ 3 & 3 & 4 & 3 \
\hline \$ 5 & 1 & 2 & x \
\hline
\end{array}$$
-Refer to Table 4-9. Regarding Harry and Darby, for whom are sandwiches a normal good?

Accepted Answer

A) only for Harry 
B) only for Darby 
C) for both Harry and Darby 
D) This cannot be determined from the given information. 
A) only for Harry 
B) only for Darby 
C) for both Harry and Darby 
D) This cannot be determined from the given information.

Question 16

Figure 4-21  
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel?

Accepted Answer

A) Point A to Point B 
B) Point C to Point B 
C) Point C to Point D 
D) Point A to Point D 
A) Point A to Point B 
B) Point C to Point B 
C) Point C to Point D 
D) Point A to Point D

Question 17

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Accepted Answer

A) Both the equilibrium price and quantity would increase. 
B) Both the equilibrium price and quantity would decrease. 
C) The equilibrium price would increase, and the equilibrium quantity would decrease. 
D) The equilibrium price would decrease, and the equilibrium quantity would increase. 
A) Both the equilibrium price and quantity would increase. 
B) Both the equilibrium price and quantity would decrease. 
C) The equilibrium price would increase, and the equilibrium quantity would decrease. 
D) The equilibrium price would decrease, and the equilibrium quantity would increase.

Question 18

Figure 4-6  
-Refer to Figure 4-6. The shift from D to D' is called

Accepted Answer

A) an increase in demand. 
B) a decrease in demand. 
C) a decrease in quantity demanded. 
D) an increase in quantity demanded. 
A) an increase in demand. 
B) a decrease in demand. 
C) a decrease in quantity demanded. 
D) an increase in quantity demanded.

Question 19

An increase in demand is represented by a

Accepted Answer

A) movement downward and to the right along a demand curve. 
B) movement upward and to the left along a demand curve. 
C) rightward shift of a demand curve. 
D) leftward shift of a demand curve. 
A) movement downward and to the right along a demand curve. 
B) movement upward and to the left along a demand curve. 
C) rightward shift of a demand curve. 
D) leftward shift of a demand curve.

Question 20

Figure 4-18  
-Refer to Figure 4-18. At a price of $12, there is a

Accepted Answer

A) surplus of 1 unit. 
B) surplus of 2 units. 
C) shortage of 1 unit. 
D) shortage of 2 units. 
A) surplus of 1 unit. 
B) surplus of 2 units. 
C) shortage of 1 unit. 
D) shortage of 2 units.

Exam 4: The Market Forces of Supply and Demand

The law of supply and demand asserts that

If a decrease in income increases the demand for a good, then the good is a(n)

Price will rise to eliminate a surplus.

An increase in demand shifts the demand curve to the left.

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

In a market economy, who or what determines who produces each good and how much is produced?

Individual demand curves are summed vertically to obtain the market demand curve.

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

A decrease in the price of a good will

An improvement in production technology will

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Figure 4-10 -Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for tennis racquets?

Which of these statements best represents the law of demand?

Table 4-9 The demand schedule below pertains to sandwiches demanded per week. Price Harry's Quantity Demanded Darby's Quantity Denanded Jake's Quantity Denanded \ 3 3 4 3 \ 5 1 2 x -Refer to Table 4-9. Regarding Harry and Darby, for whom are sandwiches a normal good?

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel?

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Figure 4-6 -Refer to Figure 4-6. The shift from D to D' is called

An increase in demand is represented by a

Figure 4-18 -Refer to Figure 4-18. At a price of $12, there is a

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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