Question 1

Which of the following might cause the supply curve for an inferior good to shift to the right?

Accepted Answer

A) an increase in input prices 
B) a decrease in consumer income 
C) an improvement in production technology that makes production of the good more profitable 
D) a decrease in the number of sellers in the market 
A) an increase in input prices 
B) a decrease in consumer income 
C) an improvement in production technology that makes production of the good more profitable 
D) a decrease in the number of sellers in the market

Question 2

If the demand for a good falls when income falls, then the good is called a(n)

Accepted Answer

A) normal good. 
B) regular good. 
C) luxury good. 
D) inferior good. 
A) normal good. 
B) regular good. 
C) luxury good. 
D) inferior good.

Question 3

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 4

The law of demand states that, other things equal, when the price of a good

Accepted Answer

A) falls, the demand for the good rises. 
B) rises, the quantity demanded of the good rises. 
C) rises, the demand for the good falls. 
D) falls, the quantity demanded of the good rises. 
A) falls, the demand for the good rises. 
B) rises, the quantity demanded of the good rises. 
C) rises, the demand for the good falls. 
D) falls, the quantity demanded of the good rises.

Question 5

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

Accepted Answer

A) the price of pork increases. 
B) the price of pork decreases. 
C) the price of pork does not change. 
D) there is no longer a market for pork. 
A) the price of pork increases. 
B) the price of pork decreases. 
C) the price of pork does not change. 
D) there is no longer a market for pork.

Question 6

A likely example of complementary goods for most people would be

Accepted Answer

A) butter and margarine. 
B) lawnmowers and automobiles. 
C) chips and salsa. 
D) cola and lemonade. 
A) butter and margarine. 
B) lawnmowers and automobiles. 
C) chips and salsa. 
D) cola and lemonade.

Question 7

Table 4-2
 $$\begin{array} { | c | c | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Willim's } \
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Ferpie's } \
\text { Quantity } \
\text { Dennanded }
\end{array} & \begin{array} { c } 
\text { Tabod's } \
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { apl de.ap's } \
\text { Quantity } \
\text { Denanded }
\end{array} \
\hline \$ 12 & 2 & 1 & 3 & 4 \
\hline \$ 10 & 4 & 4 & 4 & 5 \
\hline \$ 8 & 6 & 7 & 5 & 6 \
\hline \$ 6 & 8 & 8 & 4 & 7 \
\hline \$ 4 & 10 & 9 & 3 & 8 \
\hline \$ 2 & 12 & 10 & 2 & 9 \
\hline
\end{array}$$
-Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a price of $8 is

Accepted Answer

A) 4 units. 
B) 6 units. 
C) 24 units. 
D) 32 units. 
A) 4 units. 
B) 6 units. 
C) 24 units. 
D) 32 units.

Question 8

Figure 4-4  
-Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

Accepted Answer

A) an increase in the price of tennis balls 
B) a decrease in the price of tennis racquets 
C) an expectation by buyers that their incomes will increase in the very near future 
D) a decrease in the number of people in the United States under age 70 
A) an increase in the price of tennis balls 
B) a decrease in the price of tennis racquets 
C) an expectation by buyers that their incomes will increase in the very near future 
D) a decrease in the number of people in the United States under age 70

Question 9

If muffins and bagels are substitutes, a higher price for bagels would result in a(n)

Accepted Answer

A) increase in the demand for bagels. 
B) decrease in the demand for bagels. 
C) increase in the demand for muffins. 
D) decrease in the demand for muffins. 
A) increase in the demand for bagels. 
B) decrease in the demand for bagels. 
C) increase in the demand for muffins. 
D) decrease in the demand for muffins.

Question 10

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Accepted Answer

A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous. 
A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous.

Question 11

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A) a bakery in a large city 
B) a bank in a large city 
C) a local cable television company 
D) a small group of corn farmers 
A) a bakery in a large city 
B) a bank in a large city 
C) a local cable television company 
D) a small group of corn farmers

Question 12

When the price of a good is lower than the equilibrium price,

Accepted Answer

A) a surplus will exist. 
B) buyers desire to purchase more than is produced. 
C) sellers desire to produce and sell more than buyers wish to purchase. 
D) quantity supplied exceeds quantity demanded. 
A) a surplus will exist. 
B) buyers desire to purchase more than is produced. 
C) sellers desire to produce and sell more than buyers wish to purchase. 
D) quantity supplied exceeds quantity demanded.

Question 13

A movement along the supply curve might be caused by a change in

Accepted Answer

A) production technology. 
B) input prices. 
C) expectations about future prices. 
D) the price of the good or service that is being supplied. 
A) production technology. 
B) input prices. 
C) expectations about future prices. 
D) the price of the good or service that is being supplied.

Question 14

Figure 4-22
  
-Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded?

Accepted Answer

A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d) 
A) Panel (a) 
B) Panel (b) 
C) Panel (c) 
D) Panel (d)

Question 15

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A) will increase but not until the end of the year. 
B) increases today. 
C) decreases as you look for a substitute good. 
D) shifts left today. 
A) will increase but not until the end of the year. 
B) increases today. 
C) decreases as you look for a substitute good. 
D) shifts left today.

Question 16

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Accepted Answer

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

Question 17

Figure 4-8  
-Refer to Figure 4-8. The movement from Point A to Point B represents a(n)

Accepted Answer

A) shift in the supply curve. 
B) decrease in the quantity supplied. 
C) increase in the quantity supplied. 
D) Both a) and b) are correct. 
A) shift in the supply curve. 
B) decrease in the quantity supplied. 
C) increase in the quantity supplied. 
D) Both a) and b) are correct.

Question 18

If the supply of a product increases, then we would expect equilibrium price

Accepted Answer

A) to increase and equilibrium quantity to decrease. 
B) to decrease and equilibrium quantity to increase. 
C) and equilibrium quantity to both increase. 
D) and equilibrium quantity to both decrease. 
A) to increase and equilibrium quantity to decrease. 
B) to decrease and equilibrium quantity to increase. 
C) and equilibrium quantity to both increase. 
D) and equilibrium quantity to both decrease.

Question 19

A market supply curve shows

Accepted Answer

A) the total quantity supplied at all possible prices. 
B) the average quantity supplied by producers at all possible prices. 
C) how quantity supplied changes when consumer income changes. 
D) suppliers' responses, in terms of the amounts they will supply, to the demands of buyers. 
A) the total quantity supplied at all possible prices. 
B) the average quantity supplied by producers at all possible prices. 
C) how quantity supplied changes when consumer income changes. 
D) suppliers' responses, in terms of the amounts they will supply, to the demands of buyers.

Question 20

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

A) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B) Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
A) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B) Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Exam 4: The Market Forces of Supply and Demand

Which of the following might cause the supply curve for an inferior good to shift to the right?

If the demand for a good falls when income falls, then the good is called a(n)

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

The law of demand states that, other things equal, when the price of a good

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

A likely example of complementary goods for most people would be

Figure 4-4 -Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

If muffins and bagels are substitutes, a higher price for bagels would result in a(n)

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Which of the following would most likely serve as an example of a monopoly?

When the price of a good is lower than the equilibrium price,

A movement along the supply curve might be caused by a change in

Figure 4-22 -Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded?

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Figure 4-8 -Refer to Figure 4-8. The movement from Point A to Point B represents a(n)

If the supply of a product increases, then we would expect equilibrium price

A market supply curve shows

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

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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