Question 1

Supply and demand together determine the price and quantity of a good sold in a market.

Accepted Answer

A) True 
 B)False

Question 2

When quantity supplied decreases at every possible price, we know that the supply curve has

Accepted Answer

A) shifted to the left. 
B) shifted to the right. 
C) not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D) not shifted; rather, the supply curve has become flatter. 
A) shifted to the left. 
B) shifted to the right. 
C) not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D) not shifted; rather, the supply curve has become flatter.

Question 3

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Accepted Answer

A) True 
 B)False

Question 4

In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

Accepted Answer

A) True 
 B)False

Question 5

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

Accepted Answer

A) rise. 
B) fall. 
C) stay the same. 
D) could rise, fall, or remain unchanged. 
A) rise. 
B) fall. 
C) stay the same. 
D) could rise, fall, or remain unchanged.

Question 6

At the equilibrium price, quantity demanded is equal to quantity supplied.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A) Sellers set the price of the product. 
B) There are many sellers. 
C) Buyers must accept the price the market determines. 
D) All of the above are characteristics of a perfectly competitive market. 
A) Sellers set the price of the product. 
B) There are many sellers. 
C) Buyers must accept the price the market determines. 
D) All of the above are characteristics of a perfectly competitive market.

Question 8

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. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2.• The current price of a sandwich is $3.00.• The market quantity supplied of sandwiches is 5.• The slope of the supply curve is 1.Then there is currently a

Accepted Answer

A) shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. 
B) shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. 
C) surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. 
D) surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. 
A) shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. 
B) shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. 
C) surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. 
D) surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.

Question 9

An example of a perfectly competitive market would be the market for

Accepted Answer

A) tennis racquets. 
B) pizza. 
C) garbage collection. 
D) wheat. 
A) tennis racquets. 
B) pizza. 
C) garbage collection. 
D) wheat.

Question 10

A decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee.

Accepted Answer

A) True 
 B)False

Question 11

The supply of a good or service is determined by

Accepted Answer

A) those who buy the good or service. 
B) the government. 
C) those who sell the good or service. 
D) both those who buy and those who sell the good or service. 
A) those who buy the good or service. 
B) the government. 
C) those who sell the good or service. 
D) both those who buy and those who sell the good or service.

Question 12

Figure 4-17  
-Refer to Figure 4-17. At a price of $15,

Accepted Answer

A) quantity demanded exceeds quantity supplied. 
B) there is a shortage. 
C) there is an excess demand. 
D) All of the above are correct. 
A) quantity demanded exceeds quantity supplied. 
B) there is a shortage. 
C) there is an excess demand. 
D) All of the above are correct.

Question 13

Figure 4-13  
-Refer to Figure 4-13. The shift from S to S' could be caused by an

Accepted Answer

A) increase in the price of the good. 
B) improvement in production technology. 
C) increase in income. 
D) increase in input prices. 
A) increase in the price of the good. 
B) improvement in production technology. 
C) increase in income. 
D) increase in input prices.

Question 14

Table 4-6
 $$\begin{array} { | c | c | c | } 
\hline & \text { An Ineatse in Supply } & \text { A Decrense in Supply } \
\hline \text { An Inerease in Denend } & \text { A } & \mathbf { B } \
\hline \text { A Decrense in Denand } & \text { C } & \text { D } \
\hline
\end{array}$$
-Refer to Table 4-6. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 15

The demand curve is the upward-sloping line relating price and quantity demanded.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Accepted Answer

A) an increase in the price of wool shirts and a decrease in the price of raw cotton 
B) a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C) an increase in the price of wool shirts and an increase in the price of raw cotton 
D) a decrease in the price of wool shirts and an increase in the price of raw cotton 
A) an increase in the price of wool shirts and a decrease in the price of raw cotton 
B) a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C) an increase in the price of wool shirts and an increase in the price of raw cotton 
D) a decrease in the price of wool shirts and an increase in the price of raw cotton

Question 17

A market's equilibrium is the point at which the supply and demand curves intersect.

Accepted Answer

A) True 
 B)False

Question 18

If a good is normal, then an increase in income will result in a(n)

Accepted Answer

A) increase in the demand for the good. 
B) decrease in the demand for the good. 
C) movement down and to the right along the demand curve for the good. 
D) movement up and to the left along the demand curve for the good. 
A) increase in the demand for the good. 
B) decrease in the demand for the good. 
C) movement down and to the right along the demand curve for the good. 
D) movement up and to the left along the demand curve for the good.

Question 19

Assume Diana buys computers in a competitive market. It follows that

Accepted Answer

A) Diana has a limited number of sellers to turn to when she buys a computer. 
B) Diana will find herself negotiating with sellers whenever she buys a computer. 
C) if Diana buys a large number of computers, the price of computers will rise noticeably. 
D) None of the above is correct. 
A) Diana has a limited number of sellers to turn to when she buys a computer. 
B) Diana will find herself negotiating with sellers whenever she buys a computer. 
C) if Diana buys a large number of computers, the price of computers will rise noticeably. 
D) None of the above is correct.

Question 20

Today, people changed their expectations about the future. This change

Accepted Answer

A) can cause a movement along a demand curve. 
B) can affect future demand but not today's demand. 
C) can affect today's demand. 
D) cannot affect either today's demand or future demand. 
A) can cause a movement along a demand curve. 
B) can affect future demand but not today's demand. 
C) can affect today's demand. 
D) cannot affect either today's demand or future demand.

Exam 4: The Market Forces of Supply and Demand

Supply and demand together determine the price and quantity of a good sold in a market.

When quantity supplied decreases at every possible price, we know that the supply curve has

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

At the equilibrium price, quantity demanded is equal to quantity supplied.

Which of the following is not a characteristic of a perfectly competitive market?

An example of a perfectly competitive market would be the market for

A decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee.

The supply of a good or service is determined by

Figure 4-17 -Refer to Figure 4-17. At a price of $15,

Figure 4-13 -Refer to Figure 4-13. The shift from S to S' could be caused by an

Table 4-6 An Ineatse in Supply A Decrense in Supply An Inerease in Denend A A Decrense in Denand C D -Refer to Table 4-6. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

The demand curve is the upward-sloping line relating price and quantity demanded.

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

A market's equilibrium is the point at which the supply and demand curves intersect.

If a good is normal, then an increase in income will result in a(n)

Assume Diana buys computers in a competitive market. It follows that

Today, people changed their expectations about the future. This change

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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