Question 1

If toast and butter are complements, then which of the following would increase the demand for toast?

Accepted Answer

A) a decrease in the price of toast 
B) a decrease in the price of butter 
C) an increase in the price of butter 
D) Both a) and b) are correct. 
A) a decrease in the price of toast 
B) a decrease in the price of butter 
C) an increase in the price of butter 
D) Both a) and b) are correct.

Question 2

Figure 4-16  
-Refer to Figure 4-16. In this market, equilibrium price and quantity, respectively, are

Accepted Answer

A) $10 and 30 units. 
B) $10 and 50 units. 
C) $10 and 70 units. 
D) $4 and 50 units. 
A) $10 and 30 units. 
B) $10 and 50 units. 
C) $10 and 70 units. 
D) $4 and 50 units.

Question 3

The sum of all the individual supply curves for a product is called

Accepted Answer

A) total supply. 
B) market supply. 
C) aggregate supply. 
D) total output. 
A) total supply. 
B) market supply. 
C) aggregate supply. 
D) total output.

Question 4

When we move along a given supply curve,

Accepted Answer

A) only price is held constant. 
B) technology and price are held constant. 
C) all nonprice determinants of supply are held constant. 
D) all determinants of quantity supplied are held constant. 
A) only price is held constant. 
B) technology and price are held constant. 
C) all nonprice determinants of supply are held constant. 
D) all determinants of quantity supplied are held constant.

Question 5

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

Accepted Answer

A) a shortage 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 demanded exceeds quantity supplied. 
A) a shortage 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 demanded exceeds quantity supplied.

Question 6

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 Michelle 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 7

Which of the following would not shift the demand curve for mp3 players?

Accepted Answer

A) a decrease in the price of mp3 players 
B) a fad that makes mp3 players more popular among 12-25 year olds 
C) an increase in the price of digital music downloads, a complement for mp3 players 
D) a decrease in the price of satellite radio, a substitute for mp3 players 
A) a decrease in the price of mp3 players 
B) a fad that makes mp3 players more popular among 12-25 year olds 
C) an increase in the price of digital music downloads, a complement for mp3 players 
D) a decrease in the price of satellite radio, a substitute for mp3 players

Question 8

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

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

Question 9

Figure 4-10  
-Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for disposable ballpoint pens?

Accepted Answer

A) a decrease in the price of disposable ballpoint pens 
B) an increase in the price of fountain pens 
C) an increase in the price of ink 
D) an improvement in technology that allows firms to use less labor in the production of disposable ballpoint pens 
A) a decrease in the price of disposable ballpoint pens 
B) an increase in the price of fountain pens 
C) an increase in the price of ink 
D) an improvement in technology that allows firms to use less labor in the production of disposable ballpoint pens

Question 10

A decrease in the price of sugar will shift the supply curve for cookies to the right.

Accepted Answer

A) True 
 B)False

Question 11

A rightward shift of a supply curve is called a(n)

Accepted Answer

A) increase in supply. 
B) decrease in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied. 
A) increase in supply. 
B) decrease in supply. 
C) decrease in quantity supplied. 
D) increase in quantity supplied.

Question 12

If buyers and sellers in a certain market are price takers, then individually

Accepted Answer

A) they have no influence on market price. 
B) they have some influence on market price but that influence is limited. 
C) buyers will be able to find prices lower than those determined in the market. 
D) sellers will find it difficult to sell all they want to sell at the market price. 
A) they have no influence on market price. 
B) they have some influence on market price but that influence is limited. 
C) buyers will be able to find prices lower than those determined in the market. 
D) sellers will find it difficult to sell all they want to sell at the market price.

Question 13

Which of the following might cause the demand curve for an inferior good to shift to the left?

Accepted Answer

A) a decrease in income 
B) an increase in the price of a substitute 
C) an increase in the price of a complement 
D) None of the above is correct. 
A) a decrease in income 
B) an increase in the price of a substitute 
C) an increase in the price of a complement 
D) None of the above is correct.

Question 14

If Miguel expects to earn a higher income next month, he may choose to

Accepted Answer

A) save more now and spend less of his current income on goods and services. 
B) save less now and spend more of his current income on goods and services. 
C) decrease his current demand for goods and services. 
D) move along his current demand curves for goods and services. 
A) save more now and spend less of his current income on goods and services. 
B) save less now and spend more of his current income on goods and services. 
C) decrease his current demand for goods and services. 
D) move along his current demand curves for goods and services.

Question 15

Economists normally

Accepted Answer

A) do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B) believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C) do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D) incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. 
A) do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B) believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C) do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D) incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Question 16

When quantity demanded decreases at every possible price, the demand curve has

Accepted Answer

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

Question 17

If the price of a good is low,

Accepted Answer

A) firms would increase profit by increasing output. 
B) the quantity supplied of the good could be zero. 
C) the supply curve for the good will shift to the left. 
D) firms can and should raise the price of the product. 
A) firms would increase profit by increasing output. 
B) the quantity supplied of the good could be zero. 
C) the supply curve for the good will shift to the left. 
D) firms can and should raise the price of the product.

Question 18

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Accepted Answer

A) True 
 B)False

Question 19

Figure 4-20
The graph below pertains to the supply of paper to colleges and universities.  
-Refer to Figure 4-20. All else equal, sellers expecting the price of paper to decrease next month when many college students leave campuses for the summer would cause a current move from

Accepted Answer

A) x to y. 
B) y to x. 
C) SA to SB. 
D) SB to SA. 
A) x to y. 
B) y to x. 
C) SA to SB. 
D) SB to SA.

Question 20

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Accepted Answer

A) fall in six months but not now. 
B) increase in six months when the price goes up. 
C) fall now. 
D) increase now to meet as much demand as possible. 
A) fall in six months but not now. 
B) increase in six months when the price goes up. 
C) fall now. 
D) increase now to meet as much demand as possible.

Exam 4: The Market Forces of Supply and Demand

If toast and butter are complements, then which of the following would increase the demand for toast?

Figure 4-16 -Refer to Figure 4-16. In this market, equilibrium price and quantity, respectively, are

The sum of all the individual supply curves for a product is called

When we move along a given supply curve,

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

Which of the following would not shift the demand curve for mp3 players?

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

Figure 4-10 -Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for disposable ballpoint pens?

A decrease in the price of sugar will shift the supply curve for cookies to the right.

A rightward shift of a supply curve is called a(n)

If buyers and sellers in a certain market are price takers, then individually

Which of the following might cause the demand curve for an inferior good to shift to the left?

If Miguel expects to earn a higher income next month, he may choose to

Economists normally

When quantity demanded decreases at every possible price, the demand curve has

If the price of a good is low,

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Figure 4-20 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-20. All else equal, sellers expecting the price of paper to decrease next month when many college students leave campuses for the summer would cause a current move from

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

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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