Question 1

In competitive markets, buyers

Accepted Answer

A) are price takers, but sellers are price setters. 
B) are price setters, but sellers are price takers. 
C) and sellers are price takers. 
D) and sellers are price setters. 
A) are price takers, but sellers are price setters. 
B) are price setters, but sellers are price takers. 
C) and sellers are price takers. 
D) and sellers are price setters.

Question 2

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Accepted Answer

A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price. 
A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price.

Question 3

If the demand for 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 both to increase. 
D) and equilibrium quantity both to decrease. 
A) to increase and equilibrium quantity to decrease. 
B) to decrease and equilibrium quantity to increase. 
C) and equilibrium quantity both to increase. 
D) and equilibrium quantity both to decrease.

Question 4

Other things equal, when the price of a good falls, the

Accepted Answer

A) quantity supplied of the good increases. 
B) supply decreases. 
C) quantity supplied of the good decreases. 
D) demand increases. 
A) quantity supplied of the good increases. 
B) supply decreases. 
C) quantity supplied of the good decreases. 
D) demand increases.

Question 5

Which of the following events could shift the demand curve for gasoline to the left?

Accepted Answer

A) The income of gasoline buyers rises, and gasoline is a normal good. 
B) The income of gasoline buyers falls, and gasoline is an inferior good. 
C) Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. 
D) The price of gasoline rises. 
A) The income of gasoline buyers rises, and gasoline is a normal good. 
B) The income of gasoline buyers falls, and gasoline is an inferior good. 
C) Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. 
D) The price of gasoline rises.

Question 6

Figure 4-21  
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese?

Accepted Answer

A) a decrease in the price of cheddar cheese 
B) an increase in the price of American cheese 
C) a decrease in the price of American cheese 
D) Both a) and b) are correct. 
A) a decrease in the price of cheddar cheese 
B) an increase in the price of American cheese 
C) a decrease in the price of American cheese 
D) Both a) and b) are correct.

Question 9

Which of the following is not an example of a market?

Accepted Answer

A) A small town has only one seller of electricity. 
B) In the United States, a sick person cannot legally purchase a kidney. 
C) In Florida, there are many buyers and sellers of key lime pie. 
D) The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities. 
A) A small town has only one seller of electricity. 
B) In the United States, a sick person cannot legally purchase a kidney. 
C) In Florida, there are many buyers and sellers of key lime pie. 
D) The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities.

Question 10

Whenever a determinant of supply other than price changes, the supply curve shifts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is correct?

Accepted Answer

A) Buyers determine supply, and sellers determine demand. 
B) Buyers determine demand, and sellers determine supply. 
C) Buyers determine both demand and supply. 
D) Sellers determine both demand and supply. 
A) Buyers determine supply, and sellers determine demand. 
B) Buyers determine demand, and sellers determine supply. 
C) Buyers determine both demand and supply. 
D) Sellers determine both demand and supply.

Question 12

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

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.

Question 13

Soup is an inferior good if the demand

Accepted Answer

A) for soup falls when the price of a substitute for soup rises. 
B) for soup rises when the price of soup falls. 
C) curve for soup slopes upward. 
D) for soup falls when income rises. 
A) for soup falls when the price of a substitute for soup rises. 
B) for soup rises when the price of soup falls. 
C) curve for soup slopes upward. 
D) for soup falls when income rises.

Question 14

An increase in the price of ink will shift the supply curve for pens to the left.

Accepted Answer

A) True 
 B)False

Question 15

A market demand curve shows

Accepted Answer

A) the relationship between price and the number of buyers in a market. 
B) how quantity demanded changes when the number of sellers changes. 
C) the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. 
D) how much of a good all buyers are willing and able to buy at each possible price. 
A) the relationship between price and the number of buyers in a market. 
B) how quantity demanded changes when the number of sellers changes. 
C) the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. 
D) how much of a good all buyers are willing and able to buy at each possible price.

Question 16

An increase in the price of pizza will shift the demand curve for pizza to the left.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the price of oranges would lead to

Accepted Answer

A) an increased supply of oranges. 
B) a reduction in the prices of inputs used in orange production. 
C) an increased demand for oranges. 
D) a movement up and to the right along the supply curve for oranges. 
A) an increased supply of oranges. 
B) a reduction in the prices of inputs used in orange production. 
C) an increased demand for oranges. 
D) a movement up and to the right along the supply curve for oranges.

Question 18

A movement upward and to the left along a given demand curve is called a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 19

Figure 4-21  
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for kitchen cabinets of an increase in the price of wood?

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 20

If sellers expect higher basket prices in the near future, the current

Accepted Answer

A) supply of baskets will increase. 
B) supply of baskets will decrease. 
C) supply of baskets will be unaffected. 
D) demand for baskets will decrease. 
A) supply of baskets will increase. 
B) supply of baskets will decrease. 
C) supply of baskets will be unaffected. 
D) demand for baskets will decrease.

Exam 4: The Market Forces of Supply and Demand

In competitive markets, buyers

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

If the demand for a product increases, then we would expect equilibrium price

Other things equal, when the price of a good falls, the

Which of the following events could shift the demand curve for gasoline to the left?

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

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

If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese?

Which of the following is not an example of a market?

Whenever a determinant of supply other than price changes, the supply curve shifts.

Which of the following statements is correct?

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Soup is an inferior good if the demand

An increase in the price of ink will shift the supply curve for pens to the left.

A market demand curve shows

An increase in the price of pizza will shift the demand curve for pizza to the left.

An increase in the price of oranges would lead to

A movement upward and to the left along a given demand curve is called a decrease in demand.

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for kitchen cabinets of an increase in the price of wood?

If sellers expect higher basket prices in the near future, the current

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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