Question 1

When a surplus exists in a market, sellers

Accepted Answer

A) raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
B) raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
C) lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
D) lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
A) raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
B) raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
C) lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
D) lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.

Question 2

Which of the following events must cause equilibrium price to rise?

Accepted Answer

A) demand increases and supply decreases 
B) demand and supply both decrease 
C) demand decreases and supply increases 
D) demand and supply both increase 
A) demand increases and supply decreases 
B) demand and supply both decrease 
C) demand decreases and supply increases 
D) demand and supply both increase

Question 3

Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are

Accepted Answer

A) inferior goods. 
B) normal goods. 
C) perfectly competitive goods. 
D) durable goods. 
A) inferior goods. 
B) normal goods. 
C) perfectly competitive goods. 
D) durable goods.

Question 4

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 DVDs?

Accepted Answer

A) an increase in the price of DVDs 
B) a decrease in the price of DVD players 
C) a change in consumer preferences toward watching movies in movie theaters rather than at home 
D) an expectation by buyers that their incomes will increase in the very near future 
A) an increase in the price of DVDs 
B) a decrease in the price of DVD players 
C) a change in consumer preferences toward watching movies in movie theaters rather than at home 
D) an expectation by buyers that their incomes will increase in the very near future

Question 5

For a competitive market,

Accepted Answer

A) a seller can always increase her profit by raising the price of her product. 
B) if a seller charges more than the going price, buyers will go elsewhere to make their purchases. 
C) a seller often charges less than the going price to increase sales and profit. 
D) a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time. 
A) a seller can always increase her profit by raising the price of her product. 
B) if a seller charges more than the going price, buyers will go elsewhere to make their purchases. 
C) a seller often charges less than the going price to increase sales and profit. 
D) a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.

Question 6

If a increase in income decreases 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 7

Figure 4-13  
-Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

Accepted Answer

A) increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live. 
B) newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months. 
C) decrease in the price of lumber. 
D) All of the above are correct. 
A) increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live. 
B) newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months. 
C) decrease in the price of lumber. 
D) All of the above are correct.

Question 8

Figure 4-17  
-Refer to Figure 4-17. If the price is $10, then there would be a

Accepted Answer

A) shortage of 400 units, and price would rise. 
B) surplus of 400 units, and price would rise. 
C) shortage of 600 units, and price would rise. 
D) surplus of 600 units, and price would rise. 
A) shortage of 400 units, and price would rise. 
B) surplus of 400 units, and price would rise. 
C) shortage of 600 units, and price would rise. 
D) surplus of 600 units, and price would rise.

Question 9

Figure 4-22
  
-Refer to Figure 4-22. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?

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 10

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a determinant of demand?

Accepted Answer

A) the price of a resource that is used to produce the good 
B) the price of a complementary good 
C) the price of the good next month 
D) the price of a substitute good 
A) the price of a resource that is used to produce the good 
B) the price of a complementary good 
C) the price of the good next month 
D) the price of a substitute good

Question 12

Table 4-3
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Bet's } \
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Ernie's } \
\text { Quentity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Gruver's } \
\text { Qurntity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Oscar's } \
\text { Quantity } \
\text { Demanded }
\end{array} \
\hline \$ 0.00 & 20 & 16 & 4 & 8 \
\hline \$ 0.50 & 18 & 12 & 6 & 6 \
\hline \$ 1.00 & 14 & 10 & 2 & 5 \
\hline \$ 1.50 & 12 & 8 & 0 & 4 \
\hline \$ 2.00 & 6 & 6 & 0 & 2 \
\hline \$ 2.50 & 0 & 4 & 0 & 0 \
\hline
\end{array}$$
-Refer to Table 4-3. Whose demand does not obey the law of demand?

Accepted Answer

A) Bert's 
B) Ernie's 
C) Grover's 
D) Oscar's 
A) Bert's 
B) Ernie's 
C) Grover's 
D) Oscar's

Question 13

An increase in quantity demanded

Accepted Answer

A) results in a movement downward and to the right along a demand curve. 
B) results in a movement upward and to the left along a demand curve. 
C) shifts the demand curve to the left. 
D) shifts the demand curve to the right. 
A) results in a movement downward and to the right along a demand curve. 
B) results in a movement upward and to the left along a demand curve. 
C) shifts the demand curve to the left. 
D) shifts the demand curve to the right.

Question 14

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Accepted Answer

A) True 
 B)False

Question 15

Figure 4-20
The graph below pertains to the supply of paper to colleges and universities.  
-Refer to Figure 4-20. All else equal, buyers expecting paper to be more expensive in the future 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 16

The actions of buyers and sellers naturally move markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 17

The signals that guide the allocation of resources in a market economy are

Accepted Answer

A) surpluses and shortages. 
B) quantities. 
C) government policies. 
D) prices. 
A) surpluses and shortages. 
B) quantities. 
C) government policies. 
D) prices.

Question 18

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.  
-Refer to Figure 4-19. All else equal, a sale on chicken would cause a move from

Accepted Answer

A) DA to DB. 
B) DB to DA. 
C) x to y. 
D) y to x. 
A) DA to DB. 
B) DB to DA. 
C) x to y. 
D) y to x.

Question 19

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Accepted Answer

A) an increase in consumer income 
B) a decrease in consumer income 
C) greater government restrictions on agricultural chemicals 
D) fewer government restrictions on agricultural chemicals 
A) an increase in consumer income 
B) a decrease in consumer income 
C) greater government restrictions on agricultural chemicals 
D) fewer government restrictions on agricultural chemicals

Question 20

When drawing a demand curve,

Accepted Answer

A) demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B) quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C) price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D) price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis. 
A) demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B) quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C) price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D) price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

Exam 4: The Market Forces of Supply and Demand

When a surplus exists in a market, sellers

Which of the following events must cause equilibrium price to rise?

Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are

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 DVDs?

For a competitive market,

If a increase in income decreases the demand for a good, then the good is a(n)

Figure 4-13 -Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

Figure 4-17 -Refer to Figure 4-17. If the price is $10, then there would be a

Figure 4-22 -Refer to Figure 4-22. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Which of the following is not a determinant of demand?

Table 4-3 Price Bet's Quantity Denanded Ernie's Quentity Denanded Gruver's Qurntity Denanded Oscar's Quantity Demanded \ 0.00 20 16 4 8 \ 0.50 18 12 6 6 \ 1.00 14 10 2 5 \ 1.50 12 8 0 4 \ 2.00 6 6 0 2 \ 2.50 0 4 0 0 -Refer to Table 4-3. Whose demand does not obey the law of demand?

An increase in quantity demanded

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Figure 4-20 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-20. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

The actions of buyers and sellers naturally move markets toward equilibrium.

The signals that guide the allocation of resources in a market economy are

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19. All else equal, a sale on chicken would cause a move from

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

When drawing a demand curve,

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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