Question 1

Suppose there is an earthquake that destroys several corn canneries. Which of the following would NOT occur as a direct result of this event?

Accepted Answer

A) Sellers would not be willing to produce and sell as much as before at each relevant price. 
B) The supply would decrease. 
C) Buyers would not be willing to buy as much as before at each relevant price. 
D) The equilibrium price would rise. 
A) Sellers would not be willing to produce and sell as much as before at each relevant price. 
B) The supply would decrease. 
C) Buyers would not be willing to buy as much as before at each relevant price. 
D) The equilibrium price would rise.

Question 2

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $40?

Accepted Answer

A) a shortage of 30 
B) a surplus of 60 
C) a surplus of 30 
D) a shortage of 60 
A) a shortage of 30 
B) a surplus of 60 
C) a surplus of 30 
D) a shortage of 60

Question 3

Which of the following determines a market supply curve but not an individual supply curve?

Accepted Answer

A) number of sellers 
B) expectations 
C) input prices 
D) technology 
A) number of sellers 
B) expectations 
C) input prices 
D) technology

Question 4

Market demand is given as Qd = 300 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $40?

Accepted Answer

A) a shortage of 100 
B) a surplus of 100 
C) a surplus of 160 
D) a shortage of 160 
A) a shortage of 100 
B) a surplus of 100 
C) a surplus of 160 
D) a shortage of 160

Question 5

What is one reason that government taxes on cigarettes reduce smoking?

Accepted Answer

A) Cigarette companies are successful in passing much of the tax on to consumers. 
B) Cigarette companies do not pass much of the tax on to consumers. 
C) There are many good substitutes for cigarettes. 
D) Higher prices suggest less harmful cigarettes. 
A) Cigarette companies are successful in passing much of the tax on to consumers. 
B) Cigarette companies do not pass much of the tax on to consumers. 
C) There are many good substitutes for cigarettes. 
D) Higher prices suggest less harmful cigarettes.

Question 6

Which of the following reflects the downward-sloping demand curve?

Accepted Answer

A) Price is positively related to quantity supplied. 
B) There is an inverse relationship between price and quantity demanded. 
C) There is a direct relationship between price and quantity demanded. 
D) When the price falls, buyers willingly buy less. 
A) Price is positively related to quantity supplied. 
B) There is an inverse relationship between price and quantity demanded. 
C) There is a direct relationship between price and quantity demanded. 
D) When the price falls, buyers willingly buy less.

Question 7

Which of the following cause and effect events is in order for a seller?

Accepted Answer

A) Technology improves, profit falls, the supply curve shifts left. 
B) An input price falls, profit rises, and the supply curve shifts right. 
C) An input price rises, profit falls, and the supply curve shifts right. 
D) An input price rises, profit rises, and the supply curve shifts left. 
A) Technology improves, profit falls, the supply curve shifts left. 
B) An input price falls, profit rises, and the supply curve shifts right. 
C) An input price rises, profit falls, and the supply curve shifts right. 
D) An input price rises, profit rises, and the supply curve shifts left.

Question 8

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

Accepted Answer

A) laws 
B) buyers and sellers 
C) property rights 
D) prices 
A) laws 
B) buyers and sellers 
C) property rights 
D) prices

Question 9

You have decided to purchase a new Mustang convertible. A friend tells you that Ford will be offering a $3000 rebate on Mustangs starting next month. As a result of this information, what will happen to your demand curve for Mustangs?

Accepted Answer

A) could shift either right or left 
B) shifts right today 
C) curve will be unaffected 
D) shifts left today 
A) could shift either right or left 
B) shifts right today 
C) curve will be unaffected 
D) shifts left today

Question 10

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

Accepted Answer

A) True 
 B)False

Question 11

What is an example of complementary goods?

Accepted Answer

A) hamburgers and hot dogs 
B) lawnmowers and automobiles 
C) hamburgers and fries 
D) wine and beer 
A) hamburgers and hot dogs 
B) lawnmowers and automobiles 
C) hamburgers and fries 
D) wine and beer

Question 12

What is an example of substitute goods?

Accepted Answer

A) butter and margarine 
B) tennis balls and tennis rackets 
C) televisions and tractors 
D) peanut butter and jelly 
A) butter and margarine 
B) tennis balls and tennis rackets 
C) televisions and tractors 
D) peanut butter and jelly

Question 13

Kingston is a small college city in Ontario. What happens to the market demand curve for fast food in Kingston at the end of August each year?

Accepted Answer

A) It shifts right. 
B) It shifts left. 
C) It remains constant, but moves down the curve. 
D) It remains constant, but moves up the curve. 
A) It shifts right. 
B) It shifts left. 
C) It remains constant, but moves down the curve. 
D) It remains constant, but moves up the curve.

Question 14

Market demand is given as Qd = 200 - 3P. Market supply is given as Qs = 2P + 100. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A) price will be $140 and quantity will be 20 
B) price will be $20 and quantity will be 140 
C) price will be $60 and quantity will be 20 
D) price will be $120 and quantity will be 340 
A) price will be $140 and quantity will be 20 
B) price will be $20 and quantity will be 140 
C) price will be $60 and quantity will be 20 
D) price will be $120 and quantity will be 340

Question 15

Figure 4-5  
-Refer to Figure 4-5. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing area?

Accepted Answer

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

Question 16

Suppose that demand decreases AND supply decreases. What would you expect to occur in the market for the good?

Accepted Answer

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

Question 17

Table 4-2
  
-Refer to Table 4-2. What would the equilibrium price and quantity be?

Accepted Answer

A) $4 and 40. 
B) $6 and 30 
C) $8 and 30 
D) $10 and 35 
A) $4 and 40. 
B) $6 and 30 
C) $8 and 30 
D) $10 and 35

Question 18

For teens, what does a 10 percent increase in the price of cigarettes lead to?

Accepted Answer

A) a 6 percent drop in teenage smoking 
B) a 12 percent drop in teenage smoking 
C) a 18 percent drop in teenage smoking 
D) a 24 percent drop in teenage smoking 
A) a 6 percent drop in teenage smoking 
B) a 12 percent drop in teenage smoking 
C) a 18 percent drop in teenage smoking 
D) a 24 percent drop in teenage smoking

Question 19

Figure 4-1  
-Refer to Figure 4-1. What could cause the movement from S to S1?

Accepted Answer

A) a decrease in the price of the good 
B) an improvement in technology 
C) an increase in income 
D) an increase in input prices 
A) a decrease in the price of the good 
B) an improvement in technology 
C) an increase in income 
D) an increase in input prices

Question 20

Figure 4-3  
-Refer to Figure 4-3. In this market, what are the equilibrium price and quantity?

Accepted Answer

A) $14 and 70 
B) $12 and 40 
C) $10 and 50 
D) $8 and 50 
A) $14 and 70 
B) $12 and 40 
C) $10 and 50 
D) $8 and 50

Suppose there is an earthquake that destroys several corn canneries. Which of the following would NOT occur as a direct result of this event?

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $40?

Which of the following determines a market supply curve but not an individual supply curve?

Market demand is given as Qd = 300 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $40?

What is one reason that government taxes on cigarettes reduce smoking?

Which of the following reflects the downward-sloping demand curve?

Which of the following cause and effect events is in order for a seller?

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

You have decided to purchase a new Mustang convertible. A friend tells you that Ford will be offering a $3000 rebate on Mustangs starting next month. As a result of this information, what will happen to your demand curve for Mustangs?

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

What is an example of complementary goods?

What is an example of substitute goods?

Kingston is a small college city in Ontario. What happens to the market demand curve for fast food in Kingston at the end of August each year?

Market demand is given as Qd = 200 - 3P. Market supply is given as Qs = 2P + 100. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Figure 4-5 -Refer to Figure 4-5. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing area?

Suppose that demand decreases AND supply decreases. What would you expect to occur in the market for the good?

Table 4-2 -Refer to Table 4-2. What would the equilibrium price and quantity be?

For teens, what does a 10 percent increase in the price of cigarettes lead to?

Figure 4-1 -Refer to Figure 4-1. What could cause the movement from S to S₁?

Figure 4-3 -Refer to Figure 4-3. In this market, what are the equilibrium price and quantity?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Exam 4: The Market Forces of Supply and Demand

Suppose there is an earthquake that destroys several corn canneries. Which of the following would NOT occur as a direct result of this event?

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $40?

Which of the following determines a market supply curve but not an individual supply curve?

Market demand is given as Qd = 300 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $40?

What is one reason that government taxes on cigarettes reduce smoking?

Which of the following reflects the downward-sloping demand curve?

Which of the following cause and effect events is in order for a seller?

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

You have decided to purchase a new Mustang convertible. A friend tells you that Ford will be offering a $3000 rebate on Mustangs starting next month. As a result of this information, what will happen to your demand curve for Mustangs?

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

What is an example of complementary goods?

What is an example of substitute goods?

Kingston is a small college city in Ontario. What happens to the market demand curve for fast food in Kingston at the end of August each year?

Market demand is given as Qd = 200 - 3P. Market supply is given as Qs = 2P + 100. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Figure 4-5 -Refer to Figure 4-5. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing area?

Suppose that demand decreases AND supply decreases. What would you expect to occur in the market for the good?

Table 4-2 -Refer to Table 4-2. What would the equilibrium price and quantity be?

For teens, what does a 10 percent increase in the price of cigarettes lead to?

Figure 4-1 -Refer to Figure 4-1. What could cause the movement from S to S1?

Figure 4-3 -Refer to Figure 4-3. In this market, what are the equilibrium price and quantity?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Figure 4-1 -Refer to Figure 4-1. What could cause the movement from S to S₁?