Question 1

Figure 4-10  
-Refer to Figure 4-10. What is the movement from point B to point A on the graph called?

Accepted Answer

A) a decrease in supply 
B) an increase in supply 
C) an increase in the quantity supplied 
D) a decrease in the quantity supplied 
A) a decrease in supply 
B) an increase in supply 
C) an increase in the quantity supplied 
D) a decrease in the quantity supplied

Question 2

Suppose that health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production?

Accepted Answer

A) Beef producers, concerned about the health of their customers, decided to produce relatively less beef. 
B) Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. 
C) Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the relative price of beef, making it less attractive to produce. 
D) Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace. 
A) Beef producers, concerned about the health of their customers, decided to produce relatively less beef. 
B) Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. 
C) Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the relative price of beef, making it less attractive to produce. 
D) Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.

Question 3

Market demand is given as Qd = 60 - P. Market supply is given as Qs = 3P. What would result if the market price were $30?

Accepted Answer

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

Question 4

What do comparative statics involve?

Accepted Answer

A) comparisons of varying prices 
B) evaluation of buyers' reluctance to pay the market price 
C) comparing the old equilibrium and the new equilibrium 
D) evaluating the friction that develops between buyers and sellers 
A) comparisons of varying prices 
B) evaluation of buyers' reluctance to pay the market price 
C) comparing the old equilibrium and the new equilibrium 
D) evaluating the friction that develops between buyers and sellers

Question 5

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Accepted Answer

A) decrease the demand for marijuana 
B) increase the demand for marijuana 
C) decrease the quantity demanded of marijuana 
D) increase the quantity demanded of marijuana 
A) decrease the demand for marijuana 
B) increase the demand for marijuana 
C) decrease the quantity demanded of marijuana 
D) increase the quantity demanded of marijuana

Question 6

Why does market price prevail in a perfectly competitive market?

Accepted Answer

A) because there are wealthy buyers 
B) because the market is unregulated 
C) because there are distinctive products 
D) because no one has market power 
A) because there are wealthy buyers 
B) because the market is unregulated 
C) because there are distinctive products 
D) because no one has market power

Question 7

What does a 10 percent increase in the price of cigarettes lead to?

Accepted Answer

A) 18 percent drop in smoking 
B) 12 percent drop in smoking 
C) 6 percent drop in smoking 
D) 4 percent drop in smoking 
A) 18 percent drop in smoking 
B) 12 percent drop in smoking 
C) 6 percent drop in smoking 
D) 4 percent drop in smoking

Question 8

If suppliers expect the price of their product to fall in the future, what will they do?

Accepted Answer

A) decrease supply now 
B) increase supply now 
C) increase supply in the future but not now 
D) nothing, since there is nothing they can do to affect the price in the future 
A) decrease supply now 
B) increase supply now 
C) increase supply in the future but not now 
D) nothing, since there is nothing they can do to affect the price in the future

Question 9

Market demand is given as Qd = 75 - P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

Accepted Answer

A) a shortage of 45 
B) a surplus of 45 
C) a surplus of 40 
D) a shortage of 40 
A) a shortage of 45 
B) a surplus of 45 
C) a surplus of 40 
D) a shortage of 40

Question 10

A market is a group of buyers and sellers of a particular product.

Accepted Answer

A) True 
 B)False

Question 11

When we move up or down a given demand curve, what is held constant?

Accepted Answer

A) Only price is held constant. 
B) Income and the price of the good are held constant. 
C) All nonprice determinants of demand are assumed to be constant. 
D) All determinants of quantity demanded are held constant. 
A) Only price is held constant. 
B) Income and the price of the good are held constant. 
C) All nonprice determinants of demand are assumed to be constant. 
D) All determinants of quantity demanded are held constant.

Question 12

What does the law of demand imply?

Accepted Answer

A) price and quantity supplied are inversely related 
B) price and quantity demanded are inversely related 
C) price and quantity demanded are positively related 
D) price and quantity supplied are positively related 
A) price and quantity supplied are inversely related 
B) price and quantity demanded are inversely related 
C) price and quantity demanded are positively related 
D) price and quantity supplied are positively related

Question 13

Market demand is given as Qd = 140 - 5P. Market supply is given as Qs = 2P. What would result if the market price were $5?

Accepted Answer

A) a shortage of 35 
B) a surplus of 35 
C) a surplus of 105 
D) a shortage of 105 
A) a shortage of 35 
B) a surplus of 35 
C) a surplus of 105 
D) a shortage of 105

Question 14

What happens in a market economy?

Accepted Answer

A) Demand is determined by supply. 
B) Supply is determined by demand. 
C) Price is determined by quantity. 
D) Quantity is determined by price. 
A) Demand is determined by supply. 
B) Supply is determined by demand. 
C) Price is determined by quantity. 
D) Quantity is determined by price.

Question 15

Figure 4-4  
-Refer to Figure 4-4. If the price is $10, what would happen?

Accepted Answer

A) There would be a shortage of 200 and the price would rise. 
B) There would be a surplus of 200 and the price would fall. 
C) There would be a shortage of 600 and the price would rise. 
D) There would be a surplus of 600 and the price would fall. 
A) There would be a shortage of 200 and the price would rise. 
B) There would be a surplus of 200 and the price would fall. 
C) There would be a shortage of 600 and the price would rise. 
D) There would be a surplus of 600 and the price would fall.

Question 16

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

Accepted Answer

A) price will fall and the effect on quantity is ambiguous 
B) quantity will fall and the effect on price is ambiguous 
C) quantity will increase and the effect on price is ambiguous 
D) effect on both price and quantity is ambiguous 
A) price will fall and the effect on quantity is ambiguous 
B) quantity will fall and the effect on price is ambiguous 
C) quantity will increase and the effect on price is ambiguous 
D) effect on both price and quantity is ambiguous

Question 17

A local cable TV company might be a monopolist.

Accepted Answer

A) True 
 B)False

Question 18

What does the law of demand imply?

Accepted Answer

A) When price rises, quantity demanded falls. 
B) When price rises, quantity demanded rises also. 
C) When price falls, quantity supplied rises. 
D) When price falls, quantity supplied falls also. 
A) When price rises, quantity demanded falls. 
B) When price rises, quantity demanded rises also. 
C) When price falls, quantity supplied rises. 
D) When price falls, quantity supplied falls also.

Question 19

If a decrease in income increases the demand for a good, what is the good called?

Accepted Answer

A) a substitute good 
B) a complementary good 
C) a normal good 
D) an inferior good 
A) a substitute good 
B) a complementary good 
C) a normal good 
D) an inferior good

Question 20

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

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

Figure 4-10 -Refer to Figure 4-10. What is the movement from point B to point A on the graph called?

Suppose that health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production?

Market demand is given as Qd = 60 - P. Market supply is given as Qs = 3P. What would result if the market price were $30?

What do comparative statics involve?

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Why does market price prevail in a perfectly competitive market?

What does a 10 percent increase in the price of cigarettes lead to?

If suppliers expect the price of their product to fall in the future, what will they do?

Market demand is given as Qd = 75 - P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

A market is a group of buyers and sellers of a particular product.

When we move up or down a given demand curve, what is held constant?

What does the law of demand imply?

Market demand is given as Qd = 140 - 5P. Market supply is given as Qs = 2P. What would result if the market price were $5?

What happens in a market economy?

Figure 4-4 -Refer to Figure 4-4. If the price is $10, what would happen?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

A local cable TV company might be a monopolist.

What does the law of demand imply?

If a decrease in income increases the demand for a good, what is the good called?

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

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

Figure 4-10 -Refer to Figure 4-10. What is the movement from point B to point A on the graph called?

Suppose that health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production?

Market demand is given as Qd = 60 - P. Market supply is given as Qs = 3P. What would result if the market price were $30?

What do comparative statics involve?

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Why does market price prevail in a perfectly competitive market?

What does a 10 percent increase in the price of cigarettes lead to?

If suppliers expect the price of their product to fall in the future, what will they do?

Market demand is given as Qd = 75 - P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

A market is a group of buyers and sellers of a particular product.

When we move up or down a given demand curve, what is held constant?

What does the law of demand imply?

Market demand is given as Qd = 140 - 5P. Market supply is given as Qs = 2P. What would result if the market price were $5?

What happens in a market economy?

Figure 4-4 -Refer to Figure 4-4. If the price is $10, what would happen?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

A local cable TV company might be a monopolist.

What does the law of demand imply?

If a decrease in income increases the demand for a good, what is the good called?

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

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 S₁ to S?