Question 1

If tea and coffee are substitutes, a rise in the price of tea will cause a rise in the demand for coffee.

Accepted Answer

A) True 
 B)False

Question 2

What could cause the demand curve for fish to shift?

Accepted Answer

A)  an increase in the price of a substitute good for fish 
B)  a decrease in the price of a close substitute for fish 
C)  an increase in consumer incomes 
D)  all of the above 
A)  an increase in the price of a substitute good for fish 
B)  a decrease in the price of a close substitute for fish 
C)  an increase in consumer incomes 
D)  all of the above

Question 3

Suppose that the number of buyers in a market increases and a technological advance also occurs. What would we expect to happen in the market?

Accepted Answer

A)  the equilibrium price would increase but the impact on the amount sold in the market would be ambiguous 
B)  the equilibrium price would decrease but the impact on the amount sold in the market would be ambiguous 
C)  both equilibrium price and equilibrium quantity would increase 
D)  equilibrium quantity would increase but the impact on equilibrium price would be ambiguous 
A)  the equilibrium price would increase but the impact on the amount sold in the market would be ambiguous 
B)  the equilibrium price would decrease but the impact on the amount sold in the market would be ambiguous 
C)  both equilibrium price and equilibrium quantity would increase 
D)  equilibrium quantity would increase but the impact on equilibrium price would be ambiguous

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Graph 4-5
  
-Refer to Graph 4-5. According to the graph, at the equilibrium price:

Accepted Answer

A)  20 units would be supplied and demanded 
B)  40 units would be supplied and demanded 
C)  60 units would be supplied and demanded 
D)  60 units would be supplied, but only 20 would be demanded 
A)  20 units would be supplied and demanded 
B)  40 units would be supplied and demanded 
C)  60 units would be supplied and demanded 
D)  60 units would be supplied, but only 20 would be demanded

Question 6

The quantity demanded of a product is positively related to the price.

Accepted Answer

A) True 
 B)False

Question 7

Graph 4-4
  
-Refer to Graph 4-4. On the graph, the movement from S to S1 is called:

Accepted Answer

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

Question 8

Tastes and expectations are not determinants of individual demand.

Accepted Answer

A) True 
 B)False

Question 9

Holding the non-price determinants of supply constant, a change in price would:

Accepted Answer

A)  result in a change in supply 
B)  result in a movement along a stable supply curve 
C)  result in a shift of demand 
D)  have no effect on the quantity supplied 
A)  result in a change in supply 
B)  result in a movement along a stable supply curve 
C)  result in a shift of demand 
D)  have no effect on the quantity supplied

Question 10

Table 4-2
  
-Refer to Table 4-2. In the table shown, if the price were $10:

Accepted Answer

A)  a surplus of 7 units would exist and price would tend to fall 
B)  a surplus of 7 units would exist and price would tend to rise 
C)  a shortage of 7 units would exist and price would tend to fall 
D)  a shortage of 7 units would exist and price would tend to rise 
A)  a surplus of 7 units would exist and price would tend to fall 
B)  a surplus of 7 units would exist and price would tend to rise 
C)  a shortage of 7 units would exist and price would tend to fall 
D)  a shortage of 7 units would exist and price would tend to rise

Question 11

A technological advance will shift the:

Accepted Answer

A)  demand curve to the right 
B)  demand curve to the left 
C)  supply curve to the right 
D)  supply curve to the left 
A)  demand curve to the right 
B)  demand curve to the left 
C)  supply curve to the right 
D)  supply curve to the left

Question 12

A market demand is:

Accepted Answer

A)  a vertical summation of individual demand curves 
B)  a horizontal summation of individual demand curves 
C)  not responsive to change in tastes and preferences 
D)  determined solely by the number of buyers and sellers in the market 
A)  a vertical summation of individual demand curves 
B)  a horizontal summation of individual demand curves 
C)  not responsive to change in tastes and preferences 
D)  determined solely by the number of buyers and sellers in the market

Question 13

If the number of sellers in a market increases the:

Accepted Answer

A)  demand in that market will increase 
B)  supply in that market will decrease 
C)  supply in that market will increase 
D)  demand in that market will not change 
A)  demand in that market will increase 
B)  supply in that market will decrease 
C)  supply in that market will increase 
D)  demand in that market will not change

Question 14

Graph 4-6
  
-Refer to the Graph 4-6. If the price were $10 there would be a:

Accepted Answer

A)  shortage of 200 
B)  surplus of 200 
C)  surplus of 600 
D)  shortage of 600 
A)  shortage of 200 
B)  surplus of 200 
C)  surplus of 600 
D)  shortage of 600

Question 15

The term ceteris paribus refers to a:

Accepted Answer

A)  central market price 
B)  real-world situation in which every variable is held constant 
C)  hypothetical situation in which some variables are assumed to be constant 
D)  situation in which only the price is held constant 
A)  central market price 
B)  real-world situation in which every variable is held constant 
C)  hypothetical situation in which some variables are assumed to be constant 
D)  situation in which only the price is held constant

Question 16

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Accepted Answer

A)  an increase in supply and demand 
B)  an increase in supply and a decrease in demand 
C)  a decrease in supply and demand 
D)  a decrease in supply and an increase in demand 
A)  an increase in supply and demand 
B)  an increase in supply and a decrease in demand 
C)  a decrease in supply and demand 
D)  a decrease in supply and an increase in demand

Question 18

Suppose that John receives a pay increase. We would expect John's demand for:

Accepted Answer

A)  normal goods to remain unchanged 
B)  luxury goods to decrease 
C)  inferior goods to decrease 
D)  normal goods to decrease 
A)  normal goods to remain unchanged 
B)  luxury goods to decrease 
C)  inferior goods to decrease 
D)  normal goods to decrease

Question 19

Ceteris paribus is a Latin phrase that literally means:

Accepted Answer

A)  'other things equal' 
B)  'after this therefore because of this' 
C)  'to respond slowly to a change in price' 
D)  'there's no such thing as a free lunch' 
A)  'other things equal' 
B)  'after this therefore because of this' 
C)  'to respond slowly to a change in price' 
D)  'there's no such thing as a free lunch'

Question 20

The market demand curve illustrates:

Accepted Answer

A)  how much all buyers in the market are willing and able to buy at each possible price 
B)  the fact that tastes for a good are inversely related to the price of a good 
C)  how the quantity demanded increases as incomes increase 
D)  the fact that demand for a good is inversely related to the number of buyers 
A)  how much all buyers in the market are willing and able to buy at each possible price 
B)  the fact that tastes for a good are inversely related to the price of a good 
C)  how the quantity demanded increases as incomes increase 
D)  the fact that demand for a good is inversely related to the number of buyers

Exam 4: The Market Forces of Supply and Demand

If tea and coffee are substitutes, a rise in the price of tea will cause a rise in the demand for coffee.

What could cause the demand curve for fish to shift?

Suppose that the number of buyers in a market increases and a technological advance also occurs. What would we expect to happen in the market?

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

Graph 4-5 -Refer to Graph 4-5. According to the graph, at the equilibrium price:

The quantity demanded of a product is positively related to the price.

Graph 4-4 -Refer to Graph 4-4. On the graph, the movement from S to S1 is called:

Tastes and expectations are not determinants of individual demand.

Holding the non-price determinants of supply constant, a change in price would:

Table 4-2 -Refer to Table 4-2. In the table shown, if the price were $10:

A technological advance will shift the:

A market demand is:

If the number of sellers in a market increases the:

Graph 4-6 -Refer to the Graph 4-6. If the price were $10 there would be a:

The term ceteris paribus refers to a:

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Suppose that John receives a pay increase. We would expect John's demand for:

Ceteris paribus is a Latin phrase that literally means:

The market demand curve illustrates:

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Graph 4-4 -Refer to Graph 4-4. On the graph, the movement from S to S₁ is called: