Question 1

What are the determinants of individual demand and individual supply?

Accepted Answer

The determinants of individual

Question 2

A movement along a demand curve is called a change in quantity demanded and a shift of a demand curve is called a change in demand.

Accepted Answer

A) True 
 B)False

Question 3

In a competitive market, suppliers have little reason to charge different prices because:

Accepted Answer

A)  they have little reason to charge a lower price 
B)  if they a charge a higher price, buyers will purchase from someone else 
C)  only B is true 
D)  both A and B are true 
A)  they have little reason to charge a lower price 
B)  if they a charge a higher price, buyers will purchase from someone else 
C)  only B is true 
D)  both A and B are true

Question 4

Government interventions are frequently needed to drive a market towards an equilibrium.

Accepted Answer

A) True 
 B)False

Question 5

What is the practical purpose of ensuring ceteris paribus when explaining the results from a demand and supply model?

Accepted Answer

Ceteris paribus means 'other things equa

Question 6

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Accepted Answer

A) True 
 B)False

Question 7

Doug likes tomatoes today more than he did yesterday. Ceteris paribus, which of the following statements is correct?

Accepted Answer

A)  Doug must have received an increase in income 
B)  Doug is now willing to pay more than before for tomatoes 
C)  Doug must now consider tomatoes a luxury 
D)  the supply of tomatoes must have increased 
A)  Doug must have received an increase in income 
B)  Doug is now willing to pay more than before for tomatoes 
C)  Doug must now consider tomatoes a luxury 
D)  the supply of tomatoes must have increased

Question 8

New Zealand sphagnum moss is an input used in the production of orchids. If the price of sphagnum moss increases, but nothing else changes, this will cause:

Accepted Answer

A)  the demand for orchids to increase 
B)  the supply of orchids to decrease 
C)  the supply of orchids to increase 
D)  the demand for orchids to decrease 
A)  the demand for orchids to increase 
B)  the supply of orchids to decrease 
C)  the supply of orchids to increase 
D)  the demand for orchids to decrease

Question 9

If crocodile leather handbags are a normal good, then consumers will buy less of them as their incomes rise.

Accepted Answer

A) True 
 B)False

Question 10

The analysis of a change in the equilibrium in a market is called comparative statics.

Accepted Answer

A) True 
 B)False

Question 11

The side of the market that deals with the willingness and ability to produce and sell is:

Accepted Answer

A)  demand 
B)  competition 
C)  supply 
D)  a monopoly 
A)  demand 
B)  competition 
C)  supply 
D)  a monopoly

Question 12

An increase in the price of oranges would lead to:

Accepted Answer

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

Question 13

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

Accepted Answer

A) True 
 B)False

Question 14

An increase in the price of a good would:

Accepted Answer

A)  increase the supply 
B)  increase the amount purchased by buyers 
C)  decrease the supply 
D)  give producers an incentive to produce more 
A)  increase the supply 
B)  increase the amount purchased by buyers 
C)  decrease the supply 
D)  give producers an incentive to produce more

Question 15

Cricket bats and cricket balls are substitute goods.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an example of a market?

Accepted Answer

A)  an auction for agricultural products 
B)  the purchase and sale of software over the internet 
C)  the purchase and sale of illegal drugs in secret locations in a city 
D)  all of the above 
A)  an auction for agricultural products 
B)  the purchase and sale of software over the internet 
C)  the purchase and sale of illegal drugs in secret locations in a city 
D)  all of the above

Question 17

If the market price is below the equilibrium price, there will be a surplus and the price will rise.

Accepted Answer

A) True 
 B)False

Question 18

'Because of unseasonably cold weather, the supply of oranges has substantially decreased'. This statement indicates that:

Accepted Answer

A)  the amount of oranges that will be available at various prices has declined 
B)  the equilibrium quantity of oranges will rise 
C)  consumers will be willing and able to buy fewer oranges at each possible price 
D)  the price of oranges will fall 
A)  the amount of oranges that will be available at various prices has declined 
B)  the equilibrium quantity of oranges will rise 
C)  consumers will be willing and able to buy fewer oranges at each possible price 
D)  the price of oranges will fall

Question 19

The supply curve has a negative slope.

Accepted Answer

A) True 
 B)False

Question 20

If the price of a good changes, its demand curve shifts.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

What are the determinants of individual demand and individual supply?

A movement along a demand curve is called a change in quantity demanded and a shift of a demand curve is called a change in demand.

In a competitive market, suppliers have little reason to charge different prices because:

Government interventions are frequently needed to drive a market towards an equilibrium.

What is the practical purpose of ensuring ceteris paribus when explaining the results from a demand and supply model?

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Doug likes tomatoes today more than he did yesterday. Ceteris paribus, which of the following statements is correct?

New Zealand sphagnum moss is an input used in the production of orchids. If the price of sphagnum moss increases, but nothing else changes, this will cause:

If crocodile leather handbags are a normal good, then consumers will buy less of them as their incomes rise.

The analysis of a change in the equilibrium in a market is called comparative statics.

The side of the market that deals with the willingness and ability to produce and sell is:

An increase in the price of oranges would lead to:

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

An increase in the price of a good would:

Cricket bats and cricket balls are substitute goods.

Which of the following is an example of a market?

If the market price is below the equilibrium price, there will be a surplus and the price will rise.

'Because of unseasonably cold weather, the supply of oranges has substantially decreased'. This statement indicates that:

The supply curve has a negative slope.

If the price of a good changes, its demand curve shifts.

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

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