Question 1

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

Accepted Answer

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

Question 2

The law of supply states that,other things equal,

Accepted Answer

A)  an increase in price causes quantity supplied to increase. 
B)  an increase in price causes quantity supplied to decrease. 
C)  an increase in quantity supplied causes price to increase. 
D)  an increase in quantity supplied causes price to decrease. 
A)  an increase in price causes quantity supplied to increase. 
B)  an increase in price causes quantity supplied to decrease. 
C)  an increase in quantity supplied causes price to increase. 
D)  an increase in quantity supplied causes price to decrease. A

Question 3

Cocoa and marshmallows are complements,so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Accepted Answer

A) True 
 B)False  True

Question 4

The market for diamond rings is closely linked to the market for high-quality diamonds.If a large quantity of high-quality diamonds enters the market,then

Accepted Answer

A)  the supply curve for diamond rings will shift right,which will create a shortage at the current price.That will increase price,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity. 
B)  the supply curve for diamond rings will shift right,which will create a surplus at the current price.That will decrease price,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity. 
C)  the demand curve for diamond rings will shift right,which will create a shortage at the current price.That will increase price,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity. 
D)  the demand curve for diamond rings will shift right,which will create a surplus at the current price.That will decrease price,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity. 
A)  the supply curve for diamond rings will shift right,which will create a shortage at the current price.That will increase price,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity. 
B)  the supply curve for diamond rings will shift right,which will create a surplus at the current price.That will decrease price,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity. 
C)  the demand curve for diamond rings will shift right,which will create a shortage at the current price.That will increase price,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity. 
D)  the demand curve for diamond rings will shift right,which will create a surplus at the current price.That will decrease price,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity.

Question 5

The difference between a supply schedule and a supply curve is that

Accepted Answer

A)  a supply schedule incorporates demand and a supply curve does not. 
B)  a supply schedule incorporates profit and a supply curve does not. 
C)  a supply schedule can shift,but a supply curve cannot shift. 
D)  a supply schedule is a table and a supply curve is drawn on a graph. 
A)  a supply schedule incorporates demand and a supply curve does not. 
B)  a supply schedule incorporates profit and a supply curve does not. 
C)  a supply schedule can shift,but a supply curve cannot shift. 
D)  a supply schedule is a table and a supply curve is drawn on a graph.

Question 6

Figure 4-9  
-Refer to Figure 4-9.If price in this market is currently $14,then there would be a(n)

Accepted Answer

A)  surplus of 20 units and the law of supply and demand predicts that the price will rise from $14 to a higher price. 
B)  excess supply of 20 units and the law of supply and demand predicts that the price will fall from $14 to a lower price. 
C)  surplus of 40 units and the law of supply and demand predicts that the price will rise from $14 to a higher price. 
D)  excess supply of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price. 
A)  surplus of 20 units and the law of supply and demand predicts that the price will rise from $14 to a higher price. 
B)  excess supply of 20 units and the law of supply and demand predicts that the price will fall from $14 to a lower price. 
C)  surplus of 40 units and the law of supply and demand predicts that the price will rise from $14 to a higher price. 
D)  excess supply of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.

Question 7

The law of supply states that,other things equal,when the price of a good rises,the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 8

Most studies have found that tobacco and marijuana are complements rather than substitutes.

Accepted Answer

A) True 
 B)False

Question 9

When the price of a good is high,selling the good is profitable,and so the quantity supplied is large.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-13
The diagram below pertains to the supply of paper in university markets.  
-Refer to Figure 4-13.All else equal,an increase in the price of the pulp used in the paper production process would cause a move

Accepted Answer

A)  from x to y. 
B)  from y to x. 
C)  from SA to SB. 
D)  from SB to SA. 
A)  from x to y. 
B)  from y to x. 
C)  from SA to SB. 
D)  from SB to SA.

Question 11

The current price of neckties is $30,but the equilibrium price of neckties is $25.As a result,

Accepted Answer

A)  the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price. 
B)  the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price. 
C)  there is a surplus of neckties at the $30 price. 
D)  All of the above are correct. 
A)  the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price. 
B)  the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price. 
C)  there is a surplus of neckties at the $30 price. 
D)  All of the above are correct.

Question 12

When quantity supplied exceeds quantity demanded at the current market price,the market has a surplus and market price will likely rise in the future to eliminate the surplus.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Assume the market for tennis balls is perfectly competitive.When one tennis ball producer exits the market,

Accepted Answer

A)  the price of tennis balls increases. 
B)  the price of tennis balls decreases. 
C)  the price of tennis balls does not change. 
D)  there is no longer a market for tennis balls. 
A)  the price of tennis balls increases. 
B)  the price of tennis balls decreases. 
C)  the price of tennis balls does not change. 
D)  there is no longer a market for tennis balls.

Question 15

Figure 4-2  
-Refer to Figure 4-2.It is apparent from the figure that

Accepted Answer

A)  the good is inferior. 
B)  the demand for the good decreases as income increases. 
C)  the demand for the good conforms to the law of demand. 
D)  All of the above are correct. 
A)  the good is inferior. 
B)  the demand for the good decreases as income increases. 
C)  the demand for the good conforms to the law of demand. 
D)  All of the above are correct.

Question 16

An increase in the price of a good would

Accepted Answer

A)  increase the supply of the good. 
B)  increase the amount purchased by buyers. 
C)  give producers an incentive to produce more. 
D)  decrease both the quantity demanded of the good and the quantity supplied of the good. 
A)  increase the supply of the good. 
B)  increase the amount purchased by buyers. 
C)  give producers an incentive to produce more. 
D)  decrease both the quantity demanded of the good and the quantity supplied of the good.

Question 17

A movement upward and to the left along a given demand curve is called a decrease in demand..

Accepted Answer

A) True 
 B)False

Question 18

If the supply of a product decreases,then we would expect

Accepted Answer

A)  equilibrium price to increase and equilibrium quantity to decrease. 
B)  equilibrium price to decrease and equilibrium quantity to increase. 
C)  equilibrium price and equilibrium quantity both to increase. 
D)  equilibrium price and equilibrium quantity both to decrease. 
A)  equilibrium price to increase and equilibrium quantity to decrease. 
B)  equilibrium price to decrease and equilibrium quantity to increase. 
C)  equilibrium price and equilibrium quantity both to increase. 
D)  equilibrium price and equilibrium quantity both to decrease.

Question 19

In a competitive market,each seller has limited control over the price of his product because

Accepted Answer

A)  other sellers are offering similar products. 
B)  buyers exert more control over the price than do sellers. 
C)  these markets are highly regulated by the government. 
D)  sellers usually agree to set a common price that will allow each seller to earn a comfortable profit. 
A)  other sellers are offering similar products. 
B)  buyers exert more control over the price than do sellers. 
C)  these markets are highly regulated by the government. 
D)  sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

Question 20

The law of supply and demand asserts that

Accepted Answer

A)  demand curves and supply curves tend to shift to the right as time goes by. 
B)  the price of a good will eventually rise in response to an excess demand for that good. 
C)  when the supply curve for a good shifts,the demand curve for that good shifts in response. 
D)  the equilibrium price of a good will be rising more often than it will be falling. 
A)  demand curves and supply curves tend to shift to the right as time goes by. 
B)  the price of a good will eventually rise in response to an excess demand for that good. 
C)  when the supply curve for a good shifts,the demand curve for that good shifts in response. 
D)  the equilibrium price of a good will be rising more often than it will be falling.

Exam 4: The Market Forces of Supply and Demand

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

The law of supply states that,other things equal,

Cocoa and marshmallows are complements,so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

The market for diamond rings is closely linked to the market for high-quality diamonds.If a large quantity of high-quality diamonds enters the market,then

The difference between a supply schedule and a supply curve is that

Figure 4-9 -Refer to Figure 4-9.If price in this market is currently $14,then there would be a(n)

The law of supply states that,other things equal,when the price of a good rises,the quantity supplied of the good falls.

Most studies have found that tobacco and marijuana are complements rather than substitutes.

When the price of a good is high,selling the good is profitable,and so the quantity supplied is large.

Figure 4-13 The diagram below pertains to the supply of paper in university markets. -Refer to Figure 4-13.All else equal,an increase in the price of the pulp used in the paper production process would cause a move

The current price of neckties is $30,but the equilibrium price of neckties is $25.As a result,

When quantity supplied exceeds quantity demanded at the current market price,the market has a surplus and market price will likely rise in the future to eliminate the surplus.

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

Assume the market for tennis balls is perfectly competitive.When one tennis ball producer exits the market,

Figure 4-2 -Refer to Figure 4-2.It is apparent from the figure that

An increase in the price of a good would

A movement upward and to the left along a given demand curve is called a decrease in demand..

If the supply of a product decreases,then we would expect

In a competitive market,each seller has limited control over the price of his product because

The law of supply and demand asserts that

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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