Question 1

A price floor set below the equilibrium price will result in a surplus.

Accepted Answer

A) True 
 B)False  False

Question 2

Exhibit 4-1  
-Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D0 to D1?

Accepted Answer

A) a report that eating corn flakes increases the risk of cancer 
B) a decrease in consumer incomes if corn flakes is a normal good 
C) a decrease in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) a decrease in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession 
A) a report that eating corn flakes increases the risk of cancer 
B) a decrease in consumer incomes if corn flakes is a normal good 
C) a decrease in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) a decrease in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession D

Question 3

Which of the following is not true regarding a change in quantity demanded?

Accepted Answer

A) A change in quantity demanded is shown by a movement along a given demand curve. 
B) The demand curve shifts whenever the quantity demanded changes. 
C) A change in the price of a good,other things constant,will lead to a change in quantity demanded. 
D) The lower the price of a product,other things constant,the higher the quantity demanded. 
E) A shift of the supply curve might cause a change in quantity demanded. 
A) A change in quantity demanded is shown by a movement along a given demand curve. 
B) The demand curve shifts whenever the quantity demanded changes. 
C) A change in the price of a good,other things constant,will lead to a change in quantity demanded. 
D) The lower the price of a product,other things constant,the higher the quantity demanded. 
E) A shift of the supply curve might cause a change in quantity demanded. B

Question 4

A rightward shift of a supply curve

Accepted Answer

A) represents a decrease in supply 
B) might be caused by an increase in demand 
C) might be caused by a price ceiling 
D) would cause an excess quantity supplied at the previous equilibrium price 
E) might be caused by a decrease in demand 
A) represents a decrease in supply 
B) might be caused by an increase in demand 
C) might be caused by a price ceiling 
D) would cause an excess quantity supplied at the previous equilibrium price 
E) might be caused by a decrease in demand

Question 5

Exhibit 4-16  
-Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D1 and the supply curve S1,what is the equilibrium price and quantity?

Accepted Answer

A) P1,Q2 
B) P3,Q4 
C) P4,Q3 
D) P2,Q1 
E) P1,Q1 
A) P1,Q2 
B) P3,Q4 
C) P4,Q3 
D) P2,Q1 
E) P1,Q1

Question 6

Which of the following statements about markets is not true?

Accepted Answer

A) A market is an impersonal mechanism. 
B) Markets coordinate the independent decisions of buyers and sellers. 
C) Markets reduce the transaction costs of exchange. 
D) More specialized markets are generally found in urban areas. 
E) All markets provide the same amounts of information. 
A) A market is an impersonal mechanism. 
B) Markets coordinate the independent decisions of buyers and sellers. 
C) Markets reduce the transaction costs of exchange. 
D) More specialized markets are generally found in urban areas. 
E) All markets provide the same amounts of information.

Question 7

Exhibit 4-1  
-Consider Exhibit 4-1.Which of the following best represents a decrease in quantity demanded?

Accepted Answer

A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from B to D 
A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from B to D

Question 8

If there is a shortage in the market for athletic shoes,

Accepted Answer

A) the price should rise to eliminate the shortage 
B) inventories of athletic shoes will grow 
C) demand will decrease to restore equilibrium 
D) firms will reduce production to restore equilibrium 
E) supply will increase to restore equilibrium 
A) the price should rise to eliminate the shortage 
B) inventories of athletic shoes will grow 
C) demand will decrease to restore equilibrium 
D) firms will reduce production to restore equilibrium 
E) supply will increase to restore equilibrium

Question 9

The most important characteristic of the equilibrium price is that it

Accepted Answer

A) guarantees that producers earn profit 
B) clears the market,leaving neither a surplus nor a shortage 
C) maximizes the quantity demanded 
D) minimizes the quantity demanded 
E) guarantees that all buyers who desire the product will get it 
A) guarantees that producers earn profit 
B) clears the market,leaving neither a surplus nor a shortage 
C) maximizes the quantity demanded 
D) minimizes the quantity demanded 
E) guarantees that all buyers who desire the product will get it

Question 10

Exhibit 4-8  
-As shown in Exhibit 4-8,when a government sets a rent ceiling at $750 per month,the result is a(n)

Accepted Answer

A) equilibrium 
B) increase in supply 
C) shortage 
D) price floor 
E) surplus 
A) equilibrium 
B) increase in supply 
C) shortage 
D) price floor 
E) surplus

Question 11

Exhibit 4-1  
-Consider Exhibit 4-1.Which of the following best represents a decrease in demand?

Accepted Answer

A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from D to B 
A) the movement from A to D 
B) the movement from C to E 
C) the movement from A to B 
D) the movement from F to E 
E) the movement from D to B

Question 12

A change in income will

Accepted Answer

A) affect the demand for candy through the income effect of a price change 
B) affect the quantity demanded of candy through the income effect of a price change 
C) shift the demand curve for candy 
D) have no effect on the demand for candy,because income is assumed constant along a demand curve 
E) affect quantity demanded only if candy is a normal good 
A) affect the demand for candy through the income effect of a price change 
B) affect the quantity demanded of candy through the income effect of a price change 
C) shift the demand curve for candy 
D) have no effect on the demand for candy,because income is assumed constant along a demand curve 
E) affect quantity demanded only if candy is a normal good

Question 13

If supply increases,then quantity demanded decreases.

Accepted Answer

A) True 
 B)False

Question 14

Assume that black beans and rice are staples in the diet of one particular family.How could you tell if these goods were complements,substitutes,or unrelated goods?

Accepted Answer

A) If the price of black beans rose and the consumption of rice remained the same,they would be substitutes. 
B) If the price of black beans rose and the consumption of rice increased,they would be substitutes. 
C) If the price of black beans rose and the consumption of rice decreased,they would be substitutes. 
D) If the price of black beans rose and the consumption of both goods remained the same,they would be complements. 
E) There is no way to determine whether these goods are complements,substitutes,or unrelated goods. 
A) If the price of black beans rose and the consumption of rice remained the same,they would be substitutes. 
B) If the price of black beans rose and the consumption of rice increased,they would be substitutes. 
C) If the price of black beans rose and the consumption of rice decreased,they would be substitutes. 
D) If the price of black beans rose and the consumption of both goods remained the same,they would be complements. 
E) There is no way to determine whether these goods are complements,substitutes,or unrelated goods.

Question 15

If pretzels are a normal good,the income effect of a price change means that

Accepted Answer

A) as income increases,the quantity demanded increases along the demand curve for pretzels 
B) as income increases,the demand curve for pretzels shifts rightward 
C) as income increases,the demand curve for pretzels shifts leftward 
D) as the price of pretzels increases,the real income of individuals who demand pretzels decreases,so the quantity demanded of pretzels decreases 
E) as the price of pretzels increases,income increases 
A) as income increases,the quantity demanded increases along the demand curve for pretzels 
B) as income increases,the demand curve for pretzels shifts rightward 
C) as income increases,the demand curve for pretzels shifts leftward 
D) as the price of pretzels increases,the real income of individuals who demand pretzels decreases,so the quantity demanded of pretzels decreases 
E) as the price of pretzels increases,income increases

Question 16

If the supply curves for the following goods were plotted,they all would slope upward except one.Which is the exception?

Accepted Answer

A) red Corvettes 
B) yogurt 
C) diamond rings 
D) original copies of the Mona Lisa 
E) wine from Greece 
A) red Corvettes 
B) yogurt 
C) diamond rings 
D) original copies of the Mona Lisa 
E) wine from Greece

Question 17

Which of the following is not likely to cause a change in the supply of wheat?

Accepted Answer

A) a government subsidy to farmers who do not grow wheat 
B) an increase in the price of soybeans 
C) a decrease in the price of fertilizer 
D) a fall in the price of wheat 
E) producers expect product prices to rise 
A) a government subsidy to farmers who do not grow wheat 
B) an increase in the price of soybeans 
C) a decrease in the price of fertilizer 
D) a fall in the price of wheat 
E) producers expect product prices to rise

Question 18

Which of the following would not cause the demand curve for peaches to shift?

Accepted Answer

A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers 
A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers

Question 19

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Accepted Answer

A) the price of aspartame will increase 
B) the price of sugar will decrease 
C) the price of saccharin will increase 
D) the demand curves for aspartame and sugar will shift leftward 
E) aspartame and sugar will be complements 
A) the price of aspartame will increase 
B) the price of sugar will decrease 
C) the price of saccharin will increase 
D) the demand curves for aspartame and sugar will shift leftward 
E) aspartame and sugar will be complements

Question 20

Which of the following would cause an increase in the supply of wheat?

Accepted Answer

A) an increase in fertilizer costs 
B) a decrease in the price of bread 
C) a decrease in the price of corn 
D) an increase in land prices 
E) an expectation that the price of wheat will be higher next period 
A) an increase in fertilizer costs 
B) a decrease in the price of bread 
C) a decrease in the price of corn 
D) an increase in land prices 
E) an expectation that the price of wheat will be higher next period

Exam 4: Demand, supply, and Markets

A price floor set below the equilibrium price will result in a surplus.

Exhibit 4-1 -Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D0 to D1?

Which of the following is not true regarding a change in quantity demanded?

A rightward shift of a supply curve

Exhibit 4-16 -Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D1 and the supply curve S1,what is the equilibrium price and quantity?

Which of the following statements about markets is not true?

Exhibit 4-1 -Consider Exhibit 4-1.Which of the following best represents a decrease in quantity demanded?

If there is a shortage in the market for athletic shoes,

The most important characteristic of the equilibrium price is that it

Exhibit 4-8 -As shown in Exhibit 4-8,when a government sets a rent ceiling at $750 per month,the result is a(n)

Exhibit 4-1 -Consider Exhibit 4-1.Which of the following best represents a decrease in demand?

A change in income will

If supply increases,then quantity demanded decreases.

Assume that black beans and rice are staples in the diet of one particular family.How could you tell if these goods were complements,substitutes,or unrelated goods?

If pretzels are a normal good,the income effect of a price change means that

If the supply curves for the following goods were plotted,they all would slope upward except one.Which is the exception?

Which of the following is not likely to cause a change in the supply of wheat?

Which of the following would not cause the demand curve for peaches to shift?

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Which of the following would cause an increase in the supply of wheat?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

Exhibit 4-1 -Consider Exhibit 4-1 which shows 3 demand curves for corn flakes.Which of the following would be most likely to shift the demand curve from D₀ to D₁?

Exhibit 4-16 -Refer to exhibit 4-16.If the market for baby formula is given by the demand curve D₁ and the supply curve S₁,what is the equilibrium price and quantity?