Question 1

If the market for beef cattle was initially in equilibrium,an increase in the price of the feed grains used to fatten cattle would cause

Accepted Answer

A) the demand for beef cattle to increase,driving the price of beef upward 
B) the supply of beef cattle to decline,driving the price of beef upward in the long run 
C) the supply of beef to increase,placing downward pressure on the price of beef in the long run 
D) both supply and demand to fall,leaving the price of beef virtually unchanged 
E) the supply of beef to increase,driving the price of beef down and increasing demand 
A) the demand for beef cattle to increase,driving the price of beef upward 
B) the supply of beef cattle to decline,driving the price of beef upward in the long run 
C) the supply of beef to increase,placing downward pressure on the price of beef in the long run 
D) both supply and demand to fall,leaving the price of beef virtually unchanged 
E) the supply of beef to increase,driving the price of beef down and increasing demand

Question 2

A surplus occurs whenever

Accepted Answer

A) current price is greater than equilibrium price 
B) quantity supplied exceeds quantity demanded at the equilibrium price 
C) quantity demanded is greater than quantity supplied 
D) the problem of scarcity of a good is solved 
E) some buyers would be willing and able to pay even more for it than they have to at equilibrium 
A) current price is greater than equilibrium price 
B) quantity supplied exceeds quantity demanded at the equilibrium price 
C) quantity demanded is greater than quantity supplied 
D) the problem of scarcity of a good is solved 
E) some buyers would be willing and able to pay even more for it than they have to at equilibrium

Question 3

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Accepted Answer

A) True 
 B)False

Question 4

In what way is consumer demand different from consumer wants?

Accepted Answer

A) Demand is only for necessities. 
B) Demand is only for luxuries. 
C) Demand takes into account the ability to pay. 
D) Consumer wants are only for luxuries. 
E) Consumer wants are only for necessities. 
A) Demand is only for necessities. 
B) Demand is only for luxuries. 
C) Demand takes into account the ability to pay. 
D) Consumer wants are only for luxuries. 
E) Consumer wants are only for necessities.

Question 5

In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?

Accepted Answer

A) if supply and demand both decline 
B) if supply and demand both rise 
C) if supply declines and demand rises 
D) if supply rises and demand declines 
E) if supply remains constant and demand rises 
A) if supply and demand both decline 
B) if supply and demand both rise 
C) if supply declines and demand rises 
D) if supply rises and demand declines 
E) if supply remains constant and demand rises

Question 6

If income rises and a good is inferior,then demand for that good will decrease.

Accepted Answer

A) True 
 B)False

Question 7

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

Accepted Answer

A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs 
A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs

Question 8

Exhibit 4-1  
-Consider Exhibit 4-1.Which of the following best represents an increase 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 9

Which of the following events is likely to reduce the demand for on-campus student housing?

Accepted Answer

A) a rise in rents for off-campus housing 
B) more students enrolling at the university 
C) it becomes less fashionable to live "on campus" 
D) a rise in dorm fees 
E) a rise in the incomes of students 
A) a rise in rents for off-campus housing 
B) more students enrolling at the university 
C) it becomes less fashionable to live "on campus" 
D) a rise in dorm fees 
E) a rise in the incomes of students

Question 10

In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate?

Accepted Answer

A) supply decreases and demand increases 
B) demand decreases and supply increases 
C) demand remains constant and supply increases 
D) supply decreases and demand decreases 
E) supply remains constant and demand increases 
A) supply decreases and demand increases 
B) demand decreases and supply increases 
C) demand remains constant and supply increases 
D) supply decreases and demand decreases 
E) supply remains constant and demand increases

Question 11

Exhibit 4-2  
-Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

Accepted Answer

A) an increase in the price cattle feed 
B) the expectation of a lower price in the near future 
C) an increase in the price of milk 
D) an increase in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow 
A) an increase in the price cattle feed 
B) the expectation of a lower price in the near future 
C) an increase in the price of milk 
D) an increase in the price of beef 
E) a new and improved cattle food that increases the yield per dairy cow

Question 12

If a surplus exists in the market for swimwear,an economist would predict that

Accepted Answer

A) the price of swimwear will rise 
B) producers will increase the production of swimwear 
C) the supply of swimwear will increase 
D) the price of swimwear at retail outlets will begin to fall 
E) buyers will react to the surplus by increasing their demand for swimwear 
A) the price of swimwear will rise 
B) producers will increase the production of swimwear 
C) the supply of swimwear will increase 
D) the price of swimwear at retail outlets will begin to fall 
E) buyers will react to the surplus by increasing their demand for swimwear

Question 13

Which of the following will cause the demand curve for a good to shift to the left?

Accepted Answer

A) an increase in the price of the good 
B) a decrease in the price of the good 
C) a decrease in the price of a complementary good 
D) an expectation of a future price decline 
E) an increase in the price of a substitute good 
A) an increase in the price of the good 
B) a decrease in the price of the good 
C) a decrease in the price of a complementary good 
D) an expectation of a future price decline 
E) an increase in the price of a substitute good

Question 14

Which of the following is the reason supply curves typically slope upward?

Accepted Answer

A) Opportunity cost of production increases as quantity supplied increases. 
B) Supply increases as opportunity cost decreases. 
C) Price increases as supply decreases. 
D) Quantity supplied is unrelated to price. 
E) The income and substitution effects of a price change. 
A) Opportunity cost of production increases as quantity supplied increases. 
B) Supply increases as opportunity cost decreases. 
C) Price increases as supply decreases. 
D) Quantity supplied is unrelated to price. 
E) The income and substitution effects of a price change.

Question 15

Other things equal,the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

Accepted Answer

A) the price of wood pulp used in the production of index cards 
B) the technology in the index card production process 
C) the price of index cards 
D) the price of packaging material (a substitute in production) 
E) the future price of index cards expected by producers 
A) the price of wood pulp used in the production of index cards 
B) the technology in the index card production process 
C) the price of index cards 
D) the price of packaging material (a substitute in production) 
E) the future price of index cards expected by producers

Question 16

Rent controls mean that tenants end up with the best possible housing choices over the long run.

Accepted Answer

A) True 
 B)False

Question 17

If demand increases and supply decreases,quantity will

Accepted Answer

A) always increase 
B) always decrease 
C) increase only if supply decreases more than demand increases 
D) increase only if supply decreases less than demand increases 
E) decrease only if supply decreases less than demand increases 
A) always increase 
B) always decrease 
C) increase only if supply decreases more than demand increases 
D) increase only if supply decreases less than demand increases 
E) decrease only if supply decreases less than demand increases

Question 18

The income effect of a decrease in the price of legal services (a normal good)is a(n)

Accepted Answer

A) decrease in the demand for legal services 
B) decrease in the quantity demanded of legal services 
C) increase in the demand for legal services 
D) increase in the quantity demanded of legal services 
E) new demand curve because everything else is no longer constant 
A) decrease in the demand for legal services 
B) decrease in the quantity demanded of legal services 
C) increase in the demand for legal services 
D) increase in the quantity demanded of legal services 
E) new demand curve because everything else is no longer constant

Question 19

Two events occur simultaneously in the market for automobiles: (1)an improvement in assembly line technology and (2)the economy enters a recession (which decreases consumers' income).An economist would predict with certainty that

Accepted Answer

A) equilibrium quantity will rise 
B) equilibrium quantity will fall 
C) equilibrium price will rise 
D) equilibrium price will fall 
E) the equilibrium price will remain the same 
A) equilibrium quantity will rise 
B) equilibrium quantity will fall 
C) equilibrium price will rise 
D) equilibrium price will fall 
E) the equilibrium price will remain the same

Exam 4: Demand, supply, and Markets

If the market for beef cattle was initially in equilibrium,an increase in the price of the feed grains used to fatten cattle would cause

A surplus occurs whenever

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

In what way is consumer demand different from consumer wants?

In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?

If income rises and a good is inferior,then demand for that good will decrease.

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

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

Which of the following events is likely to reduce the demand for on-campus student housing?

In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate?

Exhibit 4-2 -Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

If a surplus exists in the market for swimwear,an economist would predict that

Which of the following will cause the demand curve for a good to shift to the left?

Which of the following is the reason supply curves typically slope upward?

Other things equal,the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

Rent controls mean that tenants end up with the best possible housing choices over the long run.

If demand increases and supply decreases,quantity will

The income effect of a decrease in the price of legal services (a normal good)is a(n)

Two events occur simultaneously in the market for automobiles: (1)an improvement in assembly line technology and (2)the economy enters a recession (which decreases consumers' income).An economist would predict with certainty that

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Introduction to Macroeconomics

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Exhibit 4-2 -Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S₁ to S₂?