Question 1

The impact of a $200 increase in income on quantity demanded would be called an income effect.

Accepted Answer

A) True 
 B)False

Question 2

If the tea harvest is bad in a particular year,the supply of tea will

Accepted Answer

A) decrease,its price will decrease,and the quantity demanded of coffee will increase 
B) decrease,its price will increase,and the quantity demanded of coffee will increase 
C) decrease,its price will increase,and the quantity demanded of coffee will decrease 
D) decrease,its price will decrease,and the quantity demanded of coffee will decrease 
E) increase,its price will increase,and the quantity demanded of coffee will increase 
A) decrease,its price will decrease,and the quantity demanded of coffee will increase 
B) decrease,its price will increase,and the quantity demanded of coffee will increase 
C) decrease,its price will increase,and the quantity demanded of coffee will decrease 
D) decrease,its price will decrease,and the quantity demanded of coffee will decrease 
E) increase,its price will increase,and the quantity demanded of coffee will increase

Question 3

An increase in professors' salaries increases the supply of college education.

Accepted Answer

A) True 
 B)False

Question 4

Larger quantities of any good will be supplied at higher prices because

Accepted Answer

A) consumers will be more satisfied 
B) higher prices attract resources from other uses 
C) people are naturally lazy and have to be bribed to give up their leisure 
D) price and quantity supplied are inversely related 
E) of the law of decreasing opportunity cost 
A) consumers will be more satisfied 
B) higher prices attract resources from other uses 
C) people are naturally lazy and have to be bribed to give up their leisure 
D) price and quantity supplied are inversely related 
E) of the law of decreasing opportunity cost

Question 5

Recently it has been discovered that lobsters grown on lobster farms can feed on algae,which is a cheaper lobster food.As a result of this discovery,

Accepted Answer

A) the supply curve for lobster will shift to the left 
B) the supply curve for lobster will shift to the right 
C) there will be an increase in the quantity of lobsters supplied 
D) there will be a decrease in the quantity of lobsters supplied 
E) both supply and demand curves will shift to the right 
A) the supply curve for lobster will shift to the left 
B) the supply curve for lobster will shift to the right 
C) there will be an increase in the quantity of lobsters supplied 
D) there will be a decrease in the quantity of lobsters supplied 
E) both supply and demand curves will shift to the right

Question 6

What is the effect of a decrease in the price of potato chips on the market for pretzels?

Accepted Answer

A) Both equilibrium price and equilibrium quantity rise. 
B) Both equilibrium price and equilibrium quantity fall. 
C) Equilibrium price rises and equilibrium quantity falls. 
D) Equilibrium price falls and equilibrium quantity rises. 
E) Equilibrium price and equilibrium quantity remain unchanged. 
A) Both equilibrium price and equilibrium quantity rise. 
B) Both equilibrium price and equilibrium quantity fall. 
C) Equilibrium price rises and equilibrium quantity falls. 
D) Equilibrium price falls and equilibrium quantity rises. 
E) Equilibrium price and equilibrium quantity remain unchanged.

Question 7

Exhibit 4-14  
-Refer to exhibit 4-14.An increase in consumer income will cause which of the following to happen if baby formula is an inferior good?

Accepted Answer

A) demand shift from D2 to D1 
B) movement from b to a on demand curve D1 
C) demand shift from D1 to D2 
D) movement from d to c on demand curve D2 
E) none of the above 
A) demand shift from D2 to D1 
B) movement from b to a on demand curve D1 
C) demand shift from D1 to D2 
D) movement from d to c on demand curve D2 
E) none of the above

Question 8

Which of the following is true of an increase in quantity supplied of a given good?

Accepted Answer

A) It is represented by a rightward shift in the supply curve. 
B) It could result from a technological improvement. 
C) The price of a key resource used to produce the good may have decreased. 
D) It is caused by an increase in the price of the good. 
E) The price of an alternative good has increased. 
A) It is represented by a rightward shift in the supply curve. 
B) It could result from a technological improvement. 
C) The price of a key resource used to produce the good may have decreased. 
D) It is caused by an increase in the price of the good. 
E) The price of an alternative good has increased.

Question 9

Exhibit 4-9  
-The sum of the individual demands of all consumers in the market is called

Accepted Answer

A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded 
A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded

Question 10

Suppliers recognize there is a shortage in the market for their product when they notice that

Accepted Answer

A) the quantity supplied exceeds the quantity demanded 
B) the quantity demanded is falling 
C) inventories are falling 
D) production exceeds new orders for the product 
E) government economists announce a shortage exists 
A) the quantity supplied exceeds the quantity demanded 
B) the quantity demanded is falling 
C) inventories are falling 
D) production exceeds new orders for the product 
E) government economists announce a shortage exists

Question 11

Suppose that the price of compact disks (CDs)increases,other things equal.Which of the following in the most likely effect in the market for DVDs?

Accepted Answer

A) a decrease in demand for DVDs 
B) an increase in demand for DVDs 
C) an increase in quantity demanded of DVDs 
D) a decrease in quantity demanded of DVDs 
E) a decrease in the quantity supplied of DVDs 
A) a decrease in demand for DVDs 
B) an increase in demand for DVDs 
C) an increase in quantity demanded of DVDs 
D) a decrease in quantity demanded of DVDs 
E) a decrease in the quantity supplied of DVDs

Question 12

Exhibit 4-16  
-Refer to exhibit 4-16.If the market demand for baby formula is given by demand curve D2 and the supply is given by supply curve S2,which of the following is the market equilibrium?

Accepted Answer

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

Question 13

An improvement in technology would shift

Accepted Answer

A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead,there is movement along both of them 
E) the supply curve rightward 
A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead,there is movement along both of them 
E) the supply curve rightward

Question 14

Rent controls can result in

Accepted Answer

A) deteriorating or abandoned buildings 
B) strong incentives to oust protected tenants 
C) payments to motivate tenants to move out 
D) benefits to rich people who get a windfall from low rents 
E) All of the answers are correct. 
A) deteriorating or abandoned buildings 
B) strong incentives to oust protected tenants 
C) payments to motivate tenants to move out 
D) benefits to rich people who get a windfall from low rents 
E) All of the answers are correct.

Question 15

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

Accepted Answer

A) demand 
B) gravity 
C) variable proportions 
D) profitability 
E) supply 
A) demand 
B) gravity 
C) variable proportions 
D) profitability 
E) supply

Question 16

A leftward shift of a supply curve represents a decrease in supply.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following might cause the demand for ice cream,a normal good,to increase?

Accepted Answer

A) an increase in the price of ice cream 
B) an increase in the price of sherbet 
C) cooler weather 
D) a decrease in the number of consumers 
E) a decrease in consumer income 
A) an increase in the price of ice cream 
B) an increase in the price of sherbet 
C) cooler weather 
D) a decrease in the number of consumers 
E) a decrease in consumer income

Question 18

Which of the following is most likely to be a normal good?

Accepted Answer

A) trips to the laundromat 
B) macaroni-and-cheese dinners 
C) tickets to major league baseball games 
D) bus rides 
E) used paperback books 
A) trips to the laundromat 
B) macaroni-and-cheese dinners 
C) tickets to major league baseball games 
D) bus rides 
E) used paperback books

Question 19

There are three consumers in the market for playing cards: Don,John,and Ron.At a price of $2 per pack,the quantities demanded by each are 3,2,and 1,respectively.At a price of $1.50 per pack,the quantities demanded by each are 4,5,and 3,respectively.Which of the following is true?

Accepted Answer

A) The market demand curve for playing cards does not obey the law of demand. 
B) The price decrease causes the quantity demanded in this market to increase by 6. 
C) The price decrease causes John's demand curve to shift the most. 
D) At a price of $1 per pack,the quantity demanded in this market must be 20. 
E) Don's behavior does not obey the law of demand. 
A) The market demand curve for playing cards does not obey the law of demand. 
B) The price decrease causes the quantity demanded in this market to increase by 6. 
C) The price decrease causes John's demand curve to shift the most. 
D) At a price of $1 per pack,the quantity demanded in this market must be 20. 
E) Don's behavior does not obey the law of demand.

Question 20

A demand curve shows how quantity demanded changes as the price changes.It implies that

Accepted Answer

A) only a change in price can shift a demand curve 
B) everything else that affects demand is assumed to be constant 
C) quantity demanded is unrelated to price 
D) economists are concerned only with money 
E) it is impossible to show how anything but price affects demand 
A) only a change in price can shift a demand curve 
B) everything else that affects demand is assumed to be constant 
C) quantity demanded is unrelated to price 
D) economists are concerned only with money 
E) it is impossible to show how anything but price affects demand

Exam 4: Demand, supply, and Markets

The impact of a $200 increase in income on quantity demanded would be called an income effect.

If the tea harvest is bad in a particular year,the supply of tea will

An increase in professors' salaries increases the supply of college education.

Larger quantities of any good will be supplied at higher prices because

Recently it has been discovered that lobsters grown on lobster farms can feed on algae,which is a cheaper lobster food.As a result of this discovery,

What is the effect of a decrease in the price of potato chips on the market for pretzels?

Exhibit 4-14 -Refer to exhibit 4-14.An increase in consumer income will cause which of the following to happen if baby formula is an inferior good?

Which of the following is true of an increase in quantity supplied of a given good?

Exhibit 4-9 -The sum of the individual demands of all consumers in the market is called

Suppliers recognize there is a shortage in the market for their product when they notice that

Suppose that the price of compact disks (CDs)increases,other things equal.Which of the following in the most likely effect in the market for DVDs?

Exhibit 4-16 -Refer to exhibit 4-16.If the market demand for baby formula is given by demand curve D2 and the supply is given by supply curve S2,which of the following is the market equilibrium?

An improvement in technology would shift

Rent controls can result in

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

A leftward shift of a supply curve represents a decrease in supply.

Which of the following might cause the demand for ice cream,a normal good,to increase?

Which of the following is most likely to be a normal good?

There are three consumers in the market for playing cards: Don,John,and Ron.At a price of $2 per pack,the quantities demanded by each are 3,2,and 1,respectively.At a price of $1.50 per pack,the quantities demanded by each are 4,5,and 3,respectively.Which of the following is true?

A demand curve shows how quantity demanded changes as the price changes.It implies that

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

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