Question 1

Which of the following statements about demand is true?

Accepted Answer

A) Since most college students want a Mercedes sports coupe,their demand for it is high. 
B) If price increases,the demand curve shifts to the right. 
C) The demand curve for bacon will not shift when the price of bacon changes. 
D) If a supply curve shifts,thereby changing the price,the demand curve will shift as well. 
E) If a demand curve shifts,the supply curve will shift as well,whether or not the price changes. 
A) Since most college students want a Mercedes sports coupe,their demand for it is high. 
B) If price increases,the demand curve shifts to the right. 
C) The demand curve for bacon will not shift when the price of bacon changes. 
D) If a supply curve shifts,thereby changing the price,the demand curve will shift as well. 
E) If a demand curve shifts,the supply curve will shift as well,whether or not the price changes.

Question 2

Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?

Accepted Answer

A) a rise in the price of milk (a complement) 
B) a rise in consumer incomes 
C) a rise in the price of cookie dough 
D) a drop in the price of cookie dough 
E) a rise in the price of crackers (a substitute) 
A) a rise in the price of milk (a complement) 
B) a rise in consumer incomes 
C) a rise in the price of cookie dough 
D) a drop in the price of cookie dough 
E) a rise in the price of crackers (a substitute)

Question 3

Which of the following will not shift the market supply curve for corn?

Accepted Answer

A) a change in the price of corn 
B) a change in the price of soybeans 
C) a change in the price of herbicides and pesticides 
D) a change in storage technology 
E) a change in the number of acres planted in corn 
A) a change in the price of corn 
B) a change in the price of soybeans 
C) a change in the price of herbicides and pesticides 
D) a change in storage technology 
E) a change in the number of acres planted in corn

Question 4

Which of the following is true of the relationship between price and quantity supplied?

Accepted Answer

A) There is always an inverse relationship. 
B) More is supplied at lower prices. 
C) Producers work harder and sell more when the price decreases. 
D) There is a direct relationship between price and quantity supplied. 
E) It is always true that a higher price leads to a decrease in quantity supplied. 
A) There is always an inverse relationship. 
B) More is supplied at lower prices. 
C) Producers work harder and sell more when the price decreases. 
D) There is a direct relationship between price and quantity supplied. 
E) It is always true that a higher price leads to a decrease in quantity supplied.

Question 5

A shortage of textbooks will cause

Accepted Answer

A) a decrease in the supply of textbooks 
B) a decrease in the demand for textbooks 
C) both an increase in the supply of textbooks and a decrease in the demand for textbooks 
D) an increase in the price of textbooks,caused by a shift of either the supply curve or the demand curve 
E) an increase in the price of textbooks 
A) a decrease in the supply of textbooks 
B) a decrease in the demand for textbooks 
C) both an increase in the supply of textbooks and a decrease in the demand for textbooks 
D) an increase in the price of textbooks,caused by a shift of either the supply curve or the demand curve 
E) an increase in the price of textbooks

Question 6

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) a decrease in the price of beef 
E) a decrease in the number of dairy farmers 
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) a decrease in the price of beef 
E) a decrease in the number of dairy farmers

Question 7

Which of the following is the best example of complements?

Accepted Answer

A) milk and cheese 
B) coffee and tea 
C) CDs and DVDs 
D) hiking boots and athletic shoes 
E) film and film processing (developing) 
A) milk and cheese 
B) coffee and tea 
C) CDs and DVDs 
D) hiking boots and athletic shoes 
E) film and film processing (developing)

Question 8

Exhibit 4-16  
-Refer to exhibit 4-16.The market demand curve is given by D1 and the supply by S1.Equilibrium price is P2 and equilibrium quantity is Q1.What will the new equilibrium price and quantity be if there is an increase in the birth rate?

Accepted Answer

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

Question 9

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

Accepted Answer

A) a leftward shift of the demand curve 
B) a movement leftward along the demand curve 
C) a rightward shift of the demand curve 
D) a movement rightward along the demand curve 
E) a rightward shift of the supply curve 
A) a leftward shift of the demand curve 
B) a movement leftward along the demand curve 
C) a rightward shift of the demand curve 
D) a movement rightward along the demand curve 
E) a rightward shift of the supply curve

Question 10

If the price of labor increases,employers will hire more labor because it is more valuable.

Accepted Answer

A) True 
 B)False

Question 11

When quantity demanded of a good is less than the quantity supplied at the prevailing market price,

Accepted Answer

A) the market is in equilibrium 
B) the price of the good tends to rise 
C) the price of the good tends to fall 
D) the demand curve shifts rightward until the surplus is eliminated 
E) the supply curve shifts leftward until the shortage is eliminated 
A) the market is in equilibrium 
B) the price of the good tends to rise 
C) the price of the good tends to fall 
D) the demand curve shifts rightward until the surplus is eliminated 
E) the supply curve shifts leftward until the shortage is eliminated

Question 12

Exhibit 4-15  
-Refer to exhibit 4-15.An increase in the number of firms producing baby formula will cause which of the following to happen?

Accepted Answer

A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2 
A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2

Question 13

The law of demand says that as the price of a good rises,

Accepted Answer

A) buyers recognize that price may be even higher in the future,and so they buy now 
B) buyers purchase less in hopes that the price will fall in the future 
C) buyers purchase less,in part because their real income has fallen 
D) buyers purchase more,in part because the price of a substitute has risen 
E) buyers purchase more,in part because it has higher status at a higher price 
A) buyers recognize that price may be even higher in the future,and so they buy now 
B) buyers purchase less in hopes that the price will fall in the future 
C) buyers purchase less,in part because their real income has fallen 
D) buyers purchase more,in part because the price of a substitute has risen 
E) buyers purchase more,in part because it has higher status at a higher price

Question 14

A decrease in demand will result in a(n)

Accepted Answer

A) increase in equilibrium price and quantity 
B) decrease in equilibrium price and quantity 
C) decrease in equilibrium price and an increase in equilibrium quantity 
D) increase in equilibrium price and a decrease in equilibrium quantity 
E) change in equilibrium price and quantity only if supply changes too 
A) increase in equilibrium price and quantity 
B) decrease in equilibrium price and quantity 
C) decrease in equilibrium price and an increase in equilibrium quantity 
D) increase in equilibrium price and a decrease in equilibrium quantity 
E) change in equilibrium price and quantity only if supply changes too

Question 15

An increase in the number of producers of a good will

Accepted Answer

A) increase the market supply because the price will rise 
B) increase the market supply only if market demand increases too 
C) increase the market supply because market supply is the sum of all individual supply curves 
D) increase the market supply only if all suppliers have an identical supply curves 
E) decrease the market supply because firms compete with each other and each firm will supply more 
A) increase the market supply because the price will rise 
B) increase the market supply only if market demand increases too 
C) increase the market supply because market supply is the sum of all individual supply curves 
D) increase the market supply only if all suppliers have an identical supply curves 
E) decrease the market supply because firms compete with each other and each firm will supply more

Question 16

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) remain constant; increase 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) remain constant; increase

Question 17

The income effect of an increase in the price of backpacks (a normal good)is a(n)

Accepted Answer

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

Question 18

Exhibit 4-13  
-Disequilibrium occurs when quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 19

When a market is in equilibrium,

Accepted Answer

A) producers earn profits 
B) the minimum possible price is achieved 
C) there is no incentive for consumers or producers to change their current behavior 
D) excess demand is less than excess supply 
E) the maximum possible price is achieved 
A) producers earn profits 
B) the minimum possible price is achieved 
C) there is no incentive for consumers or producers to change their current behavior 
D) excess demand is less than excess supply 
E) the maximum possible price is achieved

Question 20

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) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase 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) an increase in the price of oatmeal which many consumers consider to be a substitute for corn flakes 
D) an increase in the price milk which many consumers consider to be complement for corn flakes 
E) a widely anticipated recession

Exam 4: Demand, supply, and Markets

Which of the following statements about demand is true?

Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?

Which of the following will not shift the market supply curve for corn?

Which of the following is true of the relationship between price and quantity supplied?

A shortage of textbooks will cause

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?

Which of the following is the best example of complements?

Exhibit 4-16 -Refer to exhibit 4-16.The market demand curve is given by D1 and the supply by S1.Equilibrium price is P2 and equilibrium quantity is Q1.What will the new equilibrium price and quantity be if there is an increase in the birth rate?

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

If the price of labor increases,employers will hire more labor because it is more valuable.

When quantity demanded of a good is less than the quantity supplied at the prevailing market price,

Exhibit 4-15 -Refer to exhibit 4-15.An increase in the number of firms producing baby formula will cause which of the following to happen?

The law of demand says that as the price of a good rises,

A decrease in demand will result in a(n)

An increase in the number of producers of a good will

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

The income effect of an increase in the price of backpacks (a normal good)is a(n)

Exhibit 4-13 -Disequilibrium occurs when quantity demanded equals quantity supplied.

When a market is in equilibrium,

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?

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 4-2 -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?

Exhibit 4-16 -Refer to exhibit 4-16.The market demand curve is given by D₁ and the supply by S₁.Equilibrium price is P₂ and equilibrium quantity is Q₁.What will the new equilibrium price and quantity be if there is an increase in the birth rate?

An increase in supply will cause equilibrium price to and equilibrium quantity to .

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?