Question 1

Exhibit 4-15  
-Refer to exhibit 4-15.A decrease in the price of baby formula will cause which of the following to happen?

Accepted Answer

A) supply shift from S2 to S1 
B) movement from c to d on supply curve S2 
C) supply shift from S1 to S2 
D) movement from b to a on supply curve S1 
E) none of the above 
A) supply shift from S2 to S1 
B) movement from c to d on supply curve S2 
C) supply shift from S1 to S2 
D) movement from b to a on supply curve S1 
E) none of the above

Question 2

The income effect of a decrease in the price of potatoes (an inferior good)is a(n)

Accepted Answer

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

Question 3

An improvement in technology shifts the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about the substitution effect of a price change is true?

Accepted Answer

A) It is caused by a change in relative prices. 
B) It affects the consumer's ability,rather than willingness,to purchase a good. 
C) It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases. 
D) It is usually equal to the income effect. 
E) It may cause the consumer to buy less of the good when its price falls. 
A) It is caused by a change in relative prices. 
B) It affects the consumer's ability,rather than willingness,to purchase a good. 
C) It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases. 
D) It is usually equal to the income effect. 
E) It may cause the consumer to buy less of the good when its price falls.

Question 5

Exhibit 4-4  
-Refer to Exhibit 4-4.Which of the following would cause a shift of demand from D' to D?

Accepted Answer

A) an increase in the price of a substitute good 
B) an increase in the number of consumers 
C) a decrease in the price of a complementary good 
D) a decline in consumers' incomes if it is a normal good 
E) an increase in consumers' incomes if it is a normal good 
A) an increase in the price of a substitute good 
B) an increase in the number of consumers 
C) a decrease in the price of a complementary good 
D) a decline in consumers' incomes if it is a normal good 
E) an increase in consumers' incomes if it is a normal good

Question 6

An increase in the price of butter,a substitute good,would be most likely to cause

Accepted Answer

A) a rightward shift of the demand curve for margarine 
B) a leftward shift of the demand curve for margarine 
C) the quantity of margarine demanded to increase 
D) the quantity of margarine demanded to decrease 
E) a decrease in the price of margarine 
A) a rightward shift of the demand curve for margarine 
B) a leftward shift of the demand curve for margarine 
C) the quantity of margarine demanded to increase 
D) the quantity of margarine demanded to decrease 
E) a decrease in the price of margarine

Question 7

If good B is a complement to good A,then a decrease in the price of B

Accepted Answer

A) increases the quantity demanded of A 
B) decreases the demand for A 
C) increases the demand for A 
D) decreases the quantity demanded of A 
E) will cause the demand for B to increase 
A) increases the quantity demanded of A 
B) decreases the demand for A 
C) increases the demand for A 
D) decreases the quantity demanded of A 
E) will cause the demand for B to increase

Question 8

Suppose you drink more tea because the price of coffee has increased.Which of the following best explains your action?

Accepted Answer

A) the law of supply 
B) tea and coffee are complements 
C) the substitution effect 
D) the income effect 
E) your nominal income has increased 
A) the law of supply 
B) tea and coffee are complements 
C) the substitution effect 
D) the income effect 
E) your nominal income has increased

Question 9

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 an inferior good 
C) a decrease 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 an inferior good 
C) a decrease 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

Question 10

The demand curve for spinach shows the quantity demanded of spinach

Accepted Answer

A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good 
A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good

Question 11

If we say that demand has increased,we mean that there has been

Accepted Answer

A) a leftward movement along the demand curve 
B) a rightward movement along the demand curve 
C) a leftward shift of the demand curve 
D) a rightward shift of the demand curve 
E) an increase in the slope of the demand curve 
A) a leftward movement along the demand curve 
B) a rightward movement along the demand curve 
C) a leftward shift of the demand curve 
D) a rightward shift of the demand curve 
E) an increase in the slope of the demand curve

Question 12

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs.Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?

Accepted Answer

A) an increase in the price of other kinds of candy 
B) an increase in the price of the ingredients used to make chewing gum 
C) a decrease in the number of young people in the population 
D) an agreement by workers in the chewing gum industry to work for lower wages 
E) an improvement in chewing gum production technology 
A) an increase in the price of other kinds of candy 
B) an increase in the price of the ingredients used to make chewing gum 
C) a decrease in the number of young people in the population 
D) an agreement by workers in the chewing gum industry to work for lower wages 
E) an improvement in chewing gum production technology

Question 13

Exhibit 4-10  
-Economists

Accepted Answer

A) believe that tastes are the major influence on consumers' income expectations 
B) have observed that tastes vary with changes in the number of consumers 
C) recognize that tastes have an important impact on demand 
D) can say a great deal about the origin of tastes 
E) suspect that tastes can cause a movement along the demand curve 
A) believe that tastes are the major influence on consumers' income expectations 
B) have observed that tastes vary with changes in the number of consumers 
C) recognize that tastes have an important impact on demand 
D) can say a great deal about the origin of tastes 
E) suspect that tastes can cause a movement along the demand curve

Question 14

In the case of a normal good,an increase in consumers' incomes would shift the

Accepted Answer

A) demand curve inward 
B) supply curve inward 
C) supply curve outward 
D) supply and demand curves inward 
E) demand curve outward 
A) demand curve inward 
B) supply curve inward 
C) supply curve outward 
D) supply and demand curves inward 
E) demand curve outward

Question 15

If the supply of a product increases,then

Accepted Answer

A) more will be purchased at the same price 
B) the price of the product must have declined 
C) demand for the good must have increased 
D) producers are willing to accept a lower price for each unit sold 
E) producers offer less for sale at each possible price 
A) more will be purchased at the same price 
B) the price of the product must have declined 
C) demand for the good must have increased 
D) producers are willing to accept a lower price for each unit sold 
E) producers offer less for sale at each possible price

Question 16

A decrease in the demand for peanut butter could be caused by a(n)

Accepted Answer

A) increase in the supply of peanut butter 
B) increase in the price of peanut butter 
C) doubling of the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) increase in consumer income 
A) increase in the supply of peanut butter 
B) increase in the price of peanut butter 
C) doubling of the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) increase in consumer income

Question 17

Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck,North Dakota,is most likely to be correct?

Accepted Answer

A) They are both inferior goods. 
B) Their demand curves probably are quite similar. 
C) They are complements. 
D) They are substitutes. 
E) They are unrelated. 
A) They are both inferior goods. 
B) Their demand curves probably are quite similar. 
C) They are complements. 
D) They are substitutes. 
E) They are unrelated.

Question 18

The substitution effect of a change in the price of bananas refers to the way in which a change in the

Accepted Answer

A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas 
A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas

Question 19

The equilibrium point represents the only price-quantity combination in a market that

Accepted Answer

A) causes both buyers and sellers to agree to a price increase 
B) causes both buyers and sellers to agree to a price decrease 
C) exactly matches the independent plans of buyers and sellers 
D) allows buyers to purchase what they want 
E) allows sellers to earn a profit 
A) causes both buyers and sellers to agree to a price increase 
B) causes both buyers and sellers to agree to a price decrease 
C) exactly matches the independent plans of buyers and sellers 
D) allows buyers to purchase what they want 
E) allows sellers to earn a profit

Question 20

As the use of DVDs becomes more widespread,we would expect all of the following except one.Which is the exception?

Accepted Answer

A) The prices of CDs will decrease. 
B) The demand curve for CD players will shift leftward. 
C) The supply curve of CD players will shift rightward. 
D) The demand curve for CDs will shift leftward. 
E) Firms will move their resources away from CD production to DVD production. 
A) The prices of CDs will decrease. 
B) The demand curve for CD players will shift leftward. 
C) The supply curve of CD players will shift rightward. 
D) The demand curve for CDs will shift leftward. 
E) Firms will move their resources away from CD production to DVD production.

Exam 4: Demand, supply, and Markets

Exhibit 4-15 -Refer to exhibit 4-15.A decrease in the price of baby formula will cause which of the following to happen?

The income effect of a decrease in the price of potatoes (an inferior good)is a(n)

An improvement in technology shifts the supply curve rightward.

Which of the following statements about the substitution effect of a price change is true?

Exhibit 4-4 -Refer to Exhibit 4-4.Which of the following would cause a shift of demand from D' to D?

An increase in the price of butter,a substitute good,would be most likely to cause

If good B is a complement to good A,then a decrease in the price of B

Suppose you drink more tea because the price of coffee has increased.Which of the following best explains your action?

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 demand curve for spinach shows the quantity demanded of spinach

If we say that demand has increased,we mean that there has been

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs.Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?

Exhibit 4-10 -Economists

In the case of a normal good,an increase in consumers' incomes would shift the

If the supply of a product increases,then

A decrease in the demand for peanut butter could be caused by a(n)

Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck,North Dakota,is most likely to be correct?

The substitution effect of a change in the price of bananas refers to the way in which a change in the

The equilibrium point represents the only price-quantity combination in a market that

As the use of DVDs becomes more widespread,we would expect all of the following except one.Which is the exception?

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?