Question 1

​Exhibit 4-6  
-Refer to Exhibit 4-6. A supply shift from S0 to S1 can be best explained by:

Accepted Answer

A) ​decrease in input prices. 
B) ​price decreases for a substitute in production. 
C) ​rise in taxes. 
D) ​a technological advance. 
A) ​decrease in input prices. 
B) ​price decreases for a substitute in production. 
C) ​rise in taxes. 
D) ​a technological advance.

Question 2

If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right.

Accepted Answer

A) True 
 B)False

Question 3

If a product's price increases, quantity:

Accepted Answer

A) ​supplied increases. 
B) ​supplied decreases. 
C) ​supplied does not change, but supply does increase. 
D) ​demanded increases. 
A) ​supplied increases. 
B) ​supplied decreases. 
C) ​supplied does not change, but supply does increase. 
D) ​demanded increases.

Question 4

Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $2.50 to $2.25 per dozen:

Accepted Answer

A) ​the demand for cookies will fall. 
B) ​the demand for cookies will rise. 
C) ​a larger quantity of cookies will be demanded. 
D) ​a smaller quantity of cookies will be demanded. 
A) ​the demand for cookies will fall. 
B) ​the demand for cookies will rise. 
C) ​a larger quantity of cookies will be demanded. 
D) ​a smaller quantity of cookies will be demanded.

Question 5

Whenever the price of Good A increases, the demand for Good B increases as well. Good A and B appear to be:

Accepted Answer

A) ​complements. 
B) ​substitutes. 
C) ​inferior goods. 
D) ​normal goods. 
A) ​complements. 
B) ​substitutes. 
C) ​inferior goods. 
D) ​normal goods.

Question 6

Which of the following is not held constant when moving along a product's demand curve?

Accepted Answer

A) ​The price of the product itself. 
B) ​The expected price of the product in the near future. 
C) ​Income. 
D) ​Prices of complementary goods. 
E) ​Prices of substitutes. 
A) ​The price of the product itself. 
B) ​The expected price of the product in the near future. 
C) ​Income. 
D) ​Prices of complementary goods. 
E) ​Prices of substitutes.

Question 7

Ceteris paribus, if the price of lumber increases, we would expect an increase in the supply of lumber.

Accepted Answer

A) True 
 B)False

Question 8

A decrease in demand could be caused by

Accepted Answer

A) ​an increase in price. 
B) ​a decrease in the price of a complement. 
C) ​a technological advance. 
D) ​a decrease in the price of a substitute. 
A) ​an increase in price. 
B) ​a decrease in the price of a complement. 
C) ​a technological advance. 
D) ​a decrease in the price of a substitute.

Question 9

When quantity demanded decreases in response to a change in price:

Accepted Answer

A) ​the demand curve shifts to the right. 
B) ​the demand curve shifts to the left. 
C) ​there is a movement down along the demand curve. 
D) ​there is a movement up along the demand curve. 
A) ​the demand curve shifts to the right. 
B) ​the demand curve shifts to the left. 
C) ​there is a movement down along the demand curve. 
D) ​there is a movement up along the demand curve.

Question 10

Which of the following explains why the quantity of a good demanded decreases when its price increases?

Accepted Answer

A) ​Consumer preferences change when the price of a good changes. 
B) ​The nominal income of consumers falls when the price of a good increases. 
C) ​Substitutes become relatively cheaper when the price of a good increases. 
D) ​Complements become relatively cheaper when the price of a good increases. 
A) ​Consumer preferences change when the price of a good changes. 
B) ​The nominal income of consumers falls when the price of a good increases. 
C) ​Substitutes become relatively cheaper when the price of a good increases. 
D) ​Complements become relatively cheaper when the price of a good increases.

Question 11

Which of the following is the correct way to describe equilibrium in a market?

Accepted Answer

A) ​At equilibrium, demand equals supply. 
B) ​At equilibrium, quantity demanded equals quantity supplied. 
C) ​At equilibrium, market forces no longer apply. 
D) ​At equilibrium, the "fairest" price for output is achieved. 
A) ​At equilibrium, demand equals supply. 
B) ​At equilibrium, quantity demanded equals quantity supplied. 
C) ​At equilibrium, market forces no longer apply. 
D) ​At equilibrium, the "fairest" price for output is achieved.

Question 12

Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. Why?

Accepted Answer

Markets tend toward equilibrium because

Question 13

Explain how both sales and long lines prior to store openings are characteristic of markets in disequilibrium.

Accepted Answer

One function of sales is to reduce the p

Question 14

When a shortage exists in a market, sellers

Accepted Answer

A) ​raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
B) can raise price without worrying about the loss of sales, which increases quantity supplied and decreases quantity demanded until the shortage is eliminated. 
C) ​lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
D) ​lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. 
A) ​raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
B) can raise price without worrying about the loss of sales, which increases quantity supplied and decreases quantity demanded until the shortage is eliminated. 
C) ​lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
D) ​lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

Question 15

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause:

Accepted Answer

A) ​an increase in supply, or a rightward shift of the supply curve. 
B) ​a decrease in supply, or a leftward shift of the supply curve. 
C) ​an increase in quantity supplied, or a movement down the supply curve. 
D) ​a decrease in quantity supplied, or a movement up the supply curve. 
A) ​an increase in supply, or a rightward shift of the supply curve. 
B) ​a decrease in supply, or a leftward shift of the supply curve. 
C) ​an increase in quantity supplied, or a movement down the supply curve. 
D) ​a decrease in quantity supplied, or a movement up the supply curve.

Question 16

A demand curve shows the relationship between price and quantity demanded, "other things remaining constant." The other things that remain constant include all of the following except the:

Accepted Answer

A) ​price of the product. 
B) ​price of complementary products. 
C) ​price of substitute products. 
D) ​number of consumers in the demographic group purchasing the product. 
A) ​price of the product. 
B) ​price of complementary products. 
C) ​price of substitute products. 
D) ​number of consumers in the demographic group purchasing the product.

Question 17

To find the market demand curve for a product, we sum the individual demand curves

Accepted Answer

A) ​vertically. 
B) ​diagonally. 
C) ​horizontally. 
D) ​perpendicularly. 
A) ​vertically. 
B) ​diagonally. 
C) ​horizontally. 
D) ​perpendicularly.

Question 18

Define what a market is and provide three examples of where a market can be found.

Accepted Answer

A market is the process of buyers and se

Question 19

​Exhibit 4-3  
-Refer to Exhibit 4-3. The University Theater faces market demand curve D0 and has begun charging $10, up from $5, for tickets for Friday and Saturday night shows. As a result, students have:

Accepted Answer

A) ​increased their demand for tickets to Q4. 
B) ​increased their quantity of tickets demanded to Q4. 
C) ​decreased their demand for tickets to Q1. 
D) ​decreased their quantity of tickets demanded to Q1. 
A) ​increased their demand for tickets to Q4. 
B) ​increased their quantity of tickets demanded to Q4. 
C) ​decreased their demand for tickets to Q1. 
D) ​decreased their quantity of tickets demanded to Q1.

Question 20

Which of the following would lead to a decrease in the supply of watches?

Accepted Answer

A) ​An increase in the price of watches 
B) ​A decrease in the price of watches 
C) ​A decrease in the expected future price of watches 
D) ​None of the above 
A) ​An increase in the price of watches 
B) ​A decrease in the price of watches 
C) ​A decrease in the expected future price of watches 
D) ​None of the above

Exam 4: Demand, Supply, and Market Equilibrium

​Exhibit 4-6 -Refer to Exhibit 4-6. A supply shift from S0 to S1 can be best explained by:

If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right.

If a product's price increases, quantity:

Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $2.50 to $2.25 per dozen:

Whenever the price of Good A increases, the demand for Good B increases as well. Good A and B appear to be:

Which of the following is not held constant when moving along a product's demand curve?

Ceteris paribus, if the price of lumber increases, we would expect an increase in the supply of lumber.

A decrease in demand could be caused by

When quantity demanded decreases in response to a change in price:

Which of the following explains why the quantity of a good demanded decreases when its price increases?

Which of the following is the correct way to describe equilibrium in a market?

Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. Why?

Explain how both sales and long lines prior to store openings are characteristic of markets in disequilibrium.

When a shortage exists in a market, sellers

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause:

A demand curve shows the relationship between price and quantity demanded, "other things remaining constant." The other things that remain constant include all of the following except the:

To find the market demand curve for a product, we sum the individual demand curves

Define what a market is and provide three examples of where a market can be found.

​Exhibit 4-3 -Refer to Exhibit 4-3. The University Theater faces market demand curve D0 and has begun charging $10, up from $5, for tickets for Friday and Saturday night shows. As a result, students have:

Which of the following would lead to a decrease in the supply of watches?

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 4-6 -Refer to Exhibit 4-6. A supply shift from S₀ to S₁ can be best explained by:

Exhibit 4-3 -Refer to Exhibit 4-3. The University Theater faces market demand curve D₀ and has begun charging $10, up from $5, for tickets for Friday and Saturday night shows. As a result, students have: