Question 1

Which of the following is not an example of a market?

Accepted Answer

A)  A small town has only one seller of electricity. 
B)  In the United States, a sick person cannot legally purchase a kidney. 
C)  In Florida, there are many buyers and sellers of key lime pie. 
D)  The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities. 
A)  A small town has only one seller of electricity. 
B)  In the United States, a sick person cannot legally purchase a kidney. 
C)  In Florida, there are many buyers and sellers of key lime pie. 
D)  The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities.

Question 2

Local cable television companies frequently are monopolists.

Accepted Answer

A) True 
 B)False

Question 3

Holding all other things constant, a higher price for ski lift tickets would

Accepted Answer

A)  increase the number of skiers. 
B)  increase the price of skis. 
C)  decrease the number of skis sold. 
D)  decrease the demand for other winter recreational activities. 
A)  increase the number of skiers. 
B)  increase the price of skis. 
C)  decrease the number of skis sold. 
D)  decrease the demand for other winter recreational activities.

Question 4

When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

Accepted Answer

A) True 
 B)False

Question 5

An increase in the price of ink will shift the supply curve for pens to the left.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would increase in response to a decrease in the price of ironing boards?

Accepted Answer

A)  the quantity of irons demanded at each possible price of irons 
B)  the equilibrium quantity of irons 
C)  the equilibrium price of irons 
D)  All of the above are correct. 
A)  the quantity of irons demanded at each possible price of irons 
B)  the equilibrium quantity of irons 
C)  the equilibrium price of irons 
D)  All of the above are correct.

Question 7

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Accepted Answer

A)  The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
B)  The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
C)  The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
D)  The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
A)  The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
B)  The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
C)  The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
D)  The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

Question 8

When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.

Accepted Answer

A) True 
 B)False

Question 9

Pizza is a normal good if the demand

Accepted Answer

A)  for pizza rises when income rises. 
B)  for pizza rises when the price of pizza falls. 
C)  curve for pizza slopes upward. 
D)  curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes. 
A)  for pizza rises when income rises. 
B)  for pizza rises when the price of pizza falls. 
C)  curve for pizza slopes upward. 
D)  curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

Question 10

Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Accepted Answer

The answer of Refer to Figure 4-28. Using the points...

Question 11

Individual demand curves are summed horizontally to obtain the market demand curve.

Accepted Answer

A) True 
 B)False

Question 12

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Accepted Answer

A)  Sellers would not be able to produce and sell as much as before at each relevant price. 
B)  The supply would decrease. 
C)  Buyers would not be willing to buy as much as before at each relevant price. 
D)  The equilibrium price would rise. 
A)  Sellers would not be able to produce and sell as much as before at each relevant price. 
B)  The supply would decrease. 
C)  Buyers would not be willing to buy as much as before at each relevant price. 
D)  The equilibrium price would rise.

Question 13

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to

Accepted Answer

A)  shift rightward. 
B)  shift leftward. 
C)  become flatter. 
D)  remain unchanged. 
A)  shift rightward. 
B)  shift leftward. 
C)  become flatter. 
D)  remain unchanged.

Question 14

When quantity demanded increases at every possible price, the demand curve has

Accepted Answer

A)  shifted to the left. 
B)  shifted to the right. 
C)  not shifted; rather, we have moved along the demand curve to a new point on the same curve. 
D)  not shifted; rather, the demand curve has become steeper. 
A)  shifted to the left. 
B)  shifted to the right. 
C)  not shifted; rather, we have moved along the demand curve to a new point on the same curve. 
D)  not shifted; rather, the demand curve has become steeper.

Question 15

A likely example of substitute goods for most people would be

Accepted Answer

A)  peanut butter and jelly. 
B)  tennis balls and tennis rackets. 
C)  televisions and subscriptions to cable television services. 
D)  pencils and pens. 
A)  peanut butter and jelly. 
B)  tennis balls and tennis rackets. 
C)  televisions and subscriptions to cable television services. 
D)  pencils and pens.

Question 16

Figure 4-27
Panel a) Panel b)
     Panel c) Panel d)
    
-Refer to Figure 4-27. Panel a) shows which of the following?

Accepted Answer

A)  an increase in demand and an increase in quantity supplied 
B)  an increase in demand and an increase in supply 
C)  an increase in quantity demanded and an increase in quantity supplied 
D)  an increase in quantity demanded and an increase in supply 
A)  an increase in demand and an increase in quantity supplied 
B)  an increase in demand and an increase in supply 
C)  an increase in quantity demanded and an increase in quantity supplied 
D)  an increase in quantity demanded and an increase in supply

Question 17

Figure 4-2  
-Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

Accepted Answer

A)  0 units. 
B)  2 units. 
C)  4 units. 
D)  6 units. 
A)  0 units. 
B)  2 units. 
C)  4 units. 
D)  6 units.

Question 18

There is no shortage of scarce resources in a market economy because

Accepted Answer

A)  the government makes shortages illegal. 
B)  resources are abundant in market economies. 
C)  prices adjust to eliminate shortages. 
D)  quantity supplied is always greater than quantity demanded in market economies. 
A)  the government makes shortages illegal. 
B)  resources are abundant in market economies. 
C)  prices adjust to eliminate shortages. 
D)  quantity supplied is always greater than quantity demanded in market economies.

Question 19

Which of the following is an example of a market?

Accepted Answer

A)  a gas station 
B)  a garage sale 
C)  a barber shop 
D)  All of the above are examples of markets. 
A)  a gas station 
B)  a garage sale 
C)  a barber shop 
D)  All of the above are examples of markets.

Question 20

Table 4-8
  
-Refer to Table 4-8. If these are the only three sellers in the market, then the market quantity supplied at a price of $6 is

Accepted Answer

A)  6 units. 
B)  12 units. 
C)  18 units. 
D)  24 units. 
A)  6 units. 
B)  12 units. 
C)  18 units. 
D)  24 units.

Exam 4: The Market Forces of Supply and Demand

Which of the following is not an example of a market?

Local cable television companies frequently are monopolists.

Holding all other things constant, a higher price for ski lift tickets would

When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

An increase in the price of ink will shift the supply curve for pens to the left.

Which of the following would increase in response to a decrease in the price of ironing boards?

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.

Pizza is a normal good if the demand

Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Individual demand curves are summed horizontally to obtain the market demand curve.

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to

When quantity demanded increases at every possible price, the demand curve has

A likely example of substitute goods for most people would be

Figure 4-27 Panel a) Panel b) Panel c) Panel d) -Refer to Figure 4-27. Panel a) shows which of the following?

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

There is no shortage of scarce resources in a market economy because

Which of the following is an example of a market?

Table 4-8 -Refer to Table 4-8. If these are the only three sellers in the market, then the market quantity supplied at a price of $6 is

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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