Question 1

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

Accepted Answer

A)  Both the equilibrium price and quantity would increase. 
B)  Both the equilibrium price and quantity would decrease. 
C)  The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. 
D)  The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous. 
A)  Both the equilibrium price and quantity would increase. 
B)  Both the equilibrium price and quantity would decrease. 
C)  The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. 
D)  The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.

Question 3

A decrease in income will shift the demand curve for an inferior good to the right.

Accepted Answer

A) True 
 B)False

Question 4

Table 4-9
  
-Refer to Table 4-9. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 5

A newspaper's classified ads are an example of a market.

Accepted Answer

A) True 
 B)False

Question 6

The supply curve for a good is a line that relates

Accepted Answer

A)  profit and quantity supplied. 
B)  quantity supplied and quantity demanded. 
C)  price and quantity supplied. 
D)  price and profit. 
A)  profit and quantity supplied. 
B)  quantity supplied and quantity demanded. 
C)  price and quantity supplied. 
D)  price and profit.

Question 7

Economists normally

Accepted Answer

A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. 
A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Question 8

The highest form of competition is called

Accepted Answer

A)  arbitrage. 
B)  monopolistic competition. 
C)  equilibrium. 
D)  perfect competition. 
A)  arbitrage. 
B)  monopolistic competition. 
C)  equilibrium. 
D)  perfect competition.

Question 9

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?

Accepted Answer

A)  Students would purchase fewer than 750 cups per day. 
B)  Student would continue to purchase 750 cups per day. 
C)  Students would purchase more than 750 cups per day. 
D)  We do not have enough information to answer this question. 
A)  Students would purchase fewer than 750 cups per day. 
B)  Student would continue to purchase 750 cups per day. 
C)  Students would purchase more than 750 cups per day. 
D)  We do not have enough information to answer this question.

Question 10

Figure 4-15  
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Accepted Answer

A)  an increase in the price of sailboats 
B)  a decrease in the number of firms selling sailboats 
C)  a decrease in the price of fiberglass and sail cloth 
D)  a decrease in the price of America's Cup sailing t­shirts 
A)  an increase in the price of sailboats 
B)  a decrease in the number of firms selling sailboats 
C)  a decrease in the price of fiberglass and sail cloth 
D)  a decrease in the price of America's Cup sailing t­shirts

Question 11

A leftward shift of a supply curve is called an)

Accepted Answer

A)  increase in supply. 
B)  decrease in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  increase in supply. 
B)  decrease in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 12

Figure 4-24
The diagram below pertains to the demand for turkey in the United States.  
-Refer to Figure 4-24. All else equal, sellers expecting the price of turkey to rise in the future would cause a current move from

Accepted Answer

A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x. 
A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x.

Question 13

In a competitive market, the quantity of a product produced and the price of the product are determined by

Accepted Answer

A)  a single buyer. 
B)  a single seller. 
C)  one buyer and one seller working together. 
D)  all buyers and all sellers. 
A)  a single buyer. 
B)  a single seller. 
C)  one buyer and one seller working together. 
D)  all buyers and all sellers.

Question 14

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  could rise, fall, or remain unchanged. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  could rise, fall, or remain unchanged.

Question 15

A decrease in quantity supplied

Accepted Answer

A)  results in a movement downward and to the left along a fixed supply curve. 
B)  results in a movement upward and to the right along a fixed supply curve. 
C)  shifts the supply curve to the left. 
D)  shifts the supply curve to the right. 
A)  results in a movement downward and to the left along a fixed supply curve. 
B)  results in a movement upward and to the right along a fixed supply curve. 
C)  shifts the supply curve to the left. 
D)  shifts the supply curve to the right.

Question 16

Figure 4-21  
-Refer to Figure 4-21. At a price of $4, there is a

Accepted Answer

A)  surplus of 1 unit. 
B)  surplus of 3 units. 
C)  shortage of 1 unit. 
D)  shortage of 3 units. 
A)  surplus of 1 unit. 
B)  surplus of 3 units. 
C)  shortage of 1 unit. 
D)  shortage of 3 units.

Question 17

If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

Accepted Answer

A) True 
 B)False

Question 18

What is the difference between a "change in supply" and a "change in quantity supplied?" Graph your answer.
a. For each of the following changes, determine whether there will be a change in quantity supplied or a change in supply.
i. a change in input costs
ii. a change in producer expectations
iii. a change in price
iv. a change in technology
v. a change in the number of sellers

Accepted Answer

a. A change in supply refers to a shift

Question 19

Figure 4-13  
-Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is

Accepted Answer

A)  4 units. 
B)  8 units. 
C)  12 units. 
D)  16 units. 
A)  4 units. 
B)  8 units. 
C)  12 units. 
D)  16 units.

Question 20

An example of a perfectly competitive market would be the market for

Accepted Answer

A)  tennis racquets. 
B)  pizza. 
C)  garbage collection. 
D)  wheat. 
A)  tennis racquets. 
B)  pizza. 
C)  garbage collection. 
D)  wheat.

Exam 4: The Market Forces of Supply and Demand

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

A decrease in income will shift the demand curve for an inferior good to the right.

Table 4-9 -Refer to Table 4-9. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

A newspaper's classified ads are an example of a market.

The supply curve for a good is a line that relates

Economists normally

The highest form of competition is called

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

A leftward shift of a supply curve is called an)

Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, sellers expecting the price of turkey to rise in the future would cause a current move from

In a competitive market, the quantity of a product produced and the price of the product are determined by

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

A decrease in quantity supplied

Figure 4-21 -Refer to Figure 4-21. At a price of $4, there is a

If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

Figure 4-13 -Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is

An example of a perfectly competitive market would be the market for

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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