Question 1

The law of supply states that, other things equal, an increase in

Accepted Answer

A)  price causes quantity supplied to increase. 
B)  price causes quantity supplied to decrease. 
C)  quantity supplied causes price to increase. 
D)  quantity supplied causes price to decrease. 
A)  price causes quantity supplied to increase. 
B)  price causes quantity supplied to decrease. 
C)  quantity supplied causes price to increase. 
D)  quantity supplied causes price to decrease.

Question 2

Figure 4-5  
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

Accepted Answer

A)  a freeze in Florida 
B)  a technological advance that allows oranges to ripen faster 
C)  a decrease in the price of apples 
D)  an announcement by the FDA that oranges prevent heart disease 
A)  a freeze in Florida 
B)  a technological advance that allows oranges to ripen faster 
C)  a decrease in the price of apples 
D)  an announcement by the FDA that oranges prevent heart disease

Question 3

If the demand for a good falls when income falls, then the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 4

When the price of a good or service changes,

Accepted Answer

A)  the supply curve shifts in the opposite direction. 
B)  the demand curve shifts in the opposite direction. 
C)  the demand curve shifts in the same direction. 
D)  there is a movement along a given demand curve. 
A)  the supply curve shifts in the opposite direction. 
B)  the demand curve shifts in the opposite direction. 
C)  the demand curve shifts in the same direction. 
D)  there is a movement along a given demand curve.

Question 5

Figure 4-20  
-Refer to Figure 4-20. In this market, equilibrium price and quantity, respectively, are

Accepted Answer

A)  $15 and 400 units. 
B)  $20 and 600 units. 
C)  $25 and 500 units. 
D)  $25 and 800 units. 
A)  $15 and 400 units. 
B)  $20 and 600 units. 
C)  $25 and 500 units. 
D)  $25 and 800 units.

Question 6

If a good is inferior, then an increase in income will result in a(n)

Accepted Answer

A)  increase in the demand for the good. 
B)  decrease in the demand for the good. 
C)  movement down and to the right along the demand curve for the good. 
D)  movement up and to the left along the demand curve for the good. 
A)  increase in the demand for the good. 
B)  decrease in the demand for the good. 
C)  movement down and to the right along the demand curve for the good. 
D)  movement up and to the left along the demand curve for the good.

Question 7

Figure 4-5  
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs?

Accepted Answer

A)  an increase in the price of DVDs 
B)  a decrease in the price of DVD players 
C)  a change in consumer preferences toward watching movies in movie theaters rather than at home 
D)  an expectation by buyers that their incomes will increase in the very near future 
A)  an increase in the price of DVDs 
B)  a decrease in the price of DVD players 
C)  a change in consumer preferences toward watching movies in movie theaters rather than at home 
D)  an expectation by buyers that their incomes will increase in the very near future

Question 8

A surplus exists in a market if

Accepted Answer

A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct. 
A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct.

Question 9

A market demand curve shows how the total quantity demanded of a good varies as

Accepted Answer

A)  income varies. 
B)  price varies. 
C)  price of the nearest substitute good varies. 
D)  supply varies. 
A)  income varies. 
B)  price varies. 
C)  price of the nearest substitute good varies. 
D)  supply varies.

Question 10

In a market economy, supply and demand are important because they

Accepted Answer

A)  are direct policy tools used by government agencies to regulate the economy. 
B)  illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct. 
A)  are direct policy tools used by government agencies to regulate the economy. 
B)  illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct.

Question 11

A likely example of substitute goods for most people would be

Accepted Answer

A)  tables and chairs. 
B)  bicycles and helmets. 
C)  apple juice and orange juice. 
D)  coffee and sugar. 
A)  tables and chairs. 
B)  bicycles and helmets. 
C)  apple juice and orange juice. 
D)  coffee and sugar.

Question 12

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

Accepted Answer

A) True 
 B)False

Question 13

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

Accepted Answer

A) True 
 B)False

Question 14

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Accepted Answer

A) True 
 B)False

Question 15

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded

Accepted Answer

A)  applies to most goods in the economy. 
B)  is represented by a downward-sloping demand curve. 
C)  is referred to as the law of demand. 
D)  All of the above are correct. 
A)  applies to most goods in the economy. 
B)  is represented by a downward-sloping demand curve. 
C)  is referred to as the law of demand. 
D)  All of the above are correct.

Question 16

Figure 4-22  
-Refer to Figure 4-22. At a price of $8, there is a

Accepted Answer

A)  surplus of 4 units. 
B)  surplus of 8 units. 
C)  shortage of 4 units. 
D)  shortage of 8 units. 
A)  surplus of 4 units. 
B)  surplus of 8 units. 
C)  shortage of 4 units. 
D)  shortage of 8 units.

Question 17

Figure 4-17  
-Refer to Figure 4-17. At a price of

Accepted Answer

A)  $2, there is a surplus of 6 units. 
B)  $5, there is a surplus of 25 units. 
C)  $5, there is a shortage of $25. 
D)  $7, there is a surplus of 4 units. 
A)  $2, there is a surplus of 6 units. 
B)  $5, there is a surplus of 25 units. 
C)  $5, there is a shortage of $25. 
D)  $7, there is a surplus of 4 units.

Question 18

Today's supply curve for gasoline could shift in response to a change in

Accepted Answer

A)  today's price of gasoline. 
B)  the expected future price of gasoline. 
C)  the number of buyers of gasoline. 
D)  All of the above are correct. 
A)  today's price of gasoline. 
B)  the expected future price of gasoline. 
C)  the number of buyers of gasoline. 
D)  All of the above are correct.

Question 19

Which of the following might cause the demand curve for an inferior good to shift to the left?

Accepted Answer

A)  a decrease in income 
B)  an increase in the price of a substitute 
C)  an increase in the price of a complement 
D)  None of the above is correct. 
A)  a decrease in income 
B)  an increase in the price of a substitute 
C)  an increase in the price of a complement 
D)  None of the above is correct.

Question 20

Table 4-12
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:
  
-Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $30, then there will be

Accepted Answer

A)  a shortage of 300 tickets. 
B)  a surplus of 300 tickets. 
C)  600 tickets sold. 
D)  600 tickets unsold. 
A)  a shortage of 300 tickets. 
B)  a surplus of 300 tickets. 
C)  600 tickets sold. 
D)  600 tickets unsold.

Exam 4: The Market Forces of Supply and Demand

The law of supply states that, other things equal, an increase in

Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

If the demand for a good falls when income falls, then the good is called an inferior good.

When the price of a good or service changes,

Figure 4-20 -Refer to Figure 4-20. In this market, equilibrium price and quantity, respectively, are

If a good is inferior, then an increase in income will result in a(n)

Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs?

A surplus exists in a market if

A market demand curve shows how the total quantity demanded of a good varies as

In a market economy, supply and demand are important because they

A likely example of substitute goods for most people would be

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded

Figure 4-22 -Refer to Figure 4-22. At a price of $8, there is a

Figure 4-17 -Refer to Figure 4-17. At a price of

Today's supply curve for gasoline could shift in response to a change in

Which of the following might cause the demand curve for an inferior good to shift to the left?

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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