Question 1

If suppliers expect the price of their product to fall in the future, then they will

Accepted Answer

A)  decrease supply now. 
B)  increase supply now. 
C)  decrease supply in the future but not now. 
D)  increase supply in the future but not now. 
A)  decrease supply now. 
B)  increase supply now. 
C)  decrease supply in the future but not now. 
D)  increase supply in the future but not now.

Question 2

Sellers respond to a surplus by cutting their prices.

Accepted Answer

A) True 
 B)False

Question 3

Table 4-11
  
-Refer to Table 4-11. If the price were $4, a

Accepted Answer

A)  surplus of 15 units would exist, and price would tend to fall. 
B)  shortage of 25 units would exist, and price would tend to rise. 
C)  surplus of 25 units would exist, and price would tend to fall. 
D)  shortage of 40 units would exist, and price would tend to rise. 
A)  surplus of 15 units would exist, and price would tend to fall. 
B)  shortage of 25 units would exist, and price would tend to rise. 
C)  surplus of 25 units would exist, and price would tend to fall. 
D)  shortage of 40 units would exist, and price would tend to rise.

Question 4

A rightward 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 5

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A)  will increase but not until the end of the year. 
B)  increases today. 
C)  decreases as you look for a substitute good. 
D)  shifts left today. 
A)  will increase but not until the end of the year. 
B)  increases today. 
C)  decreases as you look for a substitute good. 
D)  shifts left today.

Question 6

Figure 4-18  
-Refer to Figure 4-18. At a price of $35, there would be

Accepted Answer

A)  a shortage, and the price would tend to rise from $35 to a higher price. 
B)  a surplus, and the price would tend to rise from $35 to a higher price. 
C)  excess demand, and the price would tend to fall from $35 to a lower price. 
D)  excess supply, and the price would tend to fall from $35 to a lower price. 
A)  a shortage, and the price would tend to rise from $35 to a higher price. 
B)  a surplus, and the price would tend to rise from $35 to a higher price. 
C)  excess demand, and the price would tend to fall from $35 to a lower price. 
D)  excess supply, and the price would tend to fall from $35 to a lower price.

Question 7

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

Accepted Answer

A)  Consumers have experienced an increase in income, and beef-production technology has improved. 
B)  The price of chicken has risen, and the price of steak sauce has fallen. 
C)  New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. 
D)  The demand curve for beef must be positively sloped. 
A)  Consumers have experienced an increase in income, and beef-production technology has improved. 
B)  The price of chicken has risen, and the price of steak sauce has fallen. 
C)  New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. 
D)  The demand curve for beef must be positively sloped.

Question 8

Another term for equilibrium price is

Accepted Answer

A)  dynamic price. 
B)  market-clearing price. 
C)  quantity-defining price. 
D)  balance price. 
A)  dynamic price. 
B)  market-clearing price. 
C)  quantity-defining price. 
D)  balance price.

Question 9

In a market economy, supply and demand determine

Accepted Answer

A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold. 
A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold.

Question 10

Figure 4-24
The diagram below pertains to the demand for turkey in the United States.  
-Refer to Figure 4-24. All else equal, a large number of people becoming vegetarians would cause a 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 11

Figure 4-18  
-Refer to Figure 4-18. At the equilibrium price,

Accepted Answer

A)  200 units would be supplied and demanded. 
B)  400 units would be supplied and demanded. 
C)  600 units would be supplied and demanded. 
D)  600 units would be supplied, but only 200 would be demanded. 
A)  200 units would be supplied and demanded. 
B)  400 units would be supplied and demanded. 
C)  600 units would be supplied and demanded. 
D)  600 units would be supplied, but only 200 would be demanded.

Question 12

A group of buyers and sellers of a particular good or service is called an)

Accepted Answer

A)  coalition. 
B)  economy. 
C)  market. 
D)  competition. 
A)  coalition. 
B)  economy. 
C)  market. 
D)  competition.

Question 13

If the demand for a product increases, then we would expect equilibrium price

Accepted Answer

A)  to increase and equilibrium quantity to decrease. 
B)  to decrease and equilibrium quantity to increase. 
C)  and equilibrium quantity both to increase. 
D)  and equilibrium quantity both to decrease. 
A)  to increase and equilibrium quantity to decrease. 
B)  to decrease and equilibrium quantity to increase. 
C)  and equilibrium quantity both to increase. 
D)  and equilibrium quantity both to decrease.

Question 14

Which of the following would increase in response to a increase 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)  None of the above is 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)  None of the above is correct.

Question 15

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)  Sellers set the price of the product. 
B)  There are many sellers. 
C)  Buyers must accept the price the market determines. 
D)  All of the above are characteristics of a perfectly competitive market. 
A)  Sellers set the price of the product. 
B)  There are many sellers. 
C)  Buyers must accept the price the market determines. 
D)  All of the above are characteristics of a perfectly competitive market.

Question 16

A decrease in the price of a good would

Accepted Answer

A)  increase the supply of the good. 
B)  increase the quantity demanded of the good. 
C)  give producers an incentive to produce more to keep profits from falling. 
D)  shift the supply curve for the good to the left. 
A)  increase the supply of the good. 
B)  increase the quantity demanded of the good. 
C)  give producers an incentive to produce more to keep profits from falling. 
D)  shift the supply curve for the good to the left.

Question 17

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Accepted Answer

A) True 
 B)False

Question 18

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

Accepted Answer

A)  crystal to be unaffected. 
B)  crystal to decrease. 
C)  crystal to increase. 
D)  lead to increase. 
A)  crystal to be unaffected. 
B)  crystal to decrease. 
C)  crystal to increase. 
D)  lead to increase.

Question 19

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)

Accepted Answer

A)  substitute good. 
B)  normal good. 
C)  inferior good. 
D)  complementary good. 
A)  substitute good. 
B)  normal good. 
C)  inferior good. 
D)  complementary good.

Question 20

Figure 4-25
The graph below pertains to the supply of paper to colleges and universities.  
-Refer to Figure 4-25. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from

Accepted Answer

A)  x to y. 
B)  y to x. 
C)  SA to SB. 
D)  SB to SA. 
A)  x to y. 
B)  y to x. 
C)  SA to SB. 
D)  SB to SA.

Exam 4: The Market Forces of Supply and Demand

If suppliers expect the price of their product to fall in the future, then they will

Sellers respond to a surplus by cutting their prices.

Table 4-11 -Refer to Table 4-11. If the price were $4, a

A rightward shift of a supply curve is called an)

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Figure 4-18 -Refer to Figure 4-18. At a price of $35, there would be

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

Another term for equilibrium price is

In a market economy, supply and demand determine

Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, a large number of people becoming vegetarians would cause a move from

Figure 4-18 -Refer to Figure 4-18. At the equilibrium price,

A group of buyers and sellers of a particular good or service is called an)

If the demand for a product increases, then we would expect equilibrium price

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

Which of the following is not a characteristic of a perfectly competitive market?

A decrease in the price of a good would

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)

Figure 4-25 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-25. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from

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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