Question 1

Most markets in the economy are

Accepted Answer

A)  markets in which sellers, rather than buyers, control the price of the product. 
B)  markets in which buyers, rather than sellers, control the price of the product. 
C)  perfectly competitive. 
D)  highly competitive. 
A)  markets in which sellers, rather than buyers, control the price of the product. 
B)  markets in which buyers, rather than sellers, control the price of the product. 
C)  perfectly competitive. 
D)  highly competitive.

Question 2

Buyers and sellers who have no influence on market price are referred to as

Accepted Answer

A)  market pawns. 
B)  monopolists. 
C)  price takers. 
D)  price setters. 
A)  market pawns. 
B)  monopolists. 
C)  price takers. 
D)  price setters.

Question 3

Which of the following demonstrates the law of supply?

Accepted Answer

A)  When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B)  When car production technology improved, car producers increased their supply of cars. 
C)  When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D)  When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup. 
A)  When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B)  When car production technology improved, car producers increased their supply of cars. 
C)  When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D)  When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup.

Question 4

Figure 4-31
Consider the market for 2-packs of light bulbs below.  
-Refer to Figure 4-31. Suppose there is an improvement in technology in this market and the price of lamps, a complementary good, increases. What changes do you predict in the equilibrium price and quantity?

Accepted Answer

Equilibrium price de

Question 5

Table 4-6
  
-Refer to Table 4-6. Which supply schedules obey the law of supply?

Accepted Answer

A)  Firm A's only 
B)  Firm B's, Firm C's, and Firm D's only 
C)  Firm A's and Firm C's only 
D)  Firm B's and Firm D's only 
A)  Firm A's only 
B)  Firm B's, Firm C's, and Firm D's only 
C)  Firm A's and Firm C's only 
D)  Firm B's and Firm D's only

Question 6

A decrease in supply is represented by a

Accepted Answer

A)  movement downward and to the left along a supply curve. 
B)  movement upward and to the right along a supply curve. 
C)  rightward shift of a supply curve. 
D)  leftward shift of a supply curve. 
A)  movement downward and to the left along a supply curve. 
B)  movement upward and to the right along a supply curve. 
C)  rightward shift of a supply curve. 
D)  leftward shift of a supply curve.

Question 7

Table 4-8
  
-Refer to Table 4-8. Suppose Firm X and Firm Y are the only two sellers in the market. If the market price increases from $12 to $15, quantity supplied will

Accepted Answer

A)  decrease by 6 units. 
B)  decrease by 12 units. 
C)  increase by 6 units. 
D)  increase by 12 units. 
A)  decrease by 6 units. 
B)  decrease by 12 units. 
C)  increase by 6 units. 
D)  increase by 12 units.

Question 8

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

Accepted Answer

A)  a decrease in the price of beer 
B)  an expectation by firms that the price of beer will increase in the very near future 
C)  a decrease in the price of hops 
D)  an improvement in technology that allows firms to use less labor in the production of beer 
A)  a decrease in the price of beer 
B)  an expectation by firms that the price of beer will increase in the very near future 
C)  a decrease in the price of hops 
D)  an improvement in technology that allows firms to use less labor in the production of beer

Question 9

Table 4-7
  
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then the market quantity supplied at a price of $4 is

Accepted Answer

A)  4 gallons. 
B)  5 gallons. 
C)  20 gallons. 
D)  80 gallons. 
A)  4 gallons. 
B)  5 gallons. 
C)  20 gallons. 
D)  80 gallons.

Question 10

The demand curve for coffee shifts

Accepted Answer

A)  only when income changes. 
B)  when a determinant of the demand for coffee other than the price of coffee changes. 
C)  when the price of coffee changes. 
D)  Both b and c are correct. 
A)  only when income changes. 
B)  when a determinant of the demand for coffee other than the price of coffee changes. 
C)  when the price of coffee changes. 
D)  Both b and c are correct.

Question 11

The two words most often used by economists are

Accepted Answer

A)  prices and quantities. 
B)  resources and allocation. 
C)  supply and demand. 
D)  efficiency and equity. 
A)  prices and quantities. 
B)  resources and allocation. 
C)  supply and demand. 
D)  efficiency and equity.

Question 12

A decrease in the number of sellers in the market causes

Accepted Answer

A)  the supply curve to shift to the left. 
B)  the supply curve to shift to the right. 
C)  a movement up and to the right along a stationary supply curve. 
D)  a movement downward and to the left along a stationary supply curve. 
A)  the supply curve to shift to the left. 
B)  the supply curve to shift to the right. 
C)  a movement up and to the right along a stationary supply curve. 
D)  a movement downward and to the left along a stationary supply curve.

Question 13

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation
         , where   is the quantity demanded and is the price. Also, suppose the supply schedule can be represented by the equation , where is the quantity supplied.
-Refer to Scenario 4-1. What is the equilibrium price in this market?

Accepted Answer

The answer of Scenario 4-1
Suppose the demand schedule in a...

Question 14

Does a change in the price in a market result in a shift of the demand curve or in a movement along the demand curve?

Accepted Answer

A movement

Question 15

An increase in the price of blueberries would lead to an)

Accepted Answer

A)  increased supply of blueberries. 
B)  a movement up and to the right along the supply curve for blueberries. 
C)  a movement down and to the left along the supply curve for blueberries. 
D)  Both a and b are correct. 
A)  increased supply of blueberries. 
B)  a movement up and to the right along the supply curve for blueberries. 
C)  a movement down and to the left along the supply curve for blueberries. 
D)  Both a and b are correct.

Question 16

If the demand for a good falls when income falls, then the good is called a(n)

Accepted Answer

A)  normal good. 
B)  regular good. 
C)  luxury good. 
D)  inferior good. 
A)  normal good. 
B)  regular good. 
C)  luxury good. 
D)  inferior good.

Question 17

An decrease in the price of oranges would lead to an)

Accepted Answer

A)  increased supply of oranges. 
B)  increase in the prices of inputs used in orange production. 
C)  a movement down and to the left along the supply curve for oranges. 
D)  a movement up and to the right along the supply curve for oranges. 
A)  increased supply of oranges. 
B)  increase in the prices of inputs used in orange production. 
C)  a movement down and to the left along the supply curve for oranges. 
D)  a movement up and to the right along the supply curve for oranges.

Question 18

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

Accepted Answer

A)  the price of tennis balls increases. 
B)  the price of tennis balls decreases. 
C)  the price of tennis balls does not change. 
D)  there is no longer a market for tennis balls. 
A)  the price of tennis balls increases. 
B)  the price of tennis balls decreases. 
C)  the price of tennis balls does not change. 
D)  there is no longer a market for tennis balls.

Question 19

If corn is an input into the production of ethanol, will a decrease in the price of corn increase the supply of ethanol or decrease the supply of ethanol?

Accepted Answer

The supply

Question 20

Figure 4-16  
-Refer to Figure 4-16. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by an)

Accepted Answer

A)  increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live. 
B)  newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months. 
C)  decrease in the price of lumber. 
D)  All of the above are correct. 
A)  increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live. 
B)  newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months. 
C)  decrease in the price of lumber. 
D)  All of the above are correct.

Exam 4: The Market Forces of Supply and Demand

Most markets in the economy are

Buyers and sellers who have no influence on market price are referred to as

Which of the following demonstrates the law of supply?

Figure 4-31 Consider the market for 2-packs of light bulbs below. -Refer to Figure 4-31. Suppose there is an improvement in technology in this market and the price of lamps, a complementary good, increases. What changes do you predict in the equilibrium price and quantity?

Table 4-6 -Refer to Table 4-6. Which supply schedules obey the law of supply?

A decrease in supply is represented by a

Table 4-8 -Refer to Table 4-8. Suppose Firm X and Firm Y are the only two sellers in the market. If the market price increases from $12 to $15, quantity supplied will

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

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then the market quantity supplied at a price of $4 is

The demand curve for coffee shifts

The two words most often used by economists are

A decrease in the number of sellers in the market causes

Does a change in the price in a market result in a shift of the demand curve or in a movement along the demand curve?

An increase in the price of blueberries would lead to an)

If the demand for a good falls when income falls, then the good is called a(n)

An decrease in the price of oranges would lead to an)

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

If corn is an input into the production of ethanol, will a decrease in the price of corn increase the supply of ethanol or decrease the supply of ethanol?

Figure 4-16 -Refer to Figure 4-16. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by an)

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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