Question 1

In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of

Accepted Answer

A)  government to allocate scarce resources. 
B)  supply and demand to allocate scarce resources. 
C)  credit cards to allocate scarce resources. 
D)  nature to allocate scarce resources. 
A)  government to allocate scarce resources. 
B)  supply and demand to allocate scarce resources. 
C)  credit cards to allocate scarce resources. 
D)  nature to allocate scarce resources.

Question 2

Figure 4-18  
-Refer to Figure 4-18. At a price of $20, there would be an)

Accepted Answer

A)  shortage. The law of supply and demand predicts that the price will fall from $20 to a lower price. 
B)  surplus. The law of supply and demand predicts that the price will rise from $20 to a higher price. 
C)  excess demand. The law of supply and demand predicts that the price will rise from $20 to a higher price. 
D)  excess supply. The law of supply and demand predicts that the price will fall from $20 to a lower price. 
A)  shortage. The law of supply and demand predicts that the price will fall from $20 to a lower price. 
B)  surplus. The law of supply and demand predicts that the price will rise from $20 to a higher price. 
C)  excess demand. The law of supply and demand predicts that the price will rise from $20 to a higher price. 
D)  excess supply. The law of supply and demand predicts that the price will fall from $20 to a lower price.

Question 3

Figure 4-27
Panel a) Panel b)
     Panel c) Panel d)
    
-Refer to Figure 4-27. Panel c) 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 4

If a surplus exists in a market, then we know that the actual price is

Accepted Answer

A)  above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B)  above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C)  below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D)  below the equilibrium price, and quantity supplied is greater than quantity demanded. 
A)  above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B)  above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C)  below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D)  below the equilibrium price, and quantity supplied is greater than quantity demanded.

Question 5

A competitive market is a market in which

Accepted Answer

A)  an auctioneer helps set prices and arrange sales. 
B)  there are only a few sellers. 
C)  the forces of supply and demand do not apply. 
D)  no individual buyer or seller has any significant impact on the market price. 
A)  an auctioneer helps set prices and arrange sales. 
B)  there are only a few sellers. 
C)  the forces of supply and demand do not apply. 
D)  no individual buyer or seller has any significant impact on the market price.

Question 6

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 only members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

Accepted Answer

A)  $10 
B)  $15 
C)  $20 
D)  $25 
A)  $10 
B)  $15 
C)  $20 
D)  $25

Question 7

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

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. Suppose the price is currently equal to 18 in this market. Is there a shortage or surplus in this market, and how large is the shortage/surplus?

Accepted Answer

There is a

Question 9

Figure 4-1  
-Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)

Accepted Answer

A)  increase in price. 
B)  decrease in price. 
C)  decrease in the price of a substitute good. 
D)  increase in income. 
A)  increase in price. 
B)  decrease in price. 
C)  decrease in the price of a substitute good. 
D)  increase in income.

Question 10

Sellers respond to a shortage by cutting their prices.

Accepted Answer

A) True 
 B)False

Question 11

A decrease in quantity demanded

Accepted Answer

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

Question 12

The actions of buyers and sellers naturally move markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 13

A movement along the demand curve might be caused by a change in

Accepted Answer

A)  income. 
B)  the prices of substitutes or complements. 
C)  expectations about future prices. 
D)  the price of the good or service that is being demanded. 
A)  income. 
B)  the prices of substitutes or complements. 
C)  expectations about future prices. 
D)  the price of the good or service that is being demanded.

Question 14

If the price of a good is low,

Accepted Answer

A)  firms would increase profit by increasing output. 
B)  the quantity supplied of the good could be zero. 
C)  the supply curve for the good will shift to the left. 
D)  firms can and should raise the price of the product. 
A)  firms would increase profit by increasing output. 
B)  the quantity supplied of the good could be zero. 
C)  the supply curve for the good will shift to the left. 
D)  firms can and should raise the price of the product.

Question 15

Table 4-4
  
-Refer to Table 4-4. Suppose the market consists of Adam and Barb only. If the price rises by $2, the quantity demanded in the market falls by

Accepted Answer

A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  10 units. 
A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  10 units.

Question 16

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Accepted Answer

A)  supply curve for Ashley's bread will increase. 
B)  supply curve for Ashley's bread will decrease. 
C)  demand curve for Ashley's bread will increase. 
D)  demand curve for Ashley's bread will decrease. 
A)  supply curve for Ashley's bread will increase. 
B)  supply curve for Ashley's bread will decrease. 
C)  demand curve for Ashley's bread will increase. 
D)  demand curve for Ashley's bread will decrease.

Question 17

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

Accepted Answer

A)  shortage of 400 units. 
B)  surplus of 200 units. 
C)  surplus of 400 units. 
D)  surplus of 600 units. 
A)  shortage of 400 units. 
B)  surplus of 200 units. 
C)  surplus of 400 units. 
D)  surplus of 600 units.

Question 18

In a competitive market, the price of a product

Accepted Answer

A)  is determined by buyers, and the quantity of the product produced is determined by sellers. 
B)  is determined by sellers, and the quantity of the product produced is determined by buyers. 
C)  and the quantity of the product produced are both determined by sellers. 
D)  None of the above is correct. 
A)  is determined by buyers, and the quantity of the product produced is determined by sellers. 
B)  is determined by sellers, and the quantity of the product produced is determined by buyers. 
C)  and the quantity of the product produced are both determined by sellers. 
D)  None of the above is correct.

Question 19

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls.

Accepted Answer

A) True 
 B)False

Question 20

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of

Figure 4-18 -Refer to Figure 4-18. At a price of $20, there would be an)

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

If a surplus exists in a market, then we know that the actual price is

A competitive market is a market in which

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)

Sellers respond to a shortage by cutting their prices.

A decrease in quantity demanded

The actions of buyers and sellers naturally move markets toward equilibrium.

A movement along the demand curve might be caused by a change in

If the price of a good is low,

Table 4-4 -Refer to Table 4-4. Suppose the market consists of Adam and Barb only. If the price rises by $2, the quantity demanded in the market falls by

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

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

In a competitive market, the price of a product

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls.

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

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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