Question 1

The demand curve for a good is a line that relates

Accepted Answer

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

Question 2

An increase 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 3

If the price of steel, an input into the production of automobiles, rises, and at the same time the price of gasoline rises, what will happen to the equilibrium price and quantity of automobiles?

Accepted Answer

The equilibrium quan

Question 4

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 supply curve shifts to   . What is the new equilibrium price and quantity in this market?

Accepted Answer

The new eq

Question 5

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

Accepted Answer

A)  supply curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
B)  supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
C)  demand curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
D)  demand curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
A)  supply curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
B)  supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. 
C)  demand curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. 
D)  demand curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

Question 6

Figure 4-27
Panel a) Panel b)
     Panel c) Panel d)
    
-Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?

Accepted Answer

A)  Panel a) 
B)  Panel b) 
C)  Panel c) 
D)  Panel d) 
A)  Panel a) 
B)  Panel b) 
C)  Panel c) 
D)  Panel d)

Question 7

Which of the following would cause a movement along the supply curve for cupcakes?

Accepted Answer

A)  an improvement in technology for commercial mixers 
B)  a decrease in the price of cupcakes 
C)  an increase in the price of cake flour 
D)  All of the above are correct. 
A)  an improvement in technology for commercial mixers 
B)  a decrease in the price of cupcakes 
C)  an increase in the price of cake flour 
D)  All of the above are correct.

Question 8

Table 4-1
  
-Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)  2 units. 
B)  3 units. 
C)  4 units. 
D)  5 units. 
A)  2 units. 
B)  3 units. 
C)  4 units. 
D)  5 units.

Question 9

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

Accepted Answer

A)  a decrease in demand and a decrease in quantity supplied 
B)  a decrease in demand and a decrease in supply 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply 
A)  a decrease in demand and a decrease in quantity supplied 
B)  a decrease in demand and a decrease in supply 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply

Question 10

Table 4-5
The table below shows the quantities demanded of cases of Mt. Dew per month by four families at various prices.
  
-Refer to Table 4-5. Suppose the four families listed in the table are the only demanders of Mt. Dew in the market. If the price of a case of Mt. Dew decreases by $1, the

Accepted Answer

A)  market quantity demanded decreases by 10. 
B)  market quantity demanded increases by 10. 
C)  Adams family increases its quantity demanded by more than the Smith family. 
D)  Jones family increases its quantity demanded by more than the Williams family. 
A)  market quantity demanded decreases by 10. 
B)  market quantity demanded increases by 10. 
C)  Adams family increases its quantity demanded by more than the Smith family. 
D)  Jones family increases its quantity demanded by more than the Williams family.

Question 11

Which of the following demonstrates the law of supply?

Accepted Answer

A)  When leather became more expensive, belt producers decreased their supply of 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 increased their quantity supplied of ketchup. 
A)  When leather became more expensive, belt producers decreased their supply of 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 increased their quantity supplied of ketchup.

Question 12

A leftward shift of a demand curve is called an)

Accepted Answer

A)  increase in demand. 
B)  decrease in demand. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded. 
A)  increase in demand. 
B)  decrease in demand. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded.

Question 13

If the producers of canned green beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current production into storage and supply less in the market today.

Accepted Answer

A) True 
 B)False

Question 14

When a surplus exists in a market, sellers

Accepted Answer

A)  raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
B)  raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
C)  lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
D)  lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
A)  raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
B)  raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. 
C)  lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. 
D)  lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.

Question 15

Which of the following would cause price to increase?

Accepted Answer

A)  an increase in supply 
B)  a decrease in demand 
C)  a surplus of the good 
D)  a shortage of the good 
A)  an increase in supply 
B)  a decrease in demand 
C)  a surplus of the good 
D)  a shortage of the good

Question 16

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

Accepted Answer

A)  play a critical role in the allocation of the economy's scarce resources. 
B)  determine how much of each good gets produced. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct. 
A)  play a critical role in the allocation of the economy's scarce resources. 
B)  determine how much of each good gets produced. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct.

Question 17

The signals that guide the allocation of resources in a market economy are

Accepted Answer

A)  surpluses and shortages. 
B)  quantities. 
C)  government policies. 
D)  prices. 
A)  surpluses and shortages. 
B)  quantities. 
C)  government policies. 
D)  prices.

Question 18

Which of the following events must cause equilibrium price to fall?

Accepted Answer

A)  demand increases and supply decreases 
B)  demand and supply both decrease 
C)  demand decreases and supply increases 
D)  demand and supply both increase 
A)  demand increases and supply decreases 
B)  demand and supply both decrease 
C)  demand decreases and supply increases 
D)  demand and supply both increase

Question 19

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Accepted Answer

A)  prices at and above the equilibrium price. 
B)  prices at and below the equilibrium price. 
C)  prices above and below the equilibrium price, but not at the equilibrium price. 
D)  the equilibrium price but not above or below the equilibrium price. 
A)  prices at and above the equilibrium price. 
B)  prices at and below the equilibrium price. 
C)  prices above and below the equilibrium price, but not at the equilibrium price. 
D)  the equilibrium price but not above or below the equilibrium price.

Question 20

When quantity supplied increases at every possible price, we know that the supply curve has

Accepted Answer

A)  shifted to the left. 
B)  shifted to the right. 
C)  not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D)  not shifted; rather, the supply curve has become flatter. 
A)  shifted to the left. 
B)  shifted to the right. 
C)  not shifted; rather, we have moved along the supply curve to a new point on the same curve. 
D)  not shifted; rather, the supply curve has become flatter.

Exam 4: The Market Forces of Supply and Demand

The demand curve for a good is a line that relates

An increase in supply is represented by a

If the price of steel, an input into the production of automobiles, rises, and at the same time the price of gasoline rises, what will happen to the equilibrium price and quantity of automobiles?

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

Figure 4-27 Panel a) Panel b) Panel c) Panel d) -Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?

Which of the following would cause a movement along the supply curve for cupcakes?

Table 4-1 -Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

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

Table 4-5 The table below shows the quantities demanded of cases of Mt. Dew per month by four families at various prices. -Refer to Table 4-5. Suppose the four families listed in the table are the only demanders of Mt. Dew in the market. If the price of a case of Mt. Dew decreases by $1, the

Which of the following demonstrates the law of supply?

A leftward shift of a demand curve is called an)

If the producers of canned green beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current production into storage and supply less in the market today.

When a surplus exists in a market, sellers

Which of the following would cause price to increase?

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

The signals that guide the allocation of resources in a market economy are

Which of the following events must cause equilibrium price to fall?

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

When quantity supplied increases at every possible price, we know that the supply curve has

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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