Question 1

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Accepted Answer

A)  the CPA to supply more expert tax advice now than she was supplying previously. 
B)  the CPA to supply less expert tax advice now than she was supplying previously. 
C)  the demand for this CPA's expert tax advice to fall. 
D)  no change in the CPA's current supply; instead, future supply will be affected. 
A)  the CPA to supply more expert tax advice now than she was supplying previously. 
B)  the CPA to supply less expert tax advice now than she was supplying previously. 
C)  the demand for this CPA's expert tax advice to fall. 
D)  no change in the CPA's current supply; instead, future supply will be affected.

Question 2

Which of the following might cause the supply curve for an inferior good to shift to the right?

Accepted Answer

A)  an increase in input prices 
B)  a decrease in consumer income 
C)  an improvement in production technology that makes production of the good more profitable 
D)  a decrease in the number of sellers in the market 
A)  an increase in input prices 
B)  a decrease in consumer income 
C)  an improvement in production technology that makes production of the good more profitable 
D)  a decrease in the number of sellers in the market

Question 3

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Accepted Answer

A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton 
A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton

Question 4

Table 4-11
  
-Refer to Table 4-11. If the price were $8, a

Accepted Answer

A)  shortage of 20 units would exist, and price would tend to rise. 
B)  surplus of 25 units would exist, and price would tend to fall. 
C)  shortage of 25 units would exist, and price would tend to rise. 
D)  surplus of 45 units would exist, and price would tend to fall. 
A)  shortage of 20 units would exist, and price would tend to rise. 
B)  surplus of 25 units would exist, and price would tend to fall. 
C)  shortage of 25 units would exist, and price would tend to rise. 
D)  surplus of 45 units would exist, and price would tend to fall.

Question 5

Figure 4-8  
-Refer to Figure 4-8. Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur?

Accepted Answer

A)  a movement along D2 from point A to point B 
B)  a movement along D2 from point B to point A 
C)  a shift from D1 to D2 
D)  a shift from D2 to D1 
A)  a movement along D2 from point A to point B 
B)  a movement along D2 from point B to point A 
C)  a shift from D1 to D2 
D)  a shift from D2 to D1

Question 6

Figure 4-27
Panel a) Panel b)
     Panel c) Panel d)
    
-Refer to Figure 4-27. Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

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

In competitive markets, which of the following is not correct?

Accepted Answer

A)  Firms produce identical products. 
B)  No individual buyer can influence the market price. 
C)  Some sellers can set prices. 
D)  Buyers are price takers. 
A)  Firms produce identical products. 
B)  No individual buyer can influence the market price. 
C)  Some sellers can set prices. 
D)  Buyers are price takers.

Question 8

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

Accepted Answer

A)  The number of people who purchase olives decreases. 
B)  Consumer income decreases, and olives are a normal good. 
C)  The price of pickles decreases, and pickles are a substitute for olives. 
D)  The price of olives rises. 
A)  The number of people who purchase olives decreases. 
B)  Consumer income decreases, and olives are a normal good. 
C)  The price of pickles decreases, and pickles are a substitute for olives. 
D)  The price of olives rises.

Question 9

Figure 4-18  
-Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

Accepted Answer

A)  $15 
B)  $20 
C)  $30 
D)  $35 
A)  $15 
B)  $20 
C)  $30 
D)  $35

Question 10

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

Accepted Answer

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

Question 11

When we move along a given supply curve,

Accepted Answer

A)  only price is held constant. 
B)  technology and price are held constant. 
C)  all nonprice determinants of supply are held constant. 
D)  all determinants of quantity supplied are held constant. 
A)  only price is held constant. 
B)  technology and price are held constant. 
C)  all nonprice determinants of supply are held constant. 
D)  all determinants of quantity supplied are held constant.

Question 12

When the price of peaches changes, the demand curve for peaches

Accepted Answer

A)  shifts because the price of peaches is measured on the vertical axis of the graph. 
B)  shifts because the quantity demanded of peaches is measured on the horizontal axis of the graph. 
C)  does not shift because the price of peaches is measured on the vertical axis of the graph. 
D)  does not shift because the price of peaches is measured on the horizontal axis of the graph. 
A)  shifts because the price of peaches is measured on the vertical axis of the graph. 
B)  shifts because the quantity demanded of peaches is measured on the horizontal axis of the graph. 
C)  does not shift because the price of peaches is measured on the vertical axis of the graph. 
D)  does not shift because the price of peaches is measured on the horizontal axis of the graph.

Question 13

Price will rise to eliminate a surplus.

Accepted Answer

A) True 
 B)False

Question 14

Assume Diana buys computers in a competitive market. It follows that

Accepted Answer

A)  Diana has a limited number of sellers to turn to when she buys a computer. 
B)  Diana will find herself negotiating with sellers whenever she buys a computer. 
C)  if Diana buys a large number of computers, the price of computers will rise noticeably. 
D)  None of the above is correct. 
A)  Diana has a limited number of sellers to turn to when she buys a computer. 
B)  Diana will find herself negotiating with sellers whenever she buys a computer. 
C)  if Diana buys a large number of computers, the price of computers will rise noticeably. 
D)  None of the above is correct.

Question 15

Figure 4-26  
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

Accepted Answer

A)  Point A to Point B 
B)  Point C to Point B 
C)  Point C to Point D 
D)  Point A to Point D 
A)  Point A to Point B 
B)  Point C to Point B 
C)  Point C to Point D 
D)  Point A to Point D

Question 16

Once the supply curve for a product or service is drawn, it

Accepted Answer

A)  remains stable over time. 
B)  can shift either rightward or leftward. 
C)  is possible to move along the curve, but the curve will not shift. 
D)  tends to become steeper over time. 
A)  remains stable over time. 
B)  can shift either rightward or leftward. 
C)  is possible to move along the curve, but the curve will not shift. 
D)  tends to become steeper over time.

Question 17

The University of Iowa was voted the #1 "party school" in 2013. The University of Iowa is located in Iowa City. At the end of August each year, the market demand for beer in Iowa City

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains constant, but we observe a movement downward and to the right along the demand curve. 
D)  remains constant, but we observe a movement upward and to the left along the demand curve. 
A)  decreases. 
B)  increases. 
C)  remains constant, but we observe a movement downward and to the right along the demand curve. 
D)  remains constant, but we observe a movement upward and to the left along the demand curve.

Question 18

In a competitive market, each seller has limited control over the price of his product because

Accepted Answer

A)  other sellers are offering similar products. 
B)  buyers exert more control over the price than do sellers. 
C)  these markets are highly regulated by the government. 
D)  sellers usually agree to set a common price that will allow each seller to earn a comfortable profit. 
A)  other sellers are offering similar products. 
B)  buyers exert more control over the price than do sellers. 
C)  these markets are highly regulated by the government. 
D)  sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

Question 19

For a market for a good or service to exist, there must be a

Accepted Answer

A)  group of buyers and sellers. 
B)  specific time and place at which the good or service is traded. 
C)  high degree of organization present. 
D)  All of the above are correct. 
A)  group of buyers and sellers. 
B)  specific time and place at which the good or service is traded. 
C)  high degree of organization present. 
D)  All of the above are correct.

Question 20

When quantity demanded has increased at every price, it might be because

Accepted Answer

A)  the number of buyers in the market has decreased. 
B)  income has increased, and the good is an inferior good. 
C)  the costs incurred by sellers producing the good have decreased. 
D)  the price of a complementary good has decreased. 
A)  the number of buyers in the market has decreased. 
B)  income has increased, and the good is an inferior good. 
C)  the costs incurred by sellers producing the good have decreased. 
D)  the price of a complementary good has decreased.

Exam 4: The Market Forces of Supply and Demand

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Which of the following might cause the supply curve for an inferior good to shift to the right?

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Table 4-11 -Refer to Table 4-11. If the price were $8, a

Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur?

Figure 4-27 Panel a) Panel b) Panel c) Panel d) -Refer to Figure 4-27. Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

In competitive markets, which of the following is not correct?

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

Figure 4-18 -Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

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

When we move along a given supply curve,

When the price of peaches changes, the demand curve for peaches

Price will rise to eliminate a surplus.

Assume Diana buys computers in a competitive market. It follows that

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

Once the supply curve for a product or service is drawn, it

The University of Iowa was voted the #1 "party school" in 2013. The University of Iowa is located in Iowa City. At the end of August each year, the market demand for beer in Iowa City

In a competitive market, each seller has limited control over the price of his product because

For a market for a good or service to exist, there must be a

When quantity demanded has increased at every price, it might be because

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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