Question 1

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 2

Equilibrium price must decrease when demand

Accepted Answer

A)  increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. 
B)  increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. 
C)  decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. 
D)  decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously. 
A)  increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. 
B)  increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. 
C)  decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. 
D)  decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

Question 3

A market is a group of buyers and sellers of a particular good or service.

Accepted Answer

A) True 
 B)False

Question 4

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

Accepted Answer

A) True 
 B)False

Question 5

Soup is an inferior good if the demand

Accepted Answer

A)  for soup falls when the price of a substitute for soup rises. 
B)  for soup rises when the price of soup falls. 
C)  curve for soup slopes upward. 
D)  for soup falls when income rises. 
A)  for soup falls when the price of a substitute for soup rises. 
B)  for soup rises when the price of soup falls. 
C)  curve for soup slopes upward. 
D)  for soup falls when income rises.

Question 6

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 7

When supply and demand both increase, equilibrium

Accepted Answer

A)  price will increase. 
B)  price will decrease. 
C)  quantity may increase, decrease, or remain unchanged. 
D)  price may increase, decrease, or remain unchanged. 
A)  price will increase. 
B)  price will decrease. 
C)  quantity may increase, decrease, or remain unchanged. 
D)  price may increase, decrease, or remain unchanged.

Question 8

The two words economists use most often are

Accepted Answer

A)  inflation and trade. 
B)  supply and demand. 
C)  competition and prices. 
D)  markets and equilibrium. 
A)  inflation and trade. 
B)  supply and demand. 
C)  competition and prices. 
D)  markets and equilibrium.

Question 9

Table 4-7
  
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

Accepted Answer

A)  decreases by 10 gallons. 
B)  decreases by 20 gallons. 
C)  increases by 10 gallons. 
D)  increases by 20 gallons. 
A)  decreases by 10 gallons. 
B)  decreases by 20 gallons. 
C)  increases by 10 gallons. 
D)  increases by 20 gallons.

Question 10

A very hot summer in Atlanta will cause

Accepted Answer

A)  the demand curve for lemonade to shift to the left. 
B)  the demand for air conditioners to decrease. 
C)  the demand for jackets to decrease. 
D)  a movement downward and to the right along the demand curve for tank tops. 
A)  the demand curve for lemonade to shift to the left. 
B)  the demand for air conditioners to decrease. 
C)  the demand for jackets to decrease. 
D)  a movement downward and to the right along the demand curve for tank tops.

Question 11

Whenever a determinant of supply other than price changes, the supply curve shifts.

Accepted Answer

A) True 
 B)False

Question 12

An example of a perfectly competitive market would be the market for

Accepted Answer

A)  tennis racquets. 
B)  pizza. 
C)  garbage collection. 
D)  wheat. 
A)  tennis racquets. 
B)  pizza. 
C)  garbage collection. 
D)  wheat.

Question 13

The market demand curve

Accepted Answer

A)  is found by vertically adding the individual demand curves. 
B)  slopes upward. 
C)  represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. 
D)  represents the sum of the quantities demanded by all the buyers at each price of the good. 
A)  is found by vertically adding the individual demand curves. 
B)  slopes upward. 
C)  represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. 
D)  represents the sum of the quantities demanded by all the buyers at each price of the good.

Question 14

Figure 4-26  
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for fences of a decrease in the price of wood?

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 15

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 16

The supply curve for stand up paddle boards

Accepted Answer

A)  shifts when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
B)  shifts when the price of stand up paddle boards changes because the quantity supplied of stand up paddle boards is measured on the horizontal axis of the graph. 
C)  does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
D)  does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the horizontal axis of the graph. 
A)  shifts when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
B)  shifts when the price of stand up paddle boards changes because the quantity supplied of stand up paddle boards is measured on the horizontal axis of the graph. 
C)  does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
D)  does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the horizontal axis of the graph.

Question 17

A market demand curve shows

Accepted Answer

A)  the relationship between price and the number of buyers in a market. 
B)  how quantity demanded changes when the number of sellers changes. 
C)  the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. 
D)  how much of a good all buyers are willing and able to buy at each possible price. 
A)  the relationship between price and the number of buyers in a market. 
B)  how quantity demanded changes when the number of sellers changes. 
C)  the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. 
D)  how much of a good all buyers are willing and able to buy at each possible price.

Question 18

Figure 4-26  
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

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 19

Table 4-2
  
-Refer to Table 4-2. Whose demand does not obey the law of demand?

Accepted Answer

A)  Abby's 
B)  Brandi's 
C)  Carrie's 
D)  DeeDee's 
A)  Abby's 
B)  Brandi's 
C)  Carrie's 
D)  DeeDee's

Question 20

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Accepted Answer

A)  decrease. 
B)  increase. 
C)  be unaffected. 
D)  There is insufficient information given to answer the question. 
A)  decrease. 
B)  increase. 
C)  be unaffected. 
D)  There is insufficient information given to answer the question.

Exam 4: The Market Forces of Supply and Demand

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?

Equilibrium price must decrease when demand

A market is a group of buyers and sellers of a particular good or service.

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

Soup is an inferior good if the demand

If the price of a good is low,

When supply and demand both increase, equilibrium

The two words economists use most often are

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

A very hot summer in Atlanta will cause

Whenever a determinant of supply other than price changes, the supply curve shifts.

An example of a perfectly competitive market would be the market for

The market demand curve

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for fences of a decrease in the price of wood?

When a surplus exists in a market, sellers

The supply curve for stand up paddle boards

A market demand curve shows

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Table 4-2 -Refer to Table 4-2. Whose demand does not obey the law of demand?

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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