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

The following table contains a demand schedule for a good.   If the law of demand applies to this good, then A could be

Accepted Answer

A)  0. 
B)  100. 
C)  200. 
D)  400. 
A)  0. 
B)  100. 
C)  200. 
D)  400.

Question 3

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Accepted Answer

A)  Price will rise. 
B)  Price will fall. 
C)  Price will stay exactly the same. 
D)  The price change will be ambiguous. 
A)  Price will rise. 
B)  Price will fall. 
C)  Price will stay exactly the same. 
D)  The price change will be ambiguous.

Question 4

Figure 4-5  
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?

Accepted Answer

A)  a freeze in Florida 
B)  a technological advance that allows oranges to ripen faster 
C)  a decrease in the price of apples 
D)  an announcement by the FDA that oranges prevent heart disease 
A)  a freeze in Florida 
B)  a technological advance that allows oranges to ripen faster 
C)  a decrease in the price of apples 
D)  an announcement by the FDA that oranges prevent heart disease

Question 5

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

Accepted Answer

A)  are direct policy tools used by government agencies to regulate the economy. 
B)  illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct. 
A)  are direct policy tools used by government agencies to regulate the economy. 
B)  illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. 
C)  can be used to predict the impact on the economy of various events and policies. 
D)  All of the above are correct.

Question 6

The law of demand states that, other things equal, when the price of a good

Accepted Answer

A)  falls, the demand for the good rises. 
B)  rises, the quantity demanded of the good rises. 
C)  rises, the demand for the good falls. 
D)  falls, the quantity demanded of the good rises. 
A)  falls, the demand for the good rises. 
B)  rises, the quantity demanded of the good rises. 
C)  rises, the demand for the good falls. 
D)  falls, the quantity demanded of the good rises.

Question 7

Figure 4-30  
-Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the changes) in the equilibrium price and quantity.

Accepted Answer

Equilibrium price is

Question 8

A decrease in income will shift the demand curve for an inferior good to the right.

Accepted Answer

A) True 
 B)False

Question 9

If the supply of a product increases, then we would expect equilibrium price

Accepted Answer

A)  to increase and equilibrium quantity to decrease. 
B)  to decrease and equilibrium quantity to increase. 
C)  and equilibrium quantity to both increase. 
D)  and equilibrium quantity to both decrease. 
A)  to increase and equilibrium quantity to decrease. 
B)  to decrease and equilibrium quantity to increase. 
C)  and equilibrium quantity to both increase. 
D)  and equilibrium quantity to both decrease.

Question 10

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 11

A likely example of complementary goods for most people would be

Accepted Answer

A)  butter and margarine. 
B)  lawnmowers and automobiles. 
C)  chips and salsa. 
D)  cola and lemonade. 
A)  butter and margarine. 
B)  lawnmowers and automobiles. 
C)  chips and salsa. 
D)  cola and lemonade.

Question 12

A market supply curve shows

Accepted Answer

A)  the total quantity supplied at all possible prices. 
B)  the average quantity supplied by producers at all possible prices. 
C)  how quantity supplied changes when consumer income changes. 
D)  suppliers' responses, in terms of the amounts they will supply, to the demands of buyers. 
A)  the total quantity supplied at all possible prices. 
B)  the average quantity supplied by producers at all possible prices. 
C)  how quantity supplied changes when consumer income changes. 
D)  suppliers' responses, in terms of the amounts they will supply, to the demands of buyers.

Question 13

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 14

Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices listed.
  
-Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

Accepted Answer

A)  -200 cases 
B)  -100 cases 
C)  100 cases 
D)  200 cases 
A)  -200 cases 
B)  -100 cases 
C)  100 cases 
D)  200 cases

Question 15

Figure 4-1  
-Refer to Figure 4-1. It is apparent from the figure that the

Accepted Answer

A)  good is inferior. 
B)  demand for the good decreases as income increases. 
C)  demand for the good conforms to the law of demand. 
D)  All of the above are correct. 
A)  good is inferior. 
B)  demand for the good decreases as income increases. 
C)  demand for the good conforms to the law of demand. 
D)  All of the above are correct.

Question 16

Figure 4-19  
-Refer to Figure 4-19. If price in this market is currently $14, then there would be an)

Accepted Answer

A)  surplus of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. 
B)  excess supply of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price. 
C)  surplus of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. 
D)  excess supply of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price. 
A)  surplus of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. 
B)  excess supply of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price. 
C)  surplus of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. 
D)  excess supply of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.

Question 17

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 18

Figure 4-13  
-Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $6 is

Accepted Answer

A)  4 units. 
B)  6 units. 
C)  12 units. 
D)  18 units. 
A)  4 units. 
B)  6 units. 
C)  12 units. 
D)  18 units.

Question 19

A likely example of substitute goods for most people would be

Accepted Answer

A)  peanut butter and jelly. 
B)  tennis balls and tennis rackets. 
C)  televisions and subscriptions to cable television services. 
D)  pencils and pens. 
A)  peanut butter and jelly. 
B)  tennis balls and tennis rackets. 
C)  televisions and subscriptions to cable television services. 
D)  pencils and pens.

Question 20

If, at the current price, there is a shortage of a good, then

Accepted Answer

A)  sellers are producing more than buyers wish to buy. 
B)  the market must be in equilibrium. 
C)  the price is below the equilibrium price. 
D)  quantity demanded equals quantity supplied. 
A)  sellers are producing more than buyers wish to buy. 
B)  the market must be in equilibrium. 
C)  the price is below the equilibrium price. 
D)  quantity demanded equals quantity supplied.

Exam 4: The Market Forces of Supply and Demand

Most markets in the economy are

The following table contains a demand schedule for a good. If the law of demand applies to this good, then A could be

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?

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

The law of demand states that, other things equal, when the price of a good

Figure 4-30 -Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the changes) in the equilibrium price and quantity.

A decrease in income will shift the demand curve for an inferior good to the right.

If the supply of a product increases, then we would expect equilibrium price

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?

A likely example of complementary goods for most people would be

A market supply curve shows

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

Table 4-10 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

Figure 4-1 -Refer to Figure 4-1. It is apparent from the figure that the

Figure 4-19 -Refer to Figure 4-19. If price in this market is currently $14, then there would be an)

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

Figure 4-13 -Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $6 is

A likely example of substitute goods for most people would be

If, at the current price, there is a shortage of a good, then

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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