Question 1

In a market economy, supply and demand determine

Accepted Answer

A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold. 
A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold.

Question 2

The market supply curve

Accepted Answer

A)  is found by vertically adding the individual supply curves. 
B)  slopes downward. 
C)  represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good. 
D)  represents the sum of the quantities supplied by all the sellers at each price of the good. 
A)  is found by vertically adding the individual supply curves. 
B)  slopes downward. 
C)  represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good. 
D)  represents the sum of the quantities supplied by all the sellers at each price of the good.

Question 3

Today's supply curve for iPods could shift in response to a change in

Accepted Answer

A)  today's price of iPods. 
B)  the expected future price of iPods. 
C)  the number of buyers of iPods. 
D)  All of the above are correct. 
A)  today's price of iPods. 
B)  the expected future price of iPods. 
C)  the number of buyers of iPods. 
D)  All of the above are correct.

Question 4

Figure 4-26  
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for bullet-proof vests of an increase in the price of Kevlar?

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 5

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)  Different sellers sell identical products. 
B)  There are many sellers. 
C)  Sellers must accept the price the market determines. 
D)  All of the above are characteristics of a perfectly competitive market. 
A)  Different sellers sell identical products. 
B)  There are many sellers. 
C)  Sellers must accept the price the market determines. 
D)  All of the above are characteristics of a perfectly competitive market.

Question 6

a. What is the difference between a "change in demand" and a "change in quantity demanded?" Graph your answer.
 b. For each of the following changes, determine whether there will be a change in quantity demanded or a change in demand.
i. a change in the price of a related good
ii. a change in tastes
iii. a change in the number of buyers
iv. a change in price
v. a change in consumer expectations
vi. a change in income

Accepted Answer

a. A change in demand refers to a shift

Question 7

Figure 4-12
Firm A Firm B
    
-Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

Accepted Answer

A)  2 units. 
B)  10 units. 
C)  12 units. 
D)  22 units. 
A)  2 units. 
B)  10 units. 
C)  12 units. 
D)  22 units.

Question 8

A movement upward and to the left along 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 9

A movement downward and to the left along a supply curve is called an)

Accepted Answer

A)  increase in supply. 
B)  decrease in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  increase in supply. 
B)  decrease in supply. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 10

For the general population, a 10 percent increase in the price of cigarettes leads to a

Accepted Answer

A)  1 percent reduction in the quantity demanded of cigarettes. 
B)  4 percent reduction in the quantity demanded of cigarettes. 
C)  10 percent reduction in the quantity demanded of cigarettes. 
D)  12 percent reduction in the quantity demanded of cigarettes. 
A)  1 percent reduction in the quantity demanded of cigarettes. 
B)  4 percent reduction in the quantity demanded of cigarettes. 
C)  10 percent reduction in the quantity demanded of cigarettes. 
D)  12 percent reduction in the quantity demanded of cigarettes.

Question 11

Other things equal, when the price of a good falls, the

Accepted Answer

A)  quantity supplied of the good increases. 
B)  supply decreases. 
C)  quantity supplied of the good decreases. 
D)  demand increases. 
A)  quantity supplied of the good increases. 
B)  supply decreases. 
C)  quantity supplied of the good decreases. 
D)  demand increases.

Question 12

An early frost in the vineyards of Napa Valley would cause an)

Accepted Answer

A)  increase in the demand for wine, increasing price. 
B)  increase in the supply of wine, decreasing price. 
C)  decrease in the demand for wine, decreasing price. 
D)  decrease in the supply of wine, increasing price. 
A)  increase in the demand for wine, increasing price. 
B)  increase in the supply of wine, decreasing price. 
C)  decrease in the demand for wine, decreasing price. 
D)  decrease in the supply of wine, increasing price.

Question 13

An increase in the price of a good would

Accepted Answer

A)  increase the supply of the good. 
B)  increase the amount purchased by buyers. 
C)  give producers an incentive to produce more. 
D)  decrease both the quantity demanded of the good and the quantity supplied of the good. 
A)  increase the supply of the good. 
B)  increase the amount purchased by buyers. 
C)  give producers an incentive to produce more. 
D)  decrease both the quantity demanded of the good and the quantity supplied of the good.

Question 14

In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

Accepted Answer

A) True 
 B)False

Question 15

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 16

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

Accepted Answer

A) True 
 B)False

Question 17

If a company making frozen orange juice expects the price of its product to be higher next month, it will supply more to the market this month.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, the equilibrium price rises, but the effect on the equilibrium quantity is ambiguous.

Accepted Answer

A) True 
 B)False

Question 20

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip?

Accepted Answer

A)  a decrease in the price of Miracle Whip 
B)  an increase in the price of mayonnaise 
C)  a decrease in the price of mayonnaise 
D)  Both a and b are correct. 
A)  a decrease in the price of Miracle Whip 
B)  an increase in the price of mayonnaise 
C)  a decrease in the price of mayonnaise 
D)  Both a and b are correct.

Exam 4: The Market Forces of Supply and Demand

In a market economy, supply and demand determine

The market supply curve

Today's supply curve for iPods could shift in response to a change in

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for bullet-proof vests of an increase in the price of Kevlar?

Which of the following is not a characteristic of a perfectly competitive market?

Figure 4-12 Firm A Firm B -Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

A movement upward and to the left along a demand curve is called an)

A movement downward and to the left along a supply curve is called an)

For the general population, a 10 percent increase in the price of cigarettes leads to a

Other things equal, when the price of a good falls, the

An early frost in the vineyards of Napa Valley would cause an)

An increase in the price of a good would

In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

If a company making frozen orange juice expects the price of its product to be higher next month, it will supply more to the market this month.

Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, the equilibrium price rises, but the effect on the equilibrium quantity is ambiguous.

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip?

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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