Question 1

A competitive market is one in which there

Accepted Answer

A)  is only one seller, but there are many buyers. 
B)  are many sellers, and each seller has the ability to set the price of his product. 
C)  are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market. 
D)  are so many buyers and so many sellers that each has a negligible impact on the price of the product. 
A)  is only one seller, but there are many buyers. 
B)  are many sellers, and each seller has the ability to set the price of his product. 
C)  are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market. 
D)  are so many buyers and so many sellers that each has a negligible impact on the price of the product.

Question 2

When all market participants are price takers who have no influence over prices, the markets have

Accepted Answer

A)  only a few buyers and sellers. 
B)  numerous sellers but only a few buyers. 
C)  numerous buyers but only a few sellers. 
D)  numerous buyers and sellers. 
A)  only a few buyers and sellers. 
B)  numerous sellers but only a few buyers. 
C)  numerous buyers but only a few sellers. 
D)  numerous buyers and sellers.

Question 3

Figure 4-21  
-Refer to Figure 4-21. What is the equilibrium quantity in this market?

Accepted Answer

A)  2.5 units 
B)  5 units 
C)  7.5 units 
D)  10 units 
A)  2.5 units 
B)  5 units 
C)  7.5 units 
D)  10 units

Question 4

Figure 4-8  
-Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. 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 5

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 $4 is

Accepted Answer

A)  4 units. 
B)  8 units. 
C)  12 units. 
D)  16 units. 
A)  4 units. 
B)  8 units. 
C)  12 units. 
D)  16 units.

Question 6

A yard sale is an example of a market.

Accepted Answer

A) True 
 B)False

Question 7

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?

Accepted Answer

A)  Both the equilibrium price and quantity would increase. 
B)  Both the equilibrium price and quantity would decrease. 
C)  The equilibrium price would increase, and the equilibrium quantity would decrease. 
D)  The equilibrium price would decrease, and the equilibrium quantity would increase. 
A)  Both the equilibrium price and quantity would increase. 
B)  Both the equilibrium price and quantity would decrease. 
C)  The equilibrium price would increase, and the equilibrium quantity would decrease. 
D)  The equilibrium price would decrease, and the equilibrium quantity would increase.

Question 8

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

Accepted Answer

A)  an increase in demand and an increase in quantity supplied 
B)  an increase in demand and an increase in supply 
C)  an increase in quantity demanded and an increase in quantity supplied 
D)  an increase in quantity demanded and an increase in supply 
A)  an increase in demand and an increase in quantity supplied 
B)  an increase in demand and an increase in supply 
C)  an increase in quantity demanded and an increase in quantity supplied 
D)  an increase in quantity demanded and an increase in supply

Question 9

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

Accepted Answer

A)  an increase in the price of tennis balls 
B)  a decrease in the price of tennis racquets 
C)  an expectation by buyers that their incomes will increase in the very near future 
D)  a decrease in the number of people in the United States under age 70 
A)  an increase in the price of tennis balls 
B)  a decrease in the price of tennis racquets 
C)  an expectation by buyers that their incomes will increase in the very near future 
D)  a decrease in the number of people in the United States under age 70

Question 10

The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result,

Accepted Answer

A)  the quantity supplied of blue jeans exceeds the quantity demanded of blue jeans at the $30 price. 
B)  the equilibrium quantity of blue jeans exceeds the quantity demanded at the $30 price. 
C)  there is a surplus of blue jeans at the $30 price. 
D)  All of the above are correct. 
A)  the quantity supplied of blue jeans exceeds the quantity demanded of blue jeans at the $30 price. 
B)  the equilibrium quantity of blue jeans exceeds the quantity demanded at the $30 price. 
C)  there is a surplus of blue jeans at the $30 price. 
D)  All of the above are correct.

Question 11

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold?

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 12

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Accepted Answer

A)  "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply. 
B)  increase the supply of its doll now before the other doll hits the market. 
C)  increase the price of its doll now. 
D)  discontinue its doll. 
A)  "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply. 
B)  increase the supply of its doll now before the other doll hits the market. 
C)  increase the price of its doll now. 
D)  discontinue its doll.

Question 13

Suppose there are six bait and tackle shops that sell worms in a lakeside resort town in Minnesota. If we add the respective quantities that each shop would produce and sell at each of the six bait and tackle shops when the price of worms is $2 per bucket, $2.50 per bucket, and $3 per bucket, and so forth, we have found the

Accepted Answer

A)  market demand curve. 
B)  market supply curve. 
C)  equilibrium curve. 
D)  surplus or shortage depending on market conditions. 
A)  market demand curve. 
B)  market supply curve. 
C)  equilibrium curve. 
D)  surplus or shortage depending on market conditions.

Question 14

A decrease in the price of baseball bats will decrease the demand for baseballs.

Accepted Answer

A) True 
 B)False

Question 15

A market's equilibrium is the point at which the supply and demand curves intersect.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not an expression for the sum of all the individual demand curves for a product?

Accepted Answer

A)  total demand 
B)  market demand 
C)  equilibrium demand 
D)  aggregate demand 
A)  total demand 
B)  market demand 
C)  equilibrium demand 
D)  aggregate demand

Question 17

Figure 4-18  
-Refer to Figure 4-18. At what price would there be an excess supply 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 18

Which of the following statements is correct?

Accepted Answer

A)  Buyers determine supply, and sellers determine demand. 
B)  Buyers determine demand, and sellers determine supply. 
C)  Buyers determine both demand and supply. 
D)  Sellers determine both demand and supply. 
A)  Buyers determine supply, and sellers determine demand. 
B)  Buyers determine demand, and sellers determine supply. 
C)  Buyers determine both demand and supply. 
D)  Sellers determine both demand and supply.

Question 19

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  None of the above is correct. 
A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  None of the above is correct.

Question 20

A surplus is the same as an excess demand.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

A competitive market is one in which there

When all market participants are price takers who have no influence over prices, the markets have

Figure 4-21 -Refer to Figure 4-21. What is the equilibrium quantity in this market?

Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?

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 $4 is

A yard sale is an example of a market.

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?

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

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

The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result,

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold?

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

A decrease in the price of baseball bats will decrease the demand for baseballs.

A market's equilibrium is the point at which the supply and demand curves intersect.

Which of the following is not an expression for the sum of all the individual demand curves for a product?

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

Which of the following statements is correct?

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

A surplus is the same as an excess demand.

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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