Question 1

In a market economy, prices are the signals that guide the allocation of scarce resources.

Accepted Answer

A) True 
 B)False

Question 2

If the supply of pencils, a substitute for pens, increases, what will happen to the equilibrium price of pencils and to the equilibrium price of pens?

Accepted Answer

The equilibrium pric

Question 3

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Accepted Answer

A) True 
 B)False

Question 4

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

Accepted Answer

A)  demand for flour to increase. 
B)  demand for flour to decrease. 
C)  supply of flour to increase. 
D)  supply of flour to decrease. 
A)  demand for flour to increase. 
B)  demand for flour to decrease. 
C)  supply of flour to increase. 
D)  supply of flour to decrease.

Question 5

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-22  
-Refer to Figure 4-22. At a price of $20, there is a

Accepted Answer

A)  surplus of 4 units. 
B)  surplus of 8 units. 
C)  shortage of 4 units. 
D)  shortage of 8 units. 
A)  surplus of 4 units. 
B)  surplus of 8 units. 
C)  shortage of 4 units. 
D)  shortage of 8 units.

Question 7

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

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

If something happens to alter the quantity demanded at any given price, then the demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 9

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?

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 10

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 11

Which of the following demonstrates the law of supply?

Accepted Answer

A)  When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B)  When car production technology improved, car producers increased their supply of cars. 
C)  When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D)  When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup. 
A)  When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B)  When car production technology improved, car producers increased their supply of cars. 
C)  When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D)  When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup.

Question 12

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 13

A decrease in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Accepted Answer

A) True 
 B)False

Question 14

A supply schedule is a table that shows the relationship between

Accepted Answer

A)  price and quantity supplied. 
B)  input costs and quantity supplied. 
C)  quantity demanded and quantity supplied. 
D)  profit and quantity supplied. 
A)  price and quantity supplied. 
B)  input costs and quantity supplied. 
C)  quantity demanded and quantity supplied. 
D)  profit and quantity supplied.

Question 15

Table 4-7  
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then the market quantity supplied at a price of $8 is

Accepted Answer

A)  10 gallons. 
B)  20 gallons. 
C)  32 gallons. 
D)  40 gallons. 
A)  10 gallons. 
B)  20 gallons. 
C)  32 gallons. 
D)  40 gallons.

Question 16

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 17

Table 4-16
The following table shows the supply and demand schedules in a market.  
-Refer to Table 4-16. At a price of $8, how large of a surplus will there be in this market?

Accepted Answer

The answer of Table 4-16
The following table shows the supply...

Question 18

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 19

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 20

When it comes to people's tastes, economists generally believe that

Accepted Answer

A)  tastes are based on forces that are well within the realm of economics. 
B)  tastes are based on historical and psychological forces that are beyond the realm of economics. 
C)  tastes can only be studied through well-constructed, real-life models. 
D)  because tastes do not directly affect demand, there is little need to explain people's tastes. 
A)  tastes are based on forces that are well within the realm of economics. 
B)  tastes are based on historical and psychological forces that are beyond the realm of economics. 
C)  tastes can only be studied through well-constructed, real-life models. 
D)  because tastes do not directly affect demand, there is little need to explain people's tastes.

Exam 4: The Market Forces of Supply and Demand

In a market economy, prices are the signals that guide the allocation of scarce resources.

If the supply of pencils, a substitute for pens, increases, what will happen to the equilibrium price of pencils and to the equilibrium price of pens?

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Figure 4-22 -Refer to Figure 4-22. At a price of $20, there is a

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

If something happens to alter the quantity demanded at any given price, then the demand curve shifts.

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

Which of the following demonstrates the law of supply?

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 decrease in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

A supply schedule is a table that shows the relationship between

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then the market quantity supplied at a price of $8 is

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

Table 4-16 The following table shows the supply and demand schedules in a market. -Refer to Table 4-16. At a price of $8, how large of a surplus will there be in this market?

A market demand curve shows

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 it comes to people's tastes, economists generally believe that

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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