Question 1

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 2

Equilibrium price must increase 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

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

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 4

The highest form of competition is called

Accepted Answer

A)  arbitrage. 
B)  monopolistic competition. 
C)  equilibrium. 
D)  perfect competition. 
A)  arbitrage. 
B)  monopolistic competition. 
C)  equilibrium. 
D)  perfect competition.

Question 5

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Accepted Answer

A)  Price will fall, and the effect on quantity is ambiguous. 
B)  Price will rise, and the effect on quantity is ambiguous. 
C)  Quantity will fall, and the effect on price is ambiguous. 
D)  Quantity will rise, and the effect on price is ambiguous. 
A)  Price will fall, and the effect on quantity is ambiguous. 
B)  Price will rise, and the effect on quantity is ambiguous. 
C)  Quantity will fall, and the effect on price is ambiguous. 
D)  Quantity will rise, and the effect on price is ambiguous.

Question 6

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 7

Table 4-9  
-Refer to Table 4-9. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 8

Table 4-15
The following table shows the number of cases of water each seller is willing to sell at the prices listed.  
-Refer to Table 4-15. Assuming these are the only four suppliers in this market and the function for market demand is QD=1000-100P, where QD is the quantity demanded and P is the price, what is the equilibrium price?

Accepted Answer

The answer of Table 4-15
The following table shows the number...

Question 9

A decrease in the number of sellers in the market causes

Accepted Answer

A)  the supply curve to shift to the left. 
B)  the supply curve to shift to the right. 
C)  a movement up and to the right along a stationary supply curve. 
D)  a movement downward and to the left along a stationary supply curve. 
A)  the supply curve to shift to the left. 
B)  the supply curve to shift to the right. 
C)  a movement up and to the right along a stationary supply curve. 
D)  a movement downward and to the left along a stationary supply curve.

Question 10

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 $2 is

Accepted Answer

A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  10 units. 
A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  10 units.

Question 11

Figure 4-25
The graph below pertains to the supply of paper to colleges and universities.  
-Refer to Figure 4-25. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

Accepted Answer

A)  x to y. 
B)  y to x. 
C)  SA to SB. 
D)  SB to SA. 
A)  x to y. 
B)  y to x. 
C)  SA to SB. 
D)  SB to SA.

Question 12

Figure 4-24
The diagram below pertains to the demand for turkey in the United States.  
-Refer to Figure 4-24. All else equal, a large number of people becoming vegetarians would cause a move from

Accepted Answer

A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x. 
A)  DA to DB. 
B)  DB to DA. 
C)  x to y. 
D)  y to x.

Question 13

If a surplus exists in a market, then we know that the actual price is

Accepted Answer

A)  above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B)  above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C)  below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D)  below the equilibrium price, and quantity supplied is greater than quantity demanded. 
A)  above the equilibrium price, and quantity supplied is greater than quantity demanded. 
B)  above the equilibrium price, and quantity demanded is greater than quantity supplied. 
C)  below the equilibrium price, and quantity demanded is greater than quantity supplied. 
D)  below the equilibrium price, and quantity supplied is greater than quantity demanded.

Question 14

Figure 4-28  
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if a news report stated that the price of this good was expected to increase next week.

Accepted Answer

The answer of Figure 4-28  
-Refer to Figure 4-28....

Question 15

The supply curve for a good is a line that relates

Accepted Answer

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

Question 16

Which of the following characteristics is required for a perfectly competitive market?

Accepted Answer

A)  The goods offered for sale are exactly the same. 
B)  There are so many buyers and sellers that no single buyer or seller has any influence over the market price. 
C)  It is difficult for new sellers to enter the market. 
D)  Both a and b are correct. 
A)  The goods offered for sale are exactly the same. 
B)  There are so many buyers and sellers that no single buyer or seller has any influence over the market price. 
C)  It is difficult for new sellers to enter the market. 
D)  Both a and b are correct.

Question 17

Table 4-1  
-Refer to Table 4-1. Which of the following illustrates the market demand curve?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

Accepted Answer

A)  is greater than the quantity that sellers are willing and able to sell. 
B)  exactly equals the quantity that sellers are willing and able to sell. 
C)  is less than the quantity that sellers are willing and able to sell. 
D)  Either a) or c) could be correct. 
A)  is greater than the quantity that sellers are willing and able to sell. 
B)  exactly equals the quantity that sellers are willing and able to sell. 
C)  is less than the quantity that sellers are willing and able to sell. 
D)  Either a) or c) could be correct.

Question 19

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Accepted Answer

A)  luxury good. 
B)  inferior good. 
C)  normal good. 
D)  complementary good. 
A)  luxury good. 
B)  inferior good. 
C)  normal good. 
D)  complementary good.

Question 20

Table 4-1  
-Refer to Table 4-1. If the market consists of Michelle and Laura only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)  2 units. 
B)  3 units. 
C)  4 units. 
D)  5 units. 
A)  2 units. 
B)  3 units. 
C)  4 units. 
D)  5 units.

Exam 4: The Market Forces of Supply and Demand

A likely example of complementary goods for most people would be

Equilibrium price must increase when demand

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

The highest form of competition is called

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

When supply and demand both increase, equilibrium

Table 4-9 -Refer to Table 4-9. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

A decrease in the number of sellers in the market causes

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 $2 is

Figure 4-25 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-25. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, a large number of people becoming vegetarians would cause a move from

If a surplus exists in a market, then we know that the actual price is

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if a news report stated that the price of this good was expected to increase next week.

The supply curve for a good is a line that relates

Which of the following characteristics is required for a perfectly competitive market?

Table 4-1 -Refer to Table 4-1. Which of the following illustrates the market demand curve?

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Table 4-1 -Refer to Table 4-1. If the market consists of Michelle and Laura only and the price falls by $1, the quantity demanded in the market increases by

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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