Question 1

A leftward shift of a demand curve is called a(n)

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 2

Figure 4-26  
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

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 3

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Accepted Answer

A) True 
 B)False

Question 4

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Accepted Answer

A)  price. 
B)  supply. 
C)  demand. 
D)  income. 
A)  price. 
B)  supply. 
C)  demand. 
D)  income.

Question 5

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

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

Figure 4-22  
-Refer to Figure 4-22. At a price of $8, 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

Equilibrium quantity must increase when demand

Accepted Answer

A)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase. 
B)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. 
C)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase. 
D)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. 
A)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase. 
B)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. 
C)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase. 
D)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

Question 8

A competitive market is a market in which

Accepted Answer

A)  an auctioneer helps set prices and arrange sales. 
B)  there are only a few sellers. 
C)  the forces of supply and demand do not apply. 
D)  no individual buyer or seller has any significant impact on the market price. 
A)  an auctioneer helps set prices and arrange sales. 
B)  there are only a few sellers. 
C)  the forces of supply and demand do not apply. 
D)  no individual buyer or seller has any significant impact on the market price.

Question 9

For a competitive market,

Accepted Answer

A)  a seller can always increase her profit by raising the price of her product. 
B)  if a seller charges more than the going price, buyers will go elsewhere to make their purchases. 
C)  a seller often charges less than the going price to increase sales and profit. 
D)  a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time. 
A)  a seller can always increase her profit by raising the price of her product. 
B)  if a seller charges more than the going price, buyers will go elsewhere to make their purchases. 
C)  a seller often charges less than the going price to increase sales and profit. 
D)  a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.

Question 10

A market demand curve shows how the total quantity demanded of a good varies as

Accepted Answer

A)  income varies. 
B)  price varies. 
C)  price of the nearest substitute good varies. 
D)  supply varies. 
A)  income varies. 
B)  price varies. 
C)  price of the nearest substitute good varies. 
D)  supply varies.

Question 11

Figure 4-18  
-Refer to Figure 4-18. At what price would there be an excess demand 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 12

When the price of a good is higher than the equilibrium price,

Accepted Answer

A)  a shortage will exist. 
B)  buyers desire to purchase more than is produced. 
C)  sellers desire to produce and sell more than buyers wish to purchase. 
D)  quantity demanded exceeds quantity supplied. 
A)  a shortage will exist. 
B)  buyers desire to purchase more than is produced. 
C)  sellers desire to produce and sell more than buyers wish to purchase. 
D)  quantity demanded exceeds quantity supplied.

Question 13

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Accepted Answer

A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 14

Figure 4-2  
-Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is

Accepted Answer

A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  12 units. 
A)  4 units. 
B)  6 units. 
C)  8 units. 
D)  12 units.

Question 15

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Accepted Answer

A) True 
 B)False

Question 16

Most studies have found that tobacco and marijuana are complements rather than substitutes.

Accepted Answer

A) True 
 B)False

Question 17

When drawing a demand curve,

Accepted Answer

A)  demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B)  quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C)  price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D)  price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis. 
A)  demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B)  quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C)  price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D)  price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

Question 18

A rightward shift of a supply curve is called a(n)

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 19

An example of a perfectly competitive market would be the market for

Accepted Answer

A)  electricity. 
B)  soybeans. 
C)  coffee shops. 
D)  restaurants. 
A)  electricity. 
B)  soybeans. 
C)  coffee shops. 
D)  restaurants.

Question 20

Assume Leo buys coffee beans in a competitive market. It follows that

Accepted Answer

A)  Leo has a limited number of sellers from which to buy coffee beans. 
B)  Leo will negotiate with sellers whenever he buys coffee beans. 
C)  Leo can influence the price of coffee beans if he buys a large quantity of them. 
D)  None of the above is correct. 
A)  Leo has a limited number of sellers from which to buy coffee beans. 
B)  Leo will negotiate with sellers whenever he buys coffee beans. 
C)  Leo can influence the price of coffee beans if he buys a large quantity of them. 
D)  None of the above is correct.

Exam 4: The Market Forces of Supply and Demand

A leftward shift of a demand curve is called a(n)

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Figure 4-22 -Refer to Figure 4-22. At a price of $8, there is a

Equilibrium quantity must increase when demand

A competitive market is a market in which

For a competitive market,

A market demand curve shows how the total quantity demanded of a good varies as

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

When the price of a good is higher than the equilibrium price,

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Most studies have found that tobacco and marijuana are complements rather than substitutes.

When drawing a demand curve,

A rightward shift of a supply curve is called a(n)

An example of a perfectly competitive market would be the market for

Assume Leo buys coffee beans in a competitive market. It follows 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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