Question 1

Economists normally

Accepted Answer

A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. 
A)  do not try to explain people's tastes, but they do try to explain what happens when tastes change. 
B)  believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 
C)  do not believe that people's tastes determine demand, so they ignore the subject of tastes. 
D)  incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Question 2

Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?

Accepted Answer

A)  Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. 
B)  Some degree of competition is present in most markets. 
C)  There are many buyers and many sellers in all types of markets. 
D)  Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well. 
A)  Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. 
B)  Some degree of competition is present in most markets. 
C)  There are many buyers and many sellers in all types of markets. 
D)  Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 $8 is

Accepted Answer

A)  8 units. 
B)  16 units. 
C)  24 units. 
D)  32 units. 
A)  8 units. 
B)  16 units. 
C)  24 units. 
D)  32 units.

Question 5

An improvement in production technology will

Accepted Answer

A)  increase a firm's costs and increase its supply. 
B)  increase a firm's costs and decrease its supply. 
C)  decrease a firm's costs and increase its supply. 
D)  decrease a firm's costs and decrease its supply. 
A)  increase a firm's costs and increase its supply. 
B)  increase a firm's costs and decrease its supply. 
C)  decrease a firm's costs and increase its supply. 
D)  decrease a firm's costs and decrease its supply.

Question 6

A surplus exists in a market if

Accepted Answer

A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct. 
A)  there is an excess demand for the good. 
B)  quantity demanded exceeds quantity supplied. 
C)  the current price is above its equilibrium price. 
D)  All of the above are correct.

Question 7

Which of the following would increase in response to a decrease in the price of ironing boards?

Accepted Answer

A)  the quantity of irons demanded at each possible price of irons 
B)  the equilibrium quantity of irons 
C)  the equilibrium price of irons 
D)  All of the above are correct. 
A)  the quantity of irons demanded at each possible price of irons 
B)  the equilibrium quantity of irons 
C)  the equilibrium price of irons 
D)  All of the above are correct.

Question 8

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Accepted Answer

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

Question 9

Buyers and sellers who have no influence on market price are referred to as

Accepted Answer

A)  market pawns. 
B)  monopolists. 
C)  price takers. 
D)  price setters. 
A)  market pawns. 
B)  monopolists. 
C)  price takers. 
D)  price setters.

Question 10

Which of the following is an example of a less-than-highly-organized market?

Accepted Answer

A)  the market for U.S. Treasury bonds 
B)  the market for corn 
C)  the market for soybeans 
D)  the market for ice cream 
A)  the market for U.S. Treasury bonds 
B)  the market for corn 
C)  the market for soybeans 
D)  the market for ice cream

Question 11

A likely example of substitute goods for most people would be

Accepted Answer

A)  tables and chairs. 
B)  bicycles and helmets. 
C)  apple juice and orange juice. 
D)  coffee and sugar. 
A)  tables and chairs. 
B)  bicycles and helmets. 
C)  apple juice and orange juice. 
D)  coffee and sugar.

Question 12

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a

Accepted Answer

A)  price-quantity schedule. 
B)  buyer schedule. 
C)  demand schedule. 
D)  demand curve. 
A)  price-quantity schedule. 
B)  buyer schedule. 
C)  demand schedule. 
D)  demand curve.

Question 13

Suppose goods A and B are complements. If the price of good A increases, will the demand for good B increase or decrease?

Accepted Answer

The demand

Question 14

Figure 4-27
Panel (a) Panel (b)     Panel (c) Panel (d)    
-Refer to Figure 4-27. Which of the four panels represents the market for winter coats as we progress from winter to spring?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) 
A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d)

Question 15

Figure 4-17  
-Refer to Figure 4-17. At a price of

Accepted Answer

A)  $2, there is a shortage of 6 units. 
B)  $5, there is a surplus of 25 units. 
C)  $5, there is a shortage of $25. 
D)  $7, there is a shortage of 4 units. 
A)  $2, there is a shortage of 6 units. 
B)  $5, there is a surplus of 25 units. 
C)  $5, there is a shortage of $25. 
D)  $7, there is a shortage of 4 units.

Question 16

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

Accepted Answer

A)  a decrease in demand and a decrease in quantity supplied 
B)  a decrease in demand and a decrease in supply 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply 
A)  a decrease in demand and a decrease in quantity supplied 
B)  a decrease in demand and a decrease in supply 
C)  a decrease in quantity demanded and a decrease in quantity supplied 
D)  a decrease in quantity demanded and a decrease in supply

Question 17

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.

Exam 4: The Market Forces of Supply and Demand

Economists normally

Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?

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

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 $8 is

An improvement in production technology will

A surplus exists in a market if

Which of the following would increase in response to a decrease in the price of ironing boards?

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Buyers and sellers who have no influence on market price are referred to as

Which of the following is an example of a less-than-highly-organized market?

A likely example of substitute goods for most people would be

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a

Suppose goods A and B are complements. If the price of good A increases, will the demand for good B increase or decrease?

Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Which of the four panels represents the market for winter coats as we progress from winter to spring?

Figure 4-17 -Refer to Figure 4-17. At a price of

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

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?

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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