Question 1

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following sets of events must cause an increase in the price of a new house?

Accepted Answer

A)  higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
B)  lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population and expectations of higher house prices in the future 
C)  lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population and expectations of higher house prices in the future 
D)  higher wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population and expectations of lower house prices in the future 
A)  higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future 
B)  lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population and expectations of higher house prices in the future 
C)  lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population and expectations of higher house prices in the future 
D)  higher wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population and expectations of lower house prices in the future

Question 3

The law of supply states that, other things equal, when the price of a good

Accepted Answer

A)  falls, the supply of the good rises. 
B)  rises, the quantity supplied of the good rises. 
C)  rises, the supply of the good falls. 
D)  falls, the quantity supplied of the good rises. 
A)  falls, the supply of the good rises. 
B)  rises, the quantity supplied of the good rises. 
C)  rises, the supply of the good falls. 
D)  falls, the quantity supplied of the good rises.

Question 4

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are 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 5

An increase in the price of a good will

Accepted Answer

A)  increase supply. 
B)  decrease supply. 
C)  increase quantity supplied. 
D)  decrease quantity supplied. 
A)  increase supply. 
B)  decrease supply. 
C)  increase quantity supplied. 
D)  decrease quantity supplied.

Question 6

A downward-sloping demand curve illustrates

Accepted Answer

A)  that demand decreases over time. 
B)  that prices fall over time. 
C)  the relationship between income and quantity demanded. 
D)  the law of demand. 
A)  that demand decreases over time. 
B)  that prices fall over time. 
C)  the relationship between income and quantity demanded. 
D)  the law of demand.

Question 7

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-7  
-Refer to Figure 4-7. The shift from Db to Da is called

Accepted Answer

A)  an increase in demand. 
B)  a decrease in demand. 
C)  a decrease in quantity demanded. 
D)  an increase in quantity demanded. 
A)  an increase in demand. 
B)  a decrease in demand. 
C)  a decrease in quantity demanded. 
D)  an increase in quantity demanded.

Question 9

When we move along a given demand curve,

Accepted Answer

A)  only price is held constant. 
B)  income and price are held constant. 
C)  all nonprice determinants of demand are held constant. 
D)  all determinants of quantity demanded are held constant. 
A)  only price is held constant. 
B)  income and price are held constant. 
C)  all nonprice determinants of demand are held constant. 
D)  all determinants of quantity demanded are held constant.

Question 10

If a determinant of demand other than price changes, the demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 11

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

Accepted Answer

A)  demand for bicycle assembly workers will increase. 
B)  supply of bicycles will shift to the right. 
C)  supply of bicycles will shift to the left. 
D)  firm must increase output to maintain profit levels. 
A)  demand for bicycle assembly workers will increase. 
B)  supply of bicycles will shift to the right. 
C)  supply of bicycles will shift to the left. 
D)  firm must increase output to maintain profit levels.

Question 12

An increase in the price of blueberries would lead to a(n)

Accepted Answer

A)  increased supply of blueberries. 
B)  a movement up and to the right along the supply curve for blueberries. 
C)  a movement down and to the left along the supply curve for blueberries. 
D)  Both a and b are correct. 
A)  increased supply of blueberries. 
B)  a movement up and to the right along the supply curve for blueberries. 
C)  a movement down and to the left along the supply curve for blueberries. 
D)  Both a and b are correct.

Question 13

Figure 4-30  
-Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity.

Accepted Answer

Equilibrium price is

Question 14

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A)  a bakery in a large city 
B)  a bank in a large city 
C)  a local cable television company 
D)  a small group of corn farmers 
A)  a bakery in a large city 
B)  a bank in a large city 
C)  a local cable television company 
D)  a small group of corn farmers

Question 15

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Accepted Answer

A)  fall in six months but not now. 
B)  increase in six months when the price goes up. 
C)  fall now. 
D)  increase now to meet as much demand as possible. 
A)  fall in six months but not now. 
B)  increase in six months when the price goes up. 
C)  fall now. 
D)  increase now to meet as much demand as possible.

Question 16

Which of the following is the least likely to be a competitive market?

Accepted Answer

A)  ice cream 
B)  soybeans 
C)  cable television 
D)  new houses 
A)  ice cream 
B)  soybeans 
C)  cable television 
D)  new houses

Question 17

A improvement in production technology will shift the

Accepted Answer

A)  supply curve to the right. 
B)  supply curve to the left. 
C)  demand curve to the right. 
D)  demand curve to the left. 
A)  supply curve to the right. 
B)  supply curve to the left. 
C)  demand curve to the right. 
D)  demand curve to the left.

Question 18

In a market economy, supply and demand determine

Accepted Answer

A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold. 
A)  both the quantity of each good produced and the price at which it is sold. 
B)  the quantity of each good produced but not the price at which it is sold. 
C)  the price at which each good is sold but not the quantity of each good produced. 
D)  neither the quantity of each good produced nor the price at which it is sold.

Question 19

A very hot summer in Atlanta will cause

Accepted Answer

A)  the demand curve for lemonade to shift to the left. 
B)  the demand for air conditioners to decrease. 
C)  the demand for jackets to decrease. 
D)  a movement downward and to the right along the demand curve for tank tops. 
A)  the demand curve for lemonade to shift to the left. 
B)  the demand for air conditioners to decrease. 
C)  the demand for jackets to decrease. 
D)  a movement downward and to the right along the demand curve for tank tops.

Question 20

Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices listed.  
-Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is:   the equilibrium price and quantity are

Accepted Answer

A)  $0.00 and 1200 cases 
B)  $3.00 and 300 cases 
C)  $6.00 and 600 cases 
D)  $9.00 and 600 cases 
A)  $0.00 and 1200 cases 
B)  $3.00 and 300 cases 
C)  $6.00 and 600 cases 
D)  $9.00 and 600 cases

Exam 4: The Market Forces of Supply and Demand

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Which of the following sets of events must cause an increase in the price of a new house?

The law of supply states that, other things equal, when the price of a good

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

An increase in the price of a good will

A downward-sloping demand curve illustrates

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Figure 4-7 -Refer to Figure 4-7. The shift from Db to Da is called

When we move along a given demand curve,

If a determinant of demand other than price changes, the demand curve shifts.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

An increase in the price of blueberries would lead to a(n)

Figure 4-30 -Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity.

Which of the following would most likely serve as an example of a monopoly?

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Which of the following is the least likely to be a competitive market?

A improvement in production technology will shift the

In a market economy, supply and demand determine

A very hot summer in Atlanta will cause

Table 4-10 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: the equilibrium price and quantity are

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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