Question 1

Recall Application 3, "The Supply and Demand for Cruise Ship Berths," to answer the following questions:
-Based on the application, a severe recession (all else equal) would cause the equilibrium price of cruise ships berths to:

Accepted Answer

A)  increase or decrease, without certainty. 
B)  remain constant. 
C)  decrease. 
D)  increase.

Question 2

If incomes increase and Honda Civics are considered normal goods, then

Accepted Answer

A)  the quantity demanded for Honda Civics will decrease. 
B)  the quantity demanded for Honda Civics will increase. 
C)  the demand for Honda Civics will increase. 
D)  the demand for Honda Civics will decrease.

Question 3

Rent control is an example of the government imposing:

Accepted Answer

A)  a minimum supply price. 
B)  a price ceiling. 
C)  an equilibrium price. 
D)  a price floor.

Question 4

Figure 4.2
-Figure 4.2 depicts three market situations. Which of the panels depicts a market in which the price is likely to fall?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  None of the panels depicts a market in which the price is likely to fall.

Question 5

If an increase in income results in an increase in the demand for Honda Civics, then Honda Civics are considered:

Accepted Answer

A)  substitute goods. 
B)  inferior goods. 
C)  complementary goods. 
D)  normal goods.

Question 6

Suppose that the government requires that farms use only animals instead of machinery when planting and harvesting corn. This will result in a/an:

Accepted Answer

A)  increase in the quantity supplied of corn. 
B)  decrease in the supply of corn. 
C)  increase in the supply of corn. 
D)  decrease in the quantity supplied of corn.

Question 7

If a computer company will sell a laptop only if the price is $400 or higher, then $400 is known as:

Accepted Answer

A)  the minimum production cost. 
B)  the minimum average cost. 
C)  the minimum supply price. 
D)  the input cost price.

Question 8

Figure 4.6
-Figure 4.6 illustrates a set of supply and demand curves for a product. If the good were inferior and the consumer's income decreases, then this can be illustrated as moving from point:

Accepted Answer

A)  A to B. 
B)  C to B. 
C)  E to B. 
D)  B to A.

Question 9

Two goods are substitutes if:

Accepted Answer

A)  the demand for one good decreases when the price of the other decreases. 
B)  the supply of one good decreases when the price of the other decreases. 
C)  the supply of one good decreases when the price of the other increases. 
D)  the demand for one good decreases when the price of the other increases.

Question 10

Suppose that a technological advancement substantially reduces the cost of producing cheese. We would predict that the equilibrium quantity of cheese will _______ and the equilibrium price of cheese will _______.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

Question 11

When consumers have a choice between products and they see an increase in the price of the brand they normally buy, they will purchase a _______ product.

Accepted Answer

The answer of When consumers have a choice between products...

Question 12

People will buy more of an inferior good when their income decreases.

Accepted Answer

A) True 
 B)False

Question 13

Explain how an excess demand would lead to an increase in prices in an unregulated market.

Accepted Answer

The answer of Explain how an excess demand would lead...

Question 14

Which of the following is the most likely complement for hamburgers?

Accepted Answer

A)  hamburger buns 
B)  cheese 
C)  soda 
D)  All of the above are complements.

Question 15

Excess supply in an unregulated market will cause the price of a product to fall.

Accepted Answer

A) True 
 B)False

Question 16

Recall Application 5, "Droughts in Australia and the Price of Rice," to answer the following questions:
-The adoption of new technologies used for rice production in response to the high rice prices will ultimately cause the shift of the:

Accepted Answer

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

Question 17

The market supply curve is:

Accepted Answer

A)  always horizontal. 
B)  negatively sloped. 
C)  always vertical 
D)  upward sloping.

Question 18

Which of the following can increase the number of pizzas a seller is willing to sell at a given price?

Accepted Answer

A)  The cost of inputs such as pepperoni and cheese goes up. 
B)  The amount of subsidies that pizza makers receive from the government decreases. 
C)  The number of workers working in the pizza factory decreases. 
D)  A new technology is developed that allows producers to make the same sized pizza using less cheese and dough.

Question 19

Explain how an excess supply would lead to a decrease in prices in an unregulated market.

Accepted Answer

The answer of Explain how an excess supply would lead...

Exam 4: Demand, Supply, and Market Equilibrium

Recall Application 3, "The Supply and Demand for Cruise Ship Berths," to answer the following questions: -Based on the application, a severe recession (all else equal) would cause the equilibrium price of cruise ships berths to: