Question 1

Suppose Z is a normal good.The equilibrium price and quantity of Z in the year 2013 was $25 and 60 units,respectively.In 2017,the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units.Other things remaining the same,which of the following could explain this change?

Accepted Answer

A)  A leftward shift of the supply curve of Z 
B)  A rightward shift of the supply curve of Z 
C)  A leftward shift of the demand curve for Z 
D)  A rightward shift of the demand curve for Z

Question 2

Which of the following is not a required characteristic of a market?

Accepted Answer

A)  A collection of economic agents (e.g., buyers and sellers) 
B)  Trade or exchange of a good or service 
C)  Rules and arrangements for trading 
D)  Government setting the price of the good or service

Question 3

The buyers of a good will want to purchase it as long as their willingness to pay for the good is ________.

Accepted Answer

A)  equal to zero 
B)  greater than zero 
C)  less than the price 
D)  greater than or equal to the price

Question 4

The gasoline market in the United States is often said to be highly competitive.It is not perfectly competitive,but it has features and results that are similar to those of a perfectly competitive market,such as ________.

Accepted Answer

A)  an individual buyer cannot influence the market price of gasoline by himself 
B)  gas stations located near each other tend to charge the same or very similar prices 
C)  an individual gas station cannot influence the market price by itself 
D)  all of the above

Question 5

Scenario: Suppose Major League Baseball (MLB) is considering expansion to a U.S. city that currently does not have a MLB franchise. The league has compiled the following information on five cities viewed as the top contenders for an expansion franchise:
  
MLB decides Charlotte is the most attractive candidate to receive an expansion franchise and is contemplating how demographic and economic information is likely to affect demand to attend MLB games in Charlotte.
-Refer to the scenario above.Household income is expected to grow by 5.5 percent per year in Charlotte.If MLB game attendance is a normal good,income growth will cause a(n)________.

Accepted Answer

A)  increase in quantity demanded 
B)  decrease in quantity demanded 
C)  increase in demand 
D)  decrease in demand

Question 6

The market supply is the ________ of the individual supplies of all the potential sellers.

Accepted Answer

A)  sum 
B)  product 
C)  square of the sum 
D)  square root of the sum

Question 7

The following table shows the market demand schedule and supply schedule for notebooks.
 
-Refer to the table above.At what price does the market for notebooks clear?

Accepted Answer

A)  $2 
B)  $3 
C)  $4 
D)  $5

Question 8

How would the following events affect the market demand for laser printers?
a)A recession in the economy leading to a fall in income levels
b)A fivefold increase in the price of printing paper

Accepted Answer

The answer of How would the following events affect the...

Question 9

Two goods are said to be substitutes when a fall in the price of one good ________.

Accepted Answer

A)  leads to a rise in the price of the other good 
B)  does not affect the demand for the other good 
C)  leads to a leftward shift in the demand for the other good 
D)  leads to a rightward shift in the demand for the other good

Question 10

Scenario: Suppose Major League Baseball (MLB) is considering expansion to a U.S. city that currently does not have a MLB franchise. The league has compiled the following information on five cities viewed as the top contenders for an expansion franchise:
  
MLB decides Charlotte is the most attractive candidate to receive an expansion franchise and is contemplating how demographic and economic information is likely to affect demand to attend MLB games in Charlotte.
-Refer to the scenario above.MLB forecasted that parking for MLB games in Charlotte would cost $12,but it now learns that parking will actually cost $16.How will the increased price of parking affect demand for MLB game attendance in Charlotte?

Accepted Answer

A)  Quantity demanded will increase. 
B)  Quantity demanded will decrease. 
C)  Demand will increase. 
D)  Demand will decrease.

Question 11

Which of the following is likely to lead to a rightward shift in the supply curve of cotton?

Accepted Answer

A)  An increase in labor productivity due to training programs 
B)  A rise in labor costs due to wage demands by labor unions 
C)  An increase in the price of cotton 
D)  A decrease in the price of cotton

Question 12

Suppose the market for cement is such that the output of all sellers is identical in composition and quality.While there are a large number of buyers and sellers,everyone conducts transactions at a common market price.Which of the following statements is true about the structure of the cement market?

Accepted Answer

A)  The cement market is perfectly competitive. 
B)  The cement market is government regulated. 
C)  All participants in the cement market are price-makers. 
D)  All transactions in the cement market are likely to be involuntary.

Question 13

Scenario: Suppose the market for wheat in the United States is given by the demand and supply schedules in the table below (as well as the accompanying graph).

Suppose the U.S. government imposes a minimum price for wheat (price floor) of $6 per bushel.
-Refer to the scenario above.The quantity demanded of wheat at the minimum price is ________.

Accepted Answer

A)  6 million bushels 
B)  8 million bushels 
C)  12 million bushels 
D)  unknown

Question 14

The quantity demanded of a good is ________.

Accepted Answer

A)  determined independently of the market price of the good 
B)  always determined by government intervention 
C)  the amount of the good that sellers are willing to supply at a given market price 
D)  the amount of the good that buyers are willing to purchase at a given market price

Question 15

A seller's willingness to accept is the same as his ________ cost of production.

Accepted Answer

A)  total 
B)  fixed 
C)  average 
D)  marginal

Question 16

Assume that the market for bread is perfectly competitive.The demand for bread is given by the equation D = 120 − 10P,and the market supply for bread is given by S = 60 + 5P.Determine the equilibrium price and quantity of bread.What happens if the price of the bread is set at $10 per loaf? What happens if the market price is set at $2 per loaf?

Accepted Answer

The answer of Assume that the market for bread is...

Question 17

Scenario: Suppose Major League Baseball (MLB) is considering expansion to a U.S. city that currently does not have a MLB franchise. The league has compiled the following information on five cities viewed as the top contenders for an expansion franchise:
  
MLB decides Charlotte is the most attractive candidate to receive an expansion franchise and is contemplating how demographic and economic information is likely to affect demand to attend MLB games in Charlotte.
-Refer to the scenario above.The Charlotte Metropolitan Statistical Area (seven counties in North Carolina and three counties in South Carolina)is expected to grow at an annual rate of 1.3 percent.Population growth will cause a(n)________.

Accepted Answer

A)  increase in demand 
B)  decrease in demand 
C)  increase in quantity demanded 
D)  decrease in quantity demanded

Question 18

Suppose Z is a normal good.The equilibrium price and quantity of Z in the year 2013 was $25 and 60 units,respectively.In 2017,the equilibrium price of Z had increased to $35 and the equilibrium quantity had increased to 70 units.Other things remaining the same,which of the following could explain this change?

Accepted Answer

A)  A leftward shift of the supply curve of Z 
B)  A rightward shift of the supply curve of Z 
C)  A leftward shift of the demand curve for Z 
D)  A rightward shift of the demand curve for Z

Question 19

The following table shows the supply schedule of bread for three sellers in the economy. Assume that these three sellers constitute the entire market.
 
-Refer to the table above.Assuming that the market consists of only these three sellers,what is the market supply when the price is $2 per loaf?

Accepted Answer

A)  39 loaves 
B)  41 loaves 
C)  52 loaves 
D)  89 loaves

Question 20

If the current market price of wheat in the United States is $6 per bushel and the federal government sets the maximum price of wheat at $4 per bushel,what happens to the market price and quantity of wheat in the U.S.wheat market?

Accepted Answer

A)  The market price of wheat falls and the quantity traded rises. 
B)  The market price of wheat falls and the quantity traded falls. 
C)  There is no change in the market price of wheat or the quantity traded. 
D)  The answer cannot be determined given the information provided.

Exam 4: Demand, supply, and Equilibrium