Question 1

Suppose roses are currently selling for $40.00 per dozen,while the equilibrium price of roses is $30.00 per dozen.We would expect a

Accepted Answer

A) shortage to exist and the market price of roses to increase. 
B) shortage to exist and the market price of roses to decrease. 
C) surplus to exist and the market price of roses to increase. 
D) surplus to exist and the market price of roses to decrease.

Question 2

Suppose that Carolyn receives a pay increase.We would expect

Accepted Answer

A) to observe Carolyn moving down and to the right along her given demand curve. 
B) Carolyn's demand for inferior goods to decrease. 
C) Carolyn's demand for each of two goods that are complements to increase. 
D) Carolyn's demand for normal goods to decrease.

Question 3

The line that relates the price of a good to the quantity demanded of that good is called the

Accepted Answer

A) demand schedule, and it slopes upward only if the good for which the line is drawn fails to conform to the law of demand. 
B) demand schedule, and it slopes upward only if the demand for the good in question, relative to the demand for other goods, is increasing over time. 
C) demand curve, and it slopes upward only if there is a positive relationship between income and quantity demanded. 
D) demand curve, and it slopes downward as long as the good in question conforms to the law of demand.

Question 4

If a seller in a competitive market chooses to charge more than the market price,then

Accepted Answer

A) the sellers' profits definitely would increase. 
B) the owners of the raw materials used in production would raise the prices for the raw materials. 
C) other sellers would also raise their prices. 
D) buyers will tend to make purchases from other sellers.

Question 5

The term price takers refers to buyers and sellers in

Accepted Answer

A) perfectly competitive markets. 
B) monopolies. 
C) markets that are regulated by government. 
D) markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.

Question 6

You love peanut butter.You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought,and that this will cause the price of peanuts to double by the end of the year.As a result,

Accepted Answer

A) your demand for peanut butter will increase, but not until the end of the year. 
B) your demand for peanut butter increases today. 
C) your demand for peanut butter decreases as you look for a substitute good. 
D) you will wait for the price of jelly to change before altering your demand for peanut butter.

Question 7

Holding all other things constant,a higher price for ski lift tickets would

Accepted Answer

A) increase the number of skiers. 
B) increase the price of skis. 
C) decrease the number of skis sold. 
D) decrease the demand for other winter recreational activities.

Question 8

If a good or service has only one seller,it is called a monopoly.

Accepted Answer

A) True 
 B)False

Question 9

A movement along the supply curve might be caused by a change in

Accepted Answer

A) technology. 
B) input prices. 
C) expectations about future prices. 
D) the price of the good or service that is being supplied.

Question 10

If the number of buyers in the market decreases,the

Accepted Answer

A) market demand will increase. 
B) market demand will decrease. 
C) market supply will increase. 
D) market supply will decrease.

Question 11

Which of the following events would cause a movement upward and to the right along the supply curve for tomatoes?

Accepted Answer

A) The number of sellers of tomatoes increases. 
B) There is an advance in technology that reduces the cost of producing tomatoes. 
C) The price of fertilizer decreases, and fertilizer is an input in the production of tomatoes. 
D) The price of tomatoes rises.

Question 12

The demand curve for textbooks shifts

Accepted Answer

A) when a determinant of the demand for textbooks other than income changes. 
B) when a determinant of the demand for textbooks other than the price of textbooks changes. 
C) when any determinant of the demand for textbooks changes. 
D) only when the number of textbook-buyers changes.

Question 13

When the law of demand applies to a good,then

Accepted Answer

A) the quantity demanded of the good is negatively related to the price of the good. 
B) the demand curve for the good slopes downward. 
C) when the price of the good falls, the quantity demanded of the good rises. 
D) All of the above are correct.

Question 14

Which of the following events would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Accepted Answer

A) an increase in supply and an increase in demand 
B) an increase in supply and a decrease in demand 
C) a decrease in supply and an increase in demand 
D) a decrease in supply and a decrease in demand

Question 15

If the supply of a product increases,we would expect

Accepted Answer

A) equilibrium price to increase and equilibrium quantity to decrease. 
B) equilibrium price to decrease and equilibrium quantity to increase. 
C) equilibrium price and equilibrium quantity both to increase. 
D) equilibrium price and equilibrium quantity both to decrease.

Question 16

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.

Question 17

Which of the following events would definitely result in a higher price in the market for Snickers?

Accepted Answer

A) Demand for Snickers increases and supply of Snickers decreases. 
B) Demand for Snickers and supply of Snickers both decrease. 
C) Demand for Snickers decreases and supply of Snickers increases. 
D) Demand for Snickers and supply of Snickers both increase

Question 18

Figure 4-6
 
-Refer to Figure 4-6.The movement from S to S₁ is called

Accepted Answer

A) a decrease in supply. 
B) a decrease in quantity supplied. 
C) an increase in supply. 
D) an increase in quantity supplied.

Question 19

Figure 4-8
 
-Refer to Figure 4-8.If price in this market is currently $14,there would be a

Accepted Answer

A) shortage of 20 units and the law of demand predicts that the price will rise from $14 to a higher price. 
B) excess supply of 20 units and the law of supply and demand predicts that the price will fall from $14 to a lower price. 
C) shortage of 40 units and the law of supply predicts that the price will fall from $14 to a lower price. 
D) surplus of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.

Question 20

The unique point at which the supply and demand curves intersect is called

Accepted Answer

A) market harmony. 
B) coincidence. 
C) cohesion. 
D) equilibrium.

Exam 4: The Market Forces of Supply and Demand