Question 1

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is not held constant in a supply schedule?

Accepted Answer

A)  production technology
B)  the price of the good
C)  the prices of inputs
D)  expectations B

Question 3

Most markets in the economy are highly competitive.

Accepted Answer

A) True 
 B)False  True

Question 4

If something happens to alter the quantity supplied at any given price, then

Accepted Answer

A)  we move along the supply curve.
B)  the supply curve shifts.
C)  the supply curve becomes steeper.
D)  the supply curve becomes flatter.

Question 5

When supply and demand both increase, equilibrium

Accepted Answer

A)  price will increase.
B)  price will decrease.
C)  quantity may increase, decrease, or remain unchanged.
D)  price may increase, decrease, or remain unchanged.

Question 6

Figure 4-22
 
-Refer to Figure 4-22. Which of the four panels illustrates a decrease in quantity demanded?

Accepted Answer

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

Question 7

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.

Question 8

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices

Accepted Answer

A)  encourage marijuana use, and the evidence supports this argument.
B)  encourage marijuana use, but the evidence does not support this argument.
C)  discourage marijuana use, and the evidence supports this argument.
D)  discourage marijuana use, but the evidence does not support this argument.

Question 9

What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

Accepted Answer

A)  The demand for artichokes will increase.
B)  The demand for artichokes will decrease.
C)  The demand for artichokes will be unaffected.
D)  The supply of artichokes will increase.

Question 10

Today's supply curve for gasoline could shift in response to a change in

Accepted Answer

A)  today's price of gasoline.
B)  the expected future price of gasoline.
C)  the number of buyers of gasoline.
D)  All of the above are correct.

Question 11

Table 4-8
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:
 $$\begin{array} { | c | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity Denanded } \
\text { by Members }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { by Nan-members }
\end{array} & \text { Quantity Supplied } \
\hline \$ 10 & 1000 & 500 & 600 \
\hline \$ 15 & 800 & 400 & 600 \
\hline \$ 20 & 600 & 300 & 600 \
\hline \$ 25 & 400 & 200 & 600 \
\hline \$ 30 & 200 & 100 & 600 \
\hline
\end{array}$$
-Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

Accepted Answer

A)  $10
B)  $15
C)  $20
D)  $25

Question 12

A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect

Accepted Answer

A)  the dress manufacturer to supply more dresses now than it was supplying previously.
B)  the dress manufacturer to supply fewer dresses now than it was supplying previously.
C)  the demand for this manufacturer's dresses to fall.
D)  no change in the dress manufacturer's current supply; instead, future supply will be affected.

Question 13

"Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well." This relationship between price and quantity supplied

Accepted Answer

A)  is referred to as the law of supply.
B)  applies only to a few goods in the economy.
C)  is represented by a downward-sloping supply curve.
D)  All of the above are correct.

Question 14

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

Accepted Answer

A)  Both the equilibrium price and quantity would increase.
B)  Both the equilibrium price and quantity would decrease.
C)  The equilibrium price would increase, and the equilibrium quantity would decrease.
D)  The equilibrium price would decrease, and the equilibrium quantity would increase.

Question 15

Figure 4-6 
-Refer to Figure 4-6. The movement from D to D' could be caused by

Accepted Answer

A)  an increase in price.
B)  a decrease in the price of a complement.
C)  a technological advance.
D)  a decrease in the price of a substitute.

Question 16

An increase in supply is represented by a

Accepted Answer

A)  movement downward and to the left along a supply curve.
B)  movement upward and to the right along a supply curve.
C)  rightward shift of a supply curve.
D)  leftward shift of a supply curve.

Question 17

To obtain the market demand curve for a product, sum the individual demand curves

Accepted Answer

A)  vertically.
B)  diagonally.
C)  horizontally.
D)  and then average them.

Question 18

Which of the following is not a determinant of the demand for a particular good?

Accepted Answer

A)  the prices of related goods
B)  income
C)  tastes
D)  the prices of the inputs used to produce the good

Question 19

In competitive markets,

Accepted Answer

A)  firms produce identical products.
B)  buyers can influence the market price more easily than sellers.
C)  markets are more likely to be in equilibrium.
D)  sellers are price setters.

Question 20

Table 4-7
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 10 & 10 & 60 \
\hline \$ 8 & 20 & 45 \
\hline \$ 6 & 30 & 30 \
\hline \$ 4 & 40 & 15 \
\hline \$ 2 & 50 &0 \
\hline
\end{array}$$
-Refer to Table 4-7. If the price were $8, a

Accepted Answer

A)  shortage of 20 units would exist, and price would tend to rise.
B)  surplus of 25 units would exist, and price would tend to fall.
C)  shortage of 25 units would exist, and price would tend to rise.
D)  surplus of 45 units would exist, and price would tend to fall.

Exam 4: The Market Forces of Supply and Demand