Question 1

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

Accepted Answer

A) True 
 B)False

Question 2

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Accepted Answer

A) True 
 B)False

Question 3

In a competitive market, the quantity of a product produced and the price of the product are determined by

Accepted Answer

A) a single buyer. 
B) a single seller. 
C) one buyer and one seller working together. 
D) all buyers and all sellers.

Question 4

If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see

Accepted Answer

A) an increase in demand for brown rice and a decrease in demand for white rice. 
B) a decrease in demand for brown rice and an increase in demand for white rice. 
C) an increase in demand for both brown and white rice. 
D) no change in demand for either type of rice because weight loss is not a determinant of demand.

Question 5

For a market for a good or service to exist, there must be a

Accepted Answer

A) group of buyers and sellers. 
B) specific time and place at which the good or service is traded. 
C) high degree of organization present. 
D) All of the above are correct.

Question 6

A decrease in the price of a complement will shift the demand curve for a good to the left.

Accepted Answer

A) True 
 B)False

Question 7

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 only 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 8

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

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 9

When a shortage exists in a market, sellers

Accepted Answer

A) raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
B) raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. 
C) lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. 
D) lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

Question 10

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

Accepted Answer

A) True 
 B)False

Question 11

Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers wish to sell.

Accepted Answer

A) True 
 B)False

Question 12

Figure 4-15 
-Refer to Figure 4-15. At what price would there be an excess demand of 200 units of the good?

Accepted Answer

A) $15 
B) $20 
C) $30 
D) $35

Question 13

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

Accepted Answer

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

Question 14

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

Accepted Answer

A) the ticket price was above the equilibrium price. 
B) the ticket price was below the equilibrium price. 
C) the ticket price was at the equilibrium price. 
D) nothing about the equilibrium price.

Question 15

Figure 4-4 
-Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?

Accepted Answer

A) a decrease in the price of DVDs 
B) a decrease in the price of DVD players 
C) a change in consumer preferences toward watching movies in movie theaters rather than at home 
D) a decrease in the number of people in the United States

Question 16

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

Accepted Answer

A) True 
 B)False

Question 17

The line that relates the price of a good and the quantity supplied of that good is called the supply

Accepted Answer

A) schedule, and it usually slopes upward. 
B) schedule, and it usually slopes downward. 
C) curve, and it usually slopes upward. 
D) curve, and it usually slopes downward.

Question 18

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

Accepted Answer

A) schedule, and it usually slopes upward. 
B) schedule, and it usually slopes downward. 
C) curve, and it usually slopes upward. 
D) curve, and it usually slopes downward.

Question 19

The highest form of competition is called

Accepted Answer

A) arbitrage. 
B) monopolistic competition. 
C) equilibrium. 
D) perfect competition.

Question 20

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

Accepted Answer

A) the price of tennis balls increases. 
B) the price of tennis balls decreases. 
C) the price of tennis balls does not change. 
D) there is no longer a market for tennis balls.

Exam 4: The Market Forces of Supply and Demand

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

In a competitive market, the quantity of a product produced and the price of the product are determined by

If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see

For a market for a good or service to exist, there must be a

A decrease in the price of a complement will shift the demand curve for a good to the left.

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

When a shortage exists in a market, sellers

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers wish to sell.

Figure 4-15 -Refer to Figure 4-15. At what price would there be an excess demand of 200 units of the good?

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

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

Figure 4-4 -Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

The line that relates the price of a good and the quantity supplied of that good is called the supply

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

The highest form of competition is called

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,