Question 1

Which of the following would lead to a decrease in the supply of watches?

Accepted Answer

A)  An increase in the price of watches 
B)  A decrease in the price of watches 
C)  A decrease in the expected future price of watches 
D)  None of the above

Question 2

Exhibit 4-1  Refer to Exhibit 4-1.At $4 the quantity demanded in the market would be:

Accepted Answer

A)  12. 
B)  22. 
C)  31. 
D)  39.

Question 3

Technological advances in recycling make it possible to produce a greater quantity of paper from a given quantity of recycled newspapers.Predict the likely impact on the supply curve for paper.

Accepted Answer

A)  There is a movement down along the supply curve. 
B)  There is a movement up along the supply curve. 
C)  The supply curve shifts to the left. 
D)  The supply curve shifts to the right.

Question 4

The quantity of a good demanded tends to increase as its price falls because:

Accepted Answer

A)  a decrease in price shifts the demand curve to the right. 
B)  a decrease in price shifts the demand curve to the left. 
C)  a decrease in price shifts the supply curve to the right. 
D)  a decrease in price leads consumers to substitute toward this now relatively cheaper product.

Question 5

If consumers are less willing and able to pay for each level of output than they were previously,then apparently:

Accepted Answer

A)  demand has increased. 
B)  supply has increased. 
C)  demand has decreased. 
D)  there has been a movement down along the demand curve.

Question 6

Increasing government taxation or regulation of an industry generally increases the supply of goods.

Accepted Answer

A) True 
 B)False

Question 7

A downward-sloping demand curve illustrates

Accepted Answer

A)  that demand increases. 
B)  that prices fall. 
C)  the relationship between income and demand. 
D)  the law of demand.

Question 8

Exhibit 4-7  Refer to Exhibit 4-7.What is the equilibrium price in the example?

Accepted Answer

A)  $9 
B)  $8 
C)  $7 
D)  $6

Question 9

When the price of automobile insurance increases sharply,the likely impact on the market for automobiles is:

Accepted Answer

A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a decrease in demand. 
D)  a decrease in quantity demanded.

Question 10

The price of automobiles has increased sharply lately.As a result,automobile dealers have noticed that:

Accepted Answer

A)  demand has increased. 
B)  demand has decreased. 
C)  quantity demanded has increased. 
D)  quantity demanded has decreased.

Question 11

When the price of a good is lower than the equilibrium price,

Accepted Answer

A)  a surplus will exist. 
B)  buyers desire to purchase more than is produced. 
C)  sellers desire to produce and sell more than buyers wish to purchase. 
D)  quantity supplied exceeds quantity demanded.

Question 12

A decrease in consumer incomes will:

Accepted Answer

A)  decrease the demand for an inferior good. 
B)  decrease the supply of an inferior good. 
C)  increase the demand for a normal good. 
D)  do none of the above

Question 13

Exhibit 4-5  Refer to Exhibit 4-5.A change from Point A to Point E represents a(n):

Accepted Answer

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

Question 14

Exhibit 4-7  Refer to Exhibit 4-7.At a price of $4,there is a ____ of ____ pizzas

Accepted Answer

A)  shortage; 4,500 
B)  surplus; 4,500 
C)  shortage; 6,500 
D)  surplus; 6,500

Question 15

Which of the following would most likely cause a decrease in the current demand for a normal good?

Accepted Answer

A)  An increase in the price of the good. 
B)  An increase in the expected future price of the good. 
C)  A decrease in the price of a complement for the good. 
D)  None of the above would be likely to cause a decrease in current demand for a normal good.

Question 16

Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs?

Accepted Answer

A)  an increase in the price of plasma TVs, a substitute 
B)  an increase in incomes assuming that LCD TVs are normal goods 
C)  an increase in the expected future price of LCD TVs 
D)  a decrease in the current price of LCD TVs

Question 17

"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." This relationship between price and quantity demanded is referred to as

Accepted Answer

A)  equilibrium. 
B)  the law of demand. 
C)  the relationship between demand and income. 
D)  the definition of a normal good.

Question 18

The current price of wheat is $10 per bushel,but the equilibrium price of wheat is $5 per bushel.As a result,

Accepted Answer

A)  the quantity supplied of wheat exceeds the quantity demanded of wheat at $10 per bushel. 
B)  the equilibrium quantity of wheat exceeds the quantity demanded at the $10 price. 
C)  there is a surplus of wheat at the $10 price. 
D)  All of the above are correct.

Question 19

Explain how both sales and long lines prior to store openings are characteristic of markets in disequilibrium.

Accepted Answer

The answer of Explain how both sales and long lines...

Question 20

The quantity supplied of a good is the amount that

Accepted Answer

A)  buyers are willing and able to purchase. 
B)  sellers are able to produce. 
C)  buyers and sellers agree will be brought to market. 
D)  sellers are willing and able to sell.

Exam 4: Demand, Supply, and Market Equilibrium