Question 1

In markets, prices move toward equilibrium because of

Accepted Answer

A)  the actions of buyers and sellers. 
B)  government regulations placed on market participants. 
C)  increased competition among sellers. 
D)  buyers' ability to affect market outcomes.

Question 2

Which of the following events must result in a higher price in the market for cigars?

Accepted Answer

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

Question 3

Table 4-9
 
-Refer to Table 4-9. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D

Question 4

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Accepted Answer

A)  prices at and above the equilibrium price. 
B)  prices at and below the equilibrium price. 
C)  prices above and below the equilibrium price, but not at the equilibrium price. 
D)  the equilibrium price but not above or below the equilibrium price.

Question 5

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

Accepted Answer

A)  the sellers' profits must 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 make purchases from other sellers.

Question 6

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Accepted Answer

A) True 
 B)False

Question 7

A leftward shift of a supply curve is called an)

Accepted Answer

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

Question 8

Figure 4-12
Firm A Firm B
  
-Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

Accepted Answer

A)  6 units. 
B)  7 units. 
C)  8 units. 
D)  14 units.

Question 9

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 10

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

Accepted Answer

A)  is greater than the quantity that sellers are willing and able to sell. 
B)  exactly equals the quantity that sellers are willing and able to sell. 
C)  is less than the quantity that sellers are willing and able to sell. 
D)  Either a) or c) could be correct.

Question 11

The dictionary defines equilibrium as a situation in which forces

Accepted Answer

A)  are in balance. 
B)  are the same. 
C)  clash. 
D)  remain constant.

Question 12

Figure 4-11 
-Refer to Figure 4-11. The movement from point A to point B on the graph is called

Accepted Answer

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

Question 13

Which of the following would increase in response to a increase in the price of ironing boards?

Accepted Answer

A)  the quantity of irons demanded at each possible price of irons 
B)  the equilibrium quantity of irons 
C)  the equilibrium price of irons 
D)  None of the above is correct.

Question 14

What will happen in the market for shotgun-shell ammunition now if buyers expect higher shotgun-shell prices in the near future?

Accepted Answer

A)  The demand for shotgun-shell ammunition will increase. 
B)  The demand for shotgun-shell ammunition will decrease. 
C)  The demand for shotgun-shell ammunition will be unaffected. 
D)  The supply of shotgun-shell ammunition will increase.

Question 15

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4-23 
-Refer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price

Accepted Answer

A)  increases and the equilibrium quantity decreases. 
B)  decreases and the equilibrium quantity is ambiguous. 
C)  and quantity both increase. 
D)  and quantity both decrease.

Question 17

Table 4-7
 
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Accepted Answer

A)  2.5 gallons. 
B)  4 gallons. 
C)  10 gallons. 
D)  50 gallons.

Question 18

If a determinant of demand other than price changes, the demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Figure 4-25
The graph below pertains to the supply of paper to colleges and universities. 
-Refer to Figure 4-25. All else equal, an increase in the price of the pulp used in the paper production process would cause a move from

Accepted Answer

A)  x to y. 
B)  y to x. 
C)  SA to SB. 
D)  SB to SA.

Exam 4: The Market Forces of Supply and Demand

In markets, prices move toward equilibrium because of

Which of the following events must result in a higher price in the market for cigars?

Table 4-9 -Refer to Table 4-9. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

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

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

A leftward shift of a supply curve is called an)

Figure 4-12 Firm A Firm B -Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

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.

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

The dictionary defines equilibrium as a situation in which forces

Figure 4-11 -Refer to Figure 4-11. The movement from point A to point B on the graph is called

Which of the following would increase in response to a increase in the price of ironing boards?

What will happen in the market for shotgun-shell ammunition now if buyers expect higher shotgun-shell prices in the near future?

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

Figure 4-23 -Refer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

If a determinant of demand other than price changes, the demand curve shifts.

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

Figure 4-25 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-25. All else equal, an increase in the price of the pulp used in the paper production process would cause a move from