Question 1

The highest form of competition is called

Accepted Answer

A)   absolute competition.
B)   cutthroat competition.
C)   perfect competition.
D)   market competition.

Question 2

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 3

The following table contains a monthly demand schedule for large, single-topping, carry-out pizzas.  If the law of demand applies to these pizzas, then A could be

Accepted Answer

A)   35.
B)   40.
C)   30.
D)   All of the above could be correct.

Question 4

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Accepted Answer

A)   Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)   Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
C)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 6

Figure 4-20 
-Refer to Figure 4-20. If the price is $25, then there would be an excess

Accepted Answer

A)   supply of 100 units, and price would fall.
B)   supply of 300 units, and price would fall.
C)   demand of 100 units, and price would fall.
D)   demand of 300 units, and price would fall.

Question 7

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 8

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs

Accepted Answer

A)   shifts to the right.
B)   shifts to the left.
C)   shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information.
D)   will not shift; rather, the demand curve for Mustangs will shift to the right next month.

Question 9

A leftward shift of a supply curve is called a(n)

Accepted Answer

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

Question 10

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point D

Question 11

When the price of a good or service changes,

Accepted Answer

A)   the demand curve shifts in the opposite direction.
B)   the supply curve shifts in the opposite direction.
C)   the supply curve shifts in the same direction.
D)   there is a movement along a given supply curve.

Question 12

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 13

Equilibrium quantity must increase when demand

Accepted Answer

A)   increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase.
B)   increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
C)   decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase.
D)   decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

Question 14

For the general population, a 10 percent increase in the price of cigarettes leads to a

Accepted Answer

A)   1 percent reduction in the quantity demanded of cigarettes.
B)   4 percent reduction in the quantity demanded of cigarettes.
C)   10 percent reduction in the quantity demanded of cigarettes.
D)   12 percent reduction in the quantity demanded of cigarettes.

Question 15

Table 4-12
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:
 
-Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $20, then there will be

Accepted Answer

A)   a shortage of 300 tickets.
B)   a surplus of 300 tickets.
C)   300 tickets sold.
D)   600 tickets unsold.

Question 16

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)

Accepted Answer

A)   increase in the demand for wine, increasing price.
B)   increase in the supply of wine, decreasing price.
C)   decrease in the demand for wine, decreasing price.
D)   decrease in the supply of wine, increasing price.

Question 17

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

Accepted Answer

A)   income.
B)   the prices of substitutes or complements.
C)   expectations about future prices.
D)   the price of the good or service that is being demanded.

Question 18

An increase in the price of a good will

Accepted Answer

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

Question 19

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n)

Accepted Answer

A)   decrease in the demand for sugar and a decrease in the quantity supplied of sugar.
B)   decrease in the supply of sugar and a decrease in the quantity demanded of sugar.
C)   decrease in the equilibrium price of sugar and an increase in the equilibrium quantity of sugar.
D)   increase in the equilibrium price of sugar and a decrease in the equilibrium quantity of sugar.

Question 20

Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

Accepted Answer

A)   an increase in the price of wool shirts and a decrease in the price of raw cotton
B)   a decrease in the price of wool shirts and a decrease in the price of raw cotton
C)   an increase in the price of wool shirts and an increase in the price of raw cotton
D)   a decrease in the price of wool shirts and an increase in the price of raw cotton

Exam 4: The Market Forces of Supply and Demand

An increase in the price of a good will

Correct Answer
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Equilibrium quantity must increase when demand

Correct Answer
verified

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)

Correct Answer
verified

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Correct Answer
verified

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Correct Answer
verified

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Correct Answer
verified

Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

Correct Answer
verified

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Correct Answer
verified

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

Correct Answer
verified

The highest form of competition is called

Correct Answer
verified

Figure 4-20 -Refer to Figure 4-20. If the price is $25, then there would be an excess

Correct Answer
verified

The following table contains a monthly demand schedule for large, single-topping, carry-out pizzas. If the law of demand applies to these pizzas, then A could be

Correct Answer
verified

For the general population, a 10 percent increase in the price of cigarettes leads to a

Correct Answer
verified

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n)

Correct Answer
verified

When the price of a good or service changes,

Correct Answer
verified

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

Correct Answer
verified

A leftward shift of a supply curve is called a(n)

Correct Answer
verified

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs

Correct Answer
verified

Correct Answer
verified

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.

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

An increase in the price of a good will

Correct AnswerverifiedShow Answer

Equilibrium quantity must increase when demand

Correct AnswerverifiedShow Answer

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)

Correct AnswerverifiedShow Answer

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Correct AnswerverifiedShow Answer

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Correct AnswerverifiedShow Answer

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Correct AnswerverifiedShow Answer

Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

Correct AnswerverifiedShow Answer

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The highest form of competition is called

Correct AnswerverifiedShow Answer

Figure 4-20 -Refer to Figure 4-20. If the price is $25, then there would be an excess

Correct AnswerverifiedShow Answer

The following table contains a monthly demand schedule for large, single-topping, carry-out pizzas. If the law of demand applies to these pizzas, then A could be

Correct AnswerverifiedShow Answer

For the general population, a 10 percent increase in the price of cigarettes leads to a

Correct AnswerverifiedShow Answer

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n)

Correct AnswerverifiedShow Answer

When the price of a good or service changes,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A leftward shift of a supply curve is called a(n)

Correct AnswerverifiedShow Answer

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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