Question 1

The law of demand states that, other things equal, when the price of a good

Accepted Answer

A)   falls, the demand for the good rises.
B)   rises, the quantity demanded of the good rises.
C)   rises, the demand for the good falls.
D)   falls, the quantity demanded of the good rises.

Question 2

Figure 4-17 
-Refer to Figure 4-17. At a price of

Accepted Answer

A)   $8, there is a surplus of 6 units.
B)   $5, there is neither a shortage nor a surplus.
C)   $2, there is a shortage of 6 units.
D)   All of the above are correct.

Question 3

Figure 4-13 
-Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is

Accepted Answer

A)   4 units.
B)   8 units.
C)   12 units.
D)   16 units.

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

Table 4-8
 
-Refer to Table 4-8. If these are the only three sellers in the market, then the market quantity supplied at a price of $6 is

Accepted Answer

A)   6 units.
B)   12 units.
C)   18 units.
D)   24 units.

Question 6

Figure 4-8 
-Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?

Accepted Answer

A)   a movement along D2 from point A to point B
B)   a movement along D2 from point B to point A
C)   a shift from D1 to D2
D)   a shift from D2 to D1

Question 7

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Advances in production technology typically reduce firms' costs.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)   Sellers set the price of the product.
B)   There are many sellers.
C)   Buyers must accept the price the market determines.
D)   All of the above are characteristics of a perfectly competitive market.

Question 10

The market demand curve

Accepted Answer

A)   is found by vertically adding the individual demand curves.
B)   slopes upward.
C)   represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
D)   represents the sum of the quantities demanded by all the buyers at each price of the good.

Question 11

In competitive markets, which of the following is not correct?

Accepted Answer

A)   Firms produce identical products.
B)   No individual buyer can influence the market price.
C)   Some sellers can set prices.
D)   Buyers are price takers.

Question 12

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Accepted Answer

A) True 
 B)False

Question 13

There is no shortage of scarce resources in a market economy because

Accepted Answer

A)   the government makes shortages illegal.
B)   resources are abundant in market economies.
C)   prices adjust to eliminate shortages.
D)   quantity supplied is always greater than quantity demanded in market economies.

Question 14

Figure 4-24
The diagram below pertains to the demand for turkey in the United States. 
-Refer to Figure 4-24. All else equal, the approach of Thanksgiving would cause a move from

Accepted Answer

A)   DA to DB.
B)   DB to Db.
C)   x to y.
D)   y to x.

Question 15

"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 supply and demand.
D)   the definition of an inferior good.

Question 16

A likely example of complementary goods for most people would be

Accepted Answer

A)   butter and margarine.
B)   lawnmowers and automobiles.
C)   chips and salsa.
D)   cola and lemonade.

Question 17

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Accepted Answer

A)   "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply.
B)   increase the supply of its doll now before the other doll hits the market.
C)   increase the price of its doll now.
D)   discontinue its doll.

Question 18

Table 4-13
The demand schedule below pertains to sandwiches demanded per week.
 
-Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2.
-The current price of a sandwich is $3.00.
-The market quantity supplied of sandwiches is 5.
-The slope of the supply curve is 1.
Then there is currently a

Accepted Answer

A)   shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00.
B)   shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
C)   surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00.
D)   surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.

Question 19

In competitive markets, buyers

Accepted Answer

A)   are price takers, but sellers are price setters.
B)   are price setters, but sellers are price takers.
C)   and sellers are price takers.
D)   and sellers are price setters.

Question 20

Which of the following events must cause equilibrium price to fall?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increase

Exam 4: The Market Forces of Supply and Demand

The market demand curve

Correct Answer
verified

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Correct Answer
verified

Figure 4-13 -Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is

Correct Answer
verified

Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, the approach of Thanksgiving would cause a move from

Correct Answer
verified

There is no shortage of scarce resources in a market economy because

Correct Answer
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In competitive markets, which of the following is not correct?

Correct Answer
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A likely example of complementary goods for most people would be

Correct Answer
verified

Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?

Correct Answer
verified

Correct Answer
verified

The law of demand states that, other things equal, when the price of a good

Correct Answer
verified

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

Correct Answer
verified

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

Correct Answer
verified

Table 4-8 -Refer to Table 4-8. If these are the only three sellers in the market, then the market quantity supplied at a price of $6 is

Correct Answer
verified

"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

Correct Answer
verified

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Correct Answer
verified

Which of the following is not a characteristic of a perfectly competitive market?

Correct Answer
verified

In competitive markets, buyers

Correct Answer
verified

Advances in production technology typically reduce firms' costs.

Correct Answer
verified

Which of the following events must cause equilibrium price to fall?

Correct Answer
verified

Figure 4-17 -Refer to Figure 4-17. At a price of

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

The market demand curve

Correct AnswerverifiedShow Answer

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Correct AnswerverifiedShow Answer

Figure 4-13 -Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $4 is

Correct AnswerverifiedShow Answer

Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, the approach of Thanksgiving would cause a move from

Correct AnswerverifiedShow Answer

There is no shortage of scarce resources in a market economy because

Correct AnswerverifiedShow Answer

In competitive markets, which of the following is not correct?

Correct AnswerverifiedShow Answer

A likely example of complementary goods for most people would be

Correct AnswerverifiedShow Answer

Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The law of demand states that, other things equal, when the price of a good

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

Correct AnswerverifiedShow Answer

Table 4-8 -Refer to Table 4-8. If these are the only three sellers in the market, then the market quantity supplied at a price of $6 is

Correct AnswerverifiedShow Answer

"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

Correct AnswerverifiedShow Answer

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

In competitive markets, buyers

Correct AnswerverifiedShow Answer

Advances in production technology typically reduce firms' costs.

Correct AnswerverifiedShow Answer

Which of the following events must cause equilibrium price to fall?

Correct AnswerverifiedShow Answer

Figure 4-17 -Refer to Figure 4-17. At a price of

Correct AnswerverifiedShow Answer

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