Question 1

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

Accepted Answer

A)   supply
B)   demand
C)   averages
D)   variable proportions
E)   increasing costs

Question 2

Which of the following would not shift the demand curve for pork?

Accepted Answer

A)   an increase in the price of beef
B)   an increase in the price of pork
C)   an increase in the incomes of pork consumers
D)   a widespread advertising campaign for pork
E)   a finding that consumption of beef increases the risk of heart attack

Question 3

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100,000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000?

Accepted Answer

A)   an increase in the price of other kinds of candy
B)   an increase in the price of the ingredients used to make chewing gum
C)   an agreement by workers in the chewing gum industry to work for lower wages
D)   a decrease in the number of young people in the population
E)   a decrease in income

Question 4

Economists emphasize the importance of equilibrium in markets because

Accepted Answer

A)   trading in markets can only occur at the equilibrium price and quantity
B)   the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity
C)   all buyers and sellers are better off at the equilibrium point than any other price and quantity combination
D)   it represents a compromise between sellers hoping for low prices and buyers searching for high prices
E)   it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service

Question 5

In what way is consumer demand different from consumer wants?

Accepted Answer

A)   Demand is only for necessities.
B)   Demand is only for luxuries.
C)   Demand takes into account the ability to pay.
D)   Consumer wants are only for luxuries.
E)   Consumer wants are only for necessities.

Question 6

A price ceiling set below the equilibrium price will result in a shortage.

Accepted Answer

A) True 
 B)False

Question 7

The slope of the demand curve for a normal good must be positive.

Accepted Answer

A) True 
 B)False

Question 8

Suppose a market is in equilibrium and then a price floor is established below the equilibrium price.Which of the following will happen?

Accepted Answer

A)   quantity demanded will increase
B)   a surplus will develop
C)   a shortage will develop
D)   the quantity sold will rise
E)   the market will remain in equilibrium

Question 9

Which of the following statements about markets is not true?

Accepted Answer

A)   A market is an impersonal mechanism.
B)   Markets coordinate the independent decisions of buyers and sellers.
C)   Markets reduce the transaction costs of exchange.
D)   More specialized markets are generally found in urban areas.
E)   All markets provide the same amounts of information.

Question 10

Which of the following would be most likely to increase the demand for downtown parking in a large city?

Accepted Answer

A)   improved bus service to the downtown area
B)   lower downtown parking fees
C)   more downtown parking lots
D)   more freeways leading to the downtown area
E)   a major employer moves to the suburbs

Question 11

A rightward shift of a demand curve represents a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 12

If pretzels are a normal good,the income effect of a price change means that

Accepted Answer

A)   as income increases,the quantity demanded increases along the demand curve for pretzels
B)   as income increases,the demand curve for pretzels shifts rightward
C)   as income increases,the demand curve for pretzels shifts leftward
D)   as the price of pretzels increases,the real income of individuals who demand pretzels decreases,so the quantity demanded of pretzels decreases
E)   as the price of pretzels increases,income increases

Question 13

Which of the following is true of an increase in quantity supplied of a given good?

Accepted Answer

A)   It is represented by a rightward shift in the supply curve.
B)   It could result from a technological improvement.
C)   The price of a key resource used to produce the good may have decreased.
D)   It is caused by an increase in the price of the good.
E)   The price of an alternative good has increased.

Question 14

In the case of a normal good,an increase in consumers' incomes would shift the

Accepted Answer

A)   demand curve inward
B)   supply curve inward
C)   supply curve outward
D)   supply and demand curves inward
E)   demand curve outward

Question 15

In Exhibit 4-2,which of the following could not cause the shift from D to D'?

Accepted Answer

A)   a decrease in the price of a complement
B)   an increase in the price of a substitute
C)   a decrease in the price of the good in question
D)   an increase in the number of consumers
E)   a decrease in income if the good in question is an inferior good

Question 16

Other things equal,the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

Accepted Answer

A)   the price of wood pulp used in the production of index cards
B)   the technology in the index card production process
C)   the price of index cards
D)   the price of packaging material (a substitute in production) 
E)   the future price of index cards expected by producers

Question 17

For a given supply curve,an increase in demand will typically

Accepted Answer

A)   increase price,but quantity could change in either direction
B)   increase quantity,but price could change in either direction
C)   increase price but leave quantity unchanged
D)   decrease both quantity and price
E)   increase both quantity and price

Question 18

If good B is a complement to good A,then a rise in the price of B

Accepted Answer

A)   increases the quantity demanded of A
B)   decreases the demand for A
C)   increases the demand for A
D)   decreases the quantity demanded of A
E)   will cause the demand for B to increase

Question 19

An increase in demand for chocolate chips would usually result in a(n)

Accepted Answer

A)   higher equilibrium price and a lower equilibrium quantity
B)   lower equilibrium price and a lower equilibrium quantity
C)   lower equilibrium price and a higher equilibrium quantity
D)   higher equilibrium price and a higher equilibrium quantity
E)   increase in the supply of chocolate chips

Question 20

In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?

Accepted Answer

A)   if supply and demand both decline
B)   if supply and demand both rise
C)   if supply declines and demand rises
D)   if supply rises and demand declines
E)   if supply remains constant and demand rises

Exam 4: Demand, Supply, and Markets

The slope of the demand curve for a normal good must be positive.

Correct AnswerverifiedShow Answer

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100,000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000?

Correct AnswerverifiedShow Answer

If good B is a complement to good A,then a rise in the price of B

Correct AnswerverifiedShow Answer

For a given supply curve,an increase in demand will typically

Correct AnswerverifiedShow Answer

In what way is consumer demand different from consumer wants?

Correct AnswerverifiedShow Answer

If pretzels are a normal good,the income effect of a price change means that

Correct AnswerverifiedShow Answer

Other things equal,the supply of index cards is likely to be affected by all of the following except one.Which is the exception?

Correct AnswerverifiedShow Answer

In Exhibit 4-2,which of the following could not cause the shift from D to D'?

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Suppose a market is in equilibrium and then a price floor is established below the equilibrium price.Which of the following will happen?

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In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?

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Economists emphasize the importance of equilibrium in markets because

Correct AnswerverifiedShow Answer

Which of the following would be most likely to increase the demand for downtown parking in a large city?

Correct AnswerverifiedShow Answer

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

Correct AnswerverifiedShow Answer

A rightward shift of a demand curve represents a decrease in demand.

Correct AnswerverifiedShow Answer

Which of the following statements about markets is not true?

Correct AnswerverifiedShow Answer

An increase in demand for chocolate chips would usually result in a(n)

Correct AnswerverifiedShow Answer

In the case of a normal good,an increase in consumers' incomes would shift the

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price will result in a shortage.

Correct AnswerverifiedShow Answer

Which of the following would not shift the demand curve for pork?

Correct AnswerverifiedShow Answer

Which of the following is true of an increase in quantity supplied of a given good?

Correct AnswerverifiedShow Answer

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