Question 1

Surpluses drive price up while shortages drive price down.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that the number of buyers in a market decreases and a technological advancement occurs. What would we expect to happen in the market?

Accepted Answer

A)  The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
B)  The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
C)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
D)  Both equilibrium price and equilibrium quantity would increase.E) A) and B)
F) A) and C)

Question 3

Table 4-2
 
-Refer to Table 4-2. If the price were $8, what would happen?

Accepted Answer

A)  A surplus of 50 units would exist and the price would tend to fall.
B)  A surplus of 10 units would exist and the price would tend to fall.
C)  A surplus of 25 units would exist and the price would tend to fall.
D)  A shortage of 25 units would exist and the price would tend to rise.E) A) and D)
F) A) and C)

Question 4

If buyers now wanted to purchase larger quantities of Vanilla Coke, what do we know about its demand curve?

Accepted Answer

A)  The demand curve for Vanilla Coke would shift to the left.
B)  We would move down the demand curve for Vanilla Coke.
C)  The demand curve for Vanilla Coke would shift to the right.
D)  We would move up the demand curve for Vanilla Coke.E) A) and B)
F) C) and D)

Question 5

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 6

You love peanut butter. You hear on the news that 50% of the peanut crop in North America has been wiped out, which will cause the price to double by the end of the year. What happens as a result?

Accepted Answer

A)  Your demand for peanut butter will increase by the end of the year.
B)  Your demand for peanut butter increases today.
C)  Your demand for peanut butter falls as you look for a substitute good.
D)  You decide to give up peanut butter completely.E) A) and D)
F) All of the above

Question 7

Which of the following is NOT one of the steps in analyzing how some event affects a market?

Accepted Answer

A)  Determine the number of market participants.
B)  Decide whether the curve shifts to the right or to the left.
C)  Determine whether the event shifts the supply, the demand, or both curves.
D)  Use a supply-demand diagram to examine how the shift(s)  affect the equilibrium.E) B) and C)
F) C) and D)

Question 8

If a surplus exists in a market, what do we know?

Accepted Answer

A)  The actual price is above equilibrium price and quantity supplied is greater than quantity demanded.
B)  The actual price is above equilibrium price and quantity demanded is greater than quantity supplied.
C)  The actual price is below equilibrium price and quantity demanded is greater than quantity supplied.
D)  The actual price is below equilibrium price and quantity supplied is greater than quantity demanded.E) None of the above
F) A) and D)

Question 9

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Accepted Answer

A) True 
 B)False

Question 10

What happens when there is a surplus in a market?

Accepted Answer

A)  There is upward pressure on price.
B)  There is downward pressure on price.
C)  The market could still be in equilibrium.
D)  There are too many buyers chasing too few goods.E) B) and D)
F) A) and B)

Question 11

Table 4-3
 
-Refer to Table 4-3. What is the space that would represent an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

A)  space A
B)  space B
C)  space C
D)  space DE) A) and B)
F) A) and C)

Question 12

Market demand is given as Qd = 250 - .5P. Market supply is given as Qs = 2P. What would result if the market price were $140?

Accepted Answer

A)  a shortage of 100
B)  a surplus of 100
C)  a surplus of 280
D)  a shortage of 280E) A) and C)
F) A) and B)

Question 13

What is a table called that shows the relationship between the price of a good and the quantity demanded?

Accepted Answer

A)  demand table
B)  demand schedule
C)  price-quantity table
D)  quantity demanded scheduleE) All of the above
F) C) and D)

Question 14

What would result from an increase in the number of scholarships issued for university education?

Accepted Answer

A)  an increase the supply of education
B)  a decrease the supply of education
C)  an increase the demand for education
D)  a decrease the demand for educationE) B) and C)
F) B) and D)

Question 15

What does the number of buyers in a market affect?

Accepted Answer

A)  the market demand for a good
B)  individual demand curves for a good
C)  both individual demand curves and the market demand for a good
D)  neither individual nor market demandE) A) and D)
F) B) and C)

Question 16

If a shortage exists in a market, what do we know?

Accepted Answer

A)  The actual price is below equilibrium price and quantity demanded is greater than quantity supplied.
B)  The actual price is above equilibrium price and quantity demanded is greater than quantity supplied.
C)  The actual price is above equilibrium price and quantity supplied is greater than quantity demanded.
D)  The actual price is below equilibrium price and quantity supplied is greater than quantity demanded.E) A) and D)
F) A) and B)

Question 17

What relationship is shown by the supply schedule?

Accepted Answer

A)  between price and quantity supplied
B)  between price and quantity demanded
C)  between supply and quantity
D)  between profit and priceE) All of the above
F) A) and B)

Question 18

When it comes to people's tastes, what do economists generally believe?

Accepted Answer

A)  Tastes are based on forces beyond the realm of economics.
B)  Tastes are based on historical and psychological forces.
C)  Tastes can only be studied through well-constructed, real-life models.
D)  Since tastes do not directly affect demand, there is little need to explain people's tastes.E) All of the above
F) B) and C)

Question 19

Complete the following: Two goods are substitutes if a decrease in the price of one good

Accepted Answer

A)  increases the demand for the other good.
B)  reduces the demand for the other good.
C)  reduces the quantity demanded of the other good.
D)  increases the quantity demanded of the other good.E) A) and B)
F) A) and C)

Question 20

What are the forces that make market economies work?

Accepted Answer

A)  price and quantity
B)  demand and supply
C)  cost and benefit
D)  employment and incomeE) B) and C)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

Baseballs and baseball bats are substitute goods.

Correct AnswerverifiedShow Answer

If buyers now wanted to purchase larger quantities of Vanilla Coke, what do we know about its demand curve?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 250 - .5P. Market supply is given as Qs = 2P. What would result if the market price were $140?

Correct AnswerverifiedShow Answer

What relationship is shown by the supply schedule?

Correct AnswerverifiedShow Answer

Suppose that the number of buyers in a market decreases and a technological advancement occurs. What would we expect to happen in the market?

Correct AnswerverifiedShow Answer

Which of the following is NOT one of the steps in analyzing how some event affects a market?

Correct AnswerverifiedShow Answer

If a shortage exists in a market, what do we know?

Correct AnswerverifiedShow Answer

Table 4-3 -Refer to Table 4-3. What is the space that would represent an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Correct AnswerverifiedShow Answer

What are the forces that make market economies work?

Correct AnswerverifiedShow Answer

What is a table called that shows the relationship between the price of a good and the quantity demanded?

Correct AnswerverifiedShow Answer

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Correct AnswerverifiedShow Answer

You love peanut butter. You hear on the news that 50% of the peanut crop in North America has been wiped out, which will cause the price to double by the end of the year. What happens as a result?

Correct AnswerverifiedShow Answer

If a surplus exists in a market, what do we know?

Correct AnswerverifiedShow Answer

Complete the following: Two goods are substitutes if a decrease in the price of one good

Correct AnswerverifiedShow Answer

What does the number of buyers in a market affect?

Correct AnswerverifiedShow Answer

What would result from an increase in the number of scholarships issued for university education?

Correct AnswerverifiedShow Answer

When it comes to people's tastes, what do economists generally believe?

Correct AnswerverifiedShow Answer

What happens when there is a surplus in a market?

Correct AnswerverifiedShow Answer

Surpluses drive price up while shortages drive price down.

Correct AnswerverifiedShow Answer

Table 4-2 -Refer to Table 4-2. If the price were $8, what would happen?

Correct AnswerverifiedShow Answer

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