Question 1

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

Accepted Answer

A) True 
 B)False

Question 2

Who is it that ultimately determines the demand for a product or service?

Accepted Answer

A)  those who buy the product or service
B)  the government
C)  the producers who create the product or service
D)  those who supply the raw materials used in the production of the good or serviceE) C) and D)
F) A) and B)

Question 3

Market demand is given as Qd = 75 - P. Market supply is given as Qs = 3P + 15. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)  price will be $60 and quantity will be 58
B)  price will be $15 and quantity will be 60
C)  price will be $60 and quantity will be 15
D)  price will be $15 and quantity will be 80E) A) and B)
F) None of the above

Question 4

If buyers and/or sellers are price takers, what can they do individually?

Accepted Answer

A)  They have no influence on market price.
B)  They have ultimate control over market price.
C)  Buyers will be able to find prices lower than those determined in the market.
D)  They can somewhat influence the market price.E) None of the above
F) B) and C)

Question 5

Market demand is given as Qd = 120 - P. Market supply is given as Qs = 4P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)  price will be $96 and quantity will be 25
B)  price will be $24 and quantity will be 96
C)  price will be $36 and quantity will be 84
D)  price will be $36 and quantity will be 83E) None of the above
F) B) and D)

Question 6

Figure 4-5 
-Refer to Figure 4-5. Which of the four graphs represents the market for cars after new technology was installed on assembly lines?

Accepted Answer

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

Question 7

What will happen in the rice market if buyers are expecting higher prices in the near future?

Accepted Answer

A)  The demand for rice will increase.
B)  The demand for rice will decrease.
C)  The demand for rice will be unaffected.
D)  The supply of rice will increase.E) B) and C)
F) All of the above

Question 8

For economists, what are people's tastes and demand?

Accepted Answer

A)  beyond the realm of economics
B)  negatively related
C)  not related
D)  positively relatedE) A) and C)
F) B) and C)

Question 9

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become less expensive, digital cameras become more expensive, the cost of the resources needed to manufacture traditional film increases, and fewer firms decide to manufacture traditional film?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous
B)  price will rise and the effect on quantity is ambiguous
C)  quantity will fall and the effect on price is ambiguous
D)  quantity will increase and the effect on price is ambiguousE) B) and C)
F) B) and D)

Question 10

Ryan tells you that he thinks the price of potato chips, his favourite food, will decrease in the near future. How will he probably respond?

Accepted Answer

A)  by decreasing his current demand for chips
B)  by not changing his current demand for chips
C)  by increasing his current demand for chips
D)  by currently refusing to buy any more chipsE) All of the above
F) A) and B)

Question 11

What happens at the equilibrium price?

Accepted Answer

A)  Buyers have an incentive to buy more.
B)  It is possible for there to be a shortage.
C)  Firms have an incentive to increase production.
D)  Everyone in the market has been satisfied.E) A) and B)
F) A) and C)

Question 12

Market demand is given as Qd = 140 - 5P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)  price will be $20 and quantity will be 40
B)  price will be $120 and quantity will be 40
C)  price will be $40 and quantity will be 120
D)  price will be $40 and quantity will be 20E) B) and C)
F) C) and D)

Question 13

What is an example of an inferior good?

Accepted Answer

A)  neckties
B)  one ply toilet paper
C)  cloth napkins
D)  cut flowersE) None of the above
F) B) and C)

Question 14

Figure 4-7 
-What do most studies indicate that tobacco and marijuana tend to be?

Accepted Answer

A)  substitute goods
B)  complementary goods
C)  not related since one is legal and one is illegal
D)  inferior goodsE) None of the above
F) All of the above

Question 15

Figure 4-2 
-Refer to Figure 4-2. What happens at the equilibrium price?

Accepted Answer

A)  200 units would be supplied and demanded
B)  400 units would be supplied and demanded
C)  600 units would be supplied and demanded
D)  600 units would be supplied, but only 200 would be demandedE) A) and C)
F) C) and D)

Question 16

If Francis receives an increase in his pay, what would we expect?

Accepted Answer

A)  Francis's demand for each good he purchases to remain unchanged
B)  Francis's demand for normal goods to decrease
C)  Francis's demand for luxury goods to increase
D)  Francis's demand for inferior goods to increaseE) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)  A shortage of 25 units would exist and the price would tend to fall.
B)  A surplus of 50 units would exist and the price would tend to rise.
C)  A surplus of 25 units would exist and the price would tend to fall.
D)  A shortage of 50 units would exist and the price would tend to rise.E) None of the above
F) A) and B)

Question 18

Fill in the accompanying table, showing whether equilibrium price and equilibrium quantity go up, down or stay the same.

Accepted Answer

The answer of Fill in the accompanying table, showing whether...

Question 19

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be most likely to decrease the price of a new house?

Accepted Answer

A)  Higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future.
B)  Higher wages for carpenters, lower wood prices, reductions in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future.
C)  Lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future.
D)  Lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future.E) A) and B)
F) None of the above

Exam 4: The Market Forces of Supply and Demand

Figure 4-7 -What do most studies indicate that tobacco and marijuana tend to be?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 140 - 5P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would be most likely to decrease the price of a new house?

Correct AnswerverifiedShow Answer

For economists, what are people's tastes and demand?

Correct AnswerverifiedShow Answer

What is an example of an inferior good?

Correct AnswerverifiedShow Answer

If Francis receives an increase in his pay, what would we expect?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 75 - P. Market supply is given as Qs = 3P + 15. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

Figure 4-2 -Refer to Figure 4-2. What happens at the equilibrium price?

Correct AnswerverifiedShow Answer

What will happen in the rice market if buyers are expecting higher prices in the near future?

Correct AnswerverifiedShow Answer

Ryan tells you that he thinks the price of potato chips, his favourite food, will decrease in the near future. How will he probably respond?

Correct AnswerverifiedShow Answer

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

Correct AnswerverifiedShow Answer

Fill in the accompanying table, showing whether equilibrium price and equilibrium quantity go up, down or stay the same.

Correct AnswerverifiedShow Answer

Who is it that ultimately determines the demand for a product or service?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 120 - P. Market supply is given as Qs = 4P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

If buyers and/or sellers are price takers, what can they do individually?

Correct AnswerverifiedShow Answer

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to Figure 4-5. Which of the four graphs represents the market for cars after new technology was installed on assembly lines?

Correct AnswerverifiedShow Answer

What happens at the equilibrium price?

Correct AnswerverifiedShow Answer

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become less expensive, digital cameras become more expensive, the cost of the resources needed to manufacture traditional film increases, and fewer firms decide to manufacture traditional film?

Correct AnswerverifiedShow Answer

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