Question 1

The demand for a product is the amount that

Accepted Answer

A)   buyers purchase in the market
B)   buyers are willing to purchase at a given price
C)   sellers are willing to sell at a particular price
D)   buyers are willing and able to purchase at alternative prices
E)   buyers are able to purchase at a specific priceF) D) and E)
G) A) and C)

Question 2

Exhibit 4-7 
-Exhibit 4-7 shows a demand curve for dog ownership.If your local government passes an anti-dog-litter law that raises the personal cost of owning a dog from C to C',the quantity of dogs demanded will

Accepted Answer

A)   drop to zero
B)   stay the same
C)   decrease
D)   increase
E)   The answer can only be determined with numbers to analyze.F) A) and B)
G) C) and D)

Question 3

Refer to Exhibit 4-2.Which of the following would cause a shift of demand from D' to D?

Accepted Answer

A)   an increase in the price of a substitute good
B)   an increase in the number of consumers
C)   a decrease in the price of a complementary good
D)   a decline in consumers' incomes if it is a normal good
E)   an increase in consumers' incomes if it is a normal goodF) A) and D)
G) C) and D)

Question 4

Which of the following would shift the supply curve for CDs to the right?

Accepted Answer

A)   a decrease in the price of materials used to make CDs
B)   a rise in the cost of labor used to make CDs
C)   an increase in the price of audio cassettes
D)   a decrease in the number of suppliers
E)   an increase in the price of CDsF) B) and C)
G) C) and D)

Question 5

For which of the following would the income effect of a price change be greatest?

Accepted Answer

A)   ballpoint pens
B)   air travel to Australia
C)   chewing gum
D)   haircuts
E)   college textbooksF) A) and B)
G) C) and D)

Question 6

The income effect of an increase in the price of backpacks (a normal good) is a(n)

Accepted Answer

A)   decrease in the demand for backpacks
B)   decrease in the quantity demanded of backpacks
C)   increase in the demand for backpacks
D)   increase in the quantity demanded of backpacks
E)   new demand curve because everything else is no longer constantF) D) and E)
G) B) and D)

Question 7

Two events occur simultaneously in the market for automobiles: (1) an improvement in assembly line technology and (2) the economy enters a recession (which decreases consumers' income) .An economist would predict with certainty that

Accepted Answer

A)   equilibrium quantity will rise
B)   equilibrium quantity will fall
C)   equilibrium price will rise
D)   equilibrium price will fall
E)   the equilibrium price will remain the sameF) A) and E)
G) A) and C)

Question 8

A price floor set below the equilibrium price will result in a surplus.

Accepted Answer

A) True 
 B)False

Question 9

An improvement in technology shifts the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following will cause the demand curve for gasoline to shift leftward?

Accepted Answer

A)   a decrease in the price of gasoline
B)   an increase in the price of gasoline
C)   a leftward shift of the supply of gasoline
D)   a rightward shift of the supply of cars
E)   a decrease in the price of bicyclesF) A) and D)
G) A) and E)

Question 11

Over the last few years,demand for DVDs has increased,and yet their equilibrium price has fallen.Which of the following best explains this situation?

Accepted Answer

A)   When the price falls,the quantity supplied increases.
B)   There has been a shortage of DVDs.
C)   The supply of DVDs must have decreased.
D)   The demand curve for DVDs slopes upward,so an increase in demand leads to a lower price.
E)   The supply of DVDs must have increased more than the demand for DVDs increased.F) A) and C)
G) B) and E)

Question 12

Tax preparation services and IRS tax publications can be considered substitutes.

Accepted Answer

A) True 
 B)False

Question 13

The market supply curve of a particular product indicates the total quantities

Accepted Answer

A)   that are actually sold during a given time period
B)   that buyers are willing to purchase at alternative prices
C)   that sellers are willing and able to offer at alternative prices
D)   that sellers are willing to offer for sale
E)   of complements offered for saleF) A) and C)
G) None of the above

Question 14

A decrease in the price of a good will cause a leftward shift of the demand curve,if it is a normal good.

Accepted Answer

A) True 
 B)False

Question 15

Jennifer learns that the price of CDs will be going up 10 percent next week.She usually buys three CDs per week.What happens to Jennifer's demand for CDs this week?

Accepted Answer

A)   It does not change because only quantity demanded changes when price changes.
B)   It increases because the price will be lower next week.
C)   It decreases because the price will be higher next week.
D)   It increases because the price will be higher next week.
E)   It decreases because the price will be lower next week.F) None of the above
G) A) and B)

Question 16

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

Accepted Answer

A)   a leftward shift of the demand curve
B)   a movement leftward along the demand curve
C)   a rightward shift of the demand curve
D)   a movement rightward along the demand curve
E)   a rightward shift of the supply curveF) A) and C)
G) D) and E)

Question 17

If the price of gasoline (a normal good) decreases,other things constant,

Accepted Answer

A)   the demand for gasoline increases
B)   the demand for gasoline decreases
C)   the quantity demanded of gasoline increases
D)   the quantity demanded of gasoline decreases
E)   neither the demand for gasoline nor the quantity demanded of gasoline changes because everything is assumed constant along a demand curveF) C) and E)
G) A) and C)

Question 18

The law of demand says that the lower the price of a good,other things constant,

Accepted Answer

A)   the smaller the demand for that good
B)   the larger the demand for that good
C)   the smaller the quantity demanded of that good
D)   the larger the quantity demanded of that good
E)   the smaller the real income of consumers and the lower the quantity demanded of that goodF) A) and E)
G) A) and D)

Question 19

Two goods are considered substitutes only if a(n)

Accepted Answer

A)   decrease in the demand for one leads to a decrease in the supply of the other
B)   increase in the demand for one leads to a decrease in the supply of the other
C)   increase in the price of one leads to an increase in the demand for the other
D)   decrease in the price of one leads to an increase in the demand for the other
E)   decrease in the supply of one leads producers to switch to production of the otherF) B) and E)
G) A) and E)

Question 20

Which of the following events is likely to reduce the demand for on-campus student housing?

Accepted Answer

A)   a rise in rents for off-campus housing
B)   more students enrolling at the university
C)   it becomes less fashionable to live "on campus"
D)   a rise in dorm fees
E)   a rise in the incomes of studentsF) C) and E)
G) D) and E)

Exam 4: Demand, Supply, and Markets

If the price of gasoline (a normal good) decreases,other things constant,

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Exhibit 4-7 -Exhibit 4-7 shows a demand curve for dog ownership.If your local government passes an anti-dog-litter law that raises the personal cost of owning a dog from C to C',the quantity of dogs demanded will

Correct AnswerverifiedShow Answer

Which of the following events is likely to reduce the demand for on-campus student housing?

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An improvement in technology shifts the supply curve rightward.

Correct AnswerverifiedShow Answer

Refer to Exhibit 4-2.Which of the following would cause a shift of demand from D' to D?

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Two goods are considered substitutes only if a(n)

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Tax preparation services and IRS tax publications can be considered substitutes.

Correct AnswerverifiedShow Answer

A price floor set below the equilibrium price will result in a surplus.

Correct AnswerverifiedShow Answer

The law of demand says that the lower the price of a good,other things constant,

Correct AnswerverifiedShow Answer

The market supply curve of a particular product indicates the total quantities

Correct AnswerverifiedShow Answer

The demand for a product is the amount that

Correct AnswerverifiedShow Answer

Jennifer learns that the price of CDs will be going up 10 percent next week.She usually buys three CDs per week.What happens to Jennifer's demand for CDs this week?

Correct AnswerverifiedShow Answer

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

Correct AnswerverifiedShow Answer

Two events occur simultaneously in the market for automobiles: (1) an improvement in assembly line technology and (2) the economy enters a recession (which decreases consumers' income) .An economist would predict with certainty that

Correct AnswerverifiedShow Answer

Over the last few years,demand for DVDs has increased,and yet their equilibrium price has fallen.Which of the following best explains this situation?

Correct AnswerverifiedShow Answer

Which of the following would shift the supply curve for CDs to the right?

Correct AnswerverifiedShow Answer

A decrease in the price of a good will cause a leftward shift of the demand curve,if it is a normal good.

Correct AnswerverifiedShow Answer

The income effect of an increase in the price of backpacks (a normal good) is a(n)

Correct AnswerverifiedShow Answer

For which of the following would the income effect of a price change be greatest?

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Which of the following will cause the demand curve for gasoline to shift leftward?

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