Question 1

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Accepted Answer

A) True 
 B)False

Question 2

Individual supply curves are summed vertically to obtain the market supply curve.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the shortage?

Accepted Answer

A)   The government would provide tax incentives to encourage people to become farmers.
B)   The government would subsidize the production of food.
C)   The prices of food and the wages of farmers would adjust.
D)   There are no mechanisms to remove the shortage.E) A) and D)
F) A) and B)

Question 4

The highest form of competition is called

Accepted Answer

A)   arbitrage.
B)   monopolistic competition.
C)   equilibrium.
D)   perfect competition.E) A) and B)
F) A) and C)

Question 5

Figure 4-17
 
-Refer to Figure 4-17. If price is $25, then quantity demanded and quantity supplied, respectively, are

Accepted Answer

A)   500 units and 500 units.
B)   500 units and 800 units.
C)   600 units and 600 units.
D)   800 units and 500 units.E) C) and D)
F) A) and C)

Question 6

In a market economy,

Accepted Answer

A)   supply determines demand and demand, in turn, determines prices.
B)   demand determines supply and supply, in turn, determines prices.
C)   the allocation of scarce resources determines prices and prices, in turn, determine supply and demand.
D)   supply and demand determine prices and prices, in turn, allocate the economy's scarce resources.E) B) and D)
F) None of the above

Question 7

An increase in the price of a good would

Accepted Answer

A)   increase the supply of the good.
B)   increase the amount purchased by buyers.
C)   give producers an incentive to produce more.
D)   decrease both the quantity demanded of the good and the quantity supplied of the good.E) A) and D)
F) B) and C)

Question 8

Each of the following is a determinant of demand except

Accepted Answer

A)   tastes.
B)   production technology.
C)   expectations.
D)   the prices of related goods.E) A) and D)
F) None of the above

Question 9

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?

Accepted Answer

A)   Price will rise.
B)   Price will fall.
C)   Price will stay exactly the same.
D)   The price change will be ambiguous.E) B) and C)
F) A) and B)

Question 10

A supply curve slopes upward because

Accepted Answer

A)   as more is produced, total cost of production falls.
B)   an increase in input prices increases supply.
C)   the quantity supplied of most goods and services increases over time.
D)   an increase in price gives producers an incentive to supply a larger quantity.E) A) and D)
F) B) and D)

Question 11

A decrease in the price of blueberries will decrease both the equilibrium price and quantity in the market for blueberry muffins.

Accepted Answer

A) True 
 B)False

Question 12

An example of a perfectly competitive market would be the market for

Accepted Answer

A)   tennis racquets.
B)   pizza.
C)   garbage collection.
D)   wheat.E) B) and C)
F) A) and D)

Question 13

A group of buyers and sellers of a particular good or service is called a(n)

Accepted Answer

A)   coalition.
B)   economy.
C)   market.
D)   competition.E) C) and D)
F) B) and D)

Question 14

Table 4-8
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:
 
-Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $30, then there will be

Accepted Answer

A)   a shortage of 300 tickets.
B)   a surplus of 300 tickets.
C)   600 tickets sold.
D)   600 tickets unsold.E) None of the above
F) A) and B)

Question 15

Figure 4-15
 
-Refer to Figure 4-15. At a price of $20, there would be a(n)

Accepted Answer

A)   shortage. The law of supply and demand predicts that the price will fall from $20 to a lower price.
B)   surplus. The law of supply and demand predicts that the price will rise from $20 to a higher price.
C)   excess demand. The law of supply and demand predicts that the price will rise from $20 to a higher price.
D)   excess supply. The law of supply and demand predicts that the price will fall from $20 to a lower price.E) None of the above
F) A) and C)

Question 16

Figure 4-21
 
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the price number of pastry chefs?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) All of the above
F) A) and B)

Question 17

The two words economists use most often are

Accepted Answer

A)   inflation and trade.
B)   supply and demand.
C)   competition and prices.
D)   markets and equilibrium.E) B) and D)
F) A) and C)

Question 18

Table 4-1
 
-Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) All of the above
F) B) and D)

Question 19

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A)   will increase but not until the end of the year.
B)   increases today.
C)   decreases as you look for a substitute good.
D)   shifts left today.E) None of the above
F) A) and B)

Question 20

An increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

Correct Answer
verified

The two words economists use most often are

Correct Answer
verified

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the price number of pastry chefs?

Correct Answer
verified

An increase in the price of a good would

Correct Answer
verified

Correct Answer
verified

Table 4-1 -Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Correct Answer
verified

Figure 4-17 -Refer to Figure 4-17. If price is $25, then quantity demanded and quantity supplied, respectively, are

Correct Answer
verified

A supply curve slopes upward because

Correct Answer
verified

A group of buyers and sellers of a particular good or service is called a(n)

Correct Answer
verified

Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the shortage?

Correct Answer
verified

Individual supply curves are summed vertically to obtain the market supply curve.

Correct Answer
verified

In a market economy,

Correct Answer
verified

An example of a perfectly competitive market would be the market for

Correct Answer
verified

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Correct Answer
verified

Figure 4-15 -Refer to Figure 4-15. At a price of $20, there would be a(n)

Correct Answer
verified

Each of the following is a determinant of demand except

Correct Answer
verified

An increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens.

Correct Answer
verified

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Correct Answer
verified

A decrease in the price of blueberries will decrease both the equilibrium price and quantity in the market for blueberry muffins.

Correct Answer
verified

The highest form of competition is called

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Correct AnswerverifiedShow Answer

The two words economists use most often are

Correct AnswerverifiedShow Answer

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the price number of pastry chefs?

Correct AnswerverifiedShow Answer

An increase in the price of a good would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 4-1 -Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Correct AnswerverifiedShow Answer

Figure 4-17 -Refer to Figure 4-17. If price is $25, then quantity demanded and quantity supplied, respectively, are

Correct AnswerverifiedShow Answer

A supply curve slopes upward because

Correct AnswerverifiedShow Answer

A group of buyers and sellers of a particular good or service is called a(n)

Correct AnswerverifiedShow Answer

Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the shortage?

Correct AnswerverifiedShow Answer

Individual supply curves are summed vertically to obtain the market supply curve.

Correct AnswerverifiedShow Answer

In a market economy,

Correct AnswerverifiedShow Answer

An example of a perfectly competitive market would be the market for

Correct AnswerverifiedShow Answer

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Correct AnswerverifiedShow Answer

Figure 4-15 -Refer to Figure 4-15. At a price of $20, there would be a(n)

Correct AnswerverifiedShow Answer

Each of the following is a determinant of demand except

Correct AnswerverifiedShow Answer

An increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens.

Correct AnswerverifiedShow Answer

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Correct AnswerverifiedShow Answer

A decrease in the price of blueberries will decrease both the equilibrium price and quantity in the market for blueberry muffins.

Correct AnswerverifiedShow Answer

The highest form of competition is called

Correct AnswerverifiedShow Answer

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