Question 1

Economists emphasize the importance of ____ in analyzing demand.

Accepted Answer

A)  quantity
B)  market potential
C)  wants and needs
D)  price
E)  sales opportunitiesF) B) and D)
G) A) and B) D

Question 2

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Accepted Answer

A)  a shortage.
B)  a surplus.
C)  a black market.
D)  fewer producers of the good or service.
E)  a decrease in demand.F) None of the above
G) A) and E)

Question 3

A cold winter will increase the quantity of heating fuel demanded at every price.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a characteristic of a market with a price floor?

Accepted Answer

A)  Quantity demanded exceeds quantity supplied
B)  Sellers offering discounts in disguised forms
C)  Problem of disposal created by excess supply
D)  Survival of less efficient businessesE) All of the above
F) A) and C)

Question 5

Which of the following events would result in an increase in the demand for natural gas, causing the demand curve to shift outward?

Accepted Answer

A)  A decrease in the price of electricity
B)  An increase in the price of furnaces
C)  An increase in the price of heating oil
D)  A decrease in the price of natural gasE) None of the above
F) B) and C)

Question 6

The demand by sterile couples for babies to adopt has grown rapidly, while the supply has dwindled because of improved contraception, liberal abortion laws, and an increase in the probability that unwed mothers will keep their children.It violates the law to sell human beings at any age, but for every 20 legal adoptions, there seemingly is one baby sale at a price up to $50,000.The generic term economists apply to the market produced by this type of shortage is

Accepted Answer

A)  "black market."
B)  "white slave market."
C)  "the adoption market."
D)  "baby market."E) All of the above
F) A) and B)

Question 7

1 to S2. B) S2 to S1. C) S2 to S3. D) S1 to S3." class="answers-bank-image d-inline" rel="preload" >
-Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

Accepted Answer

A)  S1 to S2.
B)  S2 to S1.
C)  S2 to S3.
D)  S1 to S3.E) All of the above
F) C) and D)

Question 8

Black markets can generally be eliminated when price ceilings are enacted.

Accepted Answer

A) True 
 B)False  False

Question 9

The supply curve of books (which are produced using paper made from trees)  will shift to the right in response to

Accepted Answer

A)  a decline in college tuition.
B)  an increase in home building.
C)  a reduction in the supply of lumberjacks.
D)  removal of government regulations that limit timber harvests from national forests.E) A) and D)
F) A) and B)

Question 10

-Falling oil prices meant that consumers in Libya could afford fewer imported goods.The Libyan government imposed controls to limit imports of cigarettes.At one point, the market price of a carton of cigarettes rose to $70.Which graph in Figure 4-22 best depicts this situation?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) None of the above
F) A) and C)

Question 11

The quantity of DVD players purchased declined in spite of a decline in price.This implies that the

Accepted Answer

A)  supply curve for DVD players shifted to the left.
B)  demand curve for DVD players shifted to the right.
C)  demand curve for DVD players shifted to the left.
D)  supply curve for DVD players shifted to the right.E) A) and B)
F) A) and C)

Question 12

Why does the quantity demanded decrease when the price of a good increases?

Accepted Answer

A)  People choose to reduce consumption of the item.
B)  People "drop out" of the market for the item.
C)  People find substitutes for the item.
D)  All of these responses are correct.E) All of the above
F) B) and D)

Question 13

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to the quantity of money supplied if the interest rate increases?

Accepted Answer

A)  It increases.
B)  It decreases.
C)  It does not change.
D)  It depends entirely on the interest rate.E) A) and B)
F) A) and C)

Question 14

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Accepted Answer

A) True 
 B)False

Question 15

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

Accepted Answer

A)  Favoritism and corruption of officials and market participants
B)  Unenforceability of laws and higher costs of transactions
C)  Increasing restrictions to enforce the laws
D)  Misallocation of resources as prices no longer correspond to costs
E)  All of these responses are correct.F) A) and B)
G) C) and D)

Question 16

An increase in price will increase supply.

Accepted Answer

A) True 
 B)False  False

Question 17

Following the devastation of Hurricane Hugo, Charleston, South Carolina was cut off from the outside world and without electricity.Prices for bagged ice rose by 1,000 percent and electric generators by 300 percent and at least one tree removal firm charged $4,000 to cut up a tree.City government responded by passing an emergency law prohibiting price "gouging." This law is an example of

Accepted Answer

A)  the cost disease of services.
B)  a price ceiling.
C)  the laissez-faire rule.
D)  the indispensable necessity syndrome.E) A) and D)
F) A) and C)

Question 18

The price of natural gas fell and the quantity sold also fell.Everything else being equal, it is consistent that

Accepted Answer

A)  the price of oil fell.
B)  natural gas workers received large wage increases.
C)  more efficient gas drilling equipment was installed.
D)  consumer incomes rose.
E)  the supply of natural gas fell.F) C) and D)
G) A) and B)

Question 19

The imposition of price ceilings on a market often results in

Accepted Answer

A)  an increase in investment in the industry.
B)  a persistent surplus in the market.
C)  the diversion of income toward black-market suppliers.
D)  lower prices being offered on the black market.E) B) and C)
F) A) and B)

Question 20

Which of the following will tend to occur if price floors are imposed on a product?

Accepted Answer

A)  Persistent surpluses
B)  Problems of disposal of goods
C)  Disguised discounts developing to eliminate excess production
D)  Overinvestment in the industry
E)  All of these responses are correct.F) B) and D)
G) A) and D)

Exam 4: Supply and Demand: an Initial Look

Economists emphasize the importance of ____ in analyzing demand.

Correct Answer
verified
D

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Correct Answer
verified

A cold winter will increase the quantity of heating fuel demanded at every price.

Correct Answer
verified

Which of the following is not a characteristic of a market with a price floor?

Correct Answer
verified

Which of the following events would result in an increase in the demand for natural gas, causing the demand curve to shift outward?

Correct Answer
verified

Correct Answer
verified

-Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

Correct Answer
verified

Black markets can generally be eliminated when price ceilings are enacted.

Correct Answer
verified
False

The supply curve of books (which are produced using paper made from trees) will shift to the right in response to

Correct Answer
verified

-Falling oil prices meant that consumers in Libya could afford fewer imported goods.The Libyan government imposed controls to limit imports of cigarettes.At one point, the market price of a carton of cigarettes rose to $70.Which graph in Figure 4-22 best depicts this situation?

Correct Answer
verified

The quantity of DVD players purchased declined in spite of a decline in price.This implies that the

Correct Answer
verified

Why does the quantity demanded decrease when the price of a good increases?

Correct Answer
verified

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to the quantity of money supplied if the interest rate increases?

Correct Answer
verified

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Correct Answer
verified

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

Correct Answer
verified

An increase in price will increase supply.

Correct Answer
verified
False

Correct Answer
verified

The price of natural gas fell and the quantity sold also fell.Everything else being equal, it is consistent that

Correct Answer
verified

The imposition of price ceilings on a market often results in

Correct Answer
verified

Which of the following will tend to occur if price floors are imposed on a product?

Correct Answer
verified

Exam 4: Supply and Demand: an Initial Look

Economists emphasize the importance of ____ in analyzing demand.

Correct AnswerverifiedD

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Correct AnswerverifiedShow Answer

A cold winter will increase the quantity of heating fuel demanded at every price.

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a market with a price floor?

Correct AnswerverifiedShow Answer

Which of the following events would result in an increase in the demand for natural gas, causing the demand curve to shift outward?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

Correct AnswerverifiedShow Answer

Black markets can generally be eliminated when price ceilings are enacted.

Correct AnswerverifiedFalse

The supply curve of books (which are produced using paper made from trees) will shift to the right in response to

Correct AnswerverifiedShow Answer

-Falling oil prices meant that consumers in Libya could afford fewer imported goods.The Libyan government imposed controls to limit imports of cigarettes.At one point, the market price of a carton of cigarettes rose to $70.Which graph in Figure 4-22 best depicts this situation?

Correct AnswerverifiedShow Answer

The quantity of DVD players purchased declined in spite of a decline in price.This implies that the

Correct AnswerverifiedShow Answer

Why does the quantity demanded decrease when the price of a good increases?

Correct AnswerverifiedShow Answer

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to the quantity of money supplied if the interest rate increases?

Correct AnswerverifiedShow Answer

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Correct AnswerverifiedShow Answer

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

Correct AnswerverifiedShow Answer

An increase in price will increase supply.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

The price of natural gas fell and the quantity sold also fell.Everything else being equal, it is consistent that

Correct AnswerverifiedShow Answer

The imposition of price ceilings on a market often results in

Correct AnswerverifiedShow Answer

Which of the following will tend to occur if price floors are imposed on a product?

Correct AnswerverifiedShow Answer

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D

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False

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False

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