Question 1

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

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 D)
F) B) and C)

Question 2

Figure 4-20
The graph below pertains to the supply of paper to colleges and universities.
 A to SB. D)  SB to SA. " class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 4-20. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

Accepted Answer

A)   x to y.
B)   y to x.
C)   SA to SB.
D)   SB to SA.E) None of the above
F) B) and D)

Question 3

A downward-sloping demand curve illustrates

Accepted Answer

A)   that demand decreases over time.
B)   that prices fall over time.
C)   the relationship between income and quantity demanded.
D)   the law of demand.E) None of the above
F) A) and D)

Question 4

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra?

Accepted Answer

A)   the government
B)   prices
C)   subsidies
D)   the Federal ReserveE) All of the above
F) None of the above

Question 5

Table 4-4
 
-Refer to Table 4-4. Which supply schedules obey the law of supply?

Accepted Answer

A)   Firm A's only
B)   Firm B's, Firm C's, and Firm D's only
C)   Firm A's and Firm C's only
D)   Firm B's and Firm D's onlyE) A) and D)
F) B) and C)

Question 6

An increase in demand is represented by a

Accepted Answer

A)   movement downward and to the right along a demand curve.
B)   movement upward and to the left along a demand curve.
C)   rightward shift of a demand curve.
D)   leftward shift of a demand curve.E) A) and B)
F) None of the above

Question 7

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 A to DB. B)  DB to DA. C)  x to y. D)  y to x. " class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 4-19. All else equal, the premature deaths of thousands of turkeys would cause a move from

Accepted Answer

A)   DA to DB.
B)   DB to DA.
C)   x to y.
D)   y to x.E) A) and C)
F) C) and D)

Question 8

Figure 4-15
 
-Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the good?

Accepted Answer

A)   $15
B)   $20
C)   $30
D)   $35E) All of the above
F) C) and D)

Question 9

Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, if the size of the shift of the demand curve is larger than the size of the shift of the supply curve, then the equilibrium quantity rises.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-22
 
-Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded?

Accepted Answer

A)   Panel (a) 
B)   Panel (b) 
C)   Panel (c) 
D)   Panel (d) E) A) and B)
F) B) and D)

Question 11

Figure 4-16
 
-Refer to Figure 4-16. If price in this market is currently $14, then there would be a(n)

Accepted Answer

A)   surplus of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price.
B)   excess supply of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.
C)   surplus of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price.
D)   excess supply of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.E) A) and D)
F) A) and C)

Question 12

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Accepted Answer

A) True 
 B)False

Question 13

The law of demand states that, other things equal, when the price of a good

Accepted Answer

A)   falls, the demand for the good rises.
B)   rises, the quantity demanded of the good rises.
C)   rises, the demand for the good falls.
D)   falls, the quantity demanded of the good rises.E) C) and D)
F) B) and D)

Question 14

In a competitive market, the price of a product

Accepted Answer

A)   is determined by buyers, and the quantity of the product produced is determined by sellers.
B)   is determined by sellers, and the quantity of the product produced is determined by buyers.
C)   and the quantity of the product produced are both determined by sellers.
D)   None of the above is correct.E) A) and B)
F) A) and D)

Question 15

A leftward shift of a supply curve is called a(n)

Accepted Answer

A)   increase in supply.
B)   decrease in supply.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) A) and C)
F) A) and D)

Question 16

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Accepted Answer

A)   an increase in consumer income
B)   a decrease in consumer income
C)   greater government restrictions on agricultural chemicals
D)   fewer government restrictions on agricultural chemicalsE) A) and B)
F) A) and C)

Question 17

The demand curve for textbooks shifts

Accepted Answer

A)   only when income changes.
B)   when a determinant of the demand for textbooks other than the price of textbooks changes.
C)   when the price of textbooks changes.
D)   Both b)  and c)  are correct.E) C) and D)
F) All of the above

Question 18

A university's football stadium is never more than half-full during football games. This indicates

Accepted Answer

A)   the ticket price is above the equilibrium price.
B)   the ticket price is below the equilibrium price.
C)   the ticket price is at the equilibrium price.
D)   nothing about the equilibrium price.E) All of the above
F) A) and B)

Question 19

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

Accepted Answer

A)   complementary goods.
B)   normal goods.
C)   inferior goods.
D)   substitute goods.E) B) and C)
F) A) and D)

Question 20

In a market economy, who or what determines who produces each good and how much is produced?

Accepted Answer

A)   the government
B)   lawyers
C)   lotteries
D)   pricesE) A) and D)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra?

Correct Answer
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Table 4-4 -Refer to Table 4-4. Which supply schedules obey the law of supply?

Correct Answer
verified

Correct Answer
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In a market economy, who or what determines who produces each good and how much is produced?

Correct Answer
verified

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19. All else equal, the premature deaths of thousands of turkeys would cause a move from

Correct Answer
verified

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Correct Answer
verified

A downward-sloping demand curve illustrates

Correct Answer
verified

In a competitive market, the price of a product

Correct Answer
verified

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Correct Answer
verified

Figure 4-16 -Refer to Figure 4-16. If price in this market is currently $14, then there would be a(n)

Correct Answer
verified

Figure 4-15 -Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the good?

Correct Answer
verified

The law of demand states that, other things equal, when the price of a good

Correct Answer
verified

The demand curve for textbooks shifts

Correct Answer
verified

Figure 4-20 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-20. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

Correct Answer
verified

Figure 4-22 -Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded?

Correct Answer
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Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

Correct Answer
verified

An increase in demand is represented by a

Correct Answer
verified

A leftward shift of a supply curve is called a(n)

Correct Answer
verified

A university's football stadium is never more than half-full during football games. This indicates

Correct Answer
verified

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra?

Correct AnswerverifiedShow Answer

Table 4-4 -Refer to Table 4-4. Which supply schedules obey the law of supply?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a market economy, who or what determines who produces each good and how much is produced?

Correct AnswerverifiedShow Answer

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19. All else equal, the premature deaths of thousands of turkeys would cause a move from

Correct AnswerverifiedShow Answer

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Correct AnswerverifiedShow Answer

A downward-sloping demand curve illustrates

Correct AnswerverifiedShow Answer

In a competitive market, the price of a product

Correct AnswerverifiedShow Answer

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Correct AnswerverifiedShow Answer

Figure 4-16 -Refer to Figure 4-16. If price in this market is currently $14, then there would be a(n)

Correct AnswerverifiedShow Answer

Figure 4-15 -Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the good?

Correct AnswerverifiedShow Answer

The law of demand states that, other things equal, when the price of a good

Correct AnswerverifiedShow Answer

The demand curve for textbooks shifts

Correct AnswerverifiedShow Answer

Figure 4-20 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-20. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

Correct AnswerverifiedShow Answer

Figure 4-22 -Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded?

Correct AnswerverifiedShow Answer

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

Correct AnswerverifiedShow Answer

An increase in demand is represented by a

Correct AnswerverifiedShow Answer

A leftward shift of a supply curve is called a(n)

Correct AnswerverifiedShow Answer

A university's football stadium is never more than half-full during football games. This indicates

Correct AnswerverifiedShow Answer

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Correct AnswerverifiedShow Answer

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