Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  airline travel
B)  restaurant meals
C)  a subscription to the Wall Street Journal
D)  soft drinks
E)  used clothingF) B) and D)
G) C) and E)

Question 3

If both demand and supply increase, price will

Accepted Answer

A)  always increase
B)  always decrease
C)  increase only if supply increases more than demand does
D)  increase only if demand increases more than supply does
E)  decrease only if supply increases less than demand doesF) A) and E)
G) A) and D)

Question 4

Which of the following is the reason supply curves typically slope upward?

Accepted Answer

A)  Opportunity cost of production increases as quantity supplied increases.
B)  Supply increases as opportunity cost decreases.
C)  Price increases as supply decreases.
D)  Quantity supplied is unrelated to price.
E)  The income and substitution effects of a price change.F) None of the above
G) C) and D)

Question 5

If pretzels are a normal good, the income effect of a price change means that

Accepted Answer

A)  as income increases, the quantity demanded increases along the demand curve for pretzels
B)  as income increases, the demand curve for pretzels shifts rightward
C)  as income increases, the demand curve for pretzels shifts leftward
D)  as the price of pretzels increases, the real income of individuals who demand pretzels decreases, so the quantity demanded of pretzels decreases
E)  as the price of pretzels increases, income increasesF) None of the above
G) All of the above

Question 6

Exhibit 4-13 2 to S1 B) movement from a to b on supply curve S1 C) supply shift from S1 to S2 D) movement from c to d on supply curve S2 E) movement from d to c on supply curve S2" class="answers-bank-image d-inline" rel="preload" > 
-Refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?

Accepted Answer

A)  supply shift from S2 to S1
B)  movement from a to b on supply curve S1
C)  supply shift from S1 to S2
D)  movement from c to d on supply curve S2
E)  movement from d to c on supply curve S2F) A) and E)
G) A) and B)

Question 7

Along a given demand curve, a decrease in supply will typically

Accepted Answer

A)  decrease price, but the change in quantity could be in either direction
B)  increase price and decrease the quantity
C)  decrease price but leave quantity unchanged
D)  decrease both quantity and price
E)  increase both quantity and priceF) D) and E)
G) A) and D)

Question 8

Which of the following will cause the demand curve for a good to shift to the left?

Accepted Answer

A)  an increase in the price of the good
B)  a decrease in the price of the good
C)  a decrease in the price of a complementary good
D)  an expectation of a future price decline
E)  an increase in the price of a substitute goodF) A) and C)
G) A) and B)

Question 9

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 B)

Question 10

Which of the following might cause the demand for ice cream, a normal good, to increase?

Accepted Answer

A)  an increase in the price of ice cream
B)  an increase in the price of sherbet
C)  cooler weather
D)  a decrease in the number of consumers
E)  a decrease in consumer incomeF) A) and E)
G) A) and D)

Question 11

In the market for chewing gum, the current price is 50 cents per pack and 100,000 packs are sold. Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?

Accepted Answer

A)  an increase in the price of other kinds of candy
B)  an increase in the price of the ingredients used to make chewing gum
C)  a decrease in the number of young people in the population
D)  an agreement by workers in the chewing gum industry to work for lower wages
E)  an increase in incomeF) A) and B)
G) C) and D)

Question 12

Movements along a demand curve are called changes in

Accepted Answer

A)  demand
B)  opportunity costs
C)  quantity demanded
D)  the substitution effect
E)  preferencesF) B) and D)
G) B) and C)

Question 13

In the case of a normal good, an increase in consumers' incomes would shift the

Accepted Answer

A)  demand curve inward
B)  supply curve inward
C)  supply curve outward
D)  supply and demand curves inward
E)  demand curve outwardF) D) and E)
G) A) and E)

Question 14

Exhibit 4-2  
-In Exhibit 4-2, which of the following could not cause the shift from D to D'?

Accepted Answer

A)  a decrease in the price of a complement
B)  an increase in the price of a substitute
C)  a decrease in the price of the good in question
D)  an increase in the number of consumers
E)  a decrease in income if the good in question is an inferior goodF) A) and B)
G) A) and C)

Question 15

If both supply and demand increase, then the change in equilibrium quantity is indeterminate.

Accepted Answer

A) True 
 B)False

Question 16

In what way is consumer demand different from consumer wants?

Accepted Answer

A)  Demand is only for necessities.
B)  Demand is only for luxuries.
C)  Demand takes into account the ability to pay.
D)  Consumer wants are only for luxuries.
E)  Consumer wants are only for necessities.F) A) and E)
G) A) and D)

Question 17

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would not cause the demand curve for peaches to shift?

Accepted Answer

A)  an increase in the price of apricots
B)  a decrease in the price of nectarines
C)  an increase in the price of peaches
D)  a change in preferences for peaches
E)  a decrease in the income of peach buyersF) All of the above
G) A) and E)

Question 19

An improvement in technology shifts the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 20

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) B) and D)
G) A) and B)

Exam 4: Demand Supply and Markets

Which of the following might cause the demand for ice cream, a normal good, to increase?

Correct AnswerverifiedShow Answer

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

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

Along a given demand curve, a decrease in supply will typically

Correct AnswerverifiedShow Answer

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Correct AnswerverifiedShow Answer

Exhibit 4-13 -Refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?

Correct AnswerverifiedShow Answer

An improvement in technology shifts the supply curve rightward.

Correct AnswerverifiedShow Answer

Which of the following is the reason supply curves typically slope upward?

Correct AnswerverifiedShow Answer

In the market for chewing gum, the current price is 50 cents per pack and 100,000 packs are sold. Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?

Correct AnswerverifiedShow Answer

In the case of a normal good, an increase in consumers' incomes would shift the

Correct AnswerverifiedShow Answer

If both supply and demand increase, then the change in equilibrium quantity is indeterminate.

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

Movements along a demand curve are called changes in

Correct AnswerverifiedShow Answer

Which of the following would not cause the demand curve for peaches to shift?

Correct AnswerverifiedShow Answer

If pretzels are a normal good, the income effect of a price change means that

Correct AnswerverifiedShow Answer

Which of the following will cause the demand curve for a good to shift to the left?

Correct AnswerverifiedShow Answer

Exhibit 4-2 -In Exhibit 4-2, which of the following could not cause the shift from D to D'?

Correct AnswerverifiedShow Answer

If both demand and supply increase, price will

Correct AnswerverifiedShow Answer

In what way is consumer demand different from consumer wants?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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