Question 1

Sellers respond to a shortage by cutting their prices.

Accepted Answer

A) True 
 B)False

Question 2

A market supply curve shows

Accepted Answer

A)   the total quantity supplied at all possible prices.
B)   the average quantity supplied by producers at all possible prices.
C)   how quantity supplied changes when consumer income changes.
D)   suppliers' responses, in terms of the amounts they will supply, to the demands of buyers.E) A) and B)
F) None of the above

Question 3

Today's supply curve for gasoline could shift in response to a change in

Accepted Answer

A)   today's price of gasoline.
B)   the expected future price of gasoline.
C)   the number of buyers of gasoline.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 4

If suppliers expect the price of their product to fall in the future, then they will

Accepted Answer

A)   decrease supply now.
B)   increase supply now.
C)   decrease supply in the future but not now.
D)   increase supply in the future but not now.E) None of the above
F) B) and C)

Question 5

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Accepted Answer

A)   Price will fall, and the effect on quantity is ambiguous.
B)   Price will rise, and the effect on quantity is ambiguous.
C)   Quantity will fall, and the effect on price is ambiguous.
D)   Quantity will rise, and the effect on price is ambiguous.E) B) and C)
F) B) and D)

Question 6

Figure 4-21
 
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel?

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) A) and B)
F) None of the above

Question 7

Price will rise to eliminate a surplus.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   $15
B)   $20
C)   $30
D)   $35E) B) and C)
F) C) and D)

Question 9

Equilibrium quantity must decrease when demand

Accepted Answer

A)   increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.
B)   increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
C)   decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
D)   decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.E) All of the above
F) B) and C)

Question 10

In a perfectly competitive market, at the market price, buyers

Accepted Answer

A)   cannot buy all they want, and sellers cannot sell all they want.
B)   cannot buy all they want, but sellers can sell all they want.
C)   can buy all they want, but sellers cannot sell all they want.
D)   can buy all they want, and sellers can sell all they want.E) A) and D)
F) All of the above

Question 11

Which of these statements does not apply to market economies?

Accepted Answer

A)   Prices prevent decentralized decision making from degenerating into chaos.
B)   Prices coordinate the actions of millions of people with varying abilities and desires.
C)   Prices ensure that anyone who wants a product can get it.
D)   Prices ensure that what needs to get done does in fact get done.E) A) and D)
F) C) and D)

Question 12

Figure 4-4
 
-Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

Accepted Answer

A)   an increase in the price of tennis balls
B)   a decrease in the price of tennis racquets
C)   an expectation by buyers that their incomes will increase in the very near future
D)   a decrease in the number of people in the United States under age 70E) A) and C)
F) A) and B)

Question 13

Figure 4-17
 
-Refer to Figure 4-17. At a price of $20, which of the following statements is not correct?

Accepted Answer

A)   The market is in equilibrium.
B)   Equilibrium price is equal to equilibrium quantity.
C)   There is no pressure for price to change.
D)   The quantity of the good that is bought and sold is 600 units.E) A) and C)
F) A) and B)

Question 14

Table 4-5
 
-Refer to Table 4-5. If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is

Accepted Answer

A)   4 units.
B)   5 units.
C)   20 units.
D)   80 units.E) A) and B)
F) A) and C)

Question 15

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Accepted Answer

A)   The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
B)   The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
C)   The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
D)   The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.E) A) and B)
F) A) and D)

Question 16

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

Accepted Answer

A)   falls, the supply of the good rises.
B)   rises, the quantity supplied of the good rises.
C)   rises, the supply of the good falls.
D)   falls, the quantity supplied of the good rises.E) B) and D)
F) A) and B)

Question 17

Which of the following is not an expression for the sum of all the individual demand curves for a product?

Accepted Answer

A)   total demand
B)   market demand
C)   equilibrium demand
D)   aggregate demandE) A) and C)
F) A) and D)

Question 18

Which of the following demonstrates the law of demand?

Accepted Answer

A)   After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise.
B)   Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal.
C)   Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
D)   Kendra buys fewer Snickers at $0.60 per Snickers after the price of Milky Ways falls to $0.50 per Milky Way.E) B) and C)
F) A) and C)

Question 19

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

Accepted Answer

A) True 
 B)False

Question 20

For teenagers, a 10 percent increase in the price of cigarettes leads to a

Accepted Answer

A)   1 percent reduction in the quantity demanded of cigarettes.
B)   4 percent reduction in the quantity demanded of cigarettes.
C)   10 percent reduction in the quantity demanded of cigarettes.
D)   12 percent reduction in the quantity demanded of cigarettes.E) A) and C)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

Figure 4-4 -Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

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Which of these statements does not apply to market economies?

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Which of the following is not an expression for the sum of all the individual demand curves for a product?

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If suppliers expect the price of their product to fall in the future, then they will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sellers respond to a shortage by cutting their prices.

Correct AnswerverifiedShow Answer

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel?

Correct AnswerverifiedShow Answer

Today's supply curve for gasoline could shift in response to a change in

Correct AnswerverifiedShow Answer

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Correct AnswerverifiedShow Answer

Table 4-5 -Refer to Table 4-5. If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is

Correct AnswerverifiedShow Answer

In a perfectly competitive market, at the market price, buyers

Correct AnswerverifiedShow Answer

For teenagers, a 10 percent increase in the price of cigarettes leads to a

Correct AnswerverifiedShow Answer

Equilibrium quantity must decrease when demand

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What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Correct AnswerverifiedShow Answer

Which of the following demonstrates the law of demand?

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Figure 4-17 -Refer to Figure 4-17. At a price of $20, which of the following statements is not correct?

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A market supply curve shows

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

Correct AnswerverifiedShow Answer

Price will rise to eliminate a surplus.

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Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

Correct AnswerverifiedShow Answer

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