Question 1

A movement along the supply curve might be caused by a change in

Accepted Answer

A)   production technology.
B)   input prices.
C)   expectations about future prices.
D)   the price of the good or service that is being supplied.E) All of the above
F) B) and C)

Question 2

The market for ice cream is a

Accepted Answer

A)   monopolistic market.
B)   highly competitive market.
C)   highly organized market.
D)   Both b and c are correct.E) B) and C)
F) B) and D)

Question 3

In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

Accepted Answer

A) True 
 B)False

Question 4

Figure 4-19 
-Refer to Figure 4-19. 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 B)
F) B) and D)

Question 5

A decrease in quantity demanded

Accepted Answer

A)   results in a movement downward and to the right along a demand curve.
B)   results in a movement upward and to the left along a demand curve.
C)   shifts the demand curve to the left.
D)   shifts the demand curve to the right.E) A) and C)
F) None of the above

Question 6

Table 4-2
 
-Refer to Table 4-2. Whose demand does not obey the law of demand?

Accepted Answer

A)   Abby's
B)   Brandi's
C)   Carrie's
D)   DeeDee'sE) A) and D)
F) All of the above

Question 7

If a surplus exists in a market, then we know that the actual price is

Accepted Answer

A)   above the equilibrium price, and quantity supplied is greater than quantity demanded.
B)   above the equilibrium price, and quantity demanded is greater than quantity supplied.
C)   below the equilibrium price, and quantity demanded is greater than quantity supplied.
D)   below the equilibrium price, and quantity supplied is greater than quantity demanded.E) B) and C)
F) B) and D)

Question 8

The following table contains a supply schedule for a good.  If the law of supply applies to this good, then Q1 could be

Accepted Answer

A)   0.
B)   50.
C)   100.
D)   150.E) A) and C)
F) B) and C)

Question 9

Figure 4-3
Consumer 1 Consumer 2
  
-Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is

Accepted Answer

A)   12 units.
B)   14 units.
C)   19 units.
D)   21 units.E) A) and B)
F) All of the above

Question 10

Figure 4-23 
-Refer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price

Accepted Answer

A)   increases and the equilibrium quantity decreases.
B)   decreases and the equilibrium quantity is ambiguous.
C)   and quantity both increase.
D)   and quantity both decrease.E) B) and C)
F) A) and C)

Question 11

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Accepted Answer

A)   Sellers would not be able to produce and sell as much as before at each relevant price.
B)   The supply would decrease.
C)   Buyers would not be willing to buy as much as before at each relevant price.
D)   The equilibrium price would rise.E) None of the above
F) C) and D)

Question 12

Which of the following is not a determinant of demand?

Accepted Answer

A)   the price of a resource that is used to produce the good
B)   the price of a complementary good
C)   the price of the good next month
D)   the price of a substitute goodE) None of the above
F) All of the above

Question 13

If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

Accepted Answer

A) True 
 B)False

Question 14

Most markets in the economy are highly competitive.

Accepted Answer

A) True 
 B)False

Question 15

Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?

Accepted Answer

The demand...

Question 16

Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

A)   Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
C)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)   None of the above is correct.E) None of the above
F) C) and D)

Question 17

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 B)

Question 18

A shortage is the same as an excess demand.

Accepted Answer

A) True 
 B)False

Question 19

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

Accepted Answer

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

Question 20

Figure 4-9
Panel (a)  Panel (b) 
  
-Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

Accepted Answer

A)   The price of marijuana, a complement to cigarettes, increased.
B)   Mandatory health warnings were placed on cigarette packages.
C)   Several foreign countries banned U.S. cigarettes in their countries.
D)   A tax was placed on cigarettes.E) B) and C)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

Most markets in the economy are highly competitive.

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Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

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Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?

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Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?

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Which of the following is not a determinant of demand?

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The following table contains a supply schedule for a good. If the law of supply applies to this good, then Q1 could be

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If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

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A decrease in quantity demanded

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Figure 4-3 Consumer 1 Consumer 2 -Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is

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Figure 4-9 Panel (a) Panel (b) -Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

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A movement along the supply curve might be caused by a change in

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Figure 4-23 -Refer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price

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If a surplus exists in a market, then we know that the actual price is

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Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

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Figure 4-19 -Refer to Figure 4-19. If price in this market is currently $14, then there would be a(n)

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A shortage is the same as an excess demand.

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The market for ice cream is a

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In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

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Table 4-2 -Refer to Table 4-2. Whose demand does not obey the law of demand?

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A downward-sloping demand curve illustrates

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The demand...
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