Question 1

Which of the following would most likely increase the price of chicken?

Accepted Answer

A)  unusually hot weather that kills millions of chickens before they are ready for market
B)  a decrease in consumer income
C)  a reduction in the price of grains used to produce chicken feed
D)  a reduction in the price of beef, a substitute for chickenE) B) and C)
F) All of the above

Question 2

FIGURE 4-5
 
-In an effort to fight inflation of 18 percent per year in Venezuela,President Hugo Chávez has instituted price controls on most basic foodstuffs.Which of the following is the likely outcome of these price controls?

Accepted Answer

A)  Demand for food will increase due to the lower prices.
B)  Firms will produce less of the price-controlled items and produce more of other items.
C)  Lower prices will cause the supply curve to shift left, reducing the equilibrium quantity.
D)  The relative price of food will increase, stimulating increased production.E) B) and C)
F) A) and C)

Question 3

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases,what will result?

Accepted Answer

A)  The quantity of lettuce traded remains the same.
B)  A shortage of lettuce will be created.
C)  A surplus of lettuce will be created.
D)  The quantity of lettuce supplied will increase.E) A) and B)
F) B) and D)

Question 4

If the price of ice cream increases substantially (ceteris paribus) ,what is the equilibrium quantity of hot fudge sauce likely to do?

Accepted Answer

A)  Increase, and the equilibrium price is likely to increase.
B)  Decrease, and the equilibrium price is likely to increase.
C)  Increase, and the equilibrium price is likely to decrease.
D)  Decrease, and the equilibrium price is likely to decrease.E) A) and B)
F) B) and C)

Question 5

Whenever there is a surplus at a particular price,what will the quantity sold at that price be equal to?

Accepted Answer

A)  the average of quantity supplied and quantity demanded
B)  the quantity demanded at that price
C)  the quantity supplied at that price
D)  the quantity supplied minus the quantity demandedE) None of the above
F) A) and D)

Question 6

FIGURE 4-2
 
-Refer to Figure 4-2.Which movement is consistent with a decrease in demand?

Accepted Answer

A)  from Point D to Point C
B)  from Point D to Point B
C)  from Point C to Point D
D)  from Point B to Point DE) A) and C)
F) A) and B)

Question 7

FIGURE 4-4
 
-Refer to Figure 4-4.Starting with initial curves D₀ and S₀,which movement is consistent with an increase in both demand and supply?

Accepted Answer

A)  from Point A to Point E
B)  from Point A to Point F
C)  from Point A to Point C
D)  from Point A to Point IE) B) and C)
F) None of the above

Question 8

What occurs whenever a price floor is imposed above equilibrium price?

Accepted Answer

A)  The supply will increase due to a higher price until it just equals the quantity demanded.
B)  The demand will increase due to a higher price and a shortage will result.
C)  The quantity supplied will exceed the quantity demanded.
D)  The supply will increase due to a higher price and a surplus will result.E) All of the above
F) C) and D)

Question 9

When both the supply and demand curves shift in the same direction,the change in equilibrium quantity will be in the same direction as the shifting curves.

Accepted Answer

A) True 
 B)False

Question 10

What action by the government will always cause a surplus?

Accepted Answer

A)  when the government imposes a price floor above the equilibrium price
B)  when the government imposes a price ceiling below the equilibrium price
C)  when the government imposes a price floor below the equilibrium price
D)  when the government imposes a price ceiling above the equilibrium priceE) A) and D)
F) C) and D)

Question 11

Which of the following will result at the equilibrium price for gasoline?

Accepted Answer

A)  Everyone with the desire and the income to buy gasoline at that price can do so.
B)  Shortages will occur.
C)  Quantity demanded exceeds the quantity supplied.
D)  Surpluses are inevitable.E) A) and D)
F) All of the above

Question 12

Ceteris paribus,if the market demand for a product increases,what will happen to the equilibrium quantity and price of the product?

Accepted Answer

A)  The quantity will increase and the price will be indeterminate.
B)  The quantity will be indeterminate and the price will decrease.
C)  The quantity will decrease and the price will decrease.
D)  The quantity will increase and the price will increase.E) B) and D)
F) A) and B)

Question 13

In an attempt to reduce poaching of elephant ivory tusks,officials in Kenya burned illegally gathered ivory.Using your understanding of shifts in supply and demand,will this turn out to be a helpful or hurtful move on the Kenyan government's part?

Accepted Answer

The burning of the ivory causes the supp...

Question 14

TABLE 4-2
 
-Refer to Table 4-2.Suppose that D₁ and S₁ are the prevailing demand and supply curves for a product.What happens in the market if the demand schedule changes from D₁ to D₂?

Accepted Answer

A)  The equilibrium price decreases from $6 to $4.
B)  The equilibrium quantity increases from 13 to 18.
C)  The equilibrium price increases from $6 to $8.
D)  The equilibrium quantity decreases from 15 to 13.E) B) and C)
F) A) and D)

Question 15

In an effort to reduce the surplus of dairy products,agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers) in 1996-1997.How did this influence the market for beef?

Accepted Answer

A)  Demand increased, leading to higher beef prices.
B)  Supply decreased, leading to higher beef prices.
C)  Demand decreased, leading to lower beef prices.
D)  Supply increased, leading to lower beef prices.E) C) and D)
F) B) and D)

Question 16

When the demand and supply of grapes both increase at the same time,what will this result in?

Accepted Answer

A)  The quantity of grapes bought and sold will rise.
B)  The price of grapes will fall.
C)  The quantity of grapes bought and sold will fall.
D)  The price of grapes will rise.E) All of the above
F) C) and D)

Question 17

Suppose Canada steps up efforts to combat drug trafficking and,with the aid of the U.S.border patrol,intercepts a significant percentage of cocaine shipments.What will be the impact of this on the market for cocaine in Montréal?

Accepted Answer

A)  The supply of cocaine will increase, causing the price of cocaine to increase.
B)  The supply of cocaine will decrease, causing the price of cocaine to increase.
C)  The demand for cocaine will increase, causing the price of cocaine to increase.
D)  There will be a movement up along the supply curve of cocaine.E) B) and D)
F) All of the above

Question 18

Which of the following could be responsible for an increase in the price of wheat?

Accepted Answer

A)  a simultaneous increase in supply and decrease in demand for wheat
B)  a decrease in the demand for wheat
C)  an increase in the demand for wheat
D)  an increase in the supply of wheatE) C) and D)
F) B) and C)

Question 19

A report produced by the OECD suggests that global food prices will increase substantially in the next 10 years.Which of the following would likely cause food prices to rise during this period?

Accepted Answer

A)  Technological change will increase supply faster than population growth increases demand.
B)  Adverse weather conditions in grain-producing regions of the world will negatively affect production.
C)  The reduction in oil prices has shifted the supply curve to the right.
D)  Governments will institute price controls on food.E) All of the above
F) A) and C)

Question 20

TABLE 4-3
 
-Refer to Table 4-3.The government imposes a $1.20 price ceiling at the same time that there is a substantial decrease in the price of sport utility vehicles.(Assume that sport utility vehicles have very high fuel consumption.) What is the expected result?

Accepted Answer

A)  The price of gasoline will equal $1.20 per litre, and a shortage of gasoline is created.
B)  The price of gasoline will equal $1.20 per litre, and the quantity demanded equals the quantity supplied.
C)  The price of gasoline will rise above $1.20 per litre, and a surplus of gasoline is created.
D)  The price of gasoline will fall below $1.20 per litre, and a shortage of gasoline is created.E) B) and C)
F) A) and B)

Exam 4: Bringing Supply and Demand Together

Which of the following could be responsible for an increase in the price of wheat?

Correct AnswerverifiedShow Answer

In an effort to reduce the surplus of dairy products,agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers) in 1996-1997.How did this influence the market for beef?

Correct AnswerverifiedShow Answer

When both the supply and demand curves shift in the same direction,the change in equilibrium quantity will be in the same direction as the shifting curves.

Correct AnswerverifiedShow Answer

If the price of ice cream increases substantially (ceteris paribus) ,what is the equilibrium quantity of hot fudge sauce likely to do?

Correct AnswerverifiedShow Answer

TABLE 4-3 -Refer to Table 4-3.The government imposes a $1.20 price ceiling at the same time that there is a substantial decrease in the price of sport utility vehicles.(Assume that sport utility vehicles have very high fuel consumption.) What is the expected result?

Correct AnswerverifiedShow Answer

A report produced by the OECD suggests that global food prices will increase substantially in the next 10 years.Which of the following would likely cause food prices to rise during this period?

Correct AnswerverifiedShow Answer

What occurs whenever a price floor is imposed above equilibrium price?

Correct AnswerverifiedShow Answer

FIGURE 4-2 -Refer to Figure 4-2.Which movement is consistent with a decrease in demand?

Correct AnswerverifiedShow Answer

Suppose Canada steps up efforts to combat drug trafficking and,with the aid of the U.S.border patrol,intercepts a significant percentage of cocaine shipments.What will be the impact of this on the market for cocaine in Montréal?

Correct AnswerverifiedShow Answer

When the demand and supply of grapes both increase at the same time,what will this result in?

Correct AnswerverifiedShow Answer

In an attempt to reduce poaching of elephant ivory tusks,officials in Kenya burned illegally gathered ivory.Using your understanding of shifts in supply and demand,will this turn out to be a helpful or hurtful move on the Kenyan government's part?

Correct AnswerverifiedThe burning of the ivory causes the supp...View AnswerShow Answer

FIGURE 4-5 -In an effort to fight inflation of 18 percent per year in Venezuela,President Hugo Chávez has instituted price controls on most basic foodstuffs.Which of the following is the likely outcome of these price controls?

Correct AnswerverifiedShow Answer

What action by the government will always cause a surplus?

Correct AnswerverifiedShow Answer

Which of the following would most likely increase the price of chicken?

Correct AnswerverifiedShow Answer

Which of the following will result at the equilibrium price for gasoline?

Correct AnswerverifiedShow Answer

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases,what will result?

Correct AnswerverifiedShow Answer

Ceteris paribus,if the market demand for a product increases,what will happen to the equilibrium quantity and price of the product?

Correct AnswerverifiedShow Answer

Whenever there is a surplus at a particular price,what will the quantity sold at that price be equal to?

Correct AnswerverifiedShow Answer

FIGURE 4-4 -Refer to Figure 4-4.Starting with initial curves D₀ and S₀,which movement is consistent with an increase in both demand and supply?

Correct AnswerverifiedShow Answer

TABLE 4-2 -Refer to Table 4-2.Suppose that D₁ and S₁ are the prevailing demand and supply curves for a product.What happens in the market if the demand schedule changes from D₁ to D₂?

Correct AnswerverifiedShow Answer

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The burning of the ivory causes the supp...
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