Question 1

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, an increase in the price of the pulp used in the paper production process would cause a move from

Accepted Answer

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

Question 2

A competitive market is one in which there

Accepted Answer

A)   is only one seller, but there are many buyers.
B)   are many sellers, and each seller has the ability to set the price of his product.
C)   are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market.
D)   are so many buyers and so many sellers that each has a negligible impact on the price of the product.E) B) and D)
F) A) and B)

Question 3

Table 4-6
 
-Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) C) and D)
F) All of the above

Question 4

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

Accepted Answer

A)   a decrease in the price of golf balls
B)   an increase in the price of green fees
C)   an expectation by buyers that their incomes will increase in the very near future
D)   a change in consumer tastes away from golf and toward tennisE) B) and C)
F) A) and D)

Question 5

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)   Sellers set the price of the product.
B)   There are many sellers.
C)   Buyers must accept the price the market determines.
D)   All of the above are characteristics of a perfectly competitive market.E) B) and C)
F) All of the above

Question 7

Figure 4-11
 
-Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a price of $8 is

Accepted Answer

A)   14 units.
B)   15 units.
C)   16 units.
D)   29 units.E) None of the above
F) A) and B)

Question 8

Figure 4-7
 
-Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (b) , the arrows are consistent with which of the following events?

Accepted Answer

A)   an increase in the price of cigarettes
B)   placing a tax on cigarettes
C)   the prohibition of cigarette advertisements on television
D)   decreasing the price of marijuana, given that tobacco and marijuana are complementsE) All of the above
F) C) and D)

Question 9

The actions of buyers and sellers naturally move markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following events must cause equilibrium quantity to fall?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increaseE) C) and D)
F) B) and D)

Question 11

In competitive markets, buyers

Accepted Answer

A)   are price takers, but sellers are price setters.
B)   are price setters, but sellers are price takers.
C)   and sellers are price takers.
D)   and sellers are price setters.E) A) and B)
F) C) and D)

Question 12

The signals that guide the allocation of resources in a market economy are

Accepted Answer

A)   surpluses and shortages.
B)   quantities.
C)   government policies.
D)   prices.E) None of the above
F) All of the above

Question 13

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 14

Figure 4-15
 
-Refer to Figure 4-15. Equilibrium price and quantity are, respectively,

Accepted Answer

A)   $15 and 200 units.
B)   $25 and 600 units.
C)   $25 and 400 units.
D)   $35 and 200 units.E) All of the above
F) A) and C)

Question 15

A decrease in demand will cause a decrease in price, which will cause a decrease in supply.

Accepted Answer

A) True 
 B)False

Question 16

The difference between a supply schedule and a supply curve is that a supply schedule

Accepted Answer

A)   incorporates demand and a supply curve does not.
B)   incorporates profit and a supply curve does not.
C)   can shift, but a supply curve cannot shift.
D)   is a table, and a supply curve is drawn on a graph.E) A) and D)
F) A) and C)

Question 17

If a good is normal, then an increase in income will result in a(n)

Accepted Answer

A)   increase in the demand for the good.
B)   decrease in the demand for the good.
C)   movement down and to the right along the demand curve for the good.
D)   movement up and to the left along the demand curve for the good.E) None of the above
F) All of the above

Question 18

Figure 4-21
 
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for paper napkins as a result of a "Go Green" advertising campaign encouraging people to use cloth napkins?

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) A) and C)

Question 19

What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

Accepted Answer

A)   The demand for artichokes will increase.
B)   The demand for artichokes will decrease.
C)   The demand for artichokes will be unaffected.
D)   The supply of artichokes will increase.E) B) and C)
F) All of the above

Question 20

Soup is an inferior good if the demand

Accepted Answer

A)   for soup falls when the price of a substitute for soup rises.
B)   for soup rises when the price of soup falls.
C)   curve for soup slopes upward.
D)   for soup falls when income rises.E) C) and D)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

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If a good is normal, then an increase in income will result in a(n)

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Which of the following events must cause equilibrium quantity to fall?

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The difference between a supply schedule and a supply curve is that a supply schedule

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Table 4-6 -Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?

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Prices allocate a market economy's scarce resources.

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Which of the following is not a characteristic of a perfectly competitive market?

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The actions of buyers and sellers naturally move markets toward equilibrium.

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Soup is an inferior good if the demand

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Figure 4-7 -Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (b) , the arrows are consistent with which of the following events?

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Figure 4-11 -Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a price of $8 is

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The signals that guide the allocation of resources in a market economy are

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A decrease in demand will cause a decrease in price, which will cause a decrease in supply.

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In competitive markets, buyers

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Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for paper napkins as a result of a "Go Green" advertising campaign encouraging people to use cloth napkins?

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A competitive market is one in which there

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Figure 4-15 -Refer to Figure 4-15. Equilibrium price and quantity are, respectively,

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When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

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Figure 4-20 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-20. All else equal, an increase in the price of the pulp used in the paper production process would cause a move from

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

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