Question 1

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) A) and B)
F) All of the above

Question 2

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A)   a bakery in a large city
B)   a bank in a large city
C)   a local cable television company
D)   a small group of corn farmersE) None of the above
F) B) and C)

Question 3

If a determinant of demand other than price changes, the demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 4

An increase in the price of blueberries would lead to a(n)

Accepted Answer

A)   increased supply of blueberries.
B)   a movement up and to the right along the supply curve for blueberries.
C)   a movement down and to the left along the supply curve for blueberries.
D)   Both a and b are correct.E) A) and D)
F) A) and B)

Question 5

Which of the following sets of events must cause an increase in the price of a new house?

Accepted Answer

A)   higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future
B)   lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population and expectations of higher house prices in the future
C)   lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population and expectations of higher house prices in the future
D)   higher wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population and expectations of lower house prices in the futureE) A) and C)
F) A) and B)

Question 6

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Accepted Answer

A) True 
 B)False

Question 7

When we move along a given demand curve,

Accepted Answer

A)   only price is held constant.
B)   income and price are held constant.
C)   all nonprice determinants of demand are held constant.
D)   all determinants of quantity demanded are held constant.E) B) and C)
F) A) and C)

Question 8

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

Accepted Answer

A)   luxury good.
B)   inferior good.
C)   normal good.
D)   complementary good.E) B) and C)
F) A) and B)

Question 9

Which of the following is the least likely to be a competitive market?

Accepted Answer

A)   ice cream
B)   soybeans
C)   cable television
D)   new housesE) A) and D)
F) A) and C)

Question 10

Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices listed. 
-Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is:  the equilibrium price and quantity are

Accepted Answer

A)   $0.00 and 1200 cases
B)   $3.00 and 300 cases
C)   $6.00 and 600 cases
D)   $9.00 and 600 casesE) None of the above
F) B) and C)

Question 11

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Accepted Answer

A) True 
 B)False

Question 12

Figure 4-7 
-Refer to Figure 4-7. The shift from Db to Da is called

Accepted Answer

A)   an increase in demand.
B)   a decrease in demand.
C)   a decrease in quantity demanded.
D)   an increase in quantity demanded.E) C) and D)
F) A) and B)

Question 13

A very hot summer in Atlanta will cause

Accepted Answer

A)   the demand curve for lemonade to shift to the left.
B)   the demand for air conditioners to decrease.
C)   the demand for jackets to decrease.
D)   a movement downward and to the right along the demand curve for tank tops.E) B) and D)
F) A) and B)

Question 14

An increase in the price of a good will

Accepted Answer

A)   increase supply.
B)   decrease supply.
C)   increase quantity supplied.
D)   decrease quantity supplied.E) B) and C)
F) None of the above

Question 15

Figure 4-30 
-Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity.

Accepted Answer

Equilibrium price is...

Question 16

In a market economy, supply and demand determine

Accepted Answer

A)   both the quantity of each good produced and the price at which it is sold.
B)   the quantity of each good produced but not the price at which it is sold.
C)   the price at which each good is sold but not the quantity of each good produced.
D)   neither the quantity of each good produced nor the price at which it is sold.E) B) and C)
F) A) and B)

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) A) and B)
F) B) and D)

Question 18

A improvement in production technology will shift the

Accepted Answer

A)   supply curve to the right.
B)   supply curve to the left.
C)   demand curve to the right.
D)   demand curve to the left.E) A) and C)
F) A) and D)

Question 19

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

Accepted Answer

A)   demand for bicycle assembly workers will increase.
B)   supply of bicycles will shift to the right.
C)   supply of bicycles will shift to the left.
D)   firm must increase output to maintain profit levels.E) A) and D)
F) A) and B)

Question 20

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Accepted Answer

A)   fall in six months but not now.
B)   increase in six months when the price goes up.
C)   fall now.
D)   increase now to meet as much demand as possible.E) A) and B)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

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

Correct AnswerverifiedShow Answer

An increase in the price of blueberries would lead to a(n)

Correct AnswerverifiedShow Answer

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

Correct AnswerverifiedShow Answer

When we move along a given demand curve,

Correct AnswerverifiedShow Answer

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

Correct AnswerverifiedShow Answer

Figure 4-30 -Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity.

Correct AnswerverifiedEquilibrium price is...View AnswerShow Answer

Which of the following would most likely serve as an example of a monopoly?

Correct AnswerverifiedShow Answer

Which of the following sets of events must cause an increase in the price of a new house?

Correct AnswerverifiedShow Answer

A very hot summer in Atlanta will cause

Correct AnswerverifiedShow Answer

If a determinant of demand other than price changes, the demand curve shifts.

Correct AnswerverifiedShow Answer

A improvement in production technology will shift the

Correct AnswerverifiedShow Answer

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

Correct AnswerverifiedShow Answer

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Correct AnswerverifiedShow Answer

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

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A downward-sloping demand curve illustrates

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Table 4-10 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: the equilibrium price and quantity are

Correct AnswerverifiedShow Answer

In a market economy, supply and demand determine

Correct AnswerverifiedShow Answer

Which of the following is the least likely to be a competitive market?

Correct AnswerverifiedShow Answer

An increase in the price of a good will

Correct AnswerverifiedShow Answer

Figure 4-7 -Refer to Figure 4-7. The shift from Db to Da is called

Correct AnswerverifiedShow Answer

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Equilibrium price is...
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