Question 1

Figure 4-21  
-A shortage will tend to occur at which price in Figure 4-21?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
A)  P1 
B)  P2 
C)  P3

Question 2

Legal limits on prices will tend to cause misallocation of resources because

Accepted Answer

A)  production (or opportunity)cost no longer corresponds to market price. 
B)  people are unable to determine their preferences at the high or low price. 
C)  producers no longer have incentive to be profitable. 
D)  consumers no longer have incentive to spend their income efficiently. 
E)  All of the above are correct. 
A)  production (or opportunity)cost no longer corresponds to market price. 
B)  people are unable to determine their preferences at the high or low price. 
C)  producers no longer have incentive to be profitable. 
D)  consumers no longer have incentive to spend their income efficiently. 
E)  All of the above are correct.

Question 3

Lines,ration coupons,and black markets are symptoms of a

Accepted Answer

A)  price floor. 
B)  price ceiling. 
C)  free market. 
D)  barter economy. 
A)  price floor. 
B)  price ceiling. 
C)  free market. 
D)  barter economy.

Question 4

Define the following terms and explain their importance to the study of economics.
a.
demand
b.
surplus
c.
equilibrium
d.
law of supply and demand
e.
quantity demanded

Accepted Answer

a. Demand is a schedule that indicates h

Question 5

If both the supply and demand curves shift to the left,then we can conclude that there will be

Accepted Answer

A)  an increase in the equilibrium quantity sold. 
B)  a decrease in the equilibrium quantity sold. 
C)  an increase in the equilibrium price. 
D)  a decrease in the equilibrium price. 
A)  an increase in the equilibrium quantity sold. 
B)  a decrease in the equilibrium quantity sold. 
C)  an increase in the equilibrium price. 
D)  a decrease in the equilibrium price.

Question 6

Assuming that resources are specialized,the opportunity cost of an item increases as production of it rises.Therefore,we expect that firms will produce more if

Accepted Answer

A)  the price increases. 
B)  the price decreases. 
C)  the opportunity cost is greater than the price. 
D)  government asks firms to produce more. 
E)  the income of buyers increases. 
A)  the price increases. 
B)  the price decreases. 
C)  the opportunity cost is greater than the price. 
D)  government asks firms to produce more. 
E)  the income of buyers increases.

Question 7

If the demand for steak shifts to the right,the most likely explanation is that

Accepted Answer

A)  the price of cattle feed has fallen. 
B)  consumer income has risen. 
C)  the price of steak has fallen. 
D)  cattle production has fallen. 
A)  the price of cattle feed has fallen. 
B)  consumer income has risen. 
C)  the price of steak has fallen. 
D)  cattle production has fallen.

Question 8

To be effective,a price floor must be

Accepted Answer

A)  above the equilibrium price. 
B)  at the equilibrium price. 
C)  below the equilibrium price. 
D)  anywhere on the graph. 
A)  above the equilibrium price. 
B)  at the equilibrium price. 
C)  below the equilibrium price. 
D)  anywhere on the graph.

Question 9

Figure 4-21  
-At price P1 in Figure 4-21,what will tend to happen?

Accepted Answer

A)  There will be a shortage,and the price will fall. 
B)  There will be a shortage,and the price will rise. 
C)  There will be a surplus,and the price will rise. 
D)  There will be a surplus,and the price will fall. 
E)  Equilibrium will occur in the market. 
A)  There will be a shortage,and the price will fall. 
B)  There will be a shortage,and the price will rise. 
C)  There will be a surplus,and the price will rise. 
D)  There will be a surplus,and the price will fall. 
E)  Equilibrium will occur in the market.

Question 10

Figure 4-27   The first graph shows a rightward shift of the supply of downloads as a result of change in technology,so that the price of downloads falls while equilibrium quantity increases (Figure 4-27).This causes a decrease in the demand for CDs,reducing price and quantity at equilibrium.
-The demand for a textbook written by Schwarz and Mobley is Q = 20,000 − 50P; supply is Q = 2,000 + 100P.Students complain about the high price of textbooks,resulting in a price ceiling and,unfortunately,a shortage of texts.Below what price will shortages occur?

Accepted Answer

A shortage will occur if the price ceili

Question 11

A change in the price of a good has no effect on the supply schedule.

Accepted Answer

A) True 
 B)False

Question 12

The laws of supply and demand force prices to an equilibrium.

Accepted Answer

A) True 
 B)False

Question 13

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Accepted Answer

A)  shortage,shortage 
B)  surplus,surplus 
C)  shortage,surplus 
D)  surplus,shortage 
A)  shortage,shortage 
B)  surplus,surplus 
C)  shortage,surplus 
D)  surplus,shortage

Question 14

When people suddenly want to buy something,supply increases.

Accepted Answer

A) True 
 B)False

Question 15

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

Accepted Answer

A)  rightward shifts in the demand curve in the summer. 
B)  a rightward shift in demand in the winter. 
C)  leftward shifts in the supply curve in the summer. 
D)  a leftward shift in demand in the winter. 
A)  rightward shifts in the demand curve in the summer. 
B)  a rightward shift in demand in the winter. 
C)  leftward shifts in the supply curve in the summer. 
D)  a leftward shift in demand in the winter.

Question 16

If orange juice prices double next year,there will be a

Accepted Answer

A)  rightward shift in the demand for grapefruit juice. 
B)  rightward shift in the supply of grapefruit juice. 
C)  leftward shift in the supply of grapefruit juice. 
D)  leftward shift in the demand for grapefruit juice. 
A)  rightward shift in the demand for grapefruit juice. 
B)  rightward shift in the supply of grapefruit juice. 
C)  leftward shift in the supply of grapefruit juice. 
D)  leftward shift in the demand for grapefruit juice.

Question 17

Demand curves can be affected by the prices of related goods.

Accepted Answer

A) True 
 B)False

Question 18

If the price of a good is below the equilibrium price,

Accepted Answer

A)  suppliers will find inventories building; they will cut output and raise prices. 
B)  suppliers will find inventories being depleted.They will increase production and raise prices. 
C)  the demand curve will shift down until an equilibrium is established at the existing price. 
D)  the supply curve will shift up until an equilibrium is established at the existing price. 
A)  suppliers will find inventories building; they will cut output and raise prices. 
B)  suppliers will find inventories being depleted.They will increase production and raise prices. 
C)  the demand curve will shift down until an equilibrium is established at the existing price. 
D)  the supply curve will shift up until an equilibrium is established at the existing price.

Question 19

George Washington's troops at Valley Forge were almost destroyed by price controls.

Accepted Answer

A) True 
 B)False

Question 20

At an equilibrium price for gasoline,

Accepted Answer

A)  everyone with the desire and the income to buy gasoline at that price can do so. 
B)  surpluses are inevitable. 
C)  inherent market forces will eventually change the quantities demanded and supplied. 
D)  suppliers must be using the most efficient oil-drilling equipment available. 
A)  everyone with the desire and the income to buy gasoline at that price can do so. 
B)  surpluses are inevitable. 
C)  inherent market forces will eventually change the quantities demanded and supplied. 
D)  suppliers must be using the most efficient oil-drilling equipment available.

Figure 4-21 -A shortage will tend to occur at which price in Figure 4-21?

Legal limits on prices will tend to cause misallocation of resources because

Lines,ration coupons,and black markets are symptoms of a

Define the following terms and explain their importance to the study of economics. a. demand b. surplus c. equilibrium d. law of supply and demand e. quantity demanded

If both the supply and demand curves shift to the left,then we can conclude that there will be

Assuming that resources are specialized,the opportunity cost of an item increases as production of it rises.Therefore,we expect that firms will produce more if

If the demand for steak shifts to the right,the most likely explanation is that

To be effective,a price floor must be

Figure 4-21 -At price P₁ in Figure 4-21,what will tend to happen?

A change in the price of a good has no effect on the supply schedule.

The laws of supply and demand force prices to an equilibrium.

A market will experience a when the price is above equilibrium and a when the price is below equilibrium.

When people suddenly want to buy something,supply increases.

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

If orange juice prices double next year,there will be a

Demand curves can be affected by the prices of related goods.

If the price of a good is below the equilibrium price,

George Washington's troops at Valley Forge were almost destroyed by price controls.

At an equilibrium price for gasoline,

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 4: Supply and Demand An Initial Look

Figure 4-21 -A shortage will tend to occur at which price in Figure 4-21?

Legal limits on prices will tend to cause misallocation of resources because

Lines,ration coupons,and black markets are symptoms of a

Define the following terms and explain their importance to the study of economics. a. demand b. surplus c. equilibrium d. law of supply and demand e. quantity demanded

If both the supply and demand curves shift to the left,then we can conclude that there will be

Assuming that resources are specialized,the opportunity cost of an item increases as production of it rises.Therefore,we expect that firms will produce more if

If the demand for steak shifts to the right,the most likely explanation is that

To be effective,a price floor must be

Figure 4-21 -At price P1 in Figure 4-21,what will tend to happen?

A change in the price of a good has no effect on the supply schedule.

The laws of supply and demand force prices to an equilibrium.

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

When people suddenly want to buy something,supply increases.

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

If orange juice prices double next year,there will be a

Demand curves can be affected by the prices of related goods.

If the price of a good is below the equilibrium price,

George Washington's troops at Valley Forge were almost destroyed by price controls.

At an equilibrium price for gasoline,

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Figure 4-21 -At price P₁ in Figure 4-21,what will tend to happen?

A market will experience a when the price is above equilibrium and a when the price is below equilibrium.