Question 1

Rent controls encourage investment in housing because they bring stability to the market.

Accepted Answer

A) True 
 B)False

Question 2

Figure 4-6  
-Grapes can be used for wine or for raisins.Which graph in Figure 4-6 best depicts the effects on the U.S.raisin market of a decrease in purchases of domestic wines?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 3

Rent controls are most often designed to protect the investment made by apartment building owners.

Accepted Answer

A) True 
 B)False

Question 4

Price floors are typically accompanied by a standard series of symptoms.What are they?

Accepted Answer

Following are some of the symptoms assoc

Question 5

Pork can be used to produce bacon or sausage, but not both.If the price of bacon rises for some reason, then, everything else equal,

Accepted Answer

A) the price of sausage will rise. 
B) the price of sausage will fall. 
C) the resources used in raising Pork will become more expensive. 
D) the resources used in raising Pork will become less expensive. 
A) the price of sausage will rise. 
B) the price of sausage will fall. 
C) the resources used in raising Pork will become more expensive. 
D) the resources used in raising Pork will become less expensive.

Question 6

Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6).The line is most likely a

Accepted Answer

A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line. 
A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line.

Question 7

One effect of market intervention is resource misallocation.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-12  
-Normally an increase in the supply of a good will cause

Accepted Answer

A) a shift of consumer preferences in favor of that good. 
B) consumers to use more of that good and less of others. 
C) a shift of consumer preferences away from that good. 
D) consumers to use less of that good and more of others. 
A) a shift of consumer preferences in favor of that good. 
B) consumers to use more of that good and less of others. 
C) a shift of consumer preferences away from that good. 
D) consumers to use less of that good and more of others.

Question 9

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the likely result would be a

Accepted Answer

A) shift in the supply curve for aluminum bats. 
B) shift in the supply curve for wooden bats. 
C) change in the quantity supplied of aluminum bats. 
D) persistent shortage of aluminum bats. 
A) shift in the supply curve for aluminum bats. 
B) shift in the supply curve for wooden bats. 
C) change in the quantity supplied of aluminum bats. 
D) persistent shortage of aluminum bats.

Question 10

Figure 4-4  
-Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers will change demand from

Accepted Answer

A) D1 to D2. 
B) D2 to D1. 
C) D2 to D3. 
D) D1 to D3. 
A) D1 to D2. 
B) D2 to D1. 
C) D2 to D3. 
D) D1 to D3.

Question 11

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 12

An increase in price will increase supply.

Accepted Answer

A) True 
 B)False

Question 13

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Accepted Answer

A) True 
 B)False

Question 14

Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold at $12.The most probable interpretation of these data is that the

Accepted Answer

A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) supply curve has shifted to the left, with no change in demand. 
D) demand curve has shifted to the right, with no change in supply. 
A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) supply curve has shifted to the left, with no change in demand. 
D) demand curve has shifted to the right, with no change in supply.

Question 15

In relation to prices that would prevail in an uncontrolled market, prices charged by a black market are usually

Accepted Answer

A) lower, since it is hard for the sellers to locate buyers. 
B) lower, since it is hard for the buyers to locate sellers. 
C) higher, since black marketers expect compensation for the risk of being caught. 
D) higher, since most people enjoy goods more if they are illegal. 
A) lower, since it is hard for the sellers to locate buyers. 
B) lower, since it is hard for the buyers to locate sellers. 
C) higher, since black marketers expect compensation for the risk of being caught. 
D) higher, since most people enjoy goods more if they are illegal.

Question 16

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Accepted Answer

A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand. 
A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand.

Question 17

Price ceilings will likely

Accepted Answer

A) result in the accumulation of surpluses. 
B) increase the volume of transactions as we move along the demand curve. 
C) increase production as producers respond to higher consumer demand at the low ceiling price. 
D) result in the development of black markets. 
A) result in the accumulation of surpluses. 
B) increase the volume of transactions as we move along the demand curve. 
C) increase production as producers respond to higher consumer demand at the low ceiling price. 
D) result in the development of black markets.

Question 18

The cost of processors and memory has decreased dramatically in the past twenty-five years.As a result, we have seen

Accepted Answer

A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply. 
A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply.

Question 19

Figure 4-5  
-If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph in Figure 4-5?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 20

An increase in demand will have what effect on equilibrium price and quantity?

Accepted Answer

A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease. 
A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease.

Exam 4: Supply and Demand an Initial Look

Rent controls encourage investment in housing because they bring stability to the market.

Figure 4-6 -Grapes can be used for wine or for raisins.Which graph in Figure 4-6 best depicts the effects on the U.S.raisin market of a decrease in purchases of domestic wines?

Rent controls are most often designed to protect the investment made by apartment building owners.

Price floors are typically accompanied by a standard series of symptoms.What are they?

Pork can be used to produce bacon or sausage, but not both.If the price of bacon rises for some reason, then, everything else equal,

Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6).The line is most likely a

One effect of market intervention is resource misallocation.

Figure 4-12 -Normally an increase in the supply of a good will cause

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the likely result would be a

Figure 4-4 -Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers will change demand from

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

An increase in price will increase supply.

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold at $12.The most probable interpretation of these data is that the

In relation to prices that would prevail in an uncontrolled market, prices charged by a black market are usually

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Price ceilings will likely

The cost of processors and memory has decreased dramatically in the past twenty-five years.As a result, we have seen

Figure 4-5 -If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph in Figure 4-5?

An increase in demand will have what effect on equilibrium price and quantity?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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