Question 1

Table 4-1
Use this table for the following questions.
  
-Refer to Table 4-1.At $10, what is the surplus?

Accepted Answer

A) 4,500 
B) 3,000 
C) 1,500 
D) 0 
A) 4,500 
B) 3,000 
C) 1,500 
D) 0

Question 2

How does rent control tend to cause persistent imbalances in the market for housing?

Accepted Answer

A) Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage. 
B) Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus. 
C) Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage. 
D) Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus. 
A) Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage. 
B) Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus. 
C) Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage. 
D) Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.

Question 3

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay.As a result, economists expected demand for money to

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect. 
A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect.

Question 4

The slope of a demand curve is almost always

Accepted Answer

A) positive, because when people buy more of a good the cost of producing it will rise. 
B) positive, because the more money a person has, the more of a particular good will be bought. 
C) negative, because when people buy more of a good the cost of producing it will fall. 
D) negative, because with everything else equal, the same people will buy more of a good when its price is lower. 
E) positive, because as the price rises, people want to sell more of the good. 
A) positive, because when people buy more of a good the cost of producing it will rise. 
B) positive, because the more money a person has, the more of a particular good will be bought. 
C) negative, because when people buy more of a good the cost of producing it will fall. 
D) negative, because with everything else equal, the same people will buy more of a good when its price is lower. 
E) positive, because as the price rises, people want to sell more of the good.

Question 5

Which of the following will tend to occur if price floors are imposed on a product?

Accepted Answer

A) persistent surpluses 
B) problems of disposal of goods 
C) disguised discounts developing to eliminate excess production 
D) overinvestment in the industry 
E) All of the above are correct. 
A) persistent surpluses 
B) problems of disposal of goods 
C) disguised discounts developing to eliminate excess production 
D) overinvestment in the industry 
E) All of the above are correct.

Question 6

The United States typically experiences a large surplus of milk annually.This is caused by

Accepted Answer

A) a price ceiling in the market. 
B) not enough demand for milk. 
C) a price floor in the market. 
D) overproduction of milk by the cows. 
A) a price ceiling in the market. 
B) not enough demand for milk. 
C) a price floor in the market. 
D) overproduction of milk by the cows.

Question 7

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 8

Which of the following will shift the demand curve for milk?

Accepted Answer

A) change in the income of buyers of milk 
B) change in the price of milk 
C) change in input prices for milk 
D) All of the above are correct. 
A) change in the income of buyers of milk 
B) change in the price of milk 
C) change in input prices for milk 
D) All of the above are correct.

Question 9

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 10

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-the law of demand does not apply to money. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-the law of demand does not apply to money.

Question 11

On a traditional supply and demand diagram,

Accepted Answer

A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines. 
A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines.

Question 12

If the price of oil, a close substitute for coal, increases then the

Accepted Answer

A) supply curve for coal will shift to the right. 
B) demand curve for coal will shift to the right. 
C) equilibrium price and quantity of coal will not change. 
D) demand curve for coal will shift to the left. 
E) supply curve of coal will shift to the left. 
A) supply curve for coal will shift to the right. 
B) demand curve for coal will shift to the right. 
C) equilibrium price and quantity of coal will not change. 
D) demand curve for coal will shift to the left. 
E) supply curve of coal will shift to the left.

Question 13

Figure 4-1  
-If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 4-1 is appropriate?

Accepted Answer

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

Question 14

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

Accepted Answer

A) True 
 B)False

Question 15

​Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?

Accepted Answer

A) ​Service station operators pass along the tax to you, adding the 10 cents to the price of a gallon of gas. 
B) ​Service station operators grumble, but pay the tax without passing the cost along to you. 
C) ​Service station operators pass along as much of the tax to you as they can, probably about 6 cents/gallon. 
D) ​None of these choices. 
A) ​Service station operators pass along the tax to you, adding the 10 cents to the price of a gallon of gas. 
B) ​Service station operators grumble, but pay the tax without passing the cost along to you. 
C) ​Service station operators pass along as much of the tax to you as they can, probably about 6 cents/gallon. 
D) ​None of these choices.

Question 16

An individual's demand schedule

Accepted Answer

A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule. 
A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule.

Question 17

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to the demand for money if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) The quantity of money demanded will increase. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) The quantity of money demanded will increase.

Question 18

If the demand curve shifts outward and the supply curve remains the same, price will fall.

Accepted Answer

A) True 
 B)False

Question 19

Figure 4-19  
-After a strike against the Financial News in London began, the number of copies of the competing Broad Street Journal sold in England increased dramatically, yet there was no increase in price.Which supply and demand graph in Figure 4-19 represents the situation for the Broad Street Journal before the strike started?

Accepted Answer

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

Question 20

When used in a professional or technical sense, the law of supply and demand refers to

Accepted Answer

A) some vague influences on economic affairs. 
B) the fact that prices go up when commodities are scarce. 
C) the market forces that show how prices and quantities are determined. 
D) the controls that regulate the amount of scarce goods that each consumer can purchase. 
A) some vague influences on economic affairs. 
B) the fact that prices go up when commodities are scarce. 
C) the market forces that show how prices and quantities are determined. 
D) the controls that regulate the amount of scarce goods that each consumer can purchase.

Exam 4: Supply and Demand an Initial Look

Table 4-1 Use this table for the following questions. -Refer to Table 4-1.At $10, what is the surplus?

How does rent control tend to cause persistent imbalances in the market for housing?

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay.As a result, economists expected demand for money to

The slope of a demand curve is almost always

Which of the following will tend to occur if price floors are imposed on a product?

The United States typically experiences a large surplus of milk annually.This is caused by

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

Which of the following will shift the demand curve for milk?

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

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

On a traditional supply and demand diagram,

If the price of oil, a close substitute for coal, increases then the

Figure 4-1 -If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 4-1 is appropriate?

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

​Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?

An individual's demand schedule

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to the demand for money if the interest rate increases?

If the demand curve shifts outward and the supply curve remains the same, price will fall.

When used in a professional or technical sense, the law of supply and demand refers to

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

Filters

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

Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?