Question 1

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. 
A) surpluses and shortages. 
B) quantities. 
C) government policies. 
D) prices. D

Question 2

Which of the following demonstrates the law of supply?

Accepted Answer

A) When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B) When car production technology improved, car producers increased their supply of cars. 
C) When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D) When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup. 
A) When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. 
B) When car production technology improved, car producers increased their supply of cars. 
C) When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. 
D) When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup. A

Question 3

Which of the following is not held constant in a demand schedule?

Accepted Answer

A) income 
B) tastes 
C) price 
D) expectations 
A) income 
B) tastes 
C) price 
D) expectations C

Question 4

Figure 4-10  
-Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

Accepted Answer

A) increase in the price. 
B) decrease in the quantity supplied. 
C) shift in the supply curve. 
D) Both a and b are correct. 
A) increase in the price. 
B) decrease in the quantity supplied. 
C) shift in the supply curve. 
D) Both a and b are correct.

Question 5

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation   , where   is the quantity demanded and   is the price. Also, suppose the supply schedule can be represented by the equation   , where   is the quantity supplied.
-Refer to Scenario 4-1. Suppose the price is currently equal to 18 in this market. Is there a shortage or surplus in this market, and how large is the shortage/surplus?

Accepted Answer

There is a

Question 6

If, at the current price, there is a surplus of a good, then

Accepted Answer

A) sellers are producing more than buyers wish to buy. 
B) the market must be in equilibrium. 
C) the price is below the equilibrium price. 
D) quantity demanded equals quantity supplied. 
A) sellers are producing more than buyers wish to buy. 
B) the market must be in equilibrium. 
C) the price is below the equilibrium price. 
D) quantity demanded equals quantity supplied.

Question 7

If the number of buyers in a market decreases, then

Accepted Answer

A) demand will increase. 
B) demand will decrease. 
C) supply will increase. 
D) supply will decrease. 
A) demand will increase. 
B) demand will decrease. 
C) supply will increase. 
D) supply will decrease.

Question 8

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

Accepted Answer

A) True 
 B)False

Question 9

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold?

Accepted Answer

A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous. 
A) Price will rise. 
B) Price will fall. 
C) Price will stay exactly the same. 
D) The price change will be ambiguous.

Question 10

A decrease in the price of baseball bats will decrease the demand for baseballs.

Accepted Answer

A) True 
 B)False

Question 11

Table 4-4  
-Refer to Table 4-4. Suppose the market consists of Barb and Carl only. If the price falls by $2, the quantity demanded in the market increases by

Accepted Answer

A) 4 units. 
B) 6 units. 
C) 8 units. 
D) 10 units. 
A) 4 units. 
B) 6 units. 
C) 8 units. 
D) 10 units.

Question 12

Today's supply curve for iPods could shift in response to a change in

Accepted Answer

A) today's price of iPods. 
B) the expected future price of iPods. 
C) the number of buyers of iPods. 
D) All of the above are correct. 
A) today's price of iPods. 
B) the expected future price of iPods. 
C) the number of buyers of iPods. 
D) All of the above are correct.

Question 13

Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a

Accepted Answer

A) shortage to exist and the market price of chocolate-dipped strawberries to increase. 
B) shortage to exist and the market price of chocolate-dipped strawberries to decrease. 
C) surplus to exist and the market price of chocolate-dipped strawberries to increase. 
D) surplus to exist and the market price of chocolate-dipped strawberries to decrease. 
A) shortage to exist and the market price of chocolate-dipped strawberries to increase. 
B) shortage to exist and the market price of chocolate-dipped strawberries to decrease. 
C) surplus to exist and the market price of chocolate-dipped strawberries to increase. 
D) surplus to exist and the market price of chocolate-dipped strawberries to decrease.

Question 14

The supply curve for stand up paddle boards

Accepted Answer

A) shifts when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
B) shifts when the price of stand up paddle boards changes because the quantity supplied of stand up paddle boards is measured on the horizontal axis of the graph. 
C) does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
D) does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the horizontal axis of the graph. 
A) shifts when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
B) shifts when the price of stand up paddle boards changes because the quantity supplied of stand up paddle boards is measured on the horizontal axis of the graph. 
C) does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph. 
D) does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the horizontal axis of the graph.

Question 15

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

Accepted Answer

A) Both the equilibrium price and quantity would increase. 
B) Both the equilibrium price and quantity would decrease. 
C) The equilibrium price would increase, and the equilibrium quantity would decrease. 
D) The equilibrium price would decrease, and the equilibrium quantity would increase. 
A) Both the equilibrium price and quantity would increase. 
B) Both the equilibrium price and quantity would decrease. 
C) The equilibrium price would increase, and the equilibrium quantity would decrease. 
D) The equilibrium price would decrease, and the equilibrium quantity would increase.

Question 16

When drawing a demand curve,

Accepted Answer

A) demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B) quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C) price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D) price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis. 
A) demand is measured along the vertical axis, and price is measured along the horizontal axis. 
B) quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. 
C) price is measured along the vertical axis, and demand is measured along the horizontal axis. 
D) price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

Question 17

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Accepted Answer

A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price. 
A) prices at and above the equilibrium price. 
B) prices at and below the equilibrium price. 
C) prices above and below the equilibrium price, but not at the equilibrium price. 
D) the equilibrium price but not above or below the equilibrium price.

Question 18

Figure 4-21  
-Refer to Figure 4-21. At a price of $16, there is a

Accepted Answer

A) surplus of 1 unit. 
B) surplus of 3 units. 
C) shortage of 1 unit. 
D) shortage of 3 units. 
A) surplus of 1 unit. 
B) surplus of 3 units. 
C) shortage of 1 unit. 
D) shortage of 3 units.

Question 19

Table 4-7  
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Accepted Answer

A) 2.5 gallons. 
B) 4 gallons. 
C) 10 gallons. 
D) 50 gallons. 
A) 2.5 gallons. 
B) 4 gallons. 
C) 10 gallons. 
D) 50 gallons.

Question 20

Assume a market is perfectly competitive. When a new producer enters the market, the

Accepted Answer

A) price in the market increases. 
B) price in the market decreases. 
C) price in the market does not change. 
D) market is no longer a competitive market. 
A) price in the market increases. 
B) price in the market decreases. 
C) price in the market does not change. 
D) market is no longer a competitive market.

Exam 4: The Market Forces of Supply and Demand

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

Which of the following demonstrates the law of supply?

Which of the following is not held constant in a demand schedule?

Figure 4-10 -Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

If, at the current price, there is a surplus of a good, then

If the number of buyers in a market decreases, then

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold?

A decrease in the price of baseball bats will decrease the demand for baseballs.

Table 4-4 -Refer to Table 4-4. Suppose the market consists of Barb and Carl only. If the price falls by $2, the quantity demanded in the market increases by

Today's supply curve for iPods could shift in response to a change in

Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a

The supply curve for stand up paddle boards

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

When drawing a demand curve,

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

Figure 4-21 -Refer to Figure 4-21. At a price of $16, there is a

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Assume a market is perfectly competitive. When a new producer enters the market, the

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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