Question 1

One motive for "fighting the invisible hand" is

Accepted Answer

A)  unhappiness about the prices that occur in free markets. 
B)  envy toward those who apparently benefit from certain prices. 
C)  a desire to have government "correct" some problems. 
D)  an attempt to produce justice between buyers and sellers. 
E)  All of the above are correct. 
A)  unhappiness about the prices that occur in free markets. 
B)  envy toward those who apparently benefit from certain prices. 
C)  a desire to have government "correct" some problems. 
D)  an attempt to produce justice between buyers and sellers. 
E)  All of the above are correct.

Question 2

An increase in the number of nursing homes and community health centers and the expansion of home care has led to an increase in the demand for nurses.At the same time, improving opportunities for women in business have reduced the supply of nurses.Hospitals, the major employers of nurses, have resisted wage increases.The resulting situation could be described as

Accepted Answer

A)  the cost disease of the service sector. 
B)  a shortage of nurses. 
C)  the problem of auxiliary restrictions. 
D)  the wage floor problem. 
A)  the cost disease of the service sector. 
B)  a shortage of nurses. 
C)  the problem of auxiliary restrictions. 
D)  the wage floor problem.

Question 3

The removal in 1966 of the requirement that Catholics eat fish on Fridays was followed by a 12.5 percent fall in prices of fresh fish.From this it can be deduced that the

Accepted Answer

A)  demand curve for fish shifted to the left. 
B)  demand curve shifted to the right. 
C)  supply curve shifted to the left. 
D)  supply curve shifted to the right. 
A)  demand curve for fish shifted to the left. 
B)  demand curve shifted to the right. 
C)  supply curve shifted to the left. 
D)  supply curve shifted to the right.

Question 4

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

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  Uncertain-economic theory has no answer to this question. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  Uncertain-economic theory has no answer to this question.

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

Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

Accepted Answer

A)  a decrease in the price of electricity 
B)  an increase in the price of air conditioners 
C)  an increase in the price of heating oil 
D)  a decrease in the price of natural gas 
A)  a decrease in the price of electricity 
B)  an increase in the price of air conditioners 
C)  an increase in the price of heating oil 
D)  a decrease in the price of natural gas

Question 7

A change in the income of buyers will normally change demand.

Accepted Answer

A) True 
 B)False

Question 8

The mechanism of supply and demand is

Accepted Answer

A)  a fundamental tool in both microeconomics and macroeconomics. 
B)  the only real "law" of economics. 
C)  a fundamental tool only in microeconomics. 
D)  a fundamental tool only in macroeconomics. 
A)  a fundamental tool in both microeconomics and macroeconomics. 
B)  the only real "law" of economics. 
C)  a fundamental tool only in microeconomics. 
D)  a fundamental tool only in macroeconomics.

Question 9

One effect of market intervention is resource misallocation.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a symptom of a price floor?

Accepted Answer

A)  scalping of Super Bowl tickets 
B)  surplus cheese 
C)  the New York city housing shortage 
D)  black markets 
E)  milk shortages 
A)  scalping of Super Bowl tickets 
B)  surplus cheese 
C)  the New York city housing shortage 
D)  black markets 
E)  milk shortages

Question 11

The quantity of Blu-Ray players purchased declined in spite of a decline in price.This implies that the

Accepted Answer

A)  supply curve for Blu-Ray players shifted to the left. 
B)  demand curve for Blu-Ray players shifted to the right. 
C)  demand curve for Blu-Ray players shifted to the left. 
D)  supply curve for Blu-Ray players shifted to the right. 
A)  supply curve for Blu-Ray players shifted to the left. 
B)  demand curve for Blu-Ray players shifted to the right. 
C)  demand curve for Blu-Ray players shifted to the left. 
D)  supply curve for Blu-Ray players shifted to the right.

Question 12

The price of gasoline has risen and the quantity sold has fallen.This was likely caused by

Accepted Answer

A)  a rise in the price of crude oil. 
B)  a seasonal rise in the demand for gasoline. 
C)  use of a new public transit system. 
D)  the discovery of crude oil in New Jersey. 
A)  a rise in the price of crude oil. 
B)  a seasonal rise in the demand for gasoline. 
C)  use of a new public transit system. 
D)  the discovery of crude oil in New Jersey.

Question 13

Why are sellers willing to sell more at a higher price?

Accepted Answer

Only at higher price will it be profitab

Question 14

Producers were accused of price gouging as the price of bottled water soared after Hurricane Andrew.Consumers clamored for price controls to keep bottled water at pre-Andrew levels.Use supply and demand analysis to graphically show the effect of setting a price ceiling on bottled water after Hurricane Andrew at the pre-hurricane equilibrium price.Use your graph to assist in explaining the likely unintended effects of such a price control.Be sure that your graph is completely and correctly labeled.

Accepted Answer

Figure 4-25
 @#IMG-DLM& 
As a result of contaminat

Question 15

Price controls are usually enacted in response to

Accepted Answer

A)  popular opinion. 
B)  governmental studies. 
C)  scholarly research on the effects of high prices. 
D)  laws enacted in other countries. 
E)  All of the above are correct. 
A)  popular opinion. 
B)  governmental studies. 
C)  scholarly research on the effects of high prices. 
D)  laws enacted in other countries. 
E)  All of the above are correct.

Question 16

The demand by sterile couples for babies to adopt has grown rapidly, while the supply has dwindled because of improved contraception, liberal abortion laws, and an increase in the probability that unwed mothers will keep their children.It violates the law to sell human beings at any age, but for every twenty legal adoptions there seemingly is one baby sale at a price up to $50,000.The generic term economists apply to the market produced by this type of shortage is

Accepted Answer

A)  "black market." 
B)  "white slave market." 
C)  "the adoption market." 
D)  "baby market." 
A)  "black market." 
B)  "white slave market." 
C)  "the adoption market." 
D)  "baby market."

Question 17

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 18

The following price-quantity coordinates for gold used by U.S.dentists were observed: P = $875/ounce, Q = 342,000; P = $200/ounce, Q = 706,000.These points most likely lie along the

Accepted Answer

A)  supply curve for gold for dental use. 
B)  demand curve for dental use. 
C)  equilibrium curve for dental use. 
D)  production possibilities curve for dental use. 
A)  supply curve for gold for dental use. 
B)  demand curve for dental use. 
C)  equilibrium curve for dental use. 
D)  production possibilities curve for dental use.

Question 19

The quantity of goods exchanged in a market will be below the equilibrium quantity

Accepted Answer

A)  when the price is either held above or below the equilibrium price. 
B)  only when the price is held above the equilibrium price. 
C)  only when the price is held below the equilibrium price. 
D)  only when the price is rising. 
A)  when the price is either held above or below the equilibrium price. 
B)  only when the price is held above the equilibrium price. 
C)  only when the price is held below the equilibrium price. 
D)  only when the price is rising.

Question 20

How do legal controls on prices lead to corruption?

Accepted Answer

A)  Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B)  Persons who make the laws may favor certain groups at the expense of others. 
C)  Selling in the black market is very profitable, and persons therefore willingly break the law. 
D)  Discrimination may occur as a means to limit buying or selling select groups. 
E)  All of the above are correct. 
A)  Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B)  Persons who make the laws may favor certain groups at the expense of others. 
C)  Selling in the black market is very profitable, and persons therefore willingly break the law. 
D)  Discrimination may occur as a means to limit buying or selling select groups. 
E)  All of the above are correct.

Exam 4: Supply and Demand: An Initial Look

One motive for "fighting the invisible hand" is

The removal in 1966 of the requirement that Catholics eat fish on Fridays was followed by a 12.5 percent fall in prices of fresh fish.From this it can be deduced that the

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

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

Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

A change in the income of buyers will normally change demand.

The mechanism of supply and demand is

One effect of market intervention is resource misallocation.

Which of the following is a symptom of a price floor?

The quantity of Blu-Ray players purchased declined in spite of a decline in price.This implies that the

The price of gasoline has risen and the quantity sold has fallen.This was likely caused by

Why are sellers willing to sell more at a higher price?

Price controls are usually enacted in response to

Price floors lead to market surpluses.

The following price-quantity coordinates for gold used by U.S.dentists were observed: P = $875/ounce, Q = 342,000; P = $200/ounce, Q = 706,000.These points most likely lie along the

The quantity of goods exchanged in a market will be below the equilibrium quantity

How do legal controls on prices lead to corruption?

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 I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

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

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

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