Question 1

A shift in the supply curve of bicycles resulting from higher steel prices will lead to

Accepted Answer

A)  higher prices of bicycles. 
B)  lower prices of bicycles. 
C)  a shift in the demand curve for bicycles. 
D)  larger output of bicycles. 
E)  no change in the price of bicycles. 
A)  higher prices of bicycles. 
B)  lower prices of bicycles. 
C)  a shift in the demand curve for bicycles. 
D)  larger output of bicycles. 
E)  no change in the price of bicycles.

Question 2

The following are common errors students make when discussing supply and demand.What is the mistake in each?
a.At equilibrium, demand equals supply.
b.The quantity of demand is greater than the quantity of supply.
c.They move along the line from both ends to an equilibrium in the middle.
d.The increase in demand causes an increase in supply.

Accepted Answer

a.Demand never equals supply because the

Question 3

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

Accepted Answer

A)  the supply curve will shift to the left. 
B)  the supply curve will remain constant. 
C)  the supply curve will shift to the right. 
D)  the demand curve will shift to the right. 
A)  the supply curve will shift to the left. 
B)  the supply curve will remain constant. 
C)  the supply curve will shift to the right. 
D)  the demand curve will shift to the right.

Question 4

If price rises, what happens to quantity demanded for a product?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain-economic theory has no answer to this question. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain-economic theory has no answer to this question.

Question 5

A shortage occurs when price is higher than the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

Drawing the supply curve and the demand curve on the same graph helps show how price is determined.

Accepted Answer

A) True 
 B)False

Question 7

Suppose demand can be described with the equation Q = 90-5P and supply with the equation Q = 100 + 5P.Complete the following table.Determine the equilibrium price and quantity.
 \(\begin{array} { r } 
 & \text { Quantity } & \text { Quantity } &\text { Surplus/ }\
\underline { \text { Price} } &  \underline { \text { Demanded } } & \underline { \text { Supplied} }&  \underline { \text { Shortage } }  \
 100& \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
95 & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
90 & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
85& \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
80 & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
75& \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
70 & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
65 & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
60& \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad } & \underline {\quad \quad \quad \quad }   \
\end{array}\)

Accepted Answer

None

Question 8

Demand shifts due to changes in price.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: An Initial Look

A shift in the supply curve of bicycles resulting from higher steel prices will lead to

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

If price rises, what happens to quantity demanded for a product?

A shortage occurs when price is higher than the market equilibrium.

Drawing the supply curve and the demand curve on the same graph helps show how price is determined.

Suppose demand can be described with the equation Q = 90-5P and supply with the equation Q = 100 + 5P.Complete the following table.Determine the equilibrium price and quantity. Quantity Quantity Surplus/ 100 95 90 85 80 75 70 65 60

Demand shifts due to changes in price.

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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