Question 1

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

Accepted Answer

A) True 
 B)False

Question 2

In an attempt to forecast enrollment, a major university hired an economist to give a "head count." One variable which she would probably emphasize more than any other in trying to forecast this is

Accepted Answer

A)  how interested people are in attending college. 
B)  the employment opportunities that college opens up. 
C)  survey results on public interest in education. 
D)  her instinct about what the public wants. 
E)  tuition (the price of attending). 
A)  how interested people are in attending college. 
B)  the employment opportunities that college opens up. 
C)  survey results on public interest in education. 
D)  her instinct about what the public wants. 
E)  tuition (the price of attending).

Question 3

Figure 4-21
  
-At price P₁ in Figure 4-21, what will tend to happen?

Accepted Answer

A)  There will be a shortage, and the price will fall. 
B)  There will be a shortage, and the price will rise. 
C)  There will be a surplus, and the price will rise. 
D)  There will be a surplus, and the price will fall. 
E)  Equilibrium will occur in the market. 
A)  There will be a shortage, and the price will fall. 
B)  There will be a shortage, and the price will rise. 
C)  There will be a surplus, and the price will rise. 
D)  There will be a surplus, and the price will fall. 
E)  Equilibrium will occur in the market.

Question 4

Which of the following would cause an increase in demand for Toyota automobiles?

Accepted Answer

A)  an increase in the price of Toyota automobiles 
B)  a decrease in the price of Toyota automobiles 
C)  a decrease in the price of Honda automobiles 
D)  an increase in the price of Honda automobiles 
A)  an increase in the price of Toyota automobiles 
B)  a decrease in the price of Toyota automobiles 
C)  a decrease in the price of Honda automobiles 
D)  an increase in the price of Honda automobiles

Question 5

The position of a demand curve is unaffected by changes in the price of the good.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-16
  
-Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

Accepted Answer

A)  S1 to S₂. 
B)  S₂ to S1. 
C)  S₂ to S₃. 
D)  S1 to S₃. 
A)  S1 to S₂. 
B)  S₂ to S1. 
C)  S₂ to S₃. 
D)  S1 to S₃.

Question 7

If the government puts price controls on medical care, this will increase the supply of affordable care in the United States.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-4
  
-Assume that Figure 4-4 shows demand for steak.An increase in income of buyers will change demand from

Accepted Answer

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

Question 9

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-16
  
-Assume that Figure 4-16 shows the supply of steak.An increase in the price of pork will change the supply from

Accepted Answer

A)  S1 to S₂. 
B)  S₂ to S1. 
C)  S₂ to S₃. 
D)  S1 to S₃. 
A)  S1 to S₂. 
B)  S₂ to S1. 
C)  S₂ to S₃. 
D)  S1 to S₃.

Question 11

A demand schedule shows the time over which different quantities will be demanded.

Accepted Answer

A) True 
 B)False

Question 12

Figure 4-4
  
-Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice 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 13

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

Accepted Answer

A)  favoritism and corruption of officials and market participants 
B)  unenforceability of laws and higher costs of transactions 
C)  increasing restrictions to enforce the laws 
D)  misallocation of resources as prices no longer correspond to costs 
E)  All of the above are correct. 
A)  favoritism and corruption of officials and market participants 
B)  unenforceability of laws and higher costs of transactions 
C)  increasing restrictions to enforce the laws 
D)  misallocation of resources as prices no longer correspond to costs 
E)  All of the above are correct.

Question 14

An increase in the price of gasoline shifts the demand for tires to the

Accepted Answer

A)  left, because gasoline and tires are substitutes. 
B)  left, because gasoline and tires are normally used together. 
C)  right, because gasoline and tires are substitutes. 
D)  right, because gasoline and tires are normally used together. 
A)  left, because gasoline and tires are substitutes. 
B)  left, because gasoline and tires are normally used together. 
C)  right, because gasoline and tires are substitutes. 
D)  right, because gasoline and tires are normally used together.

Question 15

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price which borrowers pay.As a result, economists expected that the quantity of money supplied 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 16

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

Accepted Answer

A)  a decline in college tuition. 
B)  an increase in home building. 
C)  an increase in the supply of lumberjacks. 
D)  an end to government regulations that limit timber harvesting in national forests. 
A)  a decline in college tuition. 
B)  an increase in home building. 
C)  an increase in the supply of lumberjacks. 
D)  an end to government regulations that limit timber harvesting in national forests.

Question 17

When price is below the equilibrium level, there is a shortage of the commodity being sold.

Accepted Answer

A) True 
 B)False

Question 18

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 19

To be effective, a price floor must be

Accepted Answer

A)  above the equilibrium price. 
B)  at the equilibrium price. 
C)  below the equilibrium price. 
D)  anywhere on the graph. 
A)  above the equilibrium price. 
B)  at the equilibrium price. 
C)  below the equilibrium price. 
D)  anywhere on the graph.

Question 20

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

Exam 4: Supply and Demand: An Initial Look

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

In an attempt to forecast enrollment, a major university hired an economist to give a "head count." One variable which she would probably emphasize more than any other in trying to forecast this is

Figure 4-21 -At price P₁ in Figure 4-21, what will tend to happen?

Which of the following would cause an increase in demand for Toyota automobiles?

The position of a demand curve is unaffected by changes in the price of the good.

Figure 4-16 -Assume that Figure 4-16 shows the supply of soda.An increase in the price of syrup used in the production of soda will shift supply from

If the government puts price controls on medical care, this will increase the supply of affordable care in the United States.

Figure 4-4 -Assume that Figure 4-4 shows demand for steak.An increase in income of buyers will change demand from

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Figure 4-16 -Assume that Figure 4-16 shows the supply of steak.An increase in the price of pork will change the supply from

A demand schedule shows the time over which different quantities will be demanded.

Figure 4-4 -Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice will change demand from

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

An increase in the price of gasoline shifts the demand for tires to the

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

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

When price is below the equilibrium level, there is a shortage of the commodity being sold.

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

To be effective, a price floor must be

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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