Question 1

If new manufacturers enter the computer industry, then, holding all other things constant,

Accepted Answer

A)  each "old" manufacturer must sell fewer computers than before. 
B)  some "old" manufacturers must exit the industry. 
C)  the equilibrium price of computers must rise. 
D)  the equilibrium quantity demanded of computers must rise. 
A)  each "old" manufacturer must sell fewer computers than before. 
B)  some "old" manufacturers must exit the industry. 
C)  the equilibrium price of computers must rise. 
D)  the equilibrium quantity demanded of computers must rise.

Question 2

Figure 4-8
  
-Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

Accepted Answer

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

Question 3

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Accepted Answer

A) True 
 B)False

Question 4

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Accepted Answer

A) True 
 B)False

Question 5

Why does quantity demanded decrease when price increases?

Accepted Answer

A)  People choose to reduce consumption of the item. 
B)  People "drop out" of the market for the item. 
C)  People find substitutes for the item. 
D)  All of the above are correct. 
A)  People choose to reduce consumption of the item. 
B)  People "drop out" of the market for the item. 
C)  People find substitutes for the item. 
D)  All of the above are correct.

Question 6

Any factor that shifts the demand curve to the left but does not affect the supply curve will lower the equilibrium price and raise the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 7

An increase in supply will have what effect on equilibrium price and quantity?

Accepted Answer

A)  Price will increase; quantity will decrease. 
B)  Price will decrease; quantity will increase. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease. 
A)  Price will increase; quantity will decrease. 
B)  Price will decrease; quantity will increase. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease.

Question 8

An upward-sloping supply curve shows that

Accepted Answer

A)  buyers are willing to pay more for a scarce product. 
B)  suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C)  buyers are unaffected by sellers' costs of production. 
D)  the price of a product is not influenced by the price buyers are willing to pay. 
E)  at higher prices, an envy effect begins to affect the demand curve. 
A)  buyers are willing to pay more for a scarce product. 
B)  suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C)  buyers are unaffected by sellers' costs of production. 
D)  the price of a product is not influenced by the price buyers are willing to pay. 
E)  at higher prices, an envy effect begins to affect the demand curve.

Question 9

The price for labor is the wage rate.What happens to the quantity of labor demanded if wages increase?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The whole demand schedule shifts to the left. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The whole demand schedule shifts to the left.

Question 10

"Demand" is a series of quantities demanded, one for each person in the market.

Accepted Answer

A) True 
 B)False

Question 11

A minimum wage law may cause unemployment among low-skill workers.

Accepted Answer

A) True 
 B)False

Question 12

A shift in the demand curve for sailboats resulting from an increase in incomes will lead to

Accepted Answer

A)  higher prices of sailboats. 
B)  lower prices of sailboats. 
C)  a corresponding shift in the supply curve for sailboats. 
D)  lower output of sailboats. 
E)  no change in the price of sailboats. 
A)  higher prices of sailboats. 
B)  lower prices of sailboats. 
C)  a corresponding shift in the supply curve for sailboats. 
D)  lower output of sailboats. 
E)  no change in the price of sailboats.

Question 13

Exhibit 4-1
The following are the equations for the supply and demand curves in the market for weezils:
 Demand:
$ Q_{d}=20-2 P $
Supply:
$ Q_{s}=5+3 P $
where $ Q_{d} $ is the quantity demanded, Qs is the quantity supplied, and P is the price per weezil in dollars.
-Refer to Exhibit 4-1.According to the data given, when the market is in Equilibrium, how many weezils are sold?

Accepted Answer

A)  3 
B)  5 
C)  11 
D)  14 
A)  3 
B)  5 
C)  11 
D)  14

Question 14

Supply can shift due to changes in price.

Accepted Answer

A) True 
 B)False

Question 15

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

Accepted Answer

A)  a decrease in price and no predictable impact on output. 
B)  a definite decrease in price and increase in output. 
C)  an increase in output with no predictable change in price. 
D)  no predictable changes in either price or output. 
A)  a decrease in price and no predictable impact on output. 
B)  a definite decrease in price and increase in output. 
C)  an increase in output with no predictable change in price. 
D)  no predictable changes in either price or output.

Question 16

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 17

A demand schedule shows

Accepted Answer

A)  the "market potential" for a product. 
B)  how much consumers are willing and able to buy at different prices. 
C)  possible combinations of output under different conditions. 
D)  how much producers would like to sell at different prices. 
E)  All of the above are correct. 
A)  the "market potential" for a product. 
B)  how much consumers are willing and able to buy at different prices. 
C)  possible combinations of output under different conditions. 
D)  how much producers would like to sell at different prices. 
E)  All of the above are correct.

Question 18

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

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  It depends entirely on the interest rate. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  It depends entirely on the interest rate.

Question 19

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 20

Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation.Without the heart, each patient will die.The government decides this price is too high and imposes a maximum price of $200,000.Everything else equal,

Accepted Answer

A)  more patients will now die. 
B)  fewer patients will now die. 
C)  more patients will now die only if the demand curve is vertical. 
D)  more patients will now die only if the demand curve is horizontal. 
A)  more patients will now die. 
B)  fewer patients will now die. 
C)  more patients will now die only if the demand curve is vertical. 
D)  more patients will now die only if the demand curve is horizontal.

Exam 4: Supply and Demand: An Initial Look

If new manufacturers enter the computer industry, then, holding all other things constant,

Figure 4-8 -Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Why does quantity demanded decrease when price increases?

Any factor that shifts the demand curve to the left but does not affect the supply curve will lower the equilibrium price and raise the equilibrium quantity.

An increase in supply will have what effect on equilibrium price and quantity?

An upward-sloping supply curve shows that

The price for labor is the wage rate.What happens to the quantity of labor demanded if wages increase?

"Demand" is a series of quantities demanded, one for each person in the market.

A minimum wage law may cause unemployment among low-skill workers.

A shift in the demand curve for sailboats resulting from an increase in incomes will lead to

Supply can shift due to changes in price.

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

A demand schedule shows

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

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

Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation.Without the heart, each patient will die.The government decides this price is too high and imposes a maximum price of $200,000.Everything else equal,

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

Filters