Question 1

The amount of a good sold in a market at a particular price cannot exceed the quantity

Accepted Answer

A)  demanded at that price. 
B)  supplied at that price. 
C)  sold when there is a price floor. 
D)  sold when there is a price ceiling. 
A)  demanded at that price. 
B)  supplied at that price. 
C)  sold when there is a price floor. 
D)  sold when there is a price ceiling.

Question 2

If the U.S.government starts to sell off its stockpile of cheese,

Accepted Answer

A)  consumers will be less willing to purchase cheese. 
B)  the equilibrium quantity demanded will rise. 
C)  farmers will hoard the cheese they produce. 
D)  the quantity of cheese that spoils before sale will rise. 
A)  consumers will be less willing to purchase cheese. 
B)  the equilibrium quantity demanded will rise. 
C)  farmers will hoard the cheese they produce. 
D)  the quantity of cheese that spoils before sale will rise.

Question 3

Change in the price of a good causes the demand schedule for that good to shift.

Accepted Answer

A) True 
 B)False

Question 4

List some of the problems that may arise when prices are controlled.

Accepted Answer

Apart from the standard set of issues as

Question 5

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

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The quantity of money demanded will increase. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The quantity of money demanded will increase.

Question 6

Sugar price supports primarily benefit consumers.

Accepted Answer

A) True 
 B)False

Question 7

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

Accepted Answer

A) True 
 B)False

Question 8

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Accepted Answer

A)  a shortage. 
B)  a surplus. 
C)  a black market. 
D)  fewer producers of the good or service. 
E)  a decrease in demand. 
A)  a shortage. 
B)  a surplus. 
C)  a black market. 
D)  fewer producers of the good or service. 
E)  a decrease in demand.

Question 9

Rent controls and controls on other prices often aggravate the very problem they are intended to solve.

Accepted Answer

A) True 
 B)False

Question 10

In high schools, all teachers were paid the same based on years of service and regardless of specialization.Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer.At the same time, a decline in the number of school-age children tended to reduce the demand for all other teachers, which led to a surplus.The economist's solution to this problem would be

Accepted Answer

A)  merit pay to reward the best teachers. 
B)  recognition that all teachers do comparable work and should be paid the same. 
C)  to raise the wages of all teachers. 
D)  to raise the wages of teachers in fields that are in short supply and lower those of others. 
A)  merit pay to reward the best teachers. 
B)  recognition that all teachers do comparable work and should be paid the same. 
C)  to raise the wages of all teachers. 
D)  to raise the wages of teachers in fields that are in short supply and lower those of others.

Question 11

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

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 12

When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.

Accepted Answer

A) True 
 B)False

Question 13

When a demand schedule is drawn as a graph,

Accepted Answer

A)  price is measured on the vertical axis. 
B)  quantity is measured on the horizontal axis. 
C)  the resulting curve has a negative slope. 
D)  the other variables (besides price and quantity) are held constant. 
E)  All of the above are correct. 
A)  price is measured on the vertical axis. 
B)  quantity is measured on the horizontal axis. 
C)  the resulting curve has a negative slope. 
D)  the other variables (besides price and quantity) are held constant. 
E)  All of the above are correct.

Question 14

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

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Quantity supplied is constant, but supply increases. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Quantity supplied is constant, but supply increases.

Question 15

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result, we can expect

Accepted Answer

A)  a decrease in price but no predictable change in output. 
B)  a decrease in output but no predictable change in price. 
C)  an increase in output but no predictable change in price. 
D)  a predictable decrease in both output and price. 
A)  a decrease in price but no predictable change in output. 
B)  a decrease in output but no predictable change in price. 
C)  an increase in output but no predictable change in price. 
D)  a predictable decrease in both output and price.

Question 16

A common misperception about consumer demand is that

Accepted Answer

A)  demand depends on many other variables. 
B)  price is a major determinant of quantity. 
C)  it is a fixed amount. 
D)  quantity cannot be determined in advance. 
E)  All of the above are correct. 
A)  demand depends on many other variables. 
B)  price is a major determinant of quantity. 
C)  it is a fixed amount. 
D)  quantity cannot be determined in advance. 
E)  All of the above are correct.

Question 17

If the demand for steak shifts to the right, the most likely explanation is that

Accepted Answer

A)  the price of cattle feed has fallen. 
B)  consumer income has risen. 
C)  the price of steak has fallen. 
D)  cattle production has fallen. 
A)  the price of cattle feed has fallen. 
B)  consumer income has risen. 
C)  the price of steak has fallen. 
D)  cattle production has fallen.

Question 18

During the American Revolution, Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices.The Continental Congress later passed a law which

Accepted Answer

A)  exhorted the public to obey the law and help supply food to the army. 
B)  passed tax increases to punish those who refused to sell the food. 
C)  revised the American Law of Supply and Demand. 
D)  overrode local ordinances and essentially repealed the price controls. 
E)  called for the repeal of other price control measures. 
A)  exhorted the public to obey the law and help supply food to the army. 
B)  passed tax increases to punish those who refused to sell the food. 
C)  revised the American Law of Supply and Demand. 
D)  overrode local ordinances and essentially repealed the price controls. 
E)  called for the repeal of other price control measures.

Question 19

Who tends to benefit from the sugar price supports?

Accepted Answer

A)  users of sugar in other products 
B)  individual users of sugar 
C)  producers of other agricultural products 
D)  producers of sugar 
E)  All of the above are correct. 
A)  users of sugar in other products 
B)  individual users of sugar 
C)  producers of other agricultural products 
D)  producers of sugar 
E)  All of the above are correct.

Question 20

A typical supply curve has

Accepted Answer

A)  slope equal to zero. 
B)  slope equal to infinity. 
C)  negative slope. 
D)  positive slope. 
E)  constant slope. 
A)  slope equal to zero. 
B)  slope equal to infinity. 
C)  negative slope. 
D)  positive slope. 
E)  constant slope.

Exam 4: Supply and Demand: An Initial Look

The amount of a good sold in a market at a particular price cannot exceed the quantity

If the U.S.government starts to sell off its stockpile of cheese,

Change in the price of a good causes the demand schedule for that good to shift.

List some of the problems that may arise when prices are controlled.

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

Sugar price supports primarily benefit consumers.

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Rent controls and controls on other prices often aggravate the very problem they are intended to solve.

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

When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.

When a demand schedule is drawn as a graph,

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

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result, we can expect

A common misperception about consumer demand is that

If the demand for steak shifts to the right, the most likely explanation is that

During the American Revolution, Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices.The Continental Congress later passed a law which

Who tends to benefit from the sugar price supports?

A typical supply curve has

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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