Question 1

Figure 4-4
  
-Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers 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 2

A cold winter will increase the quantity of heating fuel demanded at every price.

Accepted Answer

A) True 
 B)False

Question 3

The imposition of price ceilings on a market often results in

Accepted Answer

A)  an increase in investment in the industry. 
B)  a persistent surplus in the market. 
C)  the diversion of income toward black-market suppliers. 
D)  lower prices being offered on the black market. 
A)  an increase in investment in the industry. 
B)  a persistent surplus in the market. 
C)  the diversion of income toward black-market suppliers. 
D)  lower prices being offered on the black market.

Question 4

Normally an increase in the supply of a good will cause

Accepted Answer

A)  a shift of consumer preferences in favor of that good. 
B)  consumers to use more of that good and less of others. 
C)  a shift of consumer preferences away from that good. 
D)  consumers to use less of that good and more of others. 
A)  a shift of consumer preferences in favor of that good. 
B)  consumers to use more of that good and less of others. 
C)  a shift of consumer preferences away from that good. 
D)  consumers to use less of that good and more of others.

Question 5

The laws of supply and demand force prices to an equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

American consumers decide to boycott grapes in support of the farm workers' union.Everything else being equal, the

Accepted Answer

A)  price of grapes will rise. 
B)  supply of grapes will fall. 
C)  quantity supplied of grapes will fall. 
D)  demand curve for grapes will shift to the right. 
A)  price of grapes will rise. 
B)  supply of grapes will fall. 
C)  quantity supplied of grapes will fall. 
D)  demand curve for grapes will shift to the right.

Question 7

If orange juice prices double next year, there will be a

Accepted Answer

A)  rightward shift in the demand for grapefruit juice. 
B)  rightward shift in the supply of grapefruit juice. 
C)  leftward shift in the supply of grapefruit juice. 
D)  leftward shift in the demand for grapefruit juice. 
A)  rightward shift in the demand for grapefruit juice. 
B)  rightward shift in the supply of grapefruit juice. 
C)  leftward shift in the supply of grapefruit juice. 
D)  leftward shift in the demand for grapefruit juice.

Question 8

Figure 4-21
  
-At price P₃ 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 9

Figure 4-23
  
-In Figure 4-23, which movement will be caused by changes in income?

Accepted Answer

A)  A to C 
B)  C to A 
C)  B to D 
D)  B to A 
A)  A to C 
B)  C to A 
C)  B to D 
D)  B to A

Question 10

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Accepted Answer

A)  shortage, shortage 
B)  surplus, surplus 
C)  shortage, surplus 
D)  surplus, shortage 
A)  shortage, shortage 
B)  surplus, surplus 
C)  shortage, surplus 
D)  surplus, shortage

Question 11

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the likely result would be a

Accepted Answer

A)  shift in the supply curve for aluminum bats. 
B)  shift in the supply curve for wooden bats. 
C)  change in the quantity supplied of aluminum bats. 
D)  persistent shortage of aluminum bats. 
A)  shift in the supply curve for aluminum bats. 
B)  shift in the supply curve for wooden bats. 
C)  change in the quantity supplied of aluminum bats. 
D)  persistent shortage of aluminum bats.

Question 12

Figure 4-12
  
-The silverware industry has been in serious decline since the 1980s.Family dining habits are less formal so people purchase less silverware.Also, in 2006-2008, the price of silver increased from $5 to $20 per ounce.Which graph in Figure 4-12 best illustrates these developments?

Accepted Answer

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

Question 13

Rent controls are most often designed to protect the investment made by apartment building owners.

Accepted Answer

A) True 
 B)False

Question 14

Figure 4-22
  
-Because of falling oil prices in the past, Libya could afford fewer imported goods.Government controls were established to limit imports of cigarettes.In 1985, the market price of Marlboros rose to $70 a carton.Which graph in Figure 4-22 best depicts this situation?

Accepted Answer

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

Question 15

Consumer income changes can shift market demand.

Accepted Answer

A) True 
 B)False

Question 16

A decrease 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 17

Equilibrium in a market is

Accepted Answer

A)  a situation in which there are no inherent forces that produce change. 
B)  the natural state of affairs in the market. 
C)  the actual price and quantity that will exist in a market. 
D)  the best price and quantity that can exist in a market. 
E)  All of the above are correct. 
A)  a situation in which there are no inherent forces that produce change. 
B)  the natural state of affairs in the market. 
C)  the actual price and quantity that will exist in a market. 
D)  the best price and quantity that can exist in a market. 
E)  All of the above are correct.

Question 18

If price rises, what happens to supply 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 19

The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

Accepted Answer

A)  raise the world price of gold to pay for the new machinery. 
B)  lower the world price of gold because any amount can now be produced more cheaply. 
C)  raise the world price of gold because miners' wages must double as their productivity doubles. 
D)  lower the world price of gold only if new mining companies are not allowed to enter the industry. 
A)  raise the world price of gold to pay for the new machinery. 
B)  lower the world price of gold because any amount can now be produced more cheaply. 
C)  raise the world price of gold because miners' wages must double as their productivity doubles. 
D)  lower the world price of gold only if new mining companies are not allowed to enter the industry.

Question 20

Explain the effect of the following changes on equilibrium price and quantity of a commodity:
(a)increase in average incomes.
(b)increase in population.

Accepted Answer

If average incomes rise, consumers will

Exam 4: Supply and Demand: An Initial Look

Figure 4-4 -Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers will change demand from

A cold winter will increase the quantity of heating fuel demanded at every price.

The imposition of price ceilings on a market often results in

Normally an increase in the supply of a good will cause

The laws of supply and demand force prices to an equilibrium.

American consumers decide to boycott grapes in support of the farm workers' union.Everything else being equal, the

If orange juice prices double next year, there will be a

Figure 4-21 -At price P₃ in Figure 4-21, what will tend to happen?

Figure 4-23 -In Figure 4-23, which movement will be caused by changes in income?

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the likely result would be a

Figure 4-12 -The silverware industry has been in serious decline since the 1980s.Family dining habits are less formal so people purchase less silverware.Also, in 2006-2008, the price of silver increased from $5 to $20 per ounce.Which graph in Figure 4-12 best illustrates these developments?

Rent controls are most often designed to protect the investment made by apartment building owners.

Figure 4-22 -Because of falling oil prices in the past, Libya could afford fewer imported goods.Government controls were established to limit imports of cigarettes.In 1985, the market price of Marlboros rose to $70 a carton.Which graph in Figure 4-22 best depicts this situation?

Consumer income changes can shift market demand.

A decrease in supply will have what effect on equilibrium price and quantity?

Equilibrium in a market is

If price rises, what happens to supply for a product?

The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

Explain the effect of the following changes on equilibrium price and quantity of a commodity: (a)increase in average incomes. (b)increase in population.

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

A market will experience a when the price is above equilibrium and a when the price is below equilibrium.