Question 1

A supply schedule shows

Accepted Answer

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

Question 2

Price ceilings are designed to protect sellers, while price floors are designed to protect buyers.

Accepted Answer

A) True 
 B)False

Question 3

A demand schedule's position is determined partly by the supply of a good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 4-16
  
-Assume that Figure 4-16 shows the supply of orange juice.A decrease in the wage rate paid to workers in the orange juice industry will shift supply from

Accepted Answer

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

Question 5

Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding

Accepted Answer

A)  reduction in the volume of sales only if the price is forced down. 
B)  reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C)  decrease in the volume of sales whether the price is forced up or down. 
D)  increase in the volume of sales whether the price is forced up or down. 
A)  reduction in the volume of sales only if the price is forced down. 
B)  reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C)  decrease in the volume of sales whether the price is forced up or down. 
D)  increase in the volume of sales whether the price is forced up or down.

Question 6

The major drawback of a price ceiling is

Accepted Answer

A)  it causes a surplus. 
B)  government regulations of this kind are difficult to enforce. 
C)  it causes a shortage. 
D)  There is no drawback. 
A)  it causes a surplus. 
B)  government regulations of this kind are difficult to enforce. 
C)  it causes a shortage. 
D)  There is no drawback.

Question 7

A supply curve can be thought of as

Accepted Answer

A)  a graphical display of "market potential." 
B)  a graphical representation of the information in a supply schedule. 
C)  showing the maximum quantities that firms are able to produce. 
D)  a forecasting tool. 
E)  All of the above are correct. 
A)  a graphical display of "market potential." 
B)  a graphical representation of the information in a supply schedule. 
C)  showing the maximum quantities that firms are able to produce. 
D)  a forecasting tool. 
E)  All of the above are correct.

Question 8

For more than a thousand years, the Catholic Church required its members to abstain from meat on Fridays.Catholics customarily ate fish on Friday.After 1966 abstinence from meat on Fridays was no longer required.Consequently, the

Accepted Answer

A)  demand curve for fish shifted to the right. 
B)  demand curve for fish shifted to the left. 
C)  demand for meat decreased. 
D)  price of fish increased. 
A)  demand curve for fish shifted to the right. 
B)  demand curve for fish shifted to the left. 
C)  demand for meat decreased. 
D)  price of fish increased.

Question 9

In some markets, demand can be approximated by
 Q = 50 - 5P + 10Y
where Q is quantity, P price per unit, and Y = buyers' income.Supply can be approximated by
 Q =-5 + 10P.
a.If Y = 20, what is equilibrium price and output?
b.If Y rises to 25, what is the new equilibrium price and output?

Accepted Answer

a.Equate the supply and demand equations

Question 10

Table 4-1
Use this table for the following questions.
 $\begin{array}{ccc}
 & \text { Quantity } & \text { Quantity } \
\underline { \text { Price} } &  \underline { \text { Demanded } } & \underline { \text { Supplied} } \
\$ 10 & 1,000 & 5,500 \
9 & 2,000 & 5,000 \
8 & 3,000 & 4,500 \
7 & 4,000 & 4,000 \
6 & 5,000 & 3,500 \
5 & 6,000 & 3,000 \
4 & 7,000 & 2,500 \
3 & 8,000 & 2,000 \
2 & 9,000 & 1,500 \
1 & 10,000 & 1,000
\end{array}$
-Refer to Table 4-1.At $4, what is the shortage?

Accepted Answer

A)  0 
B)  1,500 
C)  3,000 
D)  4,500 
E)  6,000 
A)  0 
B)  1,500 
C)  3,000 
D)  4,500 
E)  6,000

Question 11

Figure 4-4
  
-Assume that Figure 4-4 shows demand for MP₃ players.An increase in the price of music downloads changes 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 12

An increase in demand 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 13

Both demand and supply curves usually have positive slopes.

Accepted Answer

A) True 
 B)False

Question 14

An important assumption that is made when constructing a demand schedule is that

Accepted Answer

A)  only price and quantity matter in determining demand. 
B)  people always want a certain amount of a product. 
C)  demand is too important to be left to the economists. 
D)  all other determinants of demand are held constant. 
E)  demand has a positive slope. 
A)  only price and quantity matter in determining demand. 
B)  people always want a certain amount of a product. 
C)  demand is too important to be left to the economists. 
D)  all other determinants of demand are held constant. 
E)  demand has a positive slope.

Question 15

Figure 4-10
  
-The rising minimum wage allegedly has reduced the quantity demanded of teenage labor.However, demographics slightly reduced the supply of teenage labor.The U.S.Department of Labor reported that teenage unemployment is an increasing problem.Which graph in Figure 4-10 is consistent with these facts?

Accepted Answer

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

Question 16

Price ceilings will likely

Accepted Answer

A)  result in the accumulation of surpluses. 
B)  increase the volume of transactions as we move along the demand curve. 
C)  increase production as producers respond to higher consumer demand at the low ceiling price. 
D)  result in the development of black markets. 
A)  result in the accumulation of surpluses. 
B)  increase the volume of transactions as we move along the demand curve. 
C)  increase production as producers respond to higher consumer demand at the low ceiling price. 
D)  result in the development of black markets.

Question 17

A price above equilibrium always yields a surplus.

Accepted Answer

A) True 
 B)False

Question 18

Table 4-1
Use this table for the following questions.
 $\begin{array}{ccc}
 & \text { Quantity } & \text { Quantity } \
\underline { \text { Price} } &  \underline { \text { Demanded } } & \underline { \text { Supplied} } \
\$ 10 & 1,000 & 5,500 \
9 & 2,000 & 5,000 \
8 & 3,000 & 4,500 \
7 & 4,000 & 4,000 \
6 & 5,000 & 3,500 \
5 & 6,000 & 3,000 \
4 & 7,000 & 2,500 \
3 & 8,000 & 2,000 \
2 & 9,000 & 1,500 \
1 & 10,000 & 1,000
\end{array}$
-Refer to Table 4-1.At $10, what is the surplus?

Accepted Answer

A)  4,500 
B)  3,000 
C)  1,500 
D)  0 
A)  4,500 
B)  3,000 
C)  1,500 
D)  0

Question 19

A change in the price of a good has no effect on the supply schedule.

Accepted Answer

A) True 
 B)False

Question 20

To construct a supply curve, an economist needs data on price and quantity.Each point on the supply curve is

Accepted Answer

A)  supply of the product. 
B)  a quantity supplied at that price. 
C)  the amount that people want to buy. 
D)  the amount people want to sell to buyers of different incomes. 
E)  All of the above are correct. 
A)  supply of the product. 
B)  a quantity supplied at that price. 
C)  the amount that people want to buy. 
D)  the amount people want to sell to buyers of different incomes. 
E)  All of the above are correct.

Exam 4: Supply and Demand: An Initial Look

A supply schedule shows

Price ceilings are designed to protect sellers, while price floors are designed to protect buyers.

A demand schedule's position is determined partly by the supply of a good.

Figure 4-16 -Assume that Figure 4-16 shows the supply of orange juice.A decrease in the wage rate paid to workers in the orange juice industry will shift supply from

Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding

The major drawback of a price ceiling is

A supply curve can be thought of as

For more than a thousand years, the Catholic Church required its members to abstain from meat on Fridays.Catholics customarily ate fish on Friday.After 1966 abstinence from meat on Fridays was no longer required.Consequently, the

In some markets, demand can be approximated by Q = 50 - 5P + 10Y where Q is quantity, P price per unit, and Y = buyers' income.Supply can be approximated by Q =-5 + 10P. a.If Y = 20, what is equilibrium price and output? b.If Y rises to 25, what is the new equilibrium price and output?

Table 4-1 Use this table for the following questions. Quantity Quantity \ 10 1,000 5,500 9 2,000 5,000 8 3,000 4,500 7 4,000 4,000 6 5,000 3,500 5 6,000 3,000 4 7,000 2,500 3 8,000 2,000 2 9,000 1,500 1 10,000 1,000 -Refer to Table 4-1.At $4, what is the shortage?

Figure 4-4 -Assume that Figure 4-4 shows demand for MP₃ players.An increase in the price of music downloads changes demand from

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

Both demand and supply curves usually have positive slopes.

An important assumption that is made when constructing a demand schedule is that

Price ceilings will likely

A price above equilibrium always yields a surplus.

Table 4-1 Use this table for the following questions. Quantity Quantity \ 10 1,000 5,500 9 2,000 5,000 8 3,000 4,500 7 4,000 4,000 6 5,000 3,500 5 6,000 3,000 4 7,000 2,500 3 8,000 2,000 2 9,000 1,500 1 10,000 1,000 -Refer to Table 4-1.At $10, what is the surplus?

A change in the price of a good has no effect on the supply schedule.

To construct a supply curve, an economist needs data on price and quantity.Each point on the supply curve is

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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