Question 1

Price ceilings will likely result in the growth of black markets.

Accepted Answer

A) True 
 B)False

Question 2

When people suddenly want to buy something, supply increases.

Accepted Answer

A) True 
 B)False

Question 3

Tampering with the price mechanism

Accepted Answer

A)  can be efficient for a while. 
B)  cannot be attempted in a market economy. 
C)  can enhance societal welfare if done properly. 
D)  often produces undesired side effects. 
A)  can be efficient for a while. 
B)  cannot be attempted in a market economy. 
C)  can enhance societal welfare if done properly. 
D)  often produces undesired side effects.

Question 4

Figure 4-2
  
-If the government has stated that it will buy any amount of good X offered at $30, which demand curve in Figure 4-2 is appropriate?

Accepted Answer

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

Question 5

Pork can be used to produce bacon or sausage, but not both.If the price of bacon rises for some reason, then, everything else equal,

Accepted Answer

A)  the price of sausage will rise. 
B)  the price of sausage will fall. 
C)  the resources used in raising Pork will become more expensive. 
D)  the resources used in raising Pork will become less expensive. 
A)  the price of sausage will rise. 
B)  the price of sausage will fall. 
C)  the resources used in raising Pork will become more expensive. 
D)  the resources used in raising Pork will become less expensive.

Question 6

At an equilibrium price for gasoline,

Accepted Answer

A)  everyone with the desire and the income to buy gasoline at that price can do so. 
B)  surpluses are inevitable. 
C)  inherent market forces will eventually change the quantities demanded and supplied. 
D)  suppliers must be using the most efficient oil-drilling equipment available. 
A)  everyone with the desire and the income to buy gasoline at that price can do so. 
B)  surpluses are inevitable. 
C)  inherent market forces will eventually change the quantities demanded and supplied. 
D)  suppliers must be using the most efficient oil-drilling equipment available.

Question 7

Figure 4-21
  
-Which price in Figure 4-21 is equilibrium?

Accepted Answer

A)  P₁ 
B)  P₂ 
C)  P₃ 
A)  P₁ 
B)  P₂ 
C)  P₃

Question 8

If the price of hamburger rises, we would expect the demand for steak to shift to the right.

Accepted Answer

A) True 
 B)False

Question 9

Price floors are only effective below the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 10

How will an increase in price tend to affect demand?

Accepted Answer

A)  Demand will increase. 
B)  Demand will decrease. 
C)  Demand will not change. 
D)  Uncertain. 
A)  Demand will increase. 
B)  Demand will decrease. 
C)  Demand will not change. 
D)  Uncertain.

Question 11

Technological advances shift the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 12

A shift in the demand curve occurs when

Accepted Answer

A)  suppliers place more goods on the market. 
B)  the price of a good rises. 
C)  consumers want to buy more or less than before at a given price. 
D)  the price of the good falls. 
A)  suppliers place more goods on the market. 
B)  the price of a good rises. 
C)  consumers want to buy more or less than before at a given price. 
D)  the price of the good falls.

Question 13

Scarcity and choice are the basic problems of economics; the supply and demand mechanism is the basic investigative tool of economics.

Accepted Answer

A) True 
 B)False

Question 14

Distinguish the terms price ceiling and price floor.

Accepted Answer

A price ceiling is a governmen

Question 15

At an equilibrium price, quantity demanded

Accepted Answer

A)  exceeds quantity supplied. 
B)  equals quantity supplied. 
C)  is less than quantity supplied. 
D)  Any of the above is possible. 
A)  exceeds quantity supplied. 
B)  equals quantity supplied. 
C)  is less than quantity supplied. 
D)  Any of the above is possible.

Question 16

Price floors set a legal minimum price on a product or commodity.

Accepted Answer

A) True 
 B)False

Question 17

"The market has failed to provide enough rental housing in New York City.This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

Accepted Answer

An economist would disagree.The free mar

Question 18

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption.Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer.Considering the market for alcohol, an economist would predict a movement

Accepted Answer

A)  up the demand curve as quantity demanded falls. 
B)  up the supply curve as the demand curve shifts. 
C)  down the supply curve as the demand curve shifts. 
D)  down the demand curve as quantity falls. 
A)  up the demand curve as quantity demanded falls. 
B)  up the supply curve as the demand curve shifts. 
C)  down the supply curve as the demand curve shifts. 
D)  down the demand curve as quantity falls.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A decrease in the price of VCRs will increase demand for video cassettes.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: An Initial Look

Price ceilings will likely result in the growth of black markets.

When people suddenly want to buy something, supply increases.

Tampering with the price mechanism

Figure 4-2 -If the government has stated that it will buy any amount of good X offered at $30, which demand curve in Figure 4-2 is appropriate?

Pork can be used to produce bacon or sausage, but not both.If the price of bacon rises for some reason, then, everything else equal,

At an equilibrium price for gasoline,

Figure 4-21 -Which price in Figure 4-21 is equilibrium?

If the price of hamburger rises, we would expect the demand for steak to shift to the right.

Price floors are only effective below the market equilibrium.

How will an increase in price tend to affect demand?

Technological advances shift the supply curve rightward.

A shift in the demand curve occurs when

Scarcity and choice are the basic problems of economics; the supply and demand mechanism is the basic investigative tool of economics.

Distinguish the terms price ceiling and price floor.

At an equilibrium price, quantity demanded

Price floors set a legal minimum price on a product or commodity.

"The market has failed to provide enough rental housing in New York City.This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption.Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer.Considering the market for alcohol, an economist would predict a movement

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

A decrease in the price of VCRs will increase demand for video cassettes.

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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