Question 1

The wage rate is the price of a unit of labor.What happens to the demand for labor if the wage rate increases?

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 2

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

Accepted Answer

A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left. 
A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left.

Question 3

Advertising has no effect on the demand schedule for a good.

Accepted Answer

A) True 
 B)False

Question 4

Lines, ration coupons, and black markets are byproducts of a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy. 
A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy.

Question 5

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 these responses 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 these responses are correct.

Question 6

The supply curve for a good can be thought of as

Accepted Answer

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

Question 7

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 supply of money (to lend) 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 8

A strike at the Financial News in London shut down its production, and the sales of a competing newspaper, the Broad Street Journal, increased dramatically, with no increase in price.Based upon this, what can you say about the Broad Street Journal's supply curve?

Accepted Answer

A) Its supply curve is vertical. 
B) Its supply curve is horizontal. 
C) Its supply curve has shifted. 
D) Its supply curve has a positive slope. 
A) Its supply curve is vertical. 
B) Its supply curve is horizontal. 
C) Its supply curve has shifted. 
D) Its supply curve has a positive slope.

Question 9

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 10

If the price of a good increases, the quantity supplied will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) quantity supplied is unchanged, but the supply will increase. 
A) increase. 
B) decrease. 
C) not change. 
D) quantity supplied is unchanged, but the supply will increase.

Question 11

African governments wish to reduce the poaching of elephants, which is done to harvest the elephant's ivory from its tusks.If this is the goal, economists would suggest that

Accepted Answer

A) a price ceiling for ivory should be set, to reduce the price in the market, which would discourage poaching. 
B) governments continue to stockpile confiscated ivory, to keep it out of the market. 
C) burning ivory reduces the supply, which would reduce the number of buyers. 
D) confiscated tusks should be sold by governments because this would lower the price of ivory and reduce the reward to poachers. 
A) a price ceiling for ivory should be set, to reduce the price in the market, which would discourage poaching. 
B) governments continue to stockpile confiscated ivory, to keep it out of the market. 
C) burning ivory reduces the supply, which would reduce the number of buyers. 
D) confiscated tusks should be sold by governments because this would lower the price of ivory and reduce the reward to poachers.

Question 12

If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.

Accepted Answer

A) True 
 B)False

Question 13

-On a traditional supply and demand diagram,

Accepted Answer

A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines. 
A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines.

Question 14

Why do airlines tend to lower ticket prices in the winter?

Accepted Answer

A) Supply is relatively variable, and a drop in demand lowers equilibrium price 
B) Demand is relatively variable, and a drop in supply lowers equilibrium price. 
C) A drop in both supply and demand lowers equilibrium price. 
D) Supply is relatively fixed, and a drop in demand lowers equilibrium price. 
E) Demand is relatively fixed, and a drop in supply lowers equilibrium price. 
A) Supply is relatively variable, and a drop in demand lowers equilibrium price 
B) Demand is relatively variable, and a drop in supply lowers equilibrium price. 
C) A drop in both supply and demand lowers equilibrium price. 
D) Supply is relatively fixed, and a drop in demand lowers equilibrium price. 
E) Demand is relatively fixed, and a drop in supply lowers equilibrium price.

Question 15

When the price per ticket is P*, there are empty seats at a university's basketball arena.From this, we can conclude that

Accepted Answer

A) P* is greater than the equilibrium price. 
B) P* is less than the equilibrium price. 
C) P* is the equilibrium price. 
D) it's not possible to determine anything about the equilibrium price with this information. 
A) P* is greater than the equilibrium price. 
B) P* is less than the equilibrium price. 
C) P* is the equilibrium price. 
D) it's not possible to determine anything about the equilibrium price with this information.

Question 16

-Grapes can be used to produce wine or raisins.Which graph in Figure 4-6 best depicts the effects on the U.S.raisin market of a decline in purchases of domestic wine?

Accepted Answer

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

Question 17

The quantity of goods exchanged in a market will be below the equilibrium quantity

Accepted Answer

A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising. 
A) when the price is either held above or below the equilibrium price. 
B) only when the price is held above the equilibrium price. 
C) only when the price is held below the equilibrium price. 
D) only when the price is rising.

Question 18

An increase in the price of poultry would lead to

Accepted Answer

A) a decrease in quantity demanded of fish and an increase in the demand for poultry. 
B) a decrease in quantity demanded of poultry and an increase in the demand for fish. 
C) an increase in quantity demanded of fish and a decrease in the demand for poultry. 
D) an increase in quantity demanded of poultry and a decrease in the demand for fish. 
A) a decrease in quantity demanded of fish and an increase in the demand for poultry. 
B) a decrease in quantity demanded of poultry and an increase in the demand for fish. 
C) an increase in quantity demanded of fish and a decrease in the demand for poultry. 
D) an increase in quantity demanded of poultry and a decrease in the demand for fish.

Question 19

A common misconception about supply is that

Accepted Answer

A) supply 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 these responses are correct. 
A) supply 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 these responses are correct.

Question 20

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.

Exam 4: Supply and Demand: an Initial Look

The wage rate is the price of a unit of labor.What happens to the demand for labor if the wage rate increases?

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

Advertising has no effect on the demand schedule for a good.

Lines, ration coupons, and black markets are byproducts of a

A demand schedule shows

The supply curve for a good can be thought of as

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 supply of money (to lend) if the interest rate increases?

A strike at the Financial News in London shut down its production, and the sales of a competing newspaper, the Broad Street Journal, increased dramatically, with no increase in price.Based upon this, what can you say about the Broad Street Journal's supply curve?

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

If the price of a good increases, the quantity supplied will

African governments wish to reduce the poaching of elephants, which is done to harvest the elephant's ivory from its tusks.If this is the goal, economists would suggest that

If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.

-On a traditional supply and demand diagram,

Why do airlines tend to lower ticket prices in the winter?

When the price per ticket is P*, there are empty seats at a university's basketball arena.From this, we can conclude that

-Grapes can be used to produce wine or raisins.Which graph in Figure 4-6 best depicts the effects on the U.S.raisin market of a decline in purchases of domestic wine?

The quantity of goods exchanged in a market will be below the equilibrium quantity

An increase in the price of poultry would lead to

A common misconception about supply is that

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

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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