Question 1

Quantity supplied increases when the price of a good increases because

Accepted Answer

A) producers find it more profitable to make the item. 
B) potential buyers "drop out" of the market, so the good becomes more abundant. 
C) as demand decreases with a high price, surpluses appear. 
D) All of these responses are correct. 
A) producers find it more profitable to make the item. 
B) potential buyers "drop out" of the market, so the good becomes more abundant. 
C) as demand decreases with a high price, surpluses appear. 
D) All of these responses are correct.

Question 2

In January, 2,500 quarts of ice cream are sold in Boston at $2.50 a quart.In February, 3,000 quarts are sold at $2.00 a quart.This change in quantity sold and price may have been caused by

Accepted Answer

A) a reduction in wages in the Boston area. 
B) the introduction of labor-saving automated ice cream-packing machinery. 
C) the release of a medical study showing that ice cream consumption improves mental health. 
D) the decision by Boston ice cream sellers to eliminate discount coupons. 
A) a reduction in wages in the Boston area. 
B) the introduction of labor-saving automated ice cream-packing machinery. 
C) the release of a medical study showing that ice cream consumption improves mental health. 
D) the decision by Boston ice cream sellers to eliminate discount coupons.

Question 3

Which of the following would result in an increase in the demand for Toyota automobiles?

Accepted Answer

A) An increase in the price of Toyota automobiles 
B) A decrease in the price of Toyota automobiles 
C) A decrease in the price of Honda automobiles 
D) An increase in the price of Honda automobiles 
A) An increase in the price of Toyota automobiles 
B) A decrease in the price of Toyota automobiles 
C) A decrease in the price of Honda automobiles 
D) An increase in the price of Honda automobiles

Question 4

The most basic investigative tool of economics is the

Accepted Answer

A) concept of scarcity. 
B) mechanism of supply and demand. 
C) coordination and trade syndrome. 
D) inflation-unemployment trade-off. 
E) regulation of business. 
A) concept of scarcity. 
B) mechanism of supply and demand. 
C) coordination and trade syndrome. 
D) inflation-unemployment trade-off. 
E) regulation of business.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The invention of new technology that can double the amount of gold extracted from raw ore will lead to a

Accepted Answer

A) higher world price of gold, since mining companies must pay for the new machinery. 
B) lower world price of gold, since any amount of gold output is now cheaper to produce. 
C) higher world price of gold, because miners' wages must double as their productivity doubles. 
D) lower world price of gold, but only if new mining companies are not allowed to enter the industry. 
A) higher world price of gold, since mining companies must pay for the new machinery. 
B) lower world price of gold, since any amount of gold output is now cheaper to produce. 
C) higher world price of gold, because miners' wages must double as their productivity doubles. 
D) lower world price of gold, but only if new mining companies are not allowed to enter the industry.

Question 7

Very few societies have used price controls.

Accepted Answer

A) True 
 B)False

Question 8

-At price P1 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

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

A demand schedule shows the time over which different quantities will be demanded.

Accepted Answer

A) True 
 B)False

Question 12

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

Accepted Answer

A) True 
 B)False

Question 13

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 that

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 14

A price ceiling is only effective if it is above the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 15

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays.Catholics customarily ate fish on Friday.Given this, economics would predict that

Accepted Answer

A) the price of both meat and fish would rise. 
B) the price of fish would increase and the price of meat would fall. 
C) the price of fish would decrease and the price of meat would rise. 
D) the price of both meat and fish would fall. 
A) the price of both meat and fish would rise. 
B) the price of fish would increase and the price of meat would fall. 
C) the price of fish would decrease and the price of meat would rise. 
D) the price of both meat and fish would fall.

Question 16

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.

Question 17

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

Quantity supplied increases when the price of a good increases because

In January, 2,500 quarts of ice cream are sold in Boston at $2.50 a quart.In February, 3,000 quarts are sold at $2.00 a quart.This change in quantity sold and price may have been caused by

Which of the following would result in an increase in the demand for Toyota automobiles?

The most basic investigative tool of economics is the

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

The invention of new technology that can double the amount of gold extracted from raw ore will lead to a

Very few societies have used price controls.

-At price P1 in Figure 4-21, what will tend to happen?

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

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,

A demand schedule shows the time over which different quantities will be demanded.

The more firms that are attracted to an industry, the greater will be the quantity of product supplied at any given price.

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 that

A price ceiling is only effective if it is above the market equilibrium.

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays.Catholics customarily ate fish on Friday.Given this, economics would predict that

A typical supply curve has

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

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

Filters

-At price P₁ in Figure 4-21, what will tend to happen?