Question 1

A shortage occurs when price is higher than the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

Rent controls encourage investment in housing because they bring stability to the market.

Accepted Answer

A) True 
 B)False

Question 3

If the price of coal, a close substitute for oil, decreases, then the

Accepted Answer

A) supply curve for oil will shift to the right. 
B) demand curve for oil will shift to the right. 
C) equilibrium price and quantity of oil will not change. 
D) demand curve for oil will shift to the left. 
E) supply curve of coal will shift to the left. 
A) supply curve for oil will shift to the right. 
B) demand curve for oil will shift to the right. 
C) equilibrium price and quantity of oil will not change. 
D) demand curve for oil will shift to the left. 
E) supply curve of coal will shift to the left.

Question 4

Higher steel prices will result in a shift in the supply curve of bicycles, and this will lead to

Accepted Answer

A) higher prices for bicycles. 
B) lower prices for bicycles. 
C) a shift in the demand curve for bicycles. 
D) a larger output of bicycles. 
E) no impact on the price of bicycles. 
A) higher prices for bicycles. 
B) lower prices for bicycles. 
C) a shift in the demand curve for bicycles. 
D) a larger output of bicycles. 
E) no impact on the price of bicycles.

Question 5

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 6

Computer processors and memory costs have decreased dramatically in the past 25 years.As a result, in the computer market, we have seen

Accepted Answer

A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply. 
A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply.

Question 7

Price floors are only effective below the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 8

A change in the price of hamburgers will change the supply of hot dogs.

Accepted Answer

A) True 
 B)False

Question 9

If a price floor is removed, which of the following would be a result?

Accepted Answer

A) The elimination of surpluses 
B) Problems with the disposal of goods 
C) Disguised discounts to sell additional goods are offered by sellers 
D) Overinvestment in the industry 
A) The elimination of surpluses 
B) Problems with the disposal of goods 
C) Disguised discounts to sell additional goods are offered by sellers 
D) Overinvestment in the industry

Question 10

There is general agreement among economists that rent controls cause shortages of housing, but despite this rent controls continue to persist.Why does this occur?

Accepted Answer

A) Many people do not understand the effects that controls cause. 
B) Property owners are politically unpopular. 
C) Many persons tend to benefit from rent controls. 
D) All of these responses are correct. 
A) Many people do not understand the effects that controls cause. 
B) Property owners are politically unpopular. 
C) Many persons tend to benefit from rent controls. 
D) All of these responses are correct.

Question 11

Which of the following is an example of a price floor?

Accepted Answer

A) Rent controls 
B) Maximum prices for gasoline 
C) Usury laws that set maximum interest rates 
D) The minimum wage 
A) Rent controls 
B) Maximum prices for gasoline 
C) Usury laws that set maximum interest rates 
D) The minimum wage

Question 12

-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 13

Which of the following changes would not result in a shift in the demand curve for milk?

Accepted Answer

A) A change in the income of buyers of milk 
B) A change in the price of milk 
C) A change in the population 
D) A medical report that milk consumption increases cholesterol. 
A) A change in the income of buyers of milk 
B) A change in the price of milk 
C) A change in the population 
D) A medical report that milk consumption increases cholesterol.

Question 14

If price of a good rises, what happens to the demand for that good, all other things held constant?

Accepted Answer

A) The demand increases. 
B) The demand decreases. 
C) The demand does not change. 
D) The outcome depends upon the supply of the good. 
A) The demand increases. 
B) The demand decreases. 
C) The demand does not change. 
D) The outcome depends upon the supply of the good.

Question 15

-When the price of a good is below the equilibrium price,

Accepted Answer

A) suppliers are unable to sell as many units as they want; they will cut output and lower prices. 
B) suppliers can sell as many units as they can produce; they will increase production and raise prices. 
C) the demand curve shifts down to reach an equilibrium price. 
D) the supply curve will shift up to reach an equilibrium price. 
A) suppliers are unable to sell as many units as they want; they will cut output and lower prices. 
B) suppliers can sell as many units as they can produce; they will increase production and raise prices. 
C) the demand curve shifts down to reach an equilibrium price. 
D) the supply curve will shift up to reach an equilibrium price.

Question 16

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 17

George Washington's troops at Valley Forge were almost destroyed by price controls.

Accepted Answer

A) True 
 B)False

Question 18

The following are the equations for the supply and demand curves in the market for weezils:     where Qd is the quantity demanded, Qs is the quantity supplied, and P is the price per weezil in dollars.
-Refer to Exhibit 4-1.If consumers decide that they want 20 percent fewer weezils at every price, the equation for the new demand curve for weezils will be

Accepted Answer

A) Qd = 20 − 1.6P. 
B) Qd = 0.2(20 − 2P). 
C) Qd = 0.8(20 − 2P). 
D) Qd = 80(20 − 2P). 
A) Qd = 20 − 1.6P. 
B) Qd = 0.2(20 − 2P). 
C) Qd = 0.8(20 − 2P). 
D) Qd = 80(20 − 2P).

Question 19

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 20

Assuming that resources are specialized, the opportunity cost of an item increases as the production of it rises.This implies that firms will produce more as

Accepted Answer

A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases. 
A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases.

Exam 4: Supply and Demand: an Initial Look

A shortage occurs when price is higher than the market equilibrium.

Rent controls encourage investment in housing because they bring stability to the market.

If the price of coal, a close substitute for oil, decreases, then the

Higher steel prices will result in a shift in the supply curve of bicycles, and this will lead to

Price controls usually enhance efficiency in the allocation of resources.

Computer processors and memory costs have decreased dramatically in the past 25 years.As a result, in the computer market, we have seen

Price floors are only effective below the market equilibrium.

A change in the price of hamburgers will change the supply of hot dogs.

If a price floor is removed, which of the following would be a result?

There is general agreement among economists that rent controls cause shortages of housing, but despite this rent controls continue to persist.Why does this occur?

Which of the following is an example of a price floor?

-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

Which of the following changes would not result in a shift in the demand curve for milk?

If price of a good rises, what happens to the demand for that good, all other things held constant?

-When the price of a good is below the equilibrium price,

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

George Washington's troops at Valley Forge were almost destroyed by price controls.

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

Assuming that resources are specialized, the opportunity cost of an item increases as the production of it rises.This implies that firms will produce more as

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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