Question 1

An individual's demand schedule

Accepted Answer

A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule. 
A) provides information about what quantity a consumer is willing and able to buy at each price. 
B) tells a buyer how many other buyers will try to purchase an item. 
C) is a schedule that regulates monthly sales of scarce goods and services. 
D) is of no use without its accompanying supply schedule.

Question 2

Any change that shifts the supply curve outward to the right and does not affect the demand curve will lower the equilibrium price and raise the equilibrium.

Accepted Answer

A) True 
 B)False

Question 3

The law of increasing relative costs, depicted by the concavity of the production possibilities frontier, is most closely related to the

Accepted Answer

A) downward slope of the demand curve. 
B) upward slope of the demand curve. 
C) downward slope of the supply curve. 
D) upward slope of the supply curve. 
A) downward slope of the demand curve. 
B) upward slope of the demand curve. 
C) downward slope of the supply curve. 
D) upward slope of the supply curve.

Question 4

If the price of chicken rises from $1.25 per pound to $1.75 per pound, and the quantity demanded goes from 250 pounds per day to 175 pounds per day, this illustrates

Accepted Answer

A) the law of diminishing returns. 
B) the law of supply. 
C) the law of demand. 
D) the law of supply and demand. 
A) the law of diminishing returns. 
B) the law of supply. 
C) the law of demand. 
D) the law of supply and demand.

Question 5

A demand curve can be thought of as

Accepted Answer

A) a graphical display of "market potential." 
B) a graphical representation of the information in a demand schedule. 
C) showing how much people want to buy. 
D) a forecasting tool. 
E) All of these responses are correct. 
A) a graphical display of "market potential." 
B) a graphical representation of the information in a demand schedule. 
C) showing how much people want to buy. 
D) a forecasting tool. 
E) All of these responses are correct.

Question 6

When people suddenly want to buy something, supply increases.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

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

Question 8

What group tends to benefit from the sugar price supports?

Accepted Answer

A) Manufacturers of products that use sugar 
B) Individual consumers of sugar 
C) Producers of other agricultural products 
D) Producers of sugar 
E) All of these responses are correct. 
A) Manufacturers of products that use sugar 
B) Individual consumers of sugar 
C) Producers of other agricultural products 
D) Producers of sugar 
E) All of these responses are correct.

Question 9

Figure 4-4  
-Assume that Figure 4-4 shows demand for steak.An increase in income of buyers will change demand from

Accepted Answer

A) D1 to D2. 
B) D2 to D1. 
C) D3 to D2. 
D) D3 to D1. 
A) D1 to D2. 
B) D2 to D1. 
C) D3 to D2. 
D) D3 to D1.

Question 10

In 1971, the U.S.government banned cigarette advertising on radio and television.After the ban was imposed, an economist would predict that the price of magazine ads would

Accepted Answer

A) increase. 
B) decrease. 
C) increase, but only for cigarettes. 
D) not be affected by this ban. 
A) increase. 
B) decrease. 
C) increase, but only for cigarettes. 
D) not be affected by this ban.

Question 11

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect. 
A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect.

Question 12

One effect of market intervention is resource misallocation.

Accepted Answer

A) True 
 B)False

Question 13

Relative to the prices that would be observed in an uncontrolled market, prices charged in a black market are generally

Accepted Answer

A) lower, since sellers have trouble locating buyers. 
B) lower, since buyers have trouble locating sellers. 
C) higher, since black market sellers compensate for the risk of being caught. 
D) higher, since most buyers enjoy goods more if they are illegal. 
A) lower, since sellers have trouble locating buyers. 
B) lower, since buyers have trouble locating sellers. 
C) higher, since black market sellers compensate for the risk of being caught. 
D) higher, since most buyers enjoy goods more if they are illegal.

Question 14

Suppose we are considering the milk market and we have two sets of values, as shown by the numbers in parentheses, which represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6).This line is most likely a

Accepted Answer

A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line. 
A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line.

Question 15

How do legal controls on prices lead to corruption?

Accepted Answer

A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of these responses are correct. 
A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of these responses are correct.

Question 16

The minimum wage is an example of a government price ceiling and results in a reduction in unemployment.

Accepted Answer

A) True 
 B)False

Question 17

-A decrease in supply 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 18

When GM advertises its cars, the company is trying to cause a

Accepted Answer

A) rightward shift in the supply. 
B) rightward shift in the demand. 
C) leftward shift in the supply. 
D) leftward shift in the demand. 
A) rightward shift in the supply. 
B) rightward shift in the demand. 
C) leftward shift in the supply. 
D) leftward shift in the demand.

Question 19

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays.Catholics customarily ate fish on Friday.Following the removal of this requirement, it was found that 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 20

If an increase in income leads to an increase in the demand curve for sailboats, this will lead to

Accepted Answer

A) higher prices of sailboats. 
B) lower prices of sailboats. 
C) a corresponding shift in the supply curve for sailboats. 
D) reduced output of sailboats. 
E) no change in the price of sailboats. 
A) higher prices of sailboats. 
B) lower prices of sailboats. 
C) a corresponding shift in the supply curve for sailboats. 
D) reduced output of sailboats. 
E) no change in the price of sailboats.

Exam 4: Supply and Demand: an Initial Look

An individual's demand schedule

Any change that shifts the supply curve outward to the right and does not affect the demand curve will lower the equilibrium price and raise the equilibrium.

The law of increasing relative costs, depicted by the concavity of the production possibilities frontier, is most closely related to the

If the price of chicken rises from $1.25 per pound to $1.75 per pound, and the quantity demanded goes from 250 pounds per day to 175 pounds per day, this illustrates

A demand curve can be thought of as

When people suddenly want to buy something, supply increases.

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

What group tends to benefit from the sugar price supports?

Figure 4-4 -Assume that Figure 4-4 shows demand for steak.An increase in income of buyers will change demand from

In 1971, the U.S.government banned cigarette advertising on radio and television.After the ban was imposed, an economist would predict that the price of magazine ads would

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to

One effect of market intervention is resource misallocation.

Relative to the prices that would be observed in an uncontrolled market, prices charged in a black market are generally

Suppose we are considering the milk market and we have two sets of values, as shown by the numbers in parentheses, which represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6).This line is most likely a

How do legal controls on prices lead to corruption?

The minimum wage is an example of a government price ceiling and results in a reduction in unemployment.

-A decrease in supply will have what effect on equilibrium price and quantity?

When GM advertises its cars, the company is trying to cause a

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays.Catholics customarily ate fish on Friday.Following the removal of this requirement, it was found that the

If an increase in income leads to an increase in the demand curve for sailboats, this will lead to

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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