Question 1

Air fares are generally lower on Tuesdays and Wednesdays each week.  What is a likely explanation for this occurrence?

Accepted Answer

A)  Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price. 
B)  Demand is relatively variable, and lower supply leads to a lower equilibrium price. 
C)  Lower levels of both supply and demand on these days lead to a lower equilibrium price. 
D)  Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price. 
E)  Demand is relatively fixed, and lower supply leads to a lower equilibrium price. 
A)  Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price. 
B)  Demand is relatively variable, and lower supply leads to a lower equilibrium price. 
C)  Lower levels of both supply and demand on these days lead to a lower equilibrium price. 
D)  Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price. 
E)  Demand is relatively fixed, and lower supply leads to a lower equilibrium price.

Question 2

We observe that the price of food rises and the quantity purchased also rises. This means the

Accepted Answer

A)  supply curve shifted to the left. 
B)  demand curve shifted to the right. 
C)  demand curve shifted to the left. 
D)  supply curve shifted to the right. 
A)  supply curve shifted to the left. 
B)  demand curve shifted to the right. 
C)  demand curve shifted to the left. 
D)  supply curve shifted to the right.

Question 3

A supply schedule shows

Accepted Answer

A)  the "market potential" for a product. 
B)  how much producers are willing and able to sell at different prices. 
C)  possible combinations of output under different conditions. 
D)  how much consumers would like to buy at different prices. 
E)  All of these responses are correct. 
A)  the "market potential" for a product. 
B)  how much producers are willing and able to sell at different prices. 
C)  possible combinations of output under different conditions. 
D)  how much consumers would like to buy at different prices. 
E)  All of these responses are correct.

Question 4

Producers were accused of price gouging as the price of bottled water soared after Hurricane Andrew. Consumers clamored for price controls to keep bottled water at pre-Andrew levels. Use supply and demand analysis to graphically show the effect of setting a price ceiling on bottled water after Hurricane Andrew at the pre-hurricane equilibrium price. Use your graph to assist in explaining the likely unintended effects of such a price control. Be sure that your graph is completely and correctly labeled.

Accepted Answer

As a result of contaminated public water

Question 5

A supply curve slopes upward because quantity supplied is higher when price is higher.

Accepted Answer

A) True 
 B)False

Question 6

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

Accepted Answer

A) True 
 B)False

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 demand for money if the interest rate increases?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The quantity of money demanded will increase. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  The quantity of money demanded will increase.

Question 8

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 9

A decrease in demand 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 10

Throughout history, governments have used price controls to

Accepted Answer

A)  protect buyers. 
B)  protect sellers. 
C)  serve the "public interest." 
D)  All of these responses are correct. 
A)  protect buyers. 
B)  protect sellers. 
C)  serve the "public interest." 
D)  All of these responses are correct.

Question 11

Refer to Table 4-1. At $10, what is the surplus?

Accepted Answer

A)  4,500 
B)  3,000 
C)  1,500 
D)  0 
A)  4,500 
B)  3,000 
C)  1,500 
D)  0

Question 12

Distinguish the terms price ceiling and price floor.

Accepted Answer

A price ceiling is a governmen

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

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)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  . 
A)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  .

Question 15

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this legislation was

Accepted Answer

A)  a large increase in the availability of those items, ending shortages. 
B)  a severe shortage of those essential commodities. 
C)  an increase in the price of those items, thus alleviating shortages. 
D)  new efforts to increase production of those commodities. 
E)  a minor inconvenience as persons adjusted to the new law. 
A)  a large increase in the availability of those items, ending shortages. 
B)  a severe shortage of those essential commodities. 
C)  an increase in the price of those items, thus alleviating shortages. 
D)  new efforts to increase production of those commodities. 
E)  a minor inconvenience as persons adjusted to the new law.

Question 16

If price of a good rises, what happens to quantity demanded for that good?

Accepted Answer

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

Question 17

Use of bovine growth hormone (BGH) on cattle dramatically increases the milk output of dairy cows. Dairy farmers in Wisconsin vigorously oppose permitting the drug's use over concerns of an excess supply and a consumer reaction on the purity of food issue that could put many of them out of business. Which of the graphs in Figure 4-13 is consistent with these concerns?

Accepted Answer

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

Question 18

Which of the following factors are held constant for a given demand curve for a good?

Accepted Answer

A)  The price of the good 
B)  The technology used to produce the good 
C)  The supply of the good 
D)  Consumer incomes and the prices of other goods 
A)  The price of the good 
B)  The technology used to produce the good 
C)  The supply of the good 
D)  Consumer incomes and the prices of other goods

Question 19

"Moonshine" is illegally produced liquor and the production process adds sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. When the price of sugar tripled, the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 4-9 best illustrates this?

Accepted Answer

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

Question 20

Demand shifts due to changes in price.

Accepted Answer

A) True 
 B)False

Air fares are generally lower on Tuesdays and Wednesdays each week. What is a likely explanation for this occurrence?

We observe that the price of food rises and the quantity purchased also rises. This means the

A supply schedule shows

A supply curve slopes upward because quantity supplied is higher when price is higher.

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

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 demand for money if the interest rate increases?

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

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

Throughout history, governments have used price controls to

Refer to Table 4-1. At $10, what is the surplus?

Distinguish the terms price ceiling and price floor.

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

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

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this legislation was

If price of a good rises, what happens to quantity demanded for that good?

Which of the following factors are held constant for a given demand curve for a good?

Demand shifts due to changes in price.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

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 Us Economy

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Exam 4: Supply and Demand: an Initial Look

Air fares are generally lower on Tuesdays and Wednesdays each week. What is a likely explanation for this occurrence?

We observe that the price of food rises and the quantity purchased also rises. This means the

A supply schedule shows

A supply curve slopes upward because quantity supplied is higher when price is higher.

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

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 demand for money if the interest rate increases?

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

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

Throughout history, governments have used price controls to

Refer to Table 4-1. At $10, what is the surplus?

Distinguish the terms price ceiling and price floor.

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

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

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this legislation was

If price of a good rises, what happens to quantity demanded for that good?

Which of the following factors are held constant for a given demand curve for a good?

Demand shifts due to changes in price.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

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 Us Economy

Filters