Question 1

An increase in price will increase supply.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

An increase in the price of gasoline shifts the demand for tires to the

Accepted Answer

A)  left, because gasoline and tires are substitutes. 
B)  left, because gasoline and tires are normally used together. 
C)  right, because gasoline and tires are substitutes. 
D)  right, because gasoline and tires are normally used together. 
A)  left, because gasoline and tires are substitutes. 
B)  left, because gasoline and tires are normally used together. 
C)  right, because gasoline and tires are substitutes. 
D)  right, because gasoline and tires are normally used together.

Question 6

The Snowshoe Inn in Vermont charges $259 per room during the winter ski season and $149 during the summer months. The number of rooms available and the operating costs for the inn remain constant throughout the year. What is indicated by these prices?

Accepted Answer

A)  The demand curve shifts out in the summer. 
B)  The demand curve shifts out during the winter months. 
C)  The supply curve shift in during the summer. 
D)  There is a decrease in demand during the winter. 
A)  The demand curve shifts out in the summer. 
B)  The demand curve shifts out during the winter months. 
C)  The supply curve shift in during the summer. 
D)  There is a decrease in demand during the winter.

Question 7

The laws of supply and demand force prices to an equilibrium.

Accepted Answer

A) True 
 B)False

Question 8

In some markets, demand can be approximated by 
  Q = 50 − 5P + 10Y 
where Q is quantity, P price per unit, and Y = buyers' income. Supply can be approximated by 
  Q = − 5 + 10P. 
a. If Y = 20, what is equilibrium price and output? 
b. If Y rises to 25, what is the new equilibrium price and output?

Accepted Answer

a Equate the supply and demand equations

Question 9

Normally, when a governmental price control affects the price, it can be expected to result in a

Accepted Answer

A)  reduction in the number of units purchased only when the price is forced down. 
B)  reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up. 
C)  decrease in the number of units purchased when the price is forced up or down. 
D)  increase in the number of units purchased when the price is forced up or down. 
A)  reduction in the number of units purchased only when the price is forced down. 
B)  reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up. 
C)  decrease in the number of units purchased when the price is forced up or down. 
D)  increase in the number of units purchased when the price is forced up or down.

Question 10

An increase 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 11

The demand curve for a typical good has

Accepted Answer

A)  a negative slope because consumers purchase less of the good as the price rises. 
B)  a negative slope because the supply of the good rises as demand rises. 
C)  a negative slope because the good has less "snob appeal" as its price falls. 
D)  a positive slope because as the price goes up, the good has more profitability. 
E)  a positive slope because price is a clear indicator of need. 
A)  a negative slope because consumers purchase less of the good as the price rises. 
B)  a negative slope because the supply of the good rises as demand rises. 
C)  a negative slope because the good has less "snob appeal" as its price falls. 
D)  a positive slope because as the price goes up, the good has more profitability. 
E)  a positive slope because price is a clear indicator of need.

Question 12

All other factors held constant, if the price of game consoles rise, the demand for gaming titles will

Accepted Answer

A)  shift to the left, because they are normally used together. 
B)  remain constant. 
C)  shift to the right, because they are normally used together. 
D)  shift to the right, because they are substitutes. 
A)  shift to the left, because they are normally used together. 
B)  remain constant. 
C)  shift to the right, because they are normally used together. 
D)  shift to the right, because they are substitutes.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Price floors are only effective below the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 15

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 16

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Price ceilings lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

An increase in price will increase supply.

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

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

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

An increase in the price of gasoline shifts the demand for tires to the

The Snowshoe Inn in Vermont charges $259 per room during the winter ski season and $149 during the summer months. The number of rooms available and the operating costs for the inn remain constant throughout the year. What is indicated by these prices?

The laws of supply and demand force prices to an equilibrium.

In some markets, demand can be approximated by Q = 50 − 5P + 10Y where Q is quantity, P price per unit, and Y = buyers' income. Supply can be approximated by Q = − 5 + 10P. a. If Y = 20, what is equilibrium price and output? b. If Y rises to 25, what is the new equilibrium price and output?

Normally, when a governmental price control affects the price, it can be expected to result in a

An increase in demand will have what effect on equilibrium price and quantity?

The demand curve for a typical good has

All other factors held constant, if the price of game consoles rise, the demand for gaming titles will

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

Price floors are only effective below the market equilibrium.

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

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Quantity supplied increases when the price of a good increases because

Price ceilings lead to market surpluses.

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

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

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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