Question 1

Why do price ceilings tend to cause persistent imbalances in the market?

Accepted Answer

A)  Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage. 
B)  Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus. 
C)  Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage. 
D)  Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus. 
A)  Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage. 
B)  Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus. 
C)  Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage. 
D)  Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.

Question 2

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 3

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 4

A change in the income of buyers will normally change demand.

Accepted Answer

A) True 
 B)False

Question 5

The price of gasoline has risen and the quantity sold has fallen. This was likely caused by

Accepted Answer

A)  a rise in the price of crude oil. 
B)  a seasonal rise in the demand for gasoline. 
C)  use of a new public transit system. 
D)  the discovery of crude oil deposits in South Dakota. 
A)  a rise in the price of crude oil. 
B)  a seasonal rise in the demand for gasoline. 
C)  use of a new public transit system. 
D)  the discovery of crude oil deposits in South Dakota.

Question 6

When people suddenly want to buy something, supply increases.

Accepted Answer

A) True 
 B)False

Question 7

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

Accepted Answer

The example used in the text is rent con

Question 8

Economists use the mechanism of supply and demand to study

Accepted Answer

A)  inflation. 
B)  unemployment. 
C)  environmental protection. 
D)  All of these responses are correct. 
A)  inflation. 
B)  unemployment. 
C)  environmental protection. 
D)  All of these responses are correct.

Question 9

To have an effect on the market, a price floor should be set at a price

Accepted Answer

A)  above the equilibrium price. 
B)  equal to the equilibrium price. 
C)  below the equilibrium price. 
D)  at any price on the supply curve. 
A)  above the equilibrium price. 
B)  equal to the equilibrium price. 
C)  below the equilibrium price. 
D)  at any price on the supply curve.

Question 10

Which of the following suggests that the "laws" of supply and demand are being disobeyed?

Accepted Answer

A)  Outside forces disturbing an equilibrium 
B)  Persistent shortages or surpluses 
C)  The market never moving from an equilibrium 
D)  "Other things" not always being equal 
A)  Outside forces disturbing an equilibrium 
B)  Persistent shortages or surpluses 
C)  The market never moving from an equilibrium 
D)  "Other things" not always being equal

Question 11

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 12

Advertising has no effect on the demand schedule for a good.

Accepted Answer

A) True 
 B)False

Question 13

Shortages normally accompany an effective price floor.

Accepted Answer

A) True 
 B)False

Question 14

An increase 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 15

Price ceilings set a legal maximum price on a product or commodity.

Accepted Answer

A) True 
 B)False

Question 16

The demand curve shows graphically how much consumers

Accepted Answer

A)  purchased at different prices over time. 
B)  purchase at different prices in different periods. 
C)  are willing and able to buy over a range of prices during a particular period. 
D)  are willing and able to buy over a range of prices in over time. 
A)  purchased at different prices over time. 
B)  purchase at different prices in different periods. 
C)  are willing and able to buy over a range of prices during a particular period. 
D)  are willing and able to buy over a range of prices in over time.

Question 17

Define the following terms and explain their importance to the study of economics. 
a. Demand 
b. Surplus 
c. Equilibrium 
d. Law of supply and demand 
e. Quantity demanded

Accepted Answer

a.Demand is a schedule that indicates ho

Question 18

The rising minimum wage allegedly has reduced the quantity demanded of teenage labor. However, demographics slightly reduced the supply of teenage labor. The U.S. Department of Labor reported that teenage unemployment is an increasing problem. Which graph in Figure 4-10 is consistent with these facts?

Accepted Answer

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

Question 19

Supply can shift due to changes in price.

Accepted Answer

A) True 
 B)False

Question 20

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

Accepted Answer

A)  both products to the right. 
B)  both products to the left. 
C)  grapefruit to the right. 
D)  oranges to the left. 
A)  both products to the right. 
B)  both products to the left. 
C)  grapefruit to the right. 
D)  oranges to the left.

Why do price ceilings tend to cause persistent imbalances in the market?

Price floors lead to market surpluses.

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 change in the income of buyers will normally change demand.

The price of gasoline has risen and the quantity sold has fallen. This was likely caused by

When people suddenly want to buy something, supply increases.

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

Economists use the mechanism of supply and demand to study

To have an effect on the market, a price floor should be set at a price

Which of the following suggests that the "laws" of supply and demand are being disobeyed?

Price controls usually enhance efficiency in the allocation of resources.

Advertising has no effect on the demand schedule for a good.

Shortages normally accompany an effective price floor.

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

Price ceilings set a legal maximum price on a product or commodity.

The demand curve shows graphically how much consumers

Define the following terms and explain their importance to the study of economics. a. Demand b. Surplus c. Equilibrium d. Law of supply and demand e. Quantity demanded

Supply can shift due to changes in price.

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

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

Exam 4: Supply and Demand: an Initial Look

Why do price ceilings tend to cause persistent imbalances in the market?

Price floors lead to market surpluses.

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 change in the income of buyers will normally change demand.

The price of gasoline has risen and the quantity sold has fallen. This was likely caused by

When people suddenly want to buy something, supply increases.

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

Economists use the mechanism of supply and demand to study

To have an effect on the market, a price floor should be set at a price

Which of the following suggests that the "laws" of supply and demand are being disobeyed?

Price controls usually enhance efficiency in the allocation of resources.

Advertising has no effect on the demand schedule for a good.

Shortages normally accompany an effective price floor.

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

Price ceilings set a legal maximum price on a product or commodity.

The demand curve shows graphically how much consumers

Define the following terms and explain their importance to the study of economics. a. Demand b. Surplus c. Equilibrium d. Law of supply and demand e. Quantity demanded

Supply can shift due to changes in price.

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

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