Question 1

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Question 2

If orange juice prices fall by 25 percent next year, there will be a

Accepted Answer

A)  rightward shift in the demand for pineapple juice. 
B)  rightward shift in the supply of pineapple juice. 
C)  leftward shift in the supply of pineapple juice. 
D)  leftward shift in the demand for pineapple juice. 
A)  rightward shift in the demand for pineapple juice. 
B)  rightward shift in the supply of pineapple juice. 
C)  leftward shift in the supply of pineapple juice. 
D)  leftward shift in the demand for pineapple juice.

Question 3

A strike at the Financial News in London shut down its production, and the sales of a competing newspaper, the Broad Street Journal, increased dramatically, with no increase in price. Based upon this, what can you say about the Broad Street Journal's supply curve?

Accepted Answer

A)  Its supply curve is vertical. 
B)  Its supply curve is horizontal. 
C)  Its supply curve has shifted. 
D)  Its supply curve has a positive slope. 
A)  Its supply curve is vertical. 
B)  Its supply curve is horizontal. 
C)  Its supply curve has shifted. 
D)  Its supply curve has a positive slope.

Question 4

A black market develops only when quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 5

The change in the amount of a good purchased after a shift of the supply curve depends on

Accepted Answer

A)  the size of the shift. 
B)  the slope of the demand curve. 
C)  whether the market is subject to price controls. 
D)  All of these responses are correct. 
A)  the size of the shift. 
B)  the slope of the demand curve. 
C)  whether the market is subject to price controls. 
D)  All of these responses are correct.

Question 6

A shift of the demand curve for a good occurs whenever new technologies make inputs used in producing that good available at lower prices.

Accepted Answer

A) True 
 B)False

Question 7

A price above equilibrium always yields a surplus.

Accepted Answer

A) True 
 B)False

Question 8

The price of coal fell and the quantity sold also fell. Everything else being equal, it is consistent that

Accepted Answer

A)  the price of oil fell. 
B)  coal miners received large wage increases. 
C)  more efficient mining equipment was installed. 
D)  consumer incomes rose. 
E)  the supply of coal fell. 
A)  the price of oil fell. 
B)  coal miners received large wage increases. 
C)  more efficient mining equipment was installed. 
D)  consumer incomes rose. 
E)  the supply of coal fell.

Question 9

Assume that Figure 4-16 shows the supply of steak. An increase in the price of cattle feed will change the supply from

Accepted Answer

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

Question 10

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

Accepted Answer

A) True 
 B)False

Question 11

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

Accepted Answer

A)  a decline in college tuition. 
B)  an increase in home building. 
C)  an increase in the supply of lumberjacks. 
D)  an end to government regulations that limit timber harvesting in national forests. 
A)  a decline in college tuition. 
B)  an increase in home building. 
C)  an increase in the supply of lumberjacks. 
D)  an end to government regulations that limit timber harvesting in national forests.

Question 12

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 13

Professional baseball teams in the United States use only wooden bats. If aluminum bats were permitted, the impact on the wooden bat market would be

Accepted Answer

A)  a higher price for wooden bats. 
B)  a lower price for wooden bats. 
C)  an increase in the number of firms producing wooden bats. 
D)  higher wages for workers in the wooden bat industry. 
A)  a higher price for wooden bats. 
B)  a lower price for wooden bats. 
C)  an increase in the number of firms producing wooden bats. 
D)  higher wages for workers in the wooden bat industry.

Question 14

List some of the problems that may arise when prices are controlled.

Accepted Answer

Apart from the standard set of issues as

Question 15

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 quantity of money demanded to

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  not change, although the demand schedule itself will shift outward. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  not change, although the demand schedule itself will shift outward.

Question 16

The demand for home computers has increased, yet the price has fallen. Explain this apparent paradox.

Accepted Answer

Supply has increased by more than demand

Question 17

Families are having more children than families did 15 years earlier. As a result, families have more trouble finding baby-sitters and are shocked at the cost of child care. Which graph in Figure 4-8 best illustrates how the situation has changed?

Accepted Answer

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

Question 18

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 19

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Accepted Answer

A) True 
 B)False

Question 20

Grapes can be used to produce wine or raisins. Which graph in Figure 4-6 best depicts the effects on the U.S. raisin market of a decline in purchases of domestic wine?

Accepted Answer

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

Exam 4: Supply and Demand: an Initial Look

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

If orange juice prices fall by 25 percent next year, there will be a

A strike at the Financial News in London shut down its production, and the sales of a competing newspaper, the Broad Street Journal, increased dramatically, with no increase in price. Based upon this, what can you say about the Broad Street Journal's supply curve?

A black market develops only when quantity demanded exceeds quantity supplied.

The change in the amount of a good purchased after a shift of the supply curve depends on

A shift of the demand curve for a good occurs whenever new technologies make inputs used in producing that good available at lower prices.

A price above equilibrium always yields a surplus.

The price of coal fell and the quantity sold also fell. Everything else being equal, it is consistent that

Assume that Figure 4-16 shows the supply of steak. An increase in the price of cattle feed will change the supply from

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

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

Professional baseball teams in the United States use only wooden bats. If aluminum bats were permitted, the impact on the wooden bat market would be

List some of the problems that may arise when prices are controlled.

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 quantity of money demanded to

The demand for home computers has increased, yet the price has fallen. Explain this apparent paradox.

Families are having more children than families did 15 years earlier. As a result, families have more trouble finding baby-sitters and are shocked at the cost of child care. Which graph in Figure 4-8 best illustrates how the situation has changed?

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.

"Equilibrium" is a situation in which there are no inherent forces to produce change.

Grapes can be used to produce wine or raisins. Which graph in Figure 4-6 best depicts the effects on the U.S. raisin market of a decline in purchases of domestic wine?

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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