Question 1

If demand increases, the equilibrium price and equilibrium quantity will both fall, everything else being equal.

Accepted Answer

A) True 
 B)False

Question 2

Demand curves can be affected by the prices of related goods.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following will tend to occur if price floors are imposed on a product?

Accepted Answer

A)  Persistent surpluses 
B)  Problems of disposal of goods 
C)  Disguised discounts developing to eliminate excess production 
D)  Overinvestment in the industry 
E)  All of these responses are correct. 
A)  Persistent surpluses 
B)  Problems of disposal of goods 
C)  Disguised discounts developing to eliminate excess production 
D)  Overinvestment in the industry 
E)  All of these responses are correct.

Question 4

If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.

Accepted Answer

A) True 
 B)False

Question 5

After Hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators, and bottled water. If governments followed the consumers' demands and imposed price ceilings in these markets, what is the likely result?

Accepted Answer

Effective price ceilings (i.e., price ce

Question 6

The following are the equations for the supply and demand curves in the market for weezils:
    where Q  d  is the quantity demanded, Q  s  is the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is

Accepted Answer

A)  $3. 
B)  $5. 
C)  $11. 
D)  $14. 
A)  $3. 
B)  $5. 
C)  $11. 
D)  $14.

Question 7

An upward-sloping supply curve shows that

Accepted Answer

A)  buyers are willing to pay more for a scarce product. 
B)  suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C)  buyers are unaffected by sellers' costs of production. 
D)  the price of a product is not influenced by the price buyers are willing to pay. 
E)  at higher prices, an envy effect begins to affect the demand curve. 
A)  buyers are willing to pay more for a scarce product. 
B)  suppliers are willing to increase production of their goods if they can receive higher prices for them. 
C)  buyers are unaffected by sellers' costs of production. 
D)  the price of a product is not influenced by the price buyers are willing to pay. 
E)  at higher prices, an envy effect begins to affect the demand curve.

Question 8

Assume that Figure 4-4 shows demand for soda. An increase in the price of bottled water will change demand from

Accepted Answer

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

Question 9

In a move to free the economy from unnecessary regulation, Congress passes legislation to remove sugar price supports. What would most likely happen to the number of producers of sugar?

Accepted Answer

A)  It would decrease, because sugar prices would fall. 
B)  It would decrease, because sugar prices would rise. 
C)  It would increase, because sugar prices would fall. 
D)  It would increase, because sugar prices would rise. 
A)  It would decrease, because sugar prices would fall. 
B)  It would decrease, because sugar prices would rise. 
C)  It would increase, because sugar prices would fall. 
D)  It would increase, because sugar prices would rise.

Question 10

Price supports increase the supply of affordable milk for U.S. families.

Accepted Answer

A) True 
 B)False

Question 11

If the price of a good increases, the quantity supplied will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  quantity supplied is unchanged, but the supply will increase. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  quantity supplied is unchanged, but the supply will increase.

Question 12

Technological advances shift the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 13

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would cause a movement up (or leftward) along the demand curve for European autos in the United States?

Accepted Answer

A)  An increase in the price of American autos 
B)  A decrease in the price of American autos 
C)  An increase in income in the United States 
D)  An increase in the price of European cars 
A)  An increase in the price of American autos 
B)  A decrease in the price of American autos 
C)  An increase in income in the United States 
D)  An increase in the price of European cars

Question 15

"The market has failed to provide enough rental housing in New York City. This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

Accepted Answer

An economist would disagree. The free ma

Question 16

The following are common errors students make when discussing supply and demand. What is the mistake in each? 
a. At equilibrium, demand equals supply. 
b. The quantity of demand is greater than the quantity of supply. 
c. They move along the line from both ends to an equilibrium in the middle. 
d. The increase in demand causes an increase in supply.

Accepted Answer

a. Demand never equals supply because th

Question 17

The mechanism of supply and demand is

Accepted Answer

A)  a fundamental tool in both microeconomics and macroeconomics. 
B)  the only real "law" of economics. 
C)  a fundamental tool only in microeconomics. 
D)  a fundamental tool only in macroeconomics. 
A)  a fundamental tool in both microeconomics and macroeconomics. 
B)  the only real "law" of economics. 
C)  a fundamental tool only in microeconomics. 
D)  a fundamental tool only in macroeconomics.

Question 18

Why does the quantity demanded decrease when the price of a good increases?

Accepted Answer

A)  People choose to reduce consumption of the item. 
B)  People "drop out" of the market for the item. 
C)  People find substitutes for the item. 
D)  All of these responses are correct. 
A)  People choose to reduce consumption of the item. 
B)  People "drop out" of the market for the item. 
C)  People find substitutes for the item. 
D)  All of these responses are correct.

Question 19

Assume that Figure 4-4 shows demand for MP3 players. An increase in the price of music downloads changes demand from

Accepted Answer

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

Question 20

At equilibrium, quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

If demand increases, the equilibrium price and equilibrium quantity will both fall, everything else being equal.

Demand curves can be affected by the prices of related goods.

Which of the following will tend to occur if price floors are imposed on a product?

If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.

After Hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators, and bottled water. If governments followed the consumers' demands and imposed price ceilings in these markets, what is the likely result?

The following are the equations for the supply and demand curves in the market for weezils: where Q _d is the quantity demanded, Q _s is the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is

An upward-sloping supply curve shows that

Assume that Figure 4-4 shows demand for soda. An increase in the price of bottled water will change demand from

In a move to free the economy from unnecessary regulation, Congress passes legislation to remove sugar price supports. What would most likely happen to the number of producers of sugar?

Price supports increase the supply of affordable milk for U.S. families.

If the price of a good increases, the quantity supplied will

Technological advances shift the supply curve rightward.

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Which of the following would cause a movement up (or leftward) along the demand curve for European autos in the United States?

"The market has failed to provide enough rental housing in New York City. This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

The mechanism of supply and demand is

Why does the quantity demanded decrease when the price of a good increases?

Assume that Figure 4-4 shows demand for MP3 players. An increase in the price of music downloads changes demand from

At equilibrium, quantity demanded equals quantity supplied.

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

If demand increases, the equilibrium price and equilibrium quantity will both fall, everything else being equal.

Demand curves can be affected by the prices of related goods.

Which of the following will tend to occur if price floors are imposed on a product?

If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.

After Hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators, and bottled water. If governments followed the consumers' demands and imposed price ceilings in these markets, what is the likely result?

The following are the equations for the supply and demand curves in the market for weezils: where Q d is the quantity demanded, Q s is the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is

An upward-sloping supply curve shows that

Assume that Figure 4-4 shows demand for soda. An increase in the price of bottled water will change demand from

In a move to free the economy from unnecessary regulation, Congress passes legislation to remove sugar price supports. What would most likely happen to the number of producers of sugar?

Price supports increase the supply of affordable milk for U.S. families.

If the price of a good increases, the quantity supplied will

Technological advances shift the supply curve rightward.

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Which of the following would cause a movement up (or leftward) along the demand curve for European autos in the United States?

"The market has failed to provide enough rental housing in New York City. This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

The mechanism of supply and demand is

Why does the quantity demanded decrease when the price of a good increases?

Assume that Figure 4-4 shows demand for MP3 players. An increase in the price of music downloads changes demand from

At equilibrium, quantity demanded equals quantity supplied.

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

The following are the equations for the supply and demand curves in the market for weezils: where Q _d is the quantity demanded, Q _s is the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is