Question 1

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 2

Which of the following events would result in an increase in the demand for natural gas, causing the demand curve to shift outward?

Accepted Answer

A) A decrease in the price of electricity 
B) An increase in the price of furnaces 
C) An increase in the price of heating oil 
D) A decrease in the price of natural gas 
A) A decrease in the price of electricity 
B) An increase in the price of furnaces 
C) An increase in the price of heating oil 
D) A decrease in the price of natural gas

Question 3

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 4

Define equilibrium as it relates to markets. Describe the process by which a market reaches a new equilibrium. Include an appropriate diagram.

Accepted Answer

The diagram should look like Figure 4-3

Question 5

Along a supply curve,

Accepted Answer

A) supply changes as price changes. 
B) quantity supplied changes as price changes. 
C) supply changes as technology changes. 
D) quantity supplied changes as technology changes. 
A) supply changes as price changes. 
B) quantity supplied changes as price changes. 
C) supply changes as technology changes. 
D) quantity supplied changes as technology changes.

Question 6

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

Accepted Answer

A) True 
 B)False

Question 7

When a demand curve is constructed, each point that demand curve represents

Accepted Answer

A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people want to buy. 
D) the amount people want to buy at different income levels. 
E) All of these responses are correct. 
A) the demand for the product. 
B) the quantity demanded at that price. 
C) the amount that people want to buy. 
D) the amount people want to buy at different income levels. 
E) All of these responses are correct.

Question 8

Which of the following will shift the demand curve for milk?

Accepted Answer

A) Change in the income of buyers of milk 
B) Change in the price of milk 
C) Change in input prices for milk 
D) All of these responses are correct. 
A) Change in the income of buyers of milk 
B) Change in the price of milk 
C) Change in input prices for milk 
D) All of these responses are correct.

Question 9

We observed that the price of a good rises and the quantity purchased also rises. Everything else being equal, it is consistent that

Accepted Answer

A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased. 
A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased.

Question 10

The minimum wage is an example of a government price ceiling and results in a reduction in unemployment.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a characteristic of a market with a price floor?

Accepted Answer

A) Quantity demanded exceeds quantity supplied 
B) Sellers offering discounts in disguised forms 
C) Problem of disposal created by excess supply 
D) Survival of less efficient businesses 
A) Quantity demanded exceeds quantity supplied 
B) Sellers offering discounts in disguised forms 
C) Problem of disposal created by excess supply 
D) Survival of less efficient businesses

Question 12

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 13

Which of the following can occur if price controls are imposed on a product?

Accepted Answer

A) Persistent shortages 
B) Illegal markets 
C) Illicit channels of distribution 
D) Industry investment slows or stops 
E) All of these responses are correct. 
A) Persistent shortages 
B) Illegal markets 
C) Illicit channels of distribution 
D) Industry investment slows or stops 
E) All of these responses are correct.

Question 14

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

Accepted Answer

A) True 
 B)False

Question 15

Assume that Figure 4-16 shows the supply of new houses. An improvement in the technology for building houses 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 16

An increase in the price of poultry would lead to

Accepted Answer

A) a decrease in quantity demanded of fish and an increase in the demand for poultry. 
B) a decrease in quantity demanded of poultry and an increase in the demand for fish. 
C) an increase in quantity demanded of fish and a decrease in the demand for poultry. 
D) an increase in quantity demanded of poultry and a decrease in the demand for fish. 
A) a decrease in quantity demanded of fish and an increase in the demand for poultry. 
B) a decrease in quantity demanded of poultry and an increase in the demand for fish. 
C) an increase in quantity demanded of fish and a decrease in the demand for poultry. 
D) an increase in quantity demanded of poultry and a decrease in the demand for fish.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an example of a price floor?

Accepted Answer

A) Rent controls 
B) Maximum prices for gasoline 
C) Usury laws that set maximum interest rates 
D) The minimum wage 
A) Rent controls 
B) Maximum prices for gasoline 
C) Usury laws that set maximum interest rates 
D) The minimum wage

Question 19

A cold winter will increase the quantity of heating fuel demanded at every price.

Accepted Answer

A) True 
 B)False

Question 20

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

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.

Which of the following events would result in an increase in the demand for natural gas, causing the demand curve to shift outward?

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

Define equilibrium as it relates to markets. Describe the process by which a market reaches a new equilibrium. Include an appropriate diagram.

Along a supply curve,

Enacting a law controlling rents near a major university will increase the affordable housing for college students.

When a demand curve is constructed, each point that demand curve represents

Which of the following will shift the demand curve for milk?

We observed that the price of a good rises and the quantity purchased also rises. Everything else being equal, it is consistent that

The minimum wage is an example of a government price ceiling and results in a reduction in unemployment.

Which of the following is not a characteristic of a market with a price floor?

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

Which of the following can occur if price controls are imposed on a product?

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

Assume that Figure 4-16 shows the supply of new houses. An improvement in the technology for building houses will shift supply from

An increase in the price of poultry would lead to

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

Which of the following is an example of a price floor?

A cold winter will increase the quantity of heating fuel demanded at every price.

Price floors lead to market surpluses.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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