Question 1

How does rent control tend to cause persistent imbalances in the market for housing?

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

Sugar price supports primarily benefit consumers.

Accepted Answer

A) True 
 B)False

Question 3

On a traditional supply and demand diagram,

Accepted Answer

A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines. 
A) price is measured along the horizontal axis and quantity along the vertical axis. 
B) price is measured along the vertical axis and quantity along the horizontal axis. 
C) quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. 
D) quantity is measured along both axes and price is indicated on the contour lines.

Question 4

What is the economic reasoning behind the proposal to legalize drugs?

Accepted Answer

A) Legal drugs will greatly increase the supply, which will reduce the price Americans pay to foreign producers of the drugs. 
B) All forms of government restrictions on behavior are immoral and ought to be removed. 
C) Legal drugs will be much cheaper than illegal drugs, which will reduce incentive for crime to obtain money for drugs and to protect drug "businesses." 
D) Legal drugs will be more expensive than illegal drugs, and the market system will encourage more production, thus lowering the price. 
E) Dealing with supply is always easier than dealing with demand, and legalization accomplishes that. 
A) Legal drugs will greatly increase the supply, which will reduce the price Americans pay to foreign producers of the drugs. 
B) All forms of government restrictions on behavior are immoral and ought to be removed. 
C) Legal drugs will be much cheaper than illegal drugs, which will reduce incentive for crime to obtain money for drugs and to protect drug "businesses." 
D) Legal drugs will be more expensive than illegal drugs, and the market system will encourage more production, thus lowering the price. 
E) Dealing with supply is always easier than dealing with demand, and legalization accomplishes that.

Question 5

Demand and quantity demanded are the same thing.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

When the price of a good increases, it

Accepted Answer

A) leads suppliers to place few goods on the market. 
B) the demand for the good shifts. 
C) leads consumers to want to buy more or less than before at a given price. 
D) a movement down along the demand curve will occur. 
A) leads suppliers to place few goods on the market. 
B) the demand for the good shifts. 
C) leads consumers to want to buy more or less than before at a given price. 
D) a movement down along the demand curve will occur.

Question 9

If new firms enter the computer manufacturing industry, then, holding all other things constant,

Accepted Answer

A) each "old" manufacturer must sell fewer computers than before. 
B) some "old" manufacturers must exit the industry. 
C) the equilibrium price of computers will rise. 
D) the equilibrium quantity demanded of computers will rise. 
A) each "old" manufacturer must sell fewer computers than before. 
B) some "old" manufacturers must exit the industry. 
C) the equilibrium price of computers will rise. 
D) the equilibrium quantity demanded of computers will rise.

Question 10

When there is an increase in demand,

Accepted Answer

A) the demand curve shifts to the right of the original demand curve. 
B) the demand curve rotates clockwise. 
C) the demand curve shifts to the left of the original demand curve. 
D) the demand curve rotates counterclockwise. 
E) a lower price has increased the amount of the good that consumers will buy. 
A) the demand curve shifts to the right of the original demand curve. 
B) the demand curve rotates clockwise. 
C) the demand curve shifts to the left of the original demand curve. 
D) the demand curve rotates counterclockwise. 
E) a lower price has increased the amount of the good that consumers will buy.

Question 11

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Accepted Answer

A) shortage, shortage 
B) surplus, surplus 
C) shortage, surplus 
D) surplus, shortage 
A) shortage, shortage 
B) surplus, surplus 
C) shortage, surplus 
D) surplus, shortage

Question 12

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 13

Professional baseball teams in the United States use only wooden bats. If aluminum bats were permitted, the likely result would be a

Accepted Answer

A) shift in the supply curve for aluminum bats. 
B) shift in the supply curve for wooden bats. 
C) change in the quantity supplied of aluminum bats. 
D) persistent shortage of aluminum bats. 
A) shift in the supply curve for aluminum bats. 
B) shift in the supply curve for wooden bats. 
C) change in the quantity supplied of aluminum bats. 
D) persistent shortage of aluminum bats.

Question 14

Figure 4-4  
 
-​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 15

Very few societies have used price controls.

Accepted Answer

A) True 
 B)False

Question 16

A demand schedule shows the time over which different quantities will be demanded.

Accepted Answer

A) True 
 B)False

Question 17

A severe freeze has damaged the Florida orange crop. The effect on the market for oranges will be a left shift of

Accepted Answer

A) demand, as consumers try to economize because of the shortage. 
B) both the supply and demand curves. 
C) the supply curve. 
D) the supply curve and a right shift in the demand curve, and the outcome will be a higher price 
A) demand, as consumers try to economize because of the shortage. 
B) both the supply and demand curves. 
C) the supply curve. 
D) the supply curve and a right shift in the demand curve, and the outcome will be a higher price

Question 18

University studies have shown that that chickens grow 2 percent larger when a red mitten is placed in their cage and Vivaldi is played in the coop. This leads to a reduction in feed costs of $60 million a year. In the chicken market, the

Accepted Answer

A) demand curve shifts to the right. 
B) supply curve shifts to the right. 
C) price will rise. 
D) quantity sold will fall. 
A) demand curve shifts to the right. 
B) supply curve shifts to the right. 
C) price will rise. 
D) quantity sold will fall.

Question 19

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 20

A price ceiling is only effective if it is above the market equilibrium.

Accepted Answer

A) True 
 B)False

Exam 4: Supply and Demand: an Initial Look

How does rent control tend to cause persistent imbalances in the market for housing?

Sugar price supports primarily benefit consumers.

On a traditional supply and demand diagram,

What is the economic reasoning behind the proposal to legalize drugs?

Demand and quantity demanded are the same thing.

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

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

When the price of a good increases, it

If new firms enter the computer manufacturing industry, then, holding all other things constant,

When there is an increase in demand,

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

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

Professional baseball teams in the United States use only wooden bats. If aluminum bats were permitted, the likely result would be a

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

Very few societies have used price controls.

A demand schedule shows the time over which different quantities will be demanded.

A severe freeze has damaged the Florida orange crop. The effect on the market for oranges will be a left shift of

University studies have shown that that chickens grow 2 percent larger when a red mitten is placed in their cage and Vivaldi is played in the coop. This leads to a reduction in feed costs of $60 million a year. In the chicken market, 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?

A price ceiling is only effective if it is above the market equilibrium.

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

Filters

A market will experience a when the price is above equilibrium and a when the price is below equilibrium.

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