Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

How do legal controls on prices lead to corruption?

Accepted Answer

A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of these responses are correct. 
A) Persons who benefit from the controls are willing to bribe officials to keep the controls in place. 
B) Persons who make the laws may favor certain groups at the expense of others. 
C) Selling in the black market is very profitable, and persons therefore willingly break the law. 
D) Discrimination may occur as a means to limit buying or selling select groups. 
E) All of these responses are correct.

Question 3

Rent controls are most often designed to protect the investment made by apartment building owners.

Accepted Answer

A) True 
 B)False

Question 4

If the price of chicken rises from $1.25 per pound to $1.75 per pound, if the demand curve is consistent with the law of demand, then the quantity of chicken demanded would be predicted to go from

Accepted Answer

A) 100 pounds to 125 pounds per day. 
B) 100 pounds to 75 pounds per day. 
C) 100 pounds to 100 pounds per day, because the price of chicken does not affect the quantity demanded. 
D) 100 pounds to 0 pounds per day, because consumers would stop purchasing chicken at a price above $1.25 per pound. 
A) 100 pounds to 125 pounds per day. 
B) 100 pounds to 75 pounds per day. 
C) 100 pounds to 100 pounds per day, because the price of chicken does not affect the quantity demanded. 
D) 100 pounds to 0 pounds per day, because consumers would stop purchasing chicken at a price above $1.25 per pound.

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

Which of the following changes would not result in a shift in the demand curve for milk?

Accepted Answer

A) A change in the income of buyers of milk 
B) A change in the price of milk 
C) A change in the population 
D) A medical report that milk consumption increases cholesterol. 
A) A change in the income of buyers of milk 
B) A change in the price of milk 
C) A change in the population 
D) A medical report that milk consumption increases cholesterol.

Question 7

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays. Catholics customarily ate fish on Friday. Following this removal, there was a 12.5 percent fall in prices of fresh fish. From this, it can be deduced that the

Accepted Answer

A) demand curve for fish shifted to the left. 
B) demand curve shifted to the right. 
C) supply curve shifted to the left. 
D) supply curve shifted to the right. 
A) demand curve for fish shifted to the left. 
B) demand curve shifted to the right. 
C) supply curve shifted to the left. 
D) supply curve shifted to the right.

Question 8

The wage rate is the price of a unit of labor. What happens to the demand for labor if the wage rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question.

Question 9

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Accepted Answer

A) True 
 B)False

Question 10

A demand schedule relates prices of a particular good to quantities demanded.

Accepted Answer

A) True 
 B)False

Question 11

A supply curve slopes upward because quantity supplied is higher when price is higher.

Accepted Answer

A) True 
 B)False

Question 12

A surplus occurs when price is higher than the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 13

A surplus will tend to occur at which price in Figure 4-21?

Accepted Answer

A) P  1  
B) P  2  
C) P  3  
D) There will be no surplus at the prices shown. 
A) P  1  
B) P  2  
C) P  3  
D) There will be no surplus at the prices shown.

Question 14

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 15

Figure 4-23  
 
In Figure 4-23, which of the following movements would be caused by a change in income?

Accepted Answer

A) A to C 
B) C to A 
C) B to D 
D) B to A 
A) A to C 
B) C to A 
C) B to D 
D) B to A

Question 16

Which of the following is the correct way to describe equilibrium in a market?

Accepted Answer

A) At equilibrium, demand equals supply. 
B) At equilibrium, quantity demanded equals quantity supplied. 
C) At equilibrium, market forces are no longer at work. 
D) Equilibrium is a tendency, a state of perpetual motion. 
E) Equilibrium is the best combination of price and quantity. 
A) At equilibrium, demand equals supply. 
B) At equilibrium, quantity demanded equals quantity supplied. 
C) At equilibrium, market forces are no longer at work. 
D) Equilibrium is a tendency, a state of perpetual motion. 
E) Equilibrium is the best combination of price and quantity.

Question 17

A decrease 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 18

When GM advertises its cars, the company is trying to cause a

Accepted Answer

A) rightward shift in the supply. 
B) rightward shift in the demand. 
C) leftward shift in the supply. 
D) leftward shift in the demand. 
A) rightward shift in the supply. 
B) rightward shift in the demand. 
C) leftward shift in the supply. 
D) leftward shift in the demand.

Question 19

In an attempt to limit the supply of illegal liquor, the Russian government has restricted sugar availability (sugar is used to increase alcohol content). Russians also like to sweeten their tea with jam, another product made using sugar. Which graph in Figure 4-11 depicts the impact of sugar rationing on the Russian tea market?

Accepted Answer

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

Question 20

At an equilibrium price for gasoline,

Accepted Answer

A) everyone who is willing and able to purchase gasoline at that price can do so. 
B) surpluses are inevitable. 
C) market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available. 
A) everyone who is willing and able to purchase gasoline at that price can do so. 
B) surpluses are inevitable. 
C) market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available.

Exam 4: Supply and Demand: an Initial Look

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

How do legal controls on prices lead to corruption?

Rent controls are most often designed to protect the investment made by apartment building owners.

If the price of chicken rises from $1.25 per pound to $1.75 per pound, if the demand curve is consistent with the law of demand, then the quantity of chicken demanded would be predicted to go from

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

Which of the following changes would not result in a shift in the demand curve for milk?

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays. Catholics customarily ate fish on Friday. Following this removal, there was a 12.5 percent fall in prices of fresh fish. From this, it can be deduced that the

The wage rate is the price of a unit of labor. What happens to the demand for labor if the wage rate increases?

At equilibrium, the market will clear, with no surpluses or shortages occurring.

A demand schedule relates prices of a particular good to quantities demanded.

A supply curve slopes upward because quantity supplied is higher when price is higher.

A surplus occurs when price is higher than the market equilibrium.

A surplus will tend to occur at which price in Figure 4-21?

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

Figure 4-23 In Figure 4-23, which of the following movements would be caused by a change in income?

Which of the following is the correct way to describe equilibrium in a market?

A decrease in supply will have what effect on equilibrium price and quantity?

When GM advertises its cars, the company is trying to cause a

At an equilibrium price for gasoline,

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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