Question 1

Technological advances shift the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 2

Air fares are generally lower on Tuesdays and Wednesdays each week.  What is a likely explanation for this occurrence?

Accepted Answer

A) Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price. 
B) Demand is relatively variable, and lower supply leads to a lower equilibrium price. 
C) Lower levels of both supply and demand on these days lead to a lower equilibrium price. 
D) Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price. 
E) Demand is relatively fixed, and lower supply leads to a lower equilibrium price. 
A) Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price. 
B) Demand is relatively variable, and lower supply leads to a lower equilibrium price. 
C) Lower levels of both supply and demand on these days lead to a lower equilibrium price. 
D) Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price. 
E) Demand is relatively fixed, and lower supply leads to a lower equilibrium price.

Question 3

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

Accepted Answer

The example used in the text is rent con

Question 4

George Washington's troops at Valley Forge were almost destroyed by price controls.

Accepted Answer

A) True 
 B)False

Question 5

A major university hired an economist to forecast enrollment to produce a prediction of "head count." One variable that she would probably emphasize more than any other in trying to make the forecast

Accepted Answer

A) how interested people are in attending college. 
B) the employment opportunities that college opens up. 
C) survey results on public interest in education. 
D) her instinct about what the public wants. 
E) the price of attending-tuition. 
A) how interested people are in attending college. 
B) the employment opportunities that college opens up. 
C) survey results on public interest in education. 
D) her instinct about what the public wants. 
E) the price of attending-tuition.

Question 6

A common misconception about supply is that

Accepted Answer

A) supply depends on many other variables 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of these responses are correct. 
A) supply depends on many other variables 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of these responses are correct.

Question 7

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 8

Rent controls encourage investment in housing because they bring stability to the market.

Accepted Answer

A) True 
 B)False

Question 9

At price P  1  in Figure 4-21, what will tend to happen?

Accepted Answer

A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market. 
A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market.

Question 10

Producers were accused of price gouging as the price of bottled water soared after Hurricane Andrew. Consumers clamored for price controls to keep bottled water at pre-Andrew levels. Use supply and demand analysis to graphically show the effect of setting a price ceiling on bottled water after Hurricane Andrew at the pre-hurricane equilibrium price. Use your graph to assist in explaining the likely unintended effects of such a price control. Be sure that your graph is completely and correctly labeled.

Accepted Answer

As a result of contaminated public water

Question 11

The invention of new technology that can double the amount of gold extracted from raw ore will lead to a

Accepted Answer

A) higher world price of gold, since mining companies must pay for the new machinery. 
B) lower world price of gold, since any amount of gold output is now cheaper to produce. 
C) higher world price of gold, because miners' wages must double as their productivity doubles. 
D) lower world price of gold, but only if new mining companies are not allowed to enter the industry. 
A) higher world price of gold, since mining companies must pay for the new machinery. 
B) lower world price of gold, since any amount of gold output is now cheaper to produce. 
C) higher world price of gold, because miners' wages must double as their productivity doubles. 
D) lower world price of gold, but only if new mining companies are not allowed to enter the industry.

Question 12

How will a decrease in price tend to affect supply?

Accepted Answer

A) Supply will increase. 
B) Supply will decrease. 
C) Supply will not change. 
D) Uncertain. 
A) Supply will increase. 
B) Supply will decrease. 
C) Supply will not change. 
D) Uncertain.

Question 13

During the Revolutionary War, the Pennsylvania legislature attempted to aid the Continental Army by setting wage floors for soldiers in the army.

Accepted Answer

A) True 
 B)False

Question 14

African governments wish to reduce the poaching of elephants, which is done to harvest the elephant's ivory from its tusks. If this is the goal, economists would suggest that

Accepted Answer

A) a price ceiling for ivory should be set, to reduce the price in the market, which would discourage poaching. 
B) governments continue to stockpile confiscated ivory, to keep it out of the market. 
C) burning ivory reduces the supply, which would reduce the number of buyers. 
D) confiscated tusks should be sold by governments because this would lower the price of ivory and reduce the reward to poachers. 
A) a price ceiling for ivory should be set, to reduce the price in the market, which would discourage poaching. 
B) governments continue to stockpile confiscated ivory, to keep it out of the market. 
C) burning ivory reduces the supply, which would reduce the number of buyers. 
D) confiscated tusks should be sold by governments because this would lower the price of ivory and reduce the reward to poachers.

Question 15

All other factors held constant, if the price of game consoles rise, the demand for gaming titles will

Accepted Answer

A) shift to the left, because they are normally used together. 
B) remain constant. 
C) shift to the right, because they are normally used together. 
D) shift to the right, because they are substitutes. 
A) shift to the left, because they are normally used together. 
B) remain constant. 
C) shift to the right, because they are normally used together. 
D) shift to the right, because they are substitutes.

Question 16

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 17

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 demand for money to

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect. 
A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect.

Question 18

The quantity of newspapers sold will decline if

Accepted Answer

A) newsprint becomes more expensive. 
B) the printers' union makes wage concessions. 
C) prices are reduced. 
D) magazine prices rise. 
A) newsprint becomes more expensive. 
B) the printers' union makes wage concessions. 
C) prices are reduced. 
D) magazine prices rise.

Question 19

If an increase in income results in higher prices for yachts, we can conclude

Accepted Answer

A) that yachts are inferior goods. 
B) that there was a decrease in the supply of yachts. 
C) that there was an increase in the supply of yachts. 
D) that yachts are normal goods. 
E) there's no relationship between income and the demand for yachts. 
A) that yachts are inferior goods. 
B) that there was a decrease in the supply of yachts. 
C) that there was an increase in the supply of yachts. 
D) that yachts are normal goods. 
E) there's no relationship between income and the demand for yachts.

Question 20

Over the previous year, 2,000 boxes of antihistamine tablets were sold at a price of $20 per box, and during the current year, 2,500 boxes of tablets were sold at $25 a box. The most likely interpretation of these data is that the

Accepted Answer

A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) the supply curve has shifted to the left, with no change in demand. 
D) the demand curve has shifted to the right, with no change in supply. 
A) supply and demand curves are shifting to the right. 
B) supply and demand curves are shifting to the left. 
C) the supply curve has shifted to the left, with no change in demand. 
D) the demand curve has shifted to the right, with no change in supply.

Technological advances shift the supply curve rightward.

Air fares are generally lower on Tuesdays and Wednesdays each week. What is a likely explanation for this occurrence?

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

George Washington's troops at Valley Forge were almost destroyed by price controls.

A major university hired an economist to forecast enrollment to produce a prediction of "head count." One variable that she would probably emphasize more than any other in trying to make the forecast

A common misconception about supply is that

Rent controls encourage investment in housing because they bring stability to the market.

At price P ₁ in Figure 4-21, what will tend to happen?

The invention of new technology that can double the amount of gold extracted from raw ore will lead to a

How will a decrease in price tend to affect supply?

During the Revolutionary War, the Pennsylvania legislature attempted to aid the Continental Army by setting wage floors for soldiers in the army.

African governments wish to reduce the poaching of elephants, which is done to harvest the elephant's ivory from its tusks. If this is the goal, economists would suggest that

All other factors held constant, if the price of game consoles rise, the demand for gaming titles will

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

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 demand for money to

The quantity of newspapers sold will decline if

If an increase in income results in higher prices for yachts, we can conclude

Over the previous year, 2,000 boxes of antihistamine tablets were sold at a price of $20 per box, and during the current year, 2,500 boxes of tablets were sold at $25 a box. The most likely interpretation of these data is that the

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

Exam 4: Supply and Demand: an Initial Look

Technological advances shift the supply curve rightward.

Air fares are generally lower on Tuesdays and Wednesdays each week. What is a likely explanation for this occurrence?

Give an example of a price ceiling. Draw a corresponding diagram and explain why there is a continuing shortage.

George Washington's troops at Valley Forge were almost destroyed by price controls.

A major university hired an economist to forecast enrollment to produce a prediction of "head count." One variable that she would probably emphasize more than any other in trying to make the forecast

A common misconception about supply is that

Rent controls encourage investment in housing because they bring stability to the market.

At price P 1 in Figure 4-21, what will tend to happen?

The invention of new technology that can double the amount of gold extracted from raw ore will lead to a

How will a decrease in price tend to affect supply?

During the Revolutionary War, the Pennsylvania legislature attempted to aid the Continental Army by setting wage floors for soldiers in the army.

African governments wish to reduce the poaching of elephants, which is done to harvest the elephant's ivory from its tusks. If this is the goal, economists would suggest that

All other factors held constant, if the price of game consoles rise, the demand for gaming titles will

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

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 demand for money to

The quantity of newspapers sold will decline if

If an increase in income results in higher prices for yachts, we can conclude

Over the previous year, 2,000 boxes of antihistamine tablets were sold at a price of $20 per box, and during the current year, 2,500 boxes of tablets were sold at $25 a box. The most likely interpretation of these data is that the

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

At price P ₁ in Figure 4-21, what will tend to happen?