Question 1

Price ceilings frequently lead to

Accepted Answer

A) an accumulation of surpluses. 
B) an increase in the number of units purchased, moving along the demand curve. 
C) increased production, since producers respond to increased consumer demand at the low ceiling price. 
D) result in the development of black markets. 
A) an accumulation of surpluses. 
B) an increase in the number of units purchased, moving along the demand curve. 
C) increased production, since producers respond to increased consumer demand at the low ceiling price. 
D) result in the development of black markets.

Question 2

The development of new technology reduces the cost of producing calculators. In addition, assume that consumers have cut back on their scheduled purchases in anticipation of further cost-saving developments. As a result, we can expect

Accepted Answer

A) a decrease in price but no predictable change in output. 
B) a decrease in output but no predictable change in price. 
C) an increase in output but no predictable change in price. 
D) a predictable decrease in both output and price. 
A) a decrease in price but no predictable change in output. 
B) a decrease in output but no predictable change in price. 
C) an increase in output but no predictable change in price. 
D) a predictable decrease in both output and price.

Question 3

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 4

The supply curve shows

Accepted Answer

A) the same basic information as the demand curve. 
B) who will have an opportunity to produce or purchase an item. 
C) the quantity produced as a function of the price. 
D) plots of what quantities have been sold over the past few weeks or months. 
A) the same basic information as the demand curve. 
B) who will have an opportunity to produce or purchase an item. 
C) the quantity produced as a function of the price. 
D) plots of what quantities have been sold over the past few weeks or months.

Question 5

Rent controls are designed to protect consumers from high rents.

Accepted Answer

A) True 
 B)False

Question 6

Assuming that the demand curve for cookies is downward sloping, if the price of cookies falls from $1.50 to $1.25 per dozen,

Accepted Answer

A) then the demand for cookies will fall. 
B) then the demand for cookies will rise. 
C) then a larger quantity of cookies will be demanded. 
D) then a smaller quantity of cookies will be demanded. 
A) then the demand for cookies will fall. 
B) then the demand for cookies will rise. 
C) then a larger quantity of cookies will be demanded. 
D) then a smaller quantity of cookies will be demanded.

Question 7

-Refer to Table 4-1. At $4, what is the shortage?

Accepted Answer

A) 0 
B) 1,500 
C) 3,000 
D) 4,500 
E) 6,000 
A) 0 
B) 1,500 
C) 3,000 
D) 4,500 
E) 6,000

Question 8

The following price-quantity coordinates for gold used by U.S. dentists were observed: P = $875\ounce, Q = 342,000; P = $200\ounce, Q = 706,000. These points most likely lie along the

Accepted Answer

A) supply curve for gold for dental use. 
B) demand curve for dental use. 
C) equilibrium curve for dental use. 
D) production possibilities curve for dental use. 
A) supply curve for gold for dental use. 
B) demand curve for dental use. 
C) equilibrium curve for dental use. 
D) production possibilities curve for dental use.

Question 9

Following the devastation of Hurricane Hugo, Charleston, South Carolina was cut off from the outside world and without electricity. Prices for bagged ice rose by 1,000 percent and electric generators by 300 percent and at least one tree removal firm charged $4,000 to cut up a tree. City government responded by passing an emergency law prohibiting price "gouging." This law is an example of

Accepted Answer

A) the cost disease of services. 
B) a price ceiling. 
C) the laissez-faire rule. 
D) the indispensable necessity syndrome. 
A) the cost disease of services. 
B) a price ceiling. 
C) the laissez-faire rule. 
D) the indispensable necessity syndrome.

Question 10

Figure 4-4  
 
-​Assume that Figure 4-4 shows demand for steak. An increase in income of buyers 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 11

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to quantity of money demanded if the interest rate increases?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) The demand for money will increase. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) The demand for money will increase.

Question 12

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

Accepted Answer

A) True 
 B)False

Question 13

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 quantity of money demanded to

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) not change, although the demand schedule itself will shift outward. 
A) increase. 
B) decrease. 
C) not change. 
D) not change, although the demand schedule itself will shift outward.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A change in the price of a good has no effect on the supply schedule.

Accepted Answer

A) True 
 B)False

Question 16

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. If the government imposes a price floor of $4 a weezil, how many weezils will be sold?

Accepted Answer

A) 5 
B) 10 
C) 12 
D) 14 
A) 5 
B) 10 
C) 12 
D) 14

Question 17

When price is above the equilibrium level, suppliers offer more than demanders wish to buy.

Accepted Answer

A) True 
 B)False

Question 18

Legal limits on prices will tend to cause misallocation of resources because

Accepted Answer

A) the market price does not reflect the costs of production. 
B) people are unable to determine their preferences at the high or low price. 
C) producers are able to produce less efficiently. 
D) consumers no longer have incentive to spend their income efficiently. 
E) All of these responses are correct. 
A) the market price does not reflect the costs of production. 
B) people are unable to determine their preferences at the high or low price. 
C) producers are able to produce less efficiently. 
D) consumers no longer have incentive to spend their income efficiently. 
E) All of these responses are correct.

Question 19

Why do price ceilings tend to cause persistent imbalances in the market?

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 20

Price floors set a legal minimum price on a product or commodity.

Accepted Answer

A) True 
 B)False

Price ceilings frequently lead to

The development of new technology reduces the cost of producing calculators. In addition, assume that consumers have cut back on their scheduled purchases in anticipation of further cost-saving developments. As a result, we can expect

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

The supply curve shows

Rent controls are designed to protect consumers from high rents.

Assuming that the demand curve for cookies is downward sloping, if the price of cookies falls from $1.50 to $1.25 per dozen,

-Refer to Table 4-1. At $4, what is the shortage?

The following price-quantity coordinates for gold used by U.S. dentists were observed: P = $875\ounce, Q = 342,000; P = $200\ounce, Q = 706,000. These points most likely lie along the

Figure 4-4 -Assume that Figure 4-4 shows demand for steak. An increase in income of buyers will change demand from

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to quantity of money demanded if the interest rate increases?

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

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 quantity of money demanded to

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

A change in the price of a good has no effect on the supply schedule.

When price is above the equilibrium level, suppliers offer more than demanders wish to buy.

Legal limits on prices will tend to cause misallocation of resources because

Why do price ceilings tend to cause persistent imbalances in the market?

Price floors set a legal minimum price on a product or commodity.

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

Price ceilings frequently lead to

The development of new technology reduces the cost of producing calculators. In addition, assume that consumers have cut back on their scheduled purchases in anticipation of further cost-saving developments. As a result, we can expect

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

The supply curve shows

Rent controls are designed to protect consumers from high rents.

Assuming that the demand curve for cookies is downward sloping, if the price of cookies falls from $1.50 to $1.25 per dozen,

-Refer to Table 4-1. At $4, what is the shortage?

The following price-quantity coordinates for gold used by U.S. dentists were observed: P = $875\ounce, Q = 342,000; P = $200\ounce, Q = 706,000. These points most likely lie along the

Figure 4-4 -​Assume that Figure 4-4 shows demand for steak. An increase in income of buyers will change demand from

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to quantity of money demanded if the interest rate increases?

Equilibrium price and quantity are determined by the intersection of the demand and supply curves.

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 quantity of money demanded to

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

A change in the price of a good has no effect on the supply schedule.

When price is above the equilibrium level, suppliers offer more than demanders wish to buy.

Legal limits on prices will tend to cause misallocation of resources because

Why do price ceilings tend to cause persistent imbalances in the market?

Price floors set a legal minimum price on a product or commodity.

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

Figure 4-4 -Assume that Figure 4-4 shows demand for steak. An increase in income of buyers will change demand from