Question 1

What represents the behaviour of buyers?

Accepted Answer

A)  demand 
B)  supply 
C)  a market 
D)  competition 
A)  demand 
B)  supply 
C)  a market 
D)  competition

Question 2

Morgan tells you that the price of lattes at the coffee shop will be going up next week. How will you probably respond?

Accepted Answer

A)  by decreasing your current demand for lattes 
B)  by increasing your current demand for lattes 
C)  by not changing your current demand for lattes 
D)  by refusing to ever buy any more lattes at that shop 
A)  by decreasing your current demand for lattes 
B)  by increasing your current demand for lattes 
C)  by not changing your current demand for lattes 
D)  by refusing to ever buy any more lattes at that shop

Question 3

Figure 4-5
  
-Refer to the Figure 4-5. Which of the four graphs represents the market for toboggans in August?

Accepted Answer

A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D 
A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D

Question 4

Who or what allocates an economy's scarce resources?

Accepted Answer

A)  economic planners 
B)  producers who use resources 
C)  prices for resources 
D)  government regulation of scarce resources 
A)  economic planners 
B)  producers who use resources 
C)  prices for resources 
D)  government regulation of scarce resources

Question 5

What is the term for buyers and sellers who have no influence on market price?

Accepted Answer

A)  price makers 
B)  market pawns 
C)  price takers 
D)  powerless 
A)  price makers 
B)  market pawns 
C)  price takers 
D)  powerless

Question 6

Market demand is given as Qd =150 - 3P. Market supply is given as Qs = 2P. What would result if the market price were $25?

Accepted Answer

A)  a shortage of 25 
B)  a surplus of 25 
C)  a surplus of 70 
D)  a shortage of 70 
A)  a shortage of 25 
B)  a surplus of 25 
C)  a surplus of 70 
D)  a shortage of 70

Question 7

Smart phones are normal goods. What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper, more firms start producing smart phones, and
Smart phone users experience an increase in income?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous

Question 8

In a competitive market, why does each seller have limited control over the price of his product?

Accepted Answer

A)  Other sellers are offering similar products. 
B)  In competitive markets, buyers have more influence over price than sellers. 
C)  The products sold in competitive markets are generally in abundant supply. 
D)  Sellers in competitive markets prefer to meet and set a price where profits will be realized. 
A)  Other sellers are offering similar products. 
B)  In competitive markets, buyers have more influence over price than sellers. 
C)  The products sold in competitive markets are generally in abundant supply. 
D)  Sellers in competitive markets prefer to meet and set a price where profits will be realized.

Question 9

Market demand is given as QD = 220 - 4P. Market supply is given as QS = 2P + 40. If price increases from $42 to $46, what is the price elasticity of demand?

Accepted Answer

A)  0.3 
B)  0.4 
C)  4.0 
D)  5.9 
A)  0.3 
B)  0.4 
C)  4.0 
D)  5.9

Question 10

Which of the following would NOT shift the demand curve for a good or service?

Accepted Answer

A)  a change in income 
B)  a change in the price of the good or service 
C)  a change in expectations about the price of the good or service 
D)  a change in the price of a related good 
A)  a change in income 
B)  a change in the price of the good or service 
C)  a change in expectations about the price of the good or service 
D)  a change in the price of a related good

Question 11

Given a fixed demand curve, which of the following is affected when the price changes?

Accepted Answer

A)  income 
B)  tastes 
C)  expectations 
D)  quantity demanded 
A)  income 
B)  tastes 
C)  expectations 
D)  quantity demanded

Question 12

Figure 4-10
  
-Refer to the Figure 4-10. What would cause the movement from point A to point B on the graph?

Accepted Answer

A)  a decrease in the price of the good 
B)  an increase in the price of the good 
C)  an increase in technology 
D)  a decrease in input prices 
A)  a decrease in the price of the good 
B)  an increase in the price of the good 
C)  an increase in technology 
D)  a decrease in input prices

Question 13

What happens in a competitive market?

Accepted Answer

A)  Only a few sellers sell the same product. 
B)  Each seller has limited control over the price of his product. 
C)  If one buyer chooses to purchase a large quantity of the product, the price will rise. 
D)  If one seller withholds his product from the market, prices will rise. 
A)  Only a few sellers sell the same product. 
B)  Each seller has limited control over the price of his product. 
C)  If one buyer chooses to purchase a large quantity of the product, the price will rise. 
D)  If one seller withholds his product from the market, prices will rise.

Question 14

Figure 4-6
  
-Refer to the Figure 4-6. What happens if the demand curve shifts from D₁
To D?

Accepted Answer

A)  Firms would be willing to supply less than before. 
B)  People are less willing to buy the product at any price than before. 
C)  People are now more willing to buy the product at any price than before. 
D)  The price of the product has decreased, causing consumers to buy more of the product. 
A)  Firms would be willing to supply less than before. 
B)  People are less willing to buy the product at any price than before. 
C)  People are now more willing to buy the product at any price than before. 
D)  The price of the product has decreased, causing consumers to buy more of the product.

Question 15

Which of the following would definitely result in a higher price in the market for smart phones?

Accepted Answer

A)  demand increases and supply decreases 
B)  demand and supply both decrease 
C)  demand decreases and supply increases 
D)  demand and supply both increase 
A)  demand increases and supply decreases 
B)  demand and supply both decrease 
C)  demand decreases and supply increases 
D)  demand and supply both increase

Question 16

What does a 10 percent increase in the price of cigarettes lead to?

Accepted Answer

A)  18 percent drop in smoking 
B)  12 percent drop in smoking 
C)  6 percent drop in smoking 
D)  4 percent drop in smoking 
A)  18 percent drop in smoking 
B)  12 percent drop in smoking 
C)  6 percent drop in smoking 
D)  4 percent drop in smoking

Question 17

Suppose both demand and supply decrease. How do the equilibrium price and quantity change?

Accepted Answer

A)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
A)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. 
B)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 18

Consider the following scenario: a new manufacturing process is introduced to make hockey skates. The new process is more efficient, lowers the cost of producing hockey skates, and allows more firms start producing hockey skates. At the same time, more individuals prefer hockey as a leisure activity and hockey league registration fees have gone down. What will happen to the equilibrium price and quantity?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous

Question 19

Currently you purchase six packages of hot dogs a month. You graduate in December and will start your new job on January 2. You have no plans to purchase hot dogs in January. What are hot dogs for you?

Accepted Answer

A)  a "college-only" good 
B)  a normal good 
C)  an inferior good 
D)  a consumer good 
A)  a "college-only" good 
B)  a normal good 
C)  an inferior good 
D)  a consumer good

Question 20

Figure 4-10
  
-Refer to the Figure 4-10. What would cause the movement from point B to point A on the graph?

Accepted Answer

A)  a decrease in the price of the good 
B)  an increase in the price of the good 
C)  an increase in technology 
D)  a decrease in input prices 
A)  a decrease in the price of the good 
B)  an increase in the price of the good 
C)  an increase in technology 
D)  a decrease in input prices

What represents the behaviour of buyers?

Morgan tells you that the price of lattes at the coffee shop will be going up next week. How will you probably respond?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for toboggans in August?

Who or what allocates an economy's scarce resources?

What is the term for buyers and sellers who have no influence on market price?

Market demand is given as Qd =150 - 3P. Market supply is given as Qs = 2P. What would result if the market price were $25?

Smart phones are normal goods. What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper, more firms start producing smart phones, and Smart phone users experience an increase in income?

In a competitive market, why does each seller have limited control over the price of his product?

Market demand is given as QD = 220 - 4P. Market supply is given as QS = 2P + 40. If price increases from $42 to $46, what is the price elasticity of demand?

Which of the following would NOT shift the demand curve for a good or service?

Given a fixed demand curve, which of the following is affected when the price changes?

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point A to point B on the graph?

What happens in a competitive market?

Figure 4-6 -Refer to the Figure 4-6. What happens if the demand curve shifts from D₁ To D?

Which of the following would definitely result in a higher price in the market for smart phones?

What does a 10 percent increase in the price of cigarettes lead to?

Suppose both demand and supply decrease. How do the equilibrium price and quantity change?

Currently you purchase six packages of hot dogs a month. You graduate in December and will start your new job on January 2. You have no plans to purchase hot dogs in January. What are hot dogs for you?

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point B to point A on the graph?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 4: The Market Forces of Supply and Demand

What represents the behaviour of buyers?

Morgan tells you that the price of lattes at the coffee shop will be going up next week. How will you probably respond?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for toboggans in August?

Who or what allocates an economy's scarce resources?

What is the term for buyers and sellers who have no influence on market price?

Market demand is given as Qd =150 - 3P. Market supply is given as Qs = 2P. What would result if the market price were $25?

Smart phones are normal goods. What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper, more firms start producing smart phones, and Smart phone users experience an increase in income?

In a competitive market, why does each seller have limited control over the price of his product?

Market demand is given as QD = 220 - 4P. Market supply is given as QS = 2P + 40. If price increases from $42 to $46, what is the price elasticity of demand?

Which of the following would NOT shift the demand curve for a good or service?

Given a fixed demand curve, which of the following is affected when the price changes?

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point A to point B on the graph?

What happens in a competitive market?

Figure 4-6 -Refer to the Figure 4-6. What happens if the demand curve shifts from D₁ To D?

Which of the following would definitely result in a higher price in the market for smart phones?

What does a 10 percent increase in the price of cigarettes lead to?

Suppose both demand and supply decrease. How do the equilibrium price and quantity change?

Currently you purchase six packages of hot dogs a month. You graduate in December and will start your new job on January 2. You have no plans to purchase hot dogs in January. What are hot dogs for you?

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point B to point A on the graph?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters