Question 1

Suppose donuts are currently selling for $14 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Accepted Answer

A)  a shortage to exist and the market price of donuts to increase 
B)  a shortage to exist and the market price of donuts to decrease 
C)  a surplus to exist and the market price of donuts to increase 
D)  a surplus to exist and the market price of donuts to decrease 
A)  a shortage to exist and the market price of donuts to increase 
B)  a shortage to exist and the market price of donuts to decrease 
C)  a surplus to exist and the market price of donuts to increase 
D)  a surplus to exist and the market price of donuts to decrease

Question 2

Who ultimately determines the demand for a product or service?

Accepted Answer

A)  those who buy the product or service 
B)  the government 
C)  the producers who create the product or service 
D)  those who supply the raw materials used in the production of the good or service 
A)  those who buy the product or service 
B)  the government 
C)  the producers who create the product or service 
D)  those who supply the raw materials used in the production of the good or service

Question 3

Figure 4-4
  
-Refer to the Figure 4-4. If the price is $10, what would happen?

Accepted Answer

A)  There would be a shortage of 200 and the price would rise. 
B)  There would be a surplus of 200 and the price would fall. 
C)  There would be a shortage of 600 and the price would rise. 
D)  There would be a surplus of 600 and the price would fall. 
A)  There would be a shortage of 200 and the price would rise. 
B)  There would be a surplus of 200 and the price would fall. 
C)  There would be a shortage of 600 and the price would rise. 
D)  There would be a surplus of 600 and the price would fall.

Question 4

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) fell, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

Accepted Answer

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

Question 5

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Accepted Answer

A)  decrease the demand for marijuana 
B)  increase the demand for marijuana 
C)  decrease the quantity demanded of marijuana 
D)  increase the quantity demanded of marijuana 
A)  decrease the demand for marijuana 
B)  increase the demand for marijuana 
C)  decrease the quantity demanded of marijuana 
D)  increase the quantity demanded of marijuana

Question 6

Table 4-2
  
-Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

A)  space A 
B)  space B 
C)  space C 
D)  space D 
A)  space A 
B)  space B 
C)  space C 
D)  space D

Question 7

Figure 4-1
  
-Refer to the Figure 4-1. What is the movement from S to S1 called?

Accepted Answer

A)  a decrease in supply 
B)  a decrease in quantity supplied 
C)  an increase in supply 
D)  an increase in quantity supplied 
A)  a decrease in supply 
B)  a decrease in quantity supplied 
C)  an increase in supply 
D)  an increase in quantity supplied

Question 8

Figure 4-1
  
-Refer to the Figure 4-1. What could cause the movement from S1 to S?

Accepted Answer

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

Question 9

If two goods are substitutes, what happens if there is a decrease in the price of one good?

Accepted Answer

A)  It increases the demand for the other good. 
B)  It reduces the demand for the other good. 
C)  It reduces the quantity demanded of the other good. 
D)  It increases the quantity demanded of the other good. 
A)  It increases the demand for the other good. 
B)  It reduces the demand for the other good. 
C)  It reduces the quantity demanded of the other good. 
D)  It increases the quantity demanded of the other good.

Question 10

What is a demand curve?

Accepted Answer

A)  the downward-sloping line relating the price of the good to the quantity demanded 
B)  the upward-sloping line relating price to quantity supplied 
C)  the curve that relates income to quantity demanded 
D)  the curve that shows the same relationship between two goods as a production possibilities frontier 
A)  the downward-sloping line relating the price of the good to the quantity demanded 
B)  the upward-sloping line relating price to quantity supplied 
C)  the curve that relates income to quantity demanded 
D)  the curve that shows the same relationship between two goods as a production possibilities frontier

Question 11

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

Accepted Answer

A) True 
 B)False

Question 12

In what type of market do we refer to buyers and sellers as "price takers"?

Accepted Answer

A)  a perfectly competitive market 
B)  a monopolistically competitive market 
C)  an oligopolistic market 
D)  a monopolistic market 
A)  a perfectly competitive market 
B)  a monopolistically competitive market 
C)  an oligopolistic market 
D)  a monopolistic market

Question 13

What relationship is shown by the supply schedule?

Accepted Answer

A)  between price and quantity supplied 
B)  between price and quantity demanded 
C)  between supply and quantity 
D)  between profit and price 
A)  between price and quantity supplied 
B)  between price and quantity demanded 
C)  between supply and quantity 
D)  between profit and price

Question 14

Market demand is given as Qd = 150 - P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Accepted Answer

A)  a shortage of 60 
B)  a surplus of 60 
C)  a surplus of 75 
D)  a shortage of 75 
A)  a shortage of 60 
B)  a surplus of 60 
C)  a surplus of 75 
D)  a shortage of 75

Question 15

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $300 to $304, what is the price elasticity of demand?

Accepted Answer

A)  0.2 
B)  1.0 
C)  1.5 
D)  3.0 
A)  0.2 
B)  1.0 
C)  1.5 
D)  3.0

Question 16

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Accepted Answer

A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton 
A)  an increase in the price of wool shirts and a decrease in the price of raw cotton 
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton 
C)  an increase in the price of wool shirts and an increase in the price of raw cotton 
D)  a decrease in the price of wool shirts and an increase in the price of raw cotton

Question 17

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $10?

Accepted Answer

A)  a shortage of 30 
B)  a surplus of 20 
C)  a surplus of 30 
D)  a shortage of 20 
A)  a shortage of 30 
B)  a surplus of 20 
C)  a surplus of 30 
D)  a shortage of 20

Question 18

What is one reason that government taxes on cigarettes reduce smoking?

Accepted Answer

A)  Cigarette companies are successful in passing much of the tax on to consumers. 
B)  Cigarette companies do not pass much of the tax on to consumers. 
C)  There are many good substitutes for cigarettes. 
D)  Higher prices suggest less harmful cigarettes. 
A)  Cigarette companies are successful in passing much of the tax on to consumers. 
B)  Cigarette companies do not pass much of the tax on to consumers. 
C)  There are many good substitutes for cigarettes. 
D)  Higher prices suggest less harmful cigarettes.

Question 19

Market demand is given as QD = 200 - 3P. Market supply is given as QS = P + 10. If price increases from $12 to $18, what is the price elasticity of demand?

Accepted Answer

A)  0.1 
B)  0.3 
C)  1.2 
D)  1.8 
A)  0.1 
B)  0.3 
C)  1.2 
D)  1.8

Question 20

Sugar is a normal good. You observe that both the equilibrium price and quantity of sugar has fallen over time. Which of the following would be most consistent with this observation?

Accepted Answer

A)  Consumers have experienced an increase in income and sugar-production technology has improved. 
B)  The price of artificial sweetener has risen and the price of coffee has fallen. 
C)  Consumer tastes have changed so as to prefer sugar less than before. 
D)  The demand curve for sugar must be positively sloped. 
A)  Consumers have experienced an increase in income and sugar-production technology has improved. 
B)  The price of artificial sweetener has risen and the price of coffee has fallen. 
C)  Consumer tastes have changed so as to prefer sugar less than before. 
D)  The demand curve for sugar must be positively sloped.

Suppose donuts are currently selling for $14 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Who ultimately determines the demand for a product or service?

Figure 4-4 -Refer to the Figure 4-4. If the price is $10, what would happen?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) fell, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Table 4-2 -Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

Figure 4-1 -Refer to the Figure 4-1. What is the movement from S to S1 called?

Figure 4-1 -Refer to the Figure 4-1. What could cause the movement from S1 to S?

If two goods are substitutes, what happens if there is a decrease in the price of one good?

What is a demand curve?

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

In what type of market do we refer to buyers and sellers as "price takers"?

What relationship is shown by the supply schedule?

Market demand is given as Qd = 150 - P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $300 to $304, what is the price elasticity of demand?

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $10?

What is one reason that government taxes on cigarettes reduce smoking?

Market demand is given as QD = 200 - 3P. Market supply is given as QS = P + 10. If price increases from $12 to $18, what is the price elasticity of demand?

Sugar is a normal good. You observe that both the equilibrium price and quantity of sugar has fallen over time. Which of the following would be most consistent with this observation?

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

Exam 4: The Market Forces of Supply and Demand

Suppose donuts are currently selling for $14 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Who ultimately determines the demand for a product or service?

Figure 4-4 -Refer to the Figure 4-4. If the price is $10, what would happen?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell, the price of jelly (a complementary good) fell, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was bad for you?

If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do?

Table 4-2 -Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

Figure 4-1 -Refer to the Figure 4-1. What is the movement from S to S1 called?

Figure 4-1 -Refer to the Figure 4-1. What could cause the movement from S1 to S?

If two goods are substitutes, what happens if there is a decrease in the price of one good?

What is a demand curve?

If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month.

In what type of market do we refer to buyers and sellers as "price takers"?

What relationship is shown by the supply schedule?

Market demand is given as Qd = 150 - P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $300 to $304, what is the price elasticity of demand?

Which of the following would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $10?

What is one reason that government taxes on cigarettes reduce smoking?

Market demand is given as QD = 200 - 3P. Market supply is given as QS = P + 10. If price increases from $12 to $18, what is the price elasticity of demand?

Sugar is a normal good. You observe that both the equilibrium price and quantity of sugar has fallen over time. Which of the following would be most consistent with this observation?

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