Question 1

Figure 4-5
  
-Refer to the Figure 4-5. Which of the following is shown in Graph C?

Accepted Answer

A)  a decrease in demand 
B)  a decrease in the number of sellers 
C)  an increase in supply 
D)  an increase in input prices 
A)  a decrease in demand 
B)  a decrease in the number of sellers 
C)  an increase in supply 
D)  an increase in input prices

Question 2

Figure 4-6
  
-Refer to the Figure 4-6. What could cause the shift from D₁
To D?

Accepted Answer

A)  an increase in price 
B)  a decrease in the price of a complement 
C)  an increase in technology 
D)  a decrease in the price of a substitute 
A)  an increase in price 
B)  a decrease in the price of a complement 
C)  an increase in technology 
D)  a decrease in the price of a substitute

Question 3

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

Accepted Answer

A) True 
 B)False

Question 4

In a free market, who determines how much of a good will be sold and the price at which it is sold?

Accepted Answer

A)  suppliers 
B)  demanders 
C)  the government 
D)  suppliers and demanders together 
A)  suppliers 
B)  demanders 
C)  the government 
D)  suppliers and demanders together

Question 5

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

Accepted Answer

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

Question 6

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 7

If the supply of a product increases, what would we expect?

Accepted Answer

A)  equilibrium price to increase and equilibrium quantity to decrease 
B)  equilibrium price to decrease and equilibrium quantity to increase 
C)  equilibrium price and equilibrium quantity to both increase 
D)  equilibrium price and equilibrium quantity to both decrease 
A)  equilibrium price to increase and equilibrium quantity to decrease 
B)  equilibrium price to decrease and equilibrium quantity to increase 
C)  equilibrium price and equilibrium quantity to both increase 
D)  equilibrium price and equilibrium quantity to both decrease

Question 8

Market demand is given as QD = 100 - P. Market supply is given as QS = 4P. If price increases from $70 to $74, what is the price elasticity of demand?

Accepted Answer

A)  0.4 
B)  0.7 
C)  2.57 
D)  3.5 
A)  0.4 
B)  0.7 
C)  2.57 
D)  3.5

Question 9

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

Accepted Answer

A)  0.2 
B)  0.8 
C)  1.0 
D)  4.2 
A)  0.2 
B)  0.8 
C)  1.0 
D)  4.2

Question 10

Suppose that demand increases and supply decreases. What would we expect to happen in the market?

Accepted Answer

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

Question 11

What is an example of an inferior good?

Accepted Answer

A)  neckties 
B)  one-ply toilet paper 
C)  cotton sheets 
D)  cut flowers 
A)  neckties 
B)  one-ply toilet paper 
C)  cotton sheets 
D)  cut flowers

Question 12

What is the law of demand?

Accepted Answer

A)  When the price of a good falls, buyers respond by purchasing more. 
B)  When income levels increase, buyers respond by purchasing more. 
C)  When buyers' tastes for the good increase, they purchase more of the good. 
D)  When the price of a good or service rises, buyers respond by purchasing more. 
A)  When the price of a good falls, buyers respond by purchasing more. 
B)  When income levels increase, buyers respond by purchasing more. 
C)  When buyers' tastes for the good increase, they purchase more of the good. 
D)  When the price of a good or service rises, buyers respond by purchasing more.

Question 13

Which of the following is NOT a determinant of demand?

Accepted Answer

A)  the price of an input 
B)  the price of a complementary good 
C)  the price of the good next month 
D)  the price of a substitute good 
A)  the price of an input 
B)  the price of a complementary good 
C)  the price of the good next month 
D)  the price of a substitute good

Question 14

Suppose you wish to analyze the change in the equilibrium price of lumber as a result of pine beetle infestations that are destroying trees in the West. What would your first step be?

Accepted Answer

A)  to identify the new equilibrium point 
B)  to decide whether the fires affect the quantity demanded 
C)  to decide whether the fires affect the price 
D)  to decide whether the fires shift demand or supply 
A)  to identify the new equilibrium point 
B)  to decide whether the fires affect the quantity demanded 
C)  to decide whether the fires affect the price 
D)  to decide whether the fires shift demand or supply

Question 15

What might be the reason when quantity demanded has increased at every price?

Accepted Answer

A)  The number of buyers in the market has decreased. 
B)  Income has increased and this good is an inferior good. 
C)  The consumer prefers another good more than this good. 
D)  The price of a substitute good has increased. 
A)  The number of buyers in the market has decreased. 
B)  Income has increased and this good is an inferior good. 
C)  The consumer prefers another good more than this good. 
D)  The price of a substitute good has increased.

Question 16

Suppose that scientists find evidence that proves tattoos improve the body's immune system. What would we expect to see?

Accepted Answer

A)  no change in the demand for tattoos 
B)  a decrease in the demand for tattoos 
C)  an increase in the demand for tattoos 
D)  a decrease in the supply of tattoos 
A)  no change in the demand for tattoos 
B)  a decrease in the demand for tattoos 
C)  an increase in the demand for tattoos 
D)  a decrease in the supply of tattoos

Question 17

The law of demand states that the quantity demanded of a product is positively related to price.

Accepted Answer

A) True 
 B)False

Question 18

When it comes to people's tastes, what do economists generally believe?

Accepted Answer

A)  Tastes are based on forces beyond the realm of economics. 
B)  Tastes are based on historical and psychological forces. 
C)  Tastes don't change. 
D)  Tastes do not directly affect demand. 
A)  Tastes are based on forces beyond the realm of economics. 
B)  Tastes are based on historical and psychological forces. 
C)  Tastes don't change. 
D)  Tastes do not directly affect demand.

Question 19

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

Accepted Answer

A) True 
 B)False

Question 20

What does a market demand curve reflect?

Accepted Answer

A)  how much all buyers are willing and able to buy at each possible price 
B)  how quantity demanded changes when the number of buyers changes 
C)  the fact that the level of income is inversely related to quantity demanded 
D)  when the buyers are willing to buy the most 
A)  how much all buyers are willing and able to buy at each possible price 
B)  how quantity demanded changes when the number of buyers changes 
C)  the fact that the level of income is inversely related to quantity demanded 
D)  when the buyers are willing to buy the most

Figure 4-5 -Refer to the Figure 4-5. Which of the following is shown in Graph C?

Figure 4-6 -Refer to the Figure 4-6. What could cause the shift from D₁ To D?

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

In a free market, who determines how much of a good will be sold and the price at which it is sold?

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

Baseballs and baseball bats are substitute goods.

If the supply of a product increases, what would we expect?

Market demand is given as QD = 100 - P. Market supply is given as QS = 4P. If price increases from $70 to $74, what is the price elasticity of demand?

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

Suppose that demand increases and supply decreases. What would we expect to happen in the market?

What is an example of an inferior good?

What is the law of demand?

Which of the following is NOT a determinant of demand?

Suppose you wish to analyze the change in the equilibrium price of lumber as a result of pine beetle infestations that are destroying trees in the West. What would your first step be?

What might be the reason when quantity demanded has increased at every price?

Suppose that scientists find evidence that proves tattoos improve the body's immune system. What would we expect to see?

The law of demand states that the quantity demanded of a product is positively related to price.

When it comes to people's tastes, what do economists generally believe?

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

What does a market demand curve reflect?

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

Figure 4-5 -Refer to the Figure 4-5. Which of the following is shown in Graph C?

Figure 4-6 -Refer to the Figure 4-6. What could cause the shift from D₁ To D?

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

In a free market, who determines how much of a good will be sold and the price at which it is sold?

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

Baseballs and baseball bats are substitute goods.

If the supply of a product increases, what would we expect?

Market demand is given as QD = 100 - P. Market supply is given as QS = 4P. If price increases from $70 to $74, what is the price elasticity of demand?

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

Suppose that demand increases and supply decreases. What would we expect to happen in the market?

What is an example of an inferior good?

What is the law of demand?

Which of the following is NOT a determinant of demand?

Suppose you wish to analyze the change in the equilibrium price of lumber as a result of pine beetle infestations that are destroying trees in the West. What would your first step be?

What might be the reason when quantity demanded has increased at every price?

Suppose that scientists find evidence that proves tattoos improve the body's immune system. What would we expect to see?

The law of demand states that the quantity demanded of a product is positively related to price.

When it comes to people's tastes, what do economists generally believe?

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

What does a market demand curve reflect?

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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