Question 1

The demand curve for spinach shows the quantity demanded of spinach

Accepted Answer

A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good 
A) only at the equilibrium price of spinach 
B) at each possible price of spinach 
C) as income increases 
D) as income decreases 
E) at each possible price of a substitute good B

Question 2

If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause

Accepted Answer

A) the demand for beef cattle to increase, driving the price of beef upward 
B) the supply of beef cattle to decline, driving the price of beef upward in the long run 
C) the supply of beef to increase, placing downward pressure on the price of beef in the long run 
D) both supply and demand to fall, leaving the price of beef virtually unchanged 
E) the supply of beef to increase, driving the price of beef down and increasing demand 
A) the demand for beef cattle to increase, driving the price of beef upward 
B) the supply of beef cattle to decline, driving the price of beef upward in the long run 
C) the supply of beef to increase, placing downward pressure on the price of beef in the long run 
D) both supply and demand to fall, leaving the price of beef virtually unchanged 
E) the supply of beef to increase, driving the price of beef down and increasing demand B

Question 3

Economists emphasize the importance of equilibrium in markets because

Accepted Answer

A) trading in markets can only occur at the equilibrium price and quantity 
B) the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity 
C) all buyers and sellers are better off at the equilibrium point than any other price and quantity combination 
D) it represents a compromise between sellers hoping for low prices and buyers searching for high prices 
E) it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service 
A) trading in markets can only occur at the equilibrium price and quantity 
B) the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity 
C) all buyers and sellers are better off at the equilibrium point than any other price and quantity combination 
D) it represents a compromise between sellers hoping for low prices and buyers searching for high prices 
E) it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service B

Question 4

The arrival of Michael Jordan, Larry Bird, and Magic Johnson in the 1980s increased the popularity of pro basketball. This led to

Accepted Answer

A) an increase in the equilibrium quantity of professional basketball 
B) a decrease in the equilibrium quantity of professional basketball 
C) a decrease in the price of professional basketball tickets 
D) a decrease in pro basketball players' salaries 
E) an increase in the price of professional basketball tickets but no change in game attendance 
A) an increase in the equilibrium quantity of professional basketball 
B) a decrease in the equilibrium quantity of professional basketball 
C) a decrease in the price of professional basketball tickets 
D) a decrease in pro basketball players' salaries 
E) an increase in the price of professional basketball tickets but no change in game attendance

Question 5

If the demand for bicycles increases,

Accepted Answer

A) the quantity demanded decreases 
B) equilibrium price increases and equilibrium quantity decreases 
C) equilibrium price decreases and equilibrium quantity increases 
D) quantity supplied increases 
E) quantity supplied decreases 
A) the quantity demanded decreases 
B) equilibrium price increases and equilibrium quantity decreases 
C) equilibrium price decreases and equilibrium quantity increases 
D) quantity supplied increases 
E) quantity supplied decreases

Question 6

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect

Accepted Answer

A) the demand for honey to increase 
B) the demand for honey to decrease 
C) the quantity demanded of honey to decrease 
D) the price of honey to decrease 
E) the quantity demanded of honey to increase 
A) the demand for honey to increase 
B) the demand for honey to decrease 
C) the quantity demanded of honey to decrease 
D) the price of honey to decrease 
E) the quantity demanded of honey to increase

Question 7

As the price of ballpoint pens increases, the demand for felt-tip pens can be expected to decrease.

Accepted Answer

A) True 
 B)False

Question 8

A decrease in supply will cause a(n)

Accepted Answer

A) increase in demand 
B) decrease in demand 
C) increase in quantity demanded 
D) decrease in quantity demanded 
E) decrease in equilibrium price 
A) increase in demand 
B) decrease in demand 
C) increase in quantity demanded 
D) decrease in quantity demanded 
E) decrease in equilibrium price

Question 9

Suppliers recognize there is a shortage in the market for their product when they notice that

Accepted Answer

A) the quantity supplied exceeds the quantity demanded 
B) the quantity demanded is falling 
C) inventories are falling 
D) production exceeds new orders for the product 
E) government economists announce a shortage exists 
A) the quantity supplied exceeds the quantity demanded 
B) the quantity demanded is falling 
C) inventories are falling 
D) production exceeds new orders for the product 
E) government economists announce a shortage exists

Question 10

Which of the following would cause an increase in the supply of wheat?

Accepted Answer

A) an increase in fertilizer costs 
B) a decrease in the price of bread 
C) a decrease in the price of corn 
D) an increase in land prices 
E) an expectation that the price of wheat will be higher next period 
A) an increase in fertilizer costs 
B) a decrease in the price of bread 
C) a decrease in the price of corn 
D) an increase in land prices 
E) an expectation that the price of wheat will be higher next period

Question 11

A demand curve usually has a

Accepted Answer

A) negative slope because price and quantity demanded are inversely related 
B) negative slope because as price rises, demand falls 
C) positive slope because price and quantity demanded are positively related 
D) positive slope because price and quantity demanded are inversely related 
E) slope of zero because there is no change along a demand curve when everything else is held constant 
A) negative slope because price and quantity demanded are inversely related 
B) negative slope because as price rises, demand falls 
C) positive slope because price and quantity demanded are positively related 
D) positive slope because price and quantity demanded are inversely related 
E) slope of zero because there is no change along a demand curve when everything else is held constant

Question 12

Exhibit 4-8   
-Refer to Exhibit 4-8. A shift from demand curve D to demand curve D' would be caused by a(n)

Accepted Answer

A) decrease in the price of the product under consideration 
B) significant decrease in population because of emigration 
C) increase in consumer income 
D) decrease in the number of producers of the product 
E) increase in the price of a relevant resource 
A) decrease in the price of the product under consideration 
B) significant decrease in population because of emigration 
C) increase in consumer income 
D) decrease in the number of producers of the product 
E) increase in the price of a relevant resource

Question 13

If the tea harvest is bad in a particular year, the supply of tea will

Accepted Answer

A) decrease, its price will decrease, and the quantity demanded of coffee will increase 
B) decrease, its price will increase, and the quantity demanded of coffee will increase 
C) decrease, its price will increase, and the quantity demanded of coffee will decrease 
D) decrease, its price will decrease, and the quantity demanded of coffee will decrease 
E) increase, its price will increase, and the quantity demanded of coffee will increase 
A) decrease, its price will decrease, and the quantity demanded of coffee will increase 
B) decrease, its price will increase, and the quantity demanded of coffee will increase 
C) decrease, its price will increase, and the quantity demanded of coffee will decrease 
D) decrease, its price will decrease, and the quantity demanded of coffee will decrease 
E) increase, its price will increase, and the quantity demanded of coffee will increase

Question 14

Exhibit 4-13   
-Refer to exhibit 4-13. An increase in the number of firms producing baby formula will cause which of the following to happen?

Accepted Answer

A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2 
A) a movement from a to b along supply curve S1 
B) supply shift from S1 to S2 
C) movement from c to d along supply curve S2 
D) supply shift from S2 to S1 
E) movement from d to c along supply curve S2

Question 15

A surplus occurs whenever

Accepted Answer

A) current price is greater than equilibrium price 
B) quantity supplied exceeds quantity demanded at the equilibrium price 
C) quantity demanded is greater than quantity supplied 
D) the problem of scarcity of a good is solved 
E) some buyers would be willing and able to pay even more for it than they have to at equilibrium 
A) current price is greater than equilibrium price 
B) quantity supplied exceeds quantity demanded at the equilibrium price 
C) quantity demanded is greater than quantity supplied 
D) the problem of scarcity of a good is solved 
E) some buyers would be willing and able to pay even more for it than they have to at equilibrium

Question 16

Which of the following is the best example of substitutes?

Accepted Answer

A) coffee and cream 
B) videotapes and VCRs 
C) money and biscuits 
D) tortillas and salsa 
E) hiking boots and athletic shoes 
A) coffee and cream 
B) videotapes and VCRs 
C) money and biscuits 
D) tortillas and salsa 
E) hiking boots and athletic shoes

Question 17

Which of the following is correct when a price is set below a market's equilibrium price?

Accepted Answer

A) quantity demanded exceeds quantity supplied at the set price 
B) quantity demanded is less than quantity supplied at the set price 
C) quantity demanded is equal to quantity supplied at the set price 
D) at the set price there is a surplus 
E) the market price is less than the ceiling price 
A) quantity demanded exceeds quantity supplied at the set price 
B) quantity demanded is less than quantity supplied at the set price 
C) quantity demanded is equal to quantity supplied at the set price 
D) at the set price there is a surplus 
E) the market price is less than the ceiling price

Question 18

Suppose demand decreases and supply decreases. Which of the following will happen?

Accepted Answer

A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change 
A) equilibrium price will increase 
B) equilibrium price will decrease 
C) equilibrium quantity will increase 
D) equilibrium quantity will decrease 
E) neither the equilibrium price nor the quantity will change

Question 19

The substitution effect of a change in the price of bananas refers to the way in which a change in the

Accepted Answer

A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas 
A) price of a substitute affects the demand for bananas 
B) price of bananas affects the ability to buy them 
C) relative price of bananas changes demand for them 
D) relative price of bananas changes the quantity demanded of bananas 
E) price of a substitute affects the quantity demanded of bananas

Question 20

Which of the following best defines supply?

Accepted Answer

A) the amount of a good that producers want to sell at a particular price 
B) the amount of a good that consumers will buy 
C) the amount of a good that producers are willing and able to sell at each possible price, other things constant 
D) the amount of a good that producers are willing to sell at each possible price, other things constant 
E) the amount of a good that producers are willing and able to buy at each possible price, other things constant 
A) the amount of a good that producers want to sell at a particular price 
B) the amount of a good that consumers will buy 
C) the amount of a good that producers are willing and able to sell at each possible price, other things constant 
D) the amount of a good that producers are willing to sell at each possible price, other things constant 
E) the amount of a good that producers are willing and able to buy at each possible price, other things constant

Exam 4: Demand Supply and Markets

The demand curve for spinach shows the quantity demanded of spinach

If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause

Economists emphasize the importance of equilibrium in markets because

The arrival of Michael Jordan, Larry Bird, and Magic Johnson in the 1980s increased the popularity of pro basketball. This led to

If the demand for bicycles increases,

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect

As the price of ballpoint pens increases, the demand for felt-tip pens can be expected to decrease.

A decrease in supply will cause a(n)

Suppliers recognize there is a shortage in the market for their product when they notice that

Which of the following would cause an increase in the supply of wheat?

A demand curve usually has a

Exhibit 4-8 -Refer to Exhibit 4-8. A shift from demand curve D to demand curve D' would be caused by a(n)

If the tea harvest is bad in a particular year, the supply of tea will

Exhibit 4-13 -Refer to exhibit 4-13. An increase in the number of firms producing baby formula will cause which of the following to happen?

A surplus occurs whenever

Which of the following is the best example of substitutes?

Which of the following is correct when a price is set below a market's equilibrium price?

Suppose demand decreases and supply decreases. Which of the following will happen?

The substitution effect of a change in the price of bananas refers to the way in which a change in the

Which of the following best defines supply?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

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