Question 1

Suppose roses are currently selling for $40.00 per dozen. The equilibrium price of roses is $30.00 per dozen. What would we expect?

Accepted Answer

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

Question 2

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers 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 D

Question 3

You lose your job and as a result, you buy fewer mystery books. What does this show that you consider mystery books to be?

Accepted Answer

A) a normal good 
B) an inferior good 
C) a luxury good 
D) a complementary good 
A) a normal good 
B) an inferior good 
C) a luxury good 
D) a complementary good A

Question 4

An increase in the price of pizza will shift the demand curve for pizza to the left.

Accepted Answer

A) True 
 B)False

Question 5

Figure 4-7  
-Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

Accepted Answer

A) It would decrease. 
B) It would increase. 
C) It would be unaffected. 
D) There is insufficient information given to answer the question. 
A) It would decrease. 
B) It would increase. 
C) It would be unaffected. 
D) There is insufficient information given to answer the question.

Question 6

This question deals with demand and supply and refers you to the table below.
a.Given the table, graph the demand and supply curves for flashlights. Make certain to label equilibrium price and equilibrium quantity.PriceQuantity Demanded/MonthQuantity Supplied/Month$56,00010,000$48,0008,000$310,0006,000$212,0004,000$114,0002,000
b.What is the equilibrium price and equilibrium quantity?
c.Suppose the price is currently at $5. What problem would exist in the economy? What would you expect to happen to price? Show this on your graph.
d.Suppose the price is currently $2. What problem exists in the economy? What would you expect to happen to price? Show this on your graph.

Accepted Answer

a. @#IMG-DLM& b.Equilibrium price would be $4 and

Question 7

Figure 4-4  
-Refer to Figure 4-4. If the price is $25, what would the quantity demanded be?

Accepted Answer

A) 400 
B) 500 
C) 600 
D) 800 
A) 400 
B) 500 
C) 600 
D) 800

Question 8

If the price of a substitute to good X increases, what will happen?

Accepted Answer

A) Demand for good X will decrease. 
B) Market price of good X will decrease. 
C) Demand for good X will increase. 
D) Quantity demanded for good X will increase. 
A) Demand for good X will decrease. 
B) Market price of good X will decrease. 
C) Demand for good X will increase. 
D) Quantity demanded for good X will increase.

Question 9

To find the market demand for a product, how are individual demand curves summed?

Accepted Answer

A) vertically 
B) diagonally 
C) horizontally 
D) by averaging 
A) vertically 
B) diagonally 
C) horizontally 
D) by averaging

Question 10

What is market demand?

Accepted Answer

A) It is a vertical summation of individual demand curves. 
B) It is a horizontal summation of individual demand curves. 
C) It is not responsive to change in tastes and preferences. 
D) It is determined solely by the number of buyers and sellers in the market. 
A) It is a vertical summation of individual demand curves. 
B) It is a horizontal summation of individual demand curves. 
C) It is not responsive to change in tastes and preferences. 
D) It is determined solely by the number of buyers and sellers in the market.

Question 11

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A) price will be $25 and quantity will be 50 
B) price will be $40 and quantity will be 30 
C) price will be $30 and quantity will be 40 
D) price will be $35 and quantity will be 30 
A) price will be $25 and quantity will be 50 
B) price will be $40 and quantity will be 30 
C) price will be $30 and quantity will be 40 
D) price will be $35 and quantity will be 30

Question 12

Suppose you make jewellery. If the price of gold falls, what would we expect you to do?

Accepted Answer

A) be willing and able to produce less jewellery than before at each possible price 
B) be willing and able to produce more jewellery than before at each possible price 
C) face a greater demand for your jewellery 
D) face a weaker demand for your jewellery 
A) be willing and able to produce less jewellery than before at each possible price 
B) be willing and able to produce more jewellery than before at each possible price 
C) face a greater demand for your jewellery 
D) face a weaker demand for your jewellery

Question 13

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also a reduction in input prices. What would we expect to occur in this market?

Accepted Answer

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

Question 14

Figure 4-7  
-Refer to Figure 4-7. What would cause the movement from point B to point A on the graph?

Accepted Answer

A) an increase in price 
B) a decrease in price 
C) a decrease in the price of a substitute good 
D) an increase in income 
A) an increase in price 
B) a decrease in price 
C) a decrease in the price of a substitute good 
D) an increase in income

Question 15

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Accepted Answer

A) True 
 B)False

Question 16

Which chain of events occurs in the correct order?

Accepted Answer

A) quantity supplied increases, price increases, demand increases 
B) price increases, demand increases, quantity supplied increases 
C) demand increases, price increases, quantity supplied increases 
D) demand increases, quantity supplied increases, price increases. 
A) quantity supplied increases, price increases, demand increases 
B) price increases, demand increases, quantity supplied increases 
C) demand increases, price increases, quantity supplied increases 
D) demand increases, quantity supplied increases, price increases.

Question 17

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?

Accepted Answer

A) complementary goods 
B) normal goods 
C) inferior goods 
D) substitute goods 
A) complementary goods 
B) normal goods 
C) inferior goods 
D) substitute goods

Question 18

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) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

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 increase 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 increase and the effect on price is ambiguous

Question 19

What impact does a person's expectations about the future have?

Accepted Answer

A) cannot affect demand because expectations change 
B) can affect future demand 
C) can affect current demand 
D) cannot shift a demand curve 
A) cannot affect demand because expectations change 
B) can affect future demand 
C) can affect current demand 
D) cannot shift a demand curve

Question 20

What is a market?

Accepted Answer

A) a group of demanders and suppliers of a particular good or service 
B) a group of people with common desires 
C) a place where only sellers meet 
D) a place where only buyers come together 
A) a group of demanders and suppliers of a particular good or service 
B) a group of people with common desires 
C) a place where only sellers meet 
D) a place where only buyers come together

Suppose roses are currently selling for $40.00 per dozen. The equilibrium price of roses is $30.00 per dozen. What would we expect?

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

You lose your job and as a result, you buy fewer mystery books. What does this show that you consider mystery books to be?

An increase in the price of pizza will shift the demand curve for pizza to the left.

Figure 4-7 -Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

Figure 4-4 -Refer to Figure 4-4. If the price is $25, what would the quantity demanded be?

If the price of a substitute to good X increases, what will happen?

To find the market demand for a product, how are individual demand curves summed?

What is market demand?

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Suppose you make jewellery. If the price of gold falls, what would we expect you to do?

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also a reduction in input prices. What would we expect to occur in this market?

Figure 4-7 -Refer to Figure 4-7. What would cause the movement from point B to point A on the graph?

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Which chain of events occurs in the correct order?

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?

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) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

What impact does a person's expectations about the future have?

What is a market?

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 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

Suppose roses are currently selling for $40.00 per dozen. The equilibrium price of roses is $30.00 per dozen. What would we expect?

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

You lose your job and as a result, you buy fewer mystery books. What does this show that you consider mystery books to be?

An increase in the price of pizza will shift the demand curve for pizza to the left.

Figure 4-7 -Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

Figure 4-4 -Refer to Figure 4-4. If the price is $25, what would the quantity demanded be?

If the price of a substitute to good X increases, what will happen?

To find the market demand for a product, how are individual demand curves summed?

What is market demand?

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Suppose you make jewellery. If the price of gold falls, what would we expect you to do?

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also a reduction in input prices. What would we expect to occur in this market?

Figure 4-7 -Refer to Figure 4-7. What would cause the movement from point B to point A on the graph?

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Which chain of events occurs in the correct order?

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?

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) increased, more firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

What impact does a person's expectations about the future have?

What is a market?

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 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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