Question 1

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal,it is consistent that

Accepted Answer

A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased. 
A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased.

Question 2

If the price of a good is below the equilibrium price,

Accepted Answer

A) suppliers will find inventories building; they will cut output and raise prices. 
B) suppliers will find inventories being depleted. They will increase production and raise prices. 
C) the demand curve will shift down until an equilibrium is established at the existing price. 
D) the supply curve will shift up until an equilibrium is established at the existing price. 
A) suppliers will find inventories building; they will cut output and raise prices. 
B) suppliers will find inventories being depleted. They will increase production and raise prices. 
C) the demand curve will shift down until an equilibrium is established at the existing price. 
D) the supply curve will shift up until an equilibrium is established at the existing price.

Question 3

The cost of processors and memory has decreased dramatically in the past twenty-five years.As a result,we have seen

Accepted Answer

A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply. 
A) an increase in demand. 
B) an increase in supply. 
C) a decrease in demand. 
D) a decrease in supply.

Question 4

A shift of the demand curve for a good occurs whenever new technologies make inputs used in producing that good available at lower prices.

Accepted Answer

A) True 
 B)False

Question 5

The ____ the demand curve for a good,the ____ the change in equilibrium quantity after a shift of the supply curve.

Accepted Answer

A) flatter; greater 
B) flatter; smaller 
C) farther from the origin at every output level; greater 
D) farther from the origin at every output level; smaller 
A) flatter; greater 
B) flatter; smaller 
C) farther from the origin at every output level; greater 
D) farther from the origin at every output level; smaller

Question 6

If oranges and grapefruit are close substitutes,an increase in the price of oranges will shift the demand curve of

Accepted Answer

A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left. 
A) both products to the right. 
B) both products to the left. 
C) grapefruit to the right. 
D) oranges to the left.

Question 7

A black market develops only when quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-4
  
-Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers will change demand from

Accepted Answer

A) D1 to D2. 
B) D2 to D1. 
C) D2 to D3. 
D) D1 to D3. 
A) D1 to D2. 
B) D2 to D1. 
C) D2 to D3. 
D) D1 to D3.

Question 9

In early 1996,Congress proposed an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved,what would most likely happen to the number of families employed in agriculture?

Accepted Answer

A) It would decrease, because agricultural prices would fall. 
B) It would decrease, because agricultural prices would rise. 
C) It would increase, because agricultural prices would fall. 
D) It would increase, because agricultural prices would rise. 
A) It would decrease, because agricultural prices would fall. 
B) It would decrease, because agricultural prices would rise. 
C) It would increase, because agricultural prices would fall. 
D) It would increase, because agricultural prices would rise.

Question 10

As price increases,additional suppliers are willing to produce a commodity.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the price of gasoline shifts the demand for tires to the

Accepted Answer

A) left, because gasoline and tires are substitutes. 
B) left, because gasoline and tires are normally used together. 
C) right, because gasoline and tires are substitutes. 
D) right, because gasoline and tires are normally used together. 
A) left, because gasoline and tires are substitutes. 
B) left, because gasoline and tires are normally used together. 
C) right, because gasoline and tires are substitutes. 
D) right, because gasoline and tires are normally used together.

Question 12

A demand schedule is a table showing how the ____ of some product during a specified period of time changes as ____ changes,holding all other determinants of quantity demanded constant.

Accepted Answer

A) demand; the price of its complement 
B) demand; the quantity supplied 
C) quantity demanded; the price of its substitute 
D) quantity demanded; the price of that product 
A) demand; the price of its complement 
B) demand; the quantity supplied 
C) quantity demanded; the price of its substitute 
D) quantity demanded; the price of that product

Question 13

The quantity of newspapers sold will decline if

Accepted Answer

A) newsprint becomes more expensive. 
B) the printers' union makes wage concessions. 
C) prices are reduced. 
D) magazine prices rise. 
A) newsprint becomes more expensive. 
B) the printers' union makes wage concessions. 
C) prices are reduced. 
D) magazine prices rise.

Question 14

Change in the price of a good causes the demand schedule for that good to shift.

Accepted Answer

A) True 
 B)False

Question 15

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Accepted Answer

A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand. 
A) a shortage. 
B) a surplus. 
C) a black market. 
D) fewer producers of the good or service. 
E) a decrease in demand.

Question 16

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Accepted Answer

A) shortage, shortage 
B) surplus, surplus 
C) shortage, surplus 
D) surplus, shortage 
A) shortage, shortage 
B) surplus, surplus 
C) shortage, surplus 
D) surplus, shortage

Question 17

Why are sellers willing to sell more at a higher price?

Accepted Answer

Only at higher price will it be profitab

Question 18

When price is below the equilibrium level,there is a shortage of the commodity being sold.

Accepted Answer

A) True 
 B)False

Question 19

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to ____,and quantity sold to ____.

Accepted Answer

A) rise; rise. 
B) fall; fall. 
C) rise; fall. 
D) fall; remain the same. 
A) rise; rise. 
B) fall; fall. 
C) rise; fall. 
D) fall; remain the same.

Question 20

From 2007 to 2008,the Federal Reserve System reduced interest rates,the price which borrowers pay.As a result,economists expected that the quantity of money supplied would

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) Uncertain-economic theory has no answer to this question. 
A) increase. 
B) decrease. 
C) not change. 
D) Uncertain-economic theory has no answer to this question.

Exam 4: Supply and Demand: An Initial Look

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal,it is consistent that

If the price of a good is below the equilibrium price,

The cost of processors and memory has decreased dramatically in the past twenty-five years.As a result,we have seen

A shift of the demand curve for a good occurs whenever new technologies make inputs used in producing that good available at lower prices.

The ____ the demand curve for a good,the ____ the change in equilibrium quantity after a shift of the supply curve.

If oranges and grapefruit are close substitutes,an increase in the price of oranges will shift the demand curve of

A black market develops only when quantity demanded exceeds quantity supplied.

Figure 4-4 -Assume that Figure 4-4 shows demand for new houses.A decrease in income of buyers will change demand from

In early 1996,Congress proposed an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved,what would most likely happen to the number of families employed in agriculture?

As price increases,additional suppliers are willing to produce a commodity.

An increase in the price of gasoline shifts the demand for tires to the

A demand schedule is a table showing how the ____ of some product during a specified period of time changes as ____ changes,holding all other determinants of quantity demanded constant.

The quantity of newspapers sold will decline if

Change in the price of a good causes the demand schedule for that good to shift.

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Why are sellers willing to sell more at a higher price?

When price is below the equilibrium level,there is a shortage of the commodity being sold.

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to ____,and quantity sold to ____.

From 2007 to 2008,the Federal Reserve System reduced interest rates,the price which borrowers pay.As a result,economists expected that the quantity of money supplied would

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production,Inputs,and Cost: Building Blocks for Supply Analysis

Output,Price,and Profit: The Importance of Marginal Analysis

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Filters

The the demand curve for a good,the the change in equilibrium quantity after a shift of the supply curve.

A demand schedule is a table showing how the of some product during a specified period of time changes as changes,holding all other determinants of quantity demanded constant.

A market will experience a when the price is above equilibrium and a when the price is below equilibrium.

Sugarcane can be used for producing both sugar and ethanol.New regulations in certain countries now allow a higher level of ethanol in gasoline.An economist would expect sugarcane prices to ,and quantity sold to .