Question 1

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4)and (78 billion quarts; $6).The line is most likely a

Accepted Answer

A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line. 
A) production possibilities frontier for milk. 
B) supply curve for milk. 
C) demand curve for milk. 
D) ray through the origin. 
E) time series line.

Question 3

A supply schedule can be plotted on a graph to yield a supply curve.

Accepted Answer

A) True 
 B)False

Question 4

Rent controls are designed to protect consumers from high rents.

Accepted Answer

A) True 
 B)False

Question 5

If demand increases,the equilibrium price and equilibrium quantity will both fall,everything else being equal.

Accepted Answer

A) True 
 B)False

Question 6

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

Accepted Answer

The example used in the text is rent con

Question 7

Which of the following will tend to occur if price floors are imposed on a product?

Accepted Answer

A) persistent surpluses 
B) problems of disposal of goods 
C) disguised discounts developing to eliminate excess production 
D) overinvestment in the industry 
E) All of the above are correct. 
A) persistent surpluses 
B) problems of disposal of goods 
C) disguised discounts developing to eliminate excess production 
D) overinvestment in the industry 
E) All of the above are correct.

Question 8

If the demand curve shifts outward and the supply curve remains the same,price will fall.

Accepted Answer

A) True 
 B)False

Question 9

A change in the income of buyers will normally change demand.

Accepted Answer

A) True 
 B)False

Question 10

Rent controls and controls on other prices often aggravate the very problem they are intended to solve.

Accepted Answer

A) True 
 B)False

Question 11

From 2007 to 2008,the Federal Reserve System reduced interest rates,the price that borrowers pay.As a result,economists expected demand for money to

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect. 
A) increase. 
B) decrease. 
C) not change. 
D) be influenced by the interest rate, but with an uncertain effect.

Question 12

Figure 4-2
  
-If the government has stated that it will buy any amount of good X offered at $30,which demand curve in Figure 4-2 is appropriate?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 13

Shortages normally accompany an effective price floor.

Accepted Answer

A) True 
 B)False

Question 14

Some hotels in Myrtle Beach,South Carolina charge over $200 a night in the summer but sometimes as little as $99 a night in the winter.Use supply and demand analysis,including graphical and verbal explanation,for these winter "sales."

Accepted Answer

Figure 4-26
 @#IMG-DLM&_TB1525_00_TB1525_00 A samp

Question 15

If supply increases,the equilibrium price will rise and the equilibrium quantity will fall.

Accepted Answer

A) True 
 B)False

Question 16

If the price of hamburger rises,we would expect the demand for steak to shift to the right.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4-8
  
-Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 18

A decrease in demand will have what effect on equilibrium price and quantity?

Accepted Answer

A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease. 
A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease.

Question 19

"The market has failed to provide enough rental housing in New York City.This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

Accepted Answer

An economist would disagree.The free mar

Question 20

Are markets always in equilibrium?

Accepted Answer

A) Yes, they are always at the equilibrium point, or very close to it. 
B) Yes, because few things tend to alter supply and demand. 
C) No, but if there is no interference, they tend to move toward equilibrium. 
D) No, they never "settle down" into a stable price and quantity. 
E) Uncertain, economic theory has no answer to this question. 
A) Yes, they are always at the equilibrium point, or very close to it. 
B) Yes, because few things tend to alter supply and demand. 
C) No, but if there is no interference, they tend to move toward equilibrium. 
D) No, they never "settle down" into a stable price and quantity. 
E) Uncertain, economic theory has no answer to this question.

Exam 4: Supply and Demand: An Initial Look

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4)and (78 billion quarts; $6).The line is most likely a

A supply schedule can be plotted on a graph to yield a supply curve.

Rent controls are designed to protect consumers from high rents.

If demand increases,the equilibrium price and equilibrium quantity will both fall,everything else being equal.

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

Which of the following will tend to occur if price floors are imposed on a product?

If the demand curve shifts outward and the supply curve remains the same,price will fall.

A change in the income of buyers will normally change demand.

Rent controls and controls on other prices often aggravate the very problem they are intended to solve.

From 2007 to 2008,the Federal Reserve System reduced interest rates,the price that borrowers pay.As a result,economists expected demand for money to

Figure 4-2 -If the government has stated that it will buy any amount of good X offered at $30,which demand curve in Figure 4-2 is appropriate?

Shortages normally accompany an effective price floor.

Some hotels in Myrtle Beach,South Carolina charge over $200 a night in the summer but sometimes as little as $99 a night in the winter.Use supply and demand analysis,including graphical and verbal explanation,for these winter "sales."

If supply increases,the equilibrium price will rise and the equilibrium quantity will fall.

If the price of hamburger rises,we would expect the demand for steak to shift to the right.

Figure 4-8 -Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

A decrease in demand will have what effect on equilibrium price and quantity?

"The market has failed to provide enough rental housing in New York City.This demonstrates another failure of free markets-they may lead to shortages of necessities." Explain why you agree or disagree.

Are markets always in equilibrium?

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

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