Question 1

Sugar price supports primarily benefit consumers.

Accepted Answer

A) True 
 B)False

Question 2

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Accepted Answer

A) True 
 B)False

Question 3

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 4

As more firms are attracted to an industry,the supply curve can be expected to shift to the right.

Accepted Answer

A) True 
 B)False

Question 5

At equilibrium,the market will clear,with no surpluses or shortages occurring.

Accepted Answer

A) True 
 B)False

Question 6

A supply schedule shows

Accepted Answer

A) the "market potential" for a product. 
B) how much producers are willing and able to sell at different prices. 
C) possible combinations of output under different conditions. 
D) how much consumers would like to buy at different prices. 
E) All of the above are correct. 
A) the "market potential" for a product. 
B) how much producers are willing and able to sell at different prices. 
C) possible combinations of output under different conditions. 
D) how much consumers would like to buy at different prices. 
E) All of the above are correct.

Question 7

Technological advances shift the supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 8

Assuming that resources are specialized,the opportunity cost of an item increases as production of it rises.Therefore,we expect that firms will produce more if

Accepted Answer

A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases. 
A) the price increases. 
B) the price decreases. 
C) the opportunity cost is greater than the price. 
D) government asks firms to produce more. 
E) the income of buyers increases.

Question 9

Lines,ration coupons,and black markets are symptoms of a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy. 
A) price floor. 
B) price ceiling. 
C) free market. 
D) barter economy.

Question 10

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

Accepted Answer

A) the supply curve will shift to the left. 
B) the supply curve will remain constant. 
C) the supply curve will shift to the right. 
D) the demand curve will shift to the right. 
A) the supply curve will shift to the left. 
B) the supply curve will remain constant. 
C) the supply curve will shift to the right. 
D) the demand curve will shift to the right.

Question 11

Figure 4-5
  
-If the suppliers of a good will sell any amount at $30 but there are no sales,then the market can best be represented by which graph in Figure 4-5?

Accepted Answer

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

Question 12

Figure 4-4
  
-Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice 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 13

Draw a graph of a market in equilibrium.Describe what might cause a change in demand or supply and how this would affect the diagram.Indicate how the equilibrium price and quantity will change.

Accepted Answer

The (completed)diagram should look like

Question 14

A typical supply curve has

Accepted Answer

A) slope equal to zero. 
B) slope equal to infinity. 
C) negative slope. 
D) positive slope. 
E) constant slope. 
A) slope equal to zero. 
B) slope equal to infinity. 
C) negative slope. 
D) positive slope. 
E) constant slope.

Question 15

Demand shifts due to changes in price.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4-4
  
-Assume that Figure 4-4 shows demand for MP3 players.An increase in the price of music downloads changes 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 17

The demand curve for a typical good has

Accepted Answer

A) a negative slope because some consumers switch to other goods as the price of the good rises. 
B) a negative slope because the supply of the good rises as demand rises. 
C) a negative slope because the good has less "snob appeal" as its price falls. 
D) an inverse slope because as the price goes up, the good has more profitability. 
E) a positive slope because price is a clear indicator of need. 
A) a negative slope because some consumers switch to other goods as the price of the good rises. 
B) a negative slope because the supply of the good rises as demand rises. 
C) a negative slope because the good has less "snob appeal" as its price falls. 
D) an inverse slope because as the price goes up, the good has more profitability. 
E) a positive slope because price is a clear indicator of need.

Question 18

A common misconception about supply is that

Accepted Answer

A) supply depends on many other variables. 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of the above are correct. 
A) supply depends on many other variables. 
B) price is a major determinant of quantity. 
C) it is a fixed amount. 
D) quantity cannot be determined in advance. 
E) All of the above are correct.

Question 19

Table 4-1
Use this table for the following questions.
 $\begin{array}{rrr}
&\text { Quantity }&\text { Quantity }\
\text {Price}&\text {Demanded}&\text {Supplied}\
\hline \$ 10 & 1,000 & 5,500 \
9 & 2,000 & 5,000 \
8 & 3,000 & 4,500 \
7 & 4,000 & 4,000 \
6 & 5,000 & 3,500 \
5 & 6,000 & 3,000 \
4 & 7,000 & 2,500 \
3 & 8,000 & 2,000 \
2 & 9,000 & 1,500 \
1 & 10,000 & 1,000
\end{array}$
-Refer to Table 4-1.What is the equilibrium price in the example above?

Accepted Answer

A) $9 
B) $8 
C) $7 
D) $6 
E) $5 
A) $9 
B) $8 
C) $7 
D) $6 
E) $5

Question 20

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result,we can expect

Accepted Answer

A) a decrease in price but no predictable change in output. 
B) a decrease in output but no predictable change in price. 
C) an increase in output but no predictable change in price. 
D) a predictable decrease in both output and price. 
A) a decrease in price but no predictable change in output. 
B) a decrease in output but no predictable change in price. 
C) an increase in output but no predictable change in price. 
D) a predictable decrease in both output and price.

Exam 4: Supply and Demand: An Initial Look

Sugar price supports primarily benefit consumers.

Black-market prices are below equilibrium prices because sellers want to sell large quantities.

Price controls usually enhance efficiency in the allocation of resources.

As more firms are attracted to an industry,the supply curve can be expected to shift to the right.

At equilibrium,the market will clear,with no surpluses or shortages occurring.

A supply schedule shows

Technological advances shift the supply curve rightward.

Assuming that resources are specialized,the opportunity cost of an item increases as production of it rises.Therefore,we expect that firms will produce more if

Lines,ration coupons,and black markets are symptoms of a

The price of one good produced by a multiproduct industry rises.For another good produced by that industry

Figure 4-5 -If the suppliers of a good will sell any amount at $30 but there are no sales,then the market can best be represented by which graph in Figure 4-5?

Figure 4-4 -Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice will change demand from

Draw a graph of a market in equilibrium.Describe what might cause a change in demand or supply and how this would affect the diagram.Indicate how the equilibrium price and quantity will change.

A typical supply curve has

Demand shifts due to changes in price.

Figure 4-4 -Assume that Figure 4-4 shows demand for MP3 players.An increase in the price of music downloads changes demand from

The demand curve for a typical good has

A common misconception about supply is that

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result,we can expect

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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