Question 1

An increase in price will decrease demand.

Accepted Answer

A) True 
 B)False

Question 2

Figure 4-21
  
-At price P3 in Figure 4-21,what will tend to happen?

Accepted Answer

A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market. 
A) There will be a shortage, and the price will fall. 
B) There will be a shortage, and the price will rise. 
C) There will be a surplus, and the price will rise. 
D) There will be a surplus, and the price will fall. 
E) Equilibrium will occur in the market.

Question 3

Rent controls encourage investment in housing because they bring stability to the market.

Accepted Answer

A) True 
 B)False

Question 4

If price rises,what happens to demand for a product?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question.

Question 5

At an equilibrium price for gasoline,

Accepted Answer

A) everyone with the desire and the income to buy gasoline at that price can do so. 
B) surpluses are inevitable. 
C) inherent market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available. 
A) everyone with the desire and the income to buy gasoline at that price can do so. 
B) surpluses are inevitable. 
C) inherent market forces will eventually change the quantities demanded and supplied. 
D) suppliers must be using the most efficient oil-drilling equipment available.

Question 6

Figure 4-16
  
-Assume that Figure 4-16 shows the supply of orange juice.A decrease in the wage rate paid to workers in the orange juice industry will shift supply from

Accepted Answer

A) S1 to S2. 
B) S2 to S1. 
C) S3 to S2. 
D) S3 to S1. 
A) S1 to S2. 
B) S2 to S1. 
C) S3 to S2. 
D) S3 to S1.

Question 7

Sugar price supports ensure an abundance of sugar,and hence reasonable prices for consumers.

Accepted Answer

A) True 
 B)False

Question 8

Price floors are typically accompanied by a standard series of symptoms.What are they?

Accepted Answer

Following are some of the symptoms assoc

Question 9

The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

Accepted Answer

A) raise the world price of gold to pay for the new machinery. 
B) lower the world price of gold because any amount can now be produced more cheaply. 
C) raise the world price of gold because miners' wages must double as their productivity doubles. 
D) lower the world price of gold only if new mining companies are not allowed to enter the industry. 
A) raise the world price of gold to pay for the new machinery. 
B) lower the world price of gold because any amount can now be produced more cheaply. 
C) raise the world price of gold because miners' wages must double as their productivity doubles. 
D) lower the world price of gold only if new mining companies are not allowed to enter the industry.

Question 10

The supply curve shows

Accepted Answer

A) the same basic information as the demand curve. 
B) who will have an opportunity to produce or purchase an item. 
C) the quantity produced as a function of the price. 
D) plots of what quantities have been sold over the past few weeks or months. 
A) the same basic information as the demand curve. 
B) who will have an opportunity to produce or purchase an item. 
C) the quantity produced as a function of the price. 
D) plots of what quantities have been sold over the past few weeks or months.

Question 11

An increase in price will increase supply.

Accepted Answer

A) True 
 B)False

Question 12

How much the quantity of a good traded changes after a shift of the supply curve depends on

Accepted Answer

A) the size of the shift. 
B) the slope of the demand curve. 
C) whether the market is subject to price controls. 
D) All of the above are correct. 
A) the size of the shift. 
B) the slope of the demand curve. 
C) whether the market is subject to price controls. 
D) All of the above are correct.

Question 13

During the American Revolution,the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was

Accepted Answer

A) a large increase in the availability of those items, ending shortages. 
B) a severe shortage of those essential commodities. 
C) an increase in the price of those items, thus alleviating shortages. 
D) new efforts to increase production of those commodities. 
E) a minor inconvenience as persons adjusted to the new law. 
A) a large increase in the availability of those items, ending shortages. 
B) a severe shortage of those essential commodities. 
C) an increase in the price of those items, thus alleviating shortages. 
D) new efforts to increase production of those commodities. 
E) a minor inconvenience as persons adjusted to the new law.

Question 14

If new manufacturers enter the computer industry,then,holding all other things constant,

Accepted Answer

A) each "old" manufacturer must sell fewer computers than before. 
B) some "old" manufacturers must exit the industry. 
C) the equilibrium price of computers must rise. 
D) the equilibrium quantity demanded of computers must rise. 
A) each "old" manufacturer must sell fewer computers than before. 
B) some "old" manufacturers must exit the industry. 
C) the equilibrium price of computers must rise. 
D) the equilibrium quantity demanded of computers must rise.

Question 15

Figure 4-20
  
-The presence of scalpers (people selling tickets at a price above the quoted price,P*)at a recent Super Bowl game suggests that the market for stadium seats could be represented by which graph in Figure 4-20?

Accepted Answer

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

Question 16

If orange juice prices double next year,there will be a

Accepted Answer

A) rightward shift in the demand for grapefruit juice. 
B) rightward shift in the supply of grapefruit juice. 
C) leftward shift in the supply of grapefruit juice. 
D) leftward shift in the demand for grapefruit juice. 
A) rightward shift in the demand for grapefruit juice. 
B) rightward shift in the supply of grapefruit juice. 
C) leftward shift in the supply of grapefruit juice. 
D) leftward shift in the demand for grapefruit juice.

Question 17

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question. 
A) It increases. 
B) It decreases. 
C) It does not change. 
D) Uncertain-economic theory has no answer to this question.

Question 18

Price controls are usually enacted in response to

Accepted Answer

A) popular opinion. 
B) governmental studies. 
C) scholarly research on the effects of high prices. 
D) laws enacted in other countries. 
E) All of the above are correct. 
A) popular opinion. 
B) governmental studies. 
C) scholarly research on the effects of high prices. 
D) laws enacted in other countries. 
E) All of the above are correct.

Question 19

Distinguish between scarcity and shortage.

Accepted Answer

Scarcity implies that people want more o

Question 20

Exhibit 4-1
The following are the equations for the supply and demand curves in the market for weezils:
 $\begin{array}{lccc}
  \text { Demand } & Q_{d}=20-2 F  \
 \text { Supply:} &  \mathrm{Q}_{s}=5+3 \mathrm{P} 
\end{array}$

where QS1U1B1dS1U1B0 is the quantity demanded, QS1U1B1sS1U1B0 is the quantity supplied, and P is the price per weezil in dollars.
-Refer to Exhibit 4-1.If the government imposes a price floor of $4 a weezil,how many weezils will be sold?

Accepted Answer

A) 5 
B) 10 
C) 12 
D) 14 
A) 5 
B) 10 
C) 12 
D) 14

Exam 4: Supply and Demand: An Initial Look

An increase in price will decrease demand.

Figure 4-21 -At price P3 in Figure 4-21,what will tend to happen?

Rent controls encourage investment in housing because they bring stability to the market.

If price rises,what happens to demand for a product?

At an equilibrium price for gasoline,

Figure 4-16 -Assume that Figure 4-16 shows the supply of orange juice.A decrease in the wage rate paid to workers in the orange juice industry will shift supply from

Sugar price supports ensure an abundance of sugar,and hence reasonable prices for consumers.

Price floors are typically accompanied by a standard series of symptoms.What are they?

The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

The supply curve shows

An increase in price will increase supply.

How much the quantity of a good traded changes after a shift of the supply curve depends on

During the American Revolution,the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was

If new manufacturers enter the computer industry,then,holding all other things constant,

Figure 4-20 -The presence of scalpers (people selling tickets at a price above the quoted price,P*)at a recent Super Bowl game suggests that the market for stadium seats could be represented by which graph in Figure 4-20?

If orange juice prices double next year,there will be a

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

Price controls are usually enacted in response to

Distinguish between scarcity and shortage.

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

Figure 4-21 -At price P₃ in Figure 4-21,what will tend to happen?