Question 1

Economists emphasize the importance of equilibrium in markets because

Accepted Answer

A) trading in markets can only occur at the equilibrium price and quantity 
B) the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity 
C) all buyers and sellers are better off at the equilibrium point than any other price and quantity combination 
D) it represents a compromise between sellers hoping for low prices and buyers searching for high prices 
E) it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service 
A) trading in markets can only occur at the equilibrium price and quantity 
B) the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity 
C) all buyers and sellers are better off at the equilibrium point than any other price and quantity combination 
D) it represents a compromise between sellers hoping for low prices and buyers searching for high prices 
E) it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service B

Question 2

Exhibit 4-2
  
-Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D' to D?

Accepted Answer

A) an increase in the price of a substitute good 
B) an increase in the number of consumers 
C) a decrease in the price of a complementary good 
D) a decline in consumers' incomes if it is a normal good 
E) an increase in consumers' incomes if it is a normal good 
A) an increase in the price of a substitute good 
B) an increase in the number of consumers 
C) a decrease in the price of a complementary good 
D) a decline in consumers' incomes if it is a normal good 
E) an increase in consumers' incomes if it is a normal good D

Question 3

Which of the following will not shift the demand curve for movie tickets?

Accepted Answer

A) a change in the cost of babysitting services 
B) a change in the price of movie tickets 
C) a change in the quality of television programs 
D) a change in the income of movie-goers 
E) a change in the number of consumers 
A) a change in the cost of babysitting services 
B) a change in the price of movie tickets 
C) a change in the quality of television programs 
D) a change in the income of movie-goers 
E) a change in the number of consumers B

Question 4

As the price of milk increases, producers are normally willing to supply greater quantities. This response is known as the law of

Accepted Answer

A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs 
A) supply 
B) demand 
C) averages 
D) variable proportions 
E) increasing costs

Question 5

The sum of the individual demands of all consumers in the market is called

Accepted Answer

A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded 
A) individual demand 
B) market demand 
C) inferior good 
D) market supply 
E) quantity demanded

Question 6

Which of the following statements about markets is not true?

Accepted Answer

A) A market is an impersonal mechanism. 
B) Markets coordinate the independent decisions of buyers and sellers. 
C) Markets reduce the transaction costs of exchange. 
D) More specialized markets are generally found in urban areas. 
E) All markets provide the same amounts of information. 
A) A market is an impersonal mechanism. 
B) Markets coordinate the independent decisions of buyers and sellers. 
C) Markets reduce the transaction costs of exchange. 
D) More specialized markets are generally found in urban areas. 
E) All markets provide the same amounts of information.

Question 7

Which of the following would not cause the demand curve for peaches to shift?

Accepted Answer

A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers 
A) an increase in the price of apricots 
B) a decrease in the price of nectarines 
C) an increase in the price of peaches 
D) a change in preferences for peaches 
E) a decrease in the income of peach buyers

Question 8

The effect of an increase in consumer income on equilibrium price and quantity of Florida orange juice (a normal good) is

Accepted Answer

A) to increase equilibrium price and quantity 
B) to decrease equilibrium price and quantity 
C) to increase equilibrium price and decrease equilibrium quantity 
D) to increase equilibrium quantity and decrease equilibrium price 
E) that equilibrium price and quantity remain constant 
A) to increase equilibrium price and quantity 
B) to decrease equilibrium price and quantity 
C) to increase equilibrium price and decrease equilibrium quantity 
D) to increase equilibrium quantity and decrease equilibrium price 
E) that equilibrium price and quantity remain constant

Question 9

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?

Accepted Answer

A) an increase in the number of new apartment complexes being built 
B) long waiting lists for apartment seekers 
C) lower maintenance of existing apartments 
D) conversion of some apartment complexes to condos 
E) a shortage 
A) an increase in the number of new apartment complexes being built 
B) long waiting lists for apartment seekers 
C) lower maintenance of existing apartments 
D) conversion of some apartment complexes to condos 
E) a shortage

Question 10

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Accepted Answer

A) equilibrium price will fall and equilibrium quantity will rise 
B) equilibrium price will rise and equilibrium quantity will fall 
C) equilibrium price will rise and equilibrium quantity will rise 
D) equilibrium price will fall and equilibrium quantity will fall 
E) neither equilibrium price nor equilibrium quantity will change 
A) equilibrium price will fall and equilibrium quantity will rise 
B) equilibrium price will rise and equilibrium quantity will fall 
C) equilibrium price will rise and equilibrium quantity will rise 
D) equilibrium price will fall and equilibrium quantity will fall 
E) neither equilibrium price nor equilibrium quantity will change

Question 11

An increase in the demand for peanut butter could be caused by a(n)

Accepted Answer

A) decrease in consumer income 
B) increase in the supply of peanut butter 
C) decrease in the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) decrease in the price of bologna 
A) decrease in consumer income 
B) increase in the supply of peanut butter 
C) decrease in the price of bread 
D) drought in Georgia that destroyed 30 percent of the peanut crop 
E) decrease in the price of bologna

Question 12

Exhibit 4-13
  
-Refer to exhibit 4-13. The development of more efficient production technologies for baby formula will cause which of the following to happen?

Accepted Answer

A) supply shift from S1 to S2 
B) movement from a to b on supply curve S1 
C) supply shift from S2 to S1 
D) movement from c to d on supply curve S2 
E) movement from b to a on supply curve S1 
A) supply shift from S1 to S2 
B) movement from a to b on supply curve S1 
C) supply shift from S2 to S1 
D) movement from c to d on supply curve S2 
E) movement from b to a on supply curve S1

Question 13

As the baby boom ended, fewer families had young children and, as a consequence, the

Accepted Answer

A) demand curve for preschool services shifted outward 
B) demand curve for preschool services shifted inward 
C) supply curve for preschool services shifted outward 
D) supply curve for preschool services shifted inward 
E) supply and demand curves for preschool services remained constant 
A) demand curve for preschool services shifted outward 
B) demand curve for preschool services shifted inward 
C) supply curve for preschool services shifted outward 
D) supply curve for preschool services shifted inward 
E) supply and demand curves for preschool services remained constant

Question 14

Which of the following would not shift the demand curve for pork?

Accepted Answer

A) an increase in the price of beef 
B) an increase in the price of pork 
C) an increase in the incomes of pork consumers 
D) a widespread advertising campaign for pork 
E) a finding that consumption of beef increases the risk of heart attack 
A) an increase in the price of beef 
B) an increase in the price of pork 
C) an increase in the incomes of pork consumers 
D) a widespread advertising campaign for pork 
E) a finding that consumption of beef increases the risk of heart attack

Question 15

A price floor set below the equilibrium price will result in a surplus.

Accepted Answer

A) True 
 B)False

Question 16

A change in income will

Accepted Answer

A) affect the demand for candy through the income effect of a price change 
B) affect the quantity demanded of candy through the income effect of a price change 
C) shift the demand curve for candy 
D) have no effect on the demand for candy, because income is assumed constant along a demand curve 
E) affect quantity demanded only if candy is a normal good 
A) affect the demand for candy through the income effect of a price change 
B) affect the quantity demanded of candy through the income effect of a price change 
C) shift the demand curve for candy 
D) have no effect on the demand for candy, because income is assumed constant along a demand curve 
E) affect quantity demanded only if candy is a normal good

Question 17

An improvement in technology would shift

Accepted Answer

A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead, there is movement along both of them 
E) the supply curve rightward 
A) the demand curve leftward 
B) the demand curve rightward 
C) the supply curve leftward 
D) neither the supply nor the demand curve; instead, there is movement along both of them 
E) the supply curve rightward

Question 18

The arrival of Michael Jordan, Larry Bird, and Magic Johnson in the 1980s increased the popularity of pro basketball. This led to

Accepted Answer

A) an increase in the equilibrium quantity of professional basketball 
B) a decrease in the equilibrium quantity of professional basketball 
C) a decrease in the price of professional basketball tickets 
D) a decrease in pro basketball players' salaries 
E) an increase in the price of professional basketball tickets but no change in game attendance 
A) an increase in the equilibrium quantity of professional basketball 
B) a decrease in the equilibrium quantity of professional basketball 
C) a decrease in the price of professional basketball tickets 
D) a decrease in pro basketball players' salaries 
E) an increase in the price of professional basketball tickets but no change in game attendance

Question 19

A decrease in the price of peanut butter will cause a leftward shift of the supply curve of peanut butter.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 4-5
  
-In Exhibit 4-5, which of the following is true at the price ceiling, P?

Accepted Answer

A) The excess quantity supplied equals 300 gallons. 
B) The excess quantity demanded equals 300 gallons. 
C) The excess quantity supplied equals 500 gallons. 
D) The excess quantity demanded equals 800 gallons. 
E) Sales will be equal to 800 gallons. 
A) The excess quantity supplied equals 300 gallons. 
B) The excess quantity demanded equals 300 gallons. 
C) The excess quantity supplied equals 500 gallons. 
D) The excess quantity demanded equals 800 gallons. 
E) Sales will be equal to 800 gallons.

Exam 5: Demand, Supply, and Markets

Economists emphasize the importance of equilibrium in markets because

Exhibit 4-2 -Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D' to D?

Which of the following will not shift the demand curve for movie tickets?

As the price of milk increases, producers are normally willing to supply greater quantities. This response is known as the law of

The sum of the individual demands of all consumers in the market is called

Which of the following statements about markets is not true?

Which of the following would not cause the demand curve for peaches to shift?

The effect of an increase in consumer income on equilibrium price and quantity of Florida orange juice (a normal good) is

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

An increase in the demand for peanut butter could be caused by a(n)

Exhibit 4-13 -Refer to exhibit 4-13. The development of more efficient production technologies for baby formula will cause which of the following to happen?

As the baby boom ended, fewer families had young children and, as a consequence, the

Which of the following would not shift the demand curve for pork?

A price floor set below the equilibrium price will result in a surplus.

A change in income will

An improvement in technology would shift

The arrival of Michael Jordan, Larry Bird, and Magic Johnson in the 1980s increased the popularity of pro basketball. This led to

A decrease in the price of peanut butter will cause a leftward shift of the supply curve of peanut butter.

Exhibit 4-5 -In Exhibit 4-5, which of the following is true at the price ceiling, P?

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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