Question 1

Which of the following best defines supply?

Accepted Answer

A)  the amount of a good that producers want to sell at a particular price 
B)  the amount of a good that consumers will buy 
C)  the amount of a good that producers are willing and able to sell at each possible price, other things constant 
D)  the amount of a good that producers are willing to sell at each possible price, other things constant 
E)  the amount of a good that producers are willing and able to buy at each possible price, other things constant 
A)  the amount of a good that producers want to sell at a particular price 
B)  the amount of a good that consumers will buy 
C)  the amount of a good that producers are willing and able to sell at each possible price, other things constant 
D)  the amount of a good that producers are willing to sell at each possible price, other things constant 
E)  the amount of a good that producers are willing and able to buy at each possible price, other things constant C

Question 2

If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause

Accepted Answer

A)  the demand for beef cattle to increase, driving the price of beef upward 
B)  the supply of beef cattle to decline, driving the price of beef upward in the long run 
C)  the supply of beef to increase, placing downward pressure on the price of beef in the long run 
D)  both supply and demand to fall, leaving the price of beef virtually unchanged 
E)  the supply of beef to increase, driving the price of beef down and increasing demand 
A)  the demand for beef cattle to increase, driving the price of beef upward 
B)  the supply of beef cattle to decline, driving the price of beef upward in the long run 
C)  the supply of beef to increase, placing downward pressure on the price of beef in the long run 
D)  both supply and demand to fall, leaving the price of beef virtually unchanged 
E)  the supply of beef to increase, driving the price of beef down and increasing demand B

Question 3

Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?

Accepted Answer

A)  a rise in the price of milk (a complement) 
B)  a rise in consumer incomes 
C)  a rise in the price of cookie dough 
D)  a drop in the price of cookie dough 
E)  a rise in the price of crackers (a substitute) 
A)  a rise in the price of milk (a complement) 
B)  a rise in consumer incomes 
C)  a rise in the price of cookie dough 
D)  a drop in the price of cookie dough 
E)  a rise in the price of crackers (a substitute) A

Question 4

The impact of a $200 increase in income on quantity demanded would be called an income effect.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following might cause the demand for ice cream, a normal good, to increase?

Accepted Answer

A)  an increase in the price of ice cream 
B)  an increase in the price of sherbet 
C)  cooler weather 
D)  a decrease in the number of consumers 
E)  a decrease in consumer income 
A)  an increase in the price of ice cream 
B)  an increase in the price of sherbet 
C)  cooler weather 
D)  a decrease in the number of consumers 
E)  a decrease in consumer income

Question 6

Rent controls mean that tenants end up with the best possible housing choices over the long run.

Accepted Answer

A) True 
 B)False

Question 7

What is the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles?

Accepted Answer

A)  Both equilibrium price and equilibrium quantity rise. 
B)  Both equilibrium price and equilibrium quantity fall. 
C)  Equilibrium price rises and equilibrium quantity falls. 
D)  Equilibrium price falls and equilibrium quantity rises. 
E)  Both equilibrium price and equilibrium quantity remain unchanged. 
A)  Both equilibrium price and equilibrium quantity rise. 
B)  Both equilibrium price and equilibrium quantity fall. 
C)  Equilibrium price rises and equilibrium quantity falls. 
D)  Equilibrium price falls and equilibrium quantity rises. 
E)  Both equilibrium price and equilibrium quantity remain unchanged.

Question 8

When a market is in equilibrium,

Accepted Answer

A)  producers earn profits 
B)  the minimum possible price is achieved 
C)  there is no incentive for consumers or producers to change their current behavior 
D)  excess demand is less than excess supply 
E)  the maximum possible price is achieved 
A)  producers earn profits 
B)  the minimum possible price is achieved 
C)  there is no incentive for consumers or producers to change their current behavior 
D)  excess demand is less than excess supply 
E)  the maximum possible price is achieved

Question 9

If good B is a complement to good A, then a rise in the price of B

Accepted Answer

A)  increases the quantity demanded of A 
B)  decreases the demand for A 
C)  increases the demand for A 
D)  decreases the quantity demanded of A 
E)  will cause the demand for B to increase 
A)  increases the quantity demanded of A 
B)  decreases the demand for A 
C)  increases the demand for A 
D)  decreases the quantity demanded of A 
E)  will cause the demand for B to increase

Question 10

Tax preparation services and IRS tax publications can be considered substitutes.

Accepted Answer

A) True 
 B)False

Question 11

In the market for professional basketball,

Accepted Answer

A)  pro basketball teams are the suppliers and pro basketball players are the demanders 
B)  pro basketball players are the suppliers and basketball fans are the demanders 
C)  pro basketball players are the suppliers and pro basketball teams are the demanders 
D)  pro basketball teams are the suppliers and basketball fans are the demanders 
E)  basketball fans are the suppliers and pro basketball teams are the demanders 
A)  pro basketball teams are the suppliers and pro basketball players are the demanders 
B)  pro basketball players are the suppliers and basketball fans are the demanders 
C)  pro basketball players are the suppliers and pro basketball teams are the demanders 
D)  pro basketball teams are the suppliers and basketball fans are the demanders 
E)  basketball fans are the suppliers and pro basketball teams are the demanders

Question 12

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs. Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?

Accepted Answer

A)  an increase in the price of other kinds of candy 
B)  an increase in the price of the ingredients used to make chewing gum 
C)  a decrease in the number of young people in the population 
D)  an agreement by workers in the chewing gum industry to work for lower wages 
E)  an improvement in chewing gum production technology 
A)  an increase in the price of other kinds of candy 
B)  an increase in the price of the ingredients used to make chewing gum 
C)  a decrease in the number of young people in the population 
D)  an agreement by workers in the chewing gum industry to work for lower wages 
E)  an improvement in chewing gum production technology

Question 13

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  remain constant; increase 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  remain constant; increase

Question 14

The demand for a product is the amount that

Accepted Answer

A)  buyers purchase in the market 
B)  buyers are willing to purchase at a given price 
C)  sellers are willing to sell at a particular price 
D)  buyers are willing and able to purchase at alternative prices 
E)  buyers are able to purchase at a specific price 
A)  buyers purchase in the market 
B)  buyers are willing to purchase at a given price 
C)  sellers are willing to sell at a particular price 
D)  buyers are willing and able to purchase at alternative prices 
E)  buyers are able to purchase at a specific price

Question 15

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 16

The income effect of a decrease in the price of potatoes (an inferior good) is a(n)

Accepted Answer

A)  decrease in the demand for potatoes 
B)  decrease in the quantity demanded of potatoes 
C)  increase in the demand for potatoes 
D)  increase in the quantity demanded of potatoes 
E)  new demand curve because everything else is no longer constant 
A)  decrease in the demand for potatoes 
B)  decrease in the quantity demanded of potatoes 
C)  increase in the demand for potatoes 
D)  increase in the quantity demanded of potatoes 
E)  new demand curve because everything else is no longer constant

Question 17

Which of the following causes the supply of leather jackets to decrease?

Accepted Answer

A)  an increase in the price of leather jackets 
B)  an increase in the price of leather 
C)  a decrease in the price of zippers 
D)  an increase in the number of motorcycles 
E)  a decrease in consumer income 
A)  an increase in the price of leather jackets 
B)  an increase in the price of leather 
C)  a decrease in the price of zippers 
D)  an increase in the number of motorcycles 
E)  a decrease in consumer income

Question 18

A decrease in demand will result in a(n)

Accepted Answer

A)  increase in equilibrium price and quantity 
B)  decrease in equilibrium price and quantity 
C)  decrease in equilibrium price and an increase in equilibrium quantity 
D)  increase in equilibrium price and a decrease in equilibrium quantity 
E)  change in equilibrium price and quantity only if supply changes too 
A)  increase in equilibrium price and quantity 
B)  decrease in equilibrium price and quantity 
C)  decrease in equilibrium price and an increase in equilibrium quantity 
D)  increase in equilibrium price and a decrease in equilibrium quantity 
E)  change in equilibrium price and quantity only if supply changes too

Question 19

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Accepted Answer

A) True 
 B)False

Question 20

Other things equal, the supply of index cards is likely to be affected by all of the following except one. Which is the exception?

Accepted Answer

A)  the price of wood pulp used in the production of index cards 
B)  the technology in the index card production process 
C)  the price of index cards 
D)  the price of packaging material (a substitute in production) 
E)  the future price of index cards expected by producers 
A)  the price of wood pulp used in the production of index cards 
B)  the technology in the index card production process 
C)  the price of index cards 
D)  the price of packaging material (a substitute in production) 
E)  the future price of index cards expected by producers

Exam 4: Demand, Supply, and Markets

Which of the following best defines supply?

If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause

Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?

The impact of a $200 increase in income on quantity demanded would be called an income effect.

Which of the following might cause the demand for ice cream, a normal good, to increase?

Rent controls mean that tenants end up with the best possible housing choices over the long run.

What is the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles?

When a market is in equilibrium,

If good B is a complement to good A, then a rise in the price of B

Tax preparation services and IRS tax publications can be considered substitutes.

In the market for professional basketball,

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs. Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

The demand for a product is the amount that

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

The income effect of a decrease in the price of potatoes (an inferior good) is a(n)

Which of the following causes the supply of leather jackets to decrease?

A decrease in demand will result in a(n)

The substitution effect of a price change describes what happens to the shift in demand for a good when its price changes.

Other things equal, the supply of index cards is likely to be affected by all of the following except one. Which is the exception?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

A: Perfect Competition

B: Perfect Competition

A: Monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

An increase in supply will cause equilibrium price to and equilibrium quantity to .