Question 1

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

Question 2

Tampering with the price mechanism

Accepted Answer

A) can be efficient for a while. 
B) cannot be attempted in a market economy. 
C) can enhance societal welfare if done properly. 
D) often produces undesired side effects.

Question 3

Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist.Why does this occur?

Accepted Answer

A) Many people do not understand the effects that controls cause. 
B) Property owners are politically unpopular. 
C) Many persons tend to benefit from rent controls. 
D) All of the above are correct.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Why does quantity demanded decrease when price increases?

Accepted Answer

A) People choose to reduce consumption of the item. 
B) People "drop out" of the market for the item. 
C) People find substitutes for the item. 
D) All of the above are correct.

Question 6

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.

Question 7

Figure 4-20 
-If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph in Figure 4-20?

Accepted Answer

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

Question 8

A demand schedule shows the time over which different quantities will be demanded.

Accepted Answer

A) True 
 B)False

Question 9

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

Accepted Answer

A) rightward shifts in the demand curve in the summer. 
B) a rightward shift in demand in the winter. 
C) leftward shifts in the supply curve in the summer. 
D) a leftward shift in demand in the winter.

Question 10

As price increases, additional suppliers are willing to produce a commodity.

Accepted Answer

A) True 
 B)False

Question 11

A cold winter will increase the quantity of heating fuel demanded at every price.

Accepted Answer

A) True 
 B)False

Question 12

The quantity of Blu-Ray players purchased declined in spite of a decline in price.This implies that the

Accepted Answer

A) supply curve for Blu-Ray players shifted to the left. 
B) demand curve for Blu-Ray players shifted to the right. 
C) demand curve for Blu-Ray players shifted to the left. 
D) supply curve for Blu-Ray players shifted to the right.

Question 13

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal, it is consistent that

Accepted Answer

A) the price of a substitute good fell. 
B) the price of a complement rose. 
C) income rose. 
D) costs of inputs increased.

Question 14

Figure 4-21 
-A surplus will tend to occur at which price in Figure 4-21?

Accepted Answer

A) P1 
B) P2 
C) P3

Question 15

A supply curve slopes upward because quantity supplied is higher when price is higher.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would cause an increase in demand for Toyota automobiles?

Accepted Answer

A) an increase in the price of Toyota automobiles 
B) a decrease in the price of Toyota automobiles 
C) a decrease in the price of Honda automobiles 
D) an increase in the price of Honda automobiles

Question 17

Figure 4-13 
-The drug BGH (bovine growth hormone) dramatically increases the milk output of dairy cows.Farmers in Wisconsin, a big dairy state, vigorously oppose licensing the drug, fearing that excess supply and a consumer reaction on the purity of food issue will put many of them out of business.Which graph in Figure 4-13 best illustrates the farmers' fears?

Accepted Answer

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

Question 18

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.

Question 19

Rent controls are designed to protect consumers from high rents.

Accepted Answer

A) True 
 B)False

Question 20

The U.S.government banned cigarette advertising on radio and television after January, 1971.You would expect to find that after the ban took effect the price of magazine ads for

Accepted Answer

A) all goods fell. 
B) only cigarettes fell. 
C) all goods rose. 
D) only cigarettes rose.

Exam 4: Supply and Demand an Initial Look

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?

Tampering with the price mechanism

Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist.Why does this occur?

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

Why does quantity demanded decrease when price increases?

Price controls are usually enacted in response to

Figure 4-20 -If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph in Figure 4-20?

A demand schedule shows the time over which different quantities will be demanded.

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

As price increases, additional suppliers are willing to produce a commodity.

A cold winter will increase the quantity of heating fuel demanded at every price.

The quantity of Blu-Ray players purchased declined in spite of a decline in price.This implies that the

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal, it is consistent that

Figure 4-21 -A surplus will tend to occur at which price in Figure 4-21?

A supply curve slopes upward because quantity supplied is higher when price is higher.

Which of the following would cause an increase in demand for Toyota automobiles?

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

Rent controls are designed to protect consumers from high rents.

The U.S.government banned cigarette advertising on radio and television after January, 1971.You would expect to find that after the ban took effect the price of magazine ads for