Question 1

In January, 2,500 quarts of ice cream are sold in Boston at $2 a quart.In February, 3,000 quarts are sold at $2.50 a quart.This change in quantity sold and price may have been caused by

Accepted Answer

A) a reduction in wages in the Boston area. 
B) the introduction of labor-saving automated ice cream-packing machinery. 
C) the release of a medical study showing that ice cream consumption improves mental health. 
D) the decision by Boston ice cream sellers to eliminate discount coupons.

Question 2

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

Accepted Answer

A) True 
 B)False

Question 3

The demand for a textbook written by Schwarz and Mobley is Q = 20,000 − 50P; supply is Q = 2,000 + 100P.Students complain about the high price of textbooks, resulting in a price ceiling and, unfortunately, a shortage of texts.Below what price will shortages occur?

Accepted Answer

The answer of The demand for a textbook written by...

Question 4

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.

Question 5

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 6

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

Accepted Answer

A) a decrease in price and no predictable impact on output. 
B) a definite decrease in price and increase in output. 
C) an increase in output with no predictable change in price. 
D) no predictable changes in either price or output.

Question 7

An increase in the price of gasoline shifts the demand for tires to the

Accepted Answer

A) left, because gasoline and tires are substitutes. 
B) left, because gasoline and tires are normally used together. 
C) right, because gasoline and tires are substitutes. 
D) right, because gasoline and tires are normally used together.

Question 8

To construct a supply curve, an economist needs data on price and quantity.Each point on the supply curve is

Accepted Answer

A) supply of the product. 
B) a quantity supplied at that price. 
C) the amount that people want to buy. 
D) the amount people want to sell to buyers of different incomes. 
E) All of the above are correct.

Question 9

An increase in supply will have what effect on equilibrium price and quantity?

Accepted Answer

A) Price will increase; quantity will decrease. 
B) Price will decrease; quantity will increase. 
C) Both price and quantity will increase. 
D) Both price and quantity will decrease.

Question 10

Figure 4-18
 
-In Figure 4-18, there would be a surplus of T-shirts if the price were

Accepted Answer

A) $10. 
B) $8. 
C) below $8. 
D) between $8 and $6.

Question 11

Figure 4-23
 
-In Figure 4-23, which movement will be caused by changes in income?

Accepted Answer

A) A to C 
B) C to A 
C) B to D 
D) B to A

Question 12

Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation.Without the heart, each patient will die.The government decides this price is too high and imposes a maximum price of $200,000.Everything else equal,

Accepted Answer

A) more patients will now die. 
B) fewer patients will now die. 
C) more patients will now die only if the demand curve is vertical. 
D) more patients will now die only if the demand curve is horizontal.

Question 13

If price rises, what happens to supply 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.

Exam 4: Supply and Demand: an Initial Look