Question 1

Figure 4-24
The diagram below pertains to the demand for turkey in the United States. 
-Refer to Figure 4-24. All else equal, a decrease in the price of the grain fed to turkeys would cause a move from

Accepted Answer

A)   DA to DB.
B)   DB to DA.
C)   x to y.
D)   y to x.E) All of the above
F) B) and C)

Question 2

In a market economy, supply and demand are important because they

Accepted Answer

A)   play a critical role in the allocation of the economy's scarce resources.
B)   determine how much of each good gets produced.
C)   can be used to predict the impact on the economy of various events and policies.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 3

Figure 4-20 
-Refer to Figure 4-20. If the price is $10, then there would be a

Accepted Answer

A)   shortage of 400 units, and price would rise.
B)   surplus of 400 units, and price would rise.
C)   shortage of 600 units, and price would rise.
D)   surplus of 600 units, and price would rise.E) C) and D)
F) B) and C)

Question 4

Figure 4-10 
-Refer to Figure 4-10. The movement from Point A to Point B represents an)

Accepted Answer

A)   shift in the supply curve.
B)   decrease in the quantity supplied.
C)   increase in the quantity supplied.
D)   Both a and b are correct.E) None of the above
F) A) and B)

Question 5

Table 4-1
 
-Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) B) and D)
F) B) and C)

Question 6

If sellers expect higher basket prices in the near future, the current

Accepted Answer

A)   supply of baskets will increase.
B)   supply of baskets will decrease.
C)   supply of baskets will be unaffected.
D)   demand for baskets will decrease.E) None of the above
F) A) and B)

Question 7

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

Accepted Answer

A) True 
 B)False

Question 8

Figure 4-31
Consider the market for 2-packs of light bulbs below. 
-Refer to Figure 4-31. What are the values of the equilibrium price and quantity?

Accepted Answer

The answer of Figure 4-31
Consider the market for 2-packs of...

Question 9

If Miguel expects to earn a higher income next month, he may choose to

Accepted Answer

A)   save more now and spend less of his current income on goods and services.
B)   save less now and spend more of his current income on goods and services.
C)   decrease his current demand for goods and services.
D)   move along his current demand curves for goods and services.E) A) and B)
F) C) and D)

Question 10

A supply curve slopes upward because

Accepted Answer

A)   as more is produced, total cost of production falls.
B)   an increase in input prices increases supply.
C)   the quantity supplied of most goods and services increases over time.
D)   an increase in price gives producers an incentive to supply a larger quantity.E) B) and C)
F) A) and D)

Question 11

Figure 4-27
Panel a)  Panel b) 
   Panel c)  Panel d) 
  
-Refer to Figure 4-27. Panel a)  shows which of the following?

Accepted Answer

A)   an increase in demand and an increase in quantity supplied
B)   an increase in demand and an increase in supply
C)   an increase in quantity demanded and an increase in quantity supplied
D)   an increase in quantity demanded and an increase in supplyE) C) and D)
F) B) and C)

Question 12

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, and scientists discovered that lattés cause heart attacks?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.
D)   The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.E) A) and C)
F) A) and D)

Question 13

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Accepted Answer

A)   Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)   Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
C)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.E) A) and D)
F) A) and C)

Question 14

Which of the following is an example of a highly organized market?

Accepted Answer

A)   the market for textbooks
B)   the market for spa services
C)   the market for soybeans
D)   the market for ice creamE) A) and B)
F) A) and C)

Question 15

Table 4-1
 
-Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) A) and B)
F) A) and C)

Question 16

When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 17

The following table contains a supply schedule for a good.  If the law of supply applies to this good, then Q1 could be

Accepted Answer

A)   0.
B)   50.
C)   100.
D)   150.E) A) and B)
F) C) and D)

Question 18

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

Accepted Answer

A)   rise.
B)   fall.
C)   stay the same.
D)   could rise, fall, or remain unchanged.E) B) and D)
F) A) and B)

Question 19

Figure 4-21 
-Refer to Figure 4-21. What is the equilibrium price in this market?

Accepted Answer

A)   $0
B)   $5
C)   $10
D)   $20E) All of the above
F) A) and C)

Question 20

Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the shortage?

Accepted Answer

A)   The government would provide tax incentives to encourage people to become farmers.
B)   The government would subsidize the production of food.
C)   The prices of food and the wages of farmers would adjust.
D)   There are no mechanisms to remove the shortage.E) None of the above
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

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If sellers expect higher basket prices in the near future, the current

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Figure 4-10 -Refer to Figure 4-10. The movement from Point A to Point B represents an)

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In a market economy, supply and demand are important because they

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Figure 4-21 -Refer to Figure 4-21. What is the equilibrium price in this market?

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Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the shortage?

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In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

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Table 4-1 -Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

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Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

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A supply curve slopes upward because

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If Miguel expects to earn a higher income next month, he may choose to

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Figure 4-27 Panel a) Panel b) Panel c) Panel d) -Refer to Figure 4-27. Panel a) shows which of the following?

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Figure 4-31 Consider the market for 2-packs of light bulbs below. -Refer to Figure 4-31. What are the values of the equilibrium price and quantity?

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What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, and scientists discovered that lattés cause heart attacks?

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Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, a decrease in the price of the grain fed to turkeys would cause a move from

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Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

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The following table contains a supply schedule for a good. If the law of supply applies to this good, then Q1 could be

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Figure 4-20 -Refer to Figure 4-20. If the price is $10, then there would be a

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Table 4-1 -Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

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Which of the following is an example of a highly organized market?

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