Question 1

The law of demand states that,other things equal,when the price of a good rises,the quantity demanded of the good rises,and when the price falls,the quantity demanded falls.

Accepted Answer

A) True 
 B)False

Question 2

Suppose roses are currently selling for $40 per dozen,but the equilibrium price of roses is $30 per dozen.We would expect a

Accepted Answer

A)   shortage to exist and the market price of roses to increase.
B)   shortage to exist and the market price of roses to decrease.
C)   surplus to exist and the market price of roses to increase.
D)   surplus to exist and the market price of roses to decrease.E) None of the above
F) B) and C)

Question 3

Which of the following sets of events must cause an increase in the price of a new house?

Accepted Answer

A)   higher wages for carpenters,higher wood prices,increases in consumer incomes,higher apartment rents,increases in population,and expectations of higher house prices in the future
B)   lower wages for carpenters,lower wood prices,increases in consumer incomes,higher apartment rents,increases in population and expectations of higher house prices in the future
C)   lower wages for carpenters,higher wood prices,decreases in consumer incomes,higher apartment rents,decreases in population and expectations of higher house prices in the future
D)   higher wages for carpenters,lower wood prices,decreases in consumer incomes,lower apartment rents,decreases in population and expectations of lower house prices in the futureE) A) and D)
F) A) and C)

Question 4

Which of the following would shift the demand curve for gasoline to the right?

Accepted Answer

A)   a decrease in the price of gasoline
B)   an increase in consumer income,assuming gasoline is a normal good
C)   an increase in the price of cars,a complement for gasoline
D)   a decrease in the expected future price of gasolineE) None of the above
F) A) and C)

Question 5

If scientists discover that steamed milk,which is used to make lattés,prevents heart attacks,what would happen to the equilibrium price and quantity of lattés?

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 increase,and the equilibrium quantity would decrease.
D)   The equilibrium price would decrease,and the equilibrium quantity would increase.E) B) and C)
F) A) and C)

Question 6

The demand curve for a good is a line that relates

Accepted Answer

A)   price and quantity demanded.
B)   income and quantity demanded.
C)   quantity demanded and quantity supplied.
D)   price and income.E) B) and C)
F) None of the above

Question 7

In a market economy,supply and demand determine both the quantity of each good produced and the price at which it is sold.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the number of college scholarships issued by private foundations would

Accepted Answer

A)   increase the supply of education.
B)   decrease the supply of education.
C)   increase the demand for education.
D)   decrease the demand for education.E) None of the above
F) B) and C)

Question 9

Figure 4-22

-Refer to Figure 4-22.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) A) and C)
F) B) and D)

Question 10

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months.As a result,we can expect the supply of lumber to

Accepted Answer

A)   fall in six months but not now.
B)   increase in six months when the price goes up.
C)   fall now.
D)   increase now to meet as much demand as possible.E) A) and C)
F) None of the above

Question 11

In a competitive market,the price of a product

Accepted Answer

A)   is determined by buyers,and the quantity of the product produced is determined by sellers.
B)   is determined by sellers,and the quantity of the product produced is determined by buyers.
C)   and the quantity of the product produced are both determined by sellers.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 12

In competitive markets,which of the following is not correct?

Accepted Answer

A)   Firms produce identical products.
B)   No individual buyer can influence the market price.
C)   Some sellers can set prices.
D)   Buyers are price takers.E) A) and C)
F) A) and B)

Question 13

A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 14

Assume a market is perfectly competitive.When a new producer enters the market,

Accepted Answer

A)   the price in the market increases.
B)   the price in the market decreases.
C)   the price in the market does not change.
D)   the market is no longer a competitive market.E) B) and D)
F) None of the above

Question 15

Figure 4-4 
-Refer to Figure 4-4.Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?

Accepted Answer

A)   a decrease in the price of DVDs
B)   a decrease in the price of DVD players
C)   a change in consumer preferences toward watching movies in movie theaters rather than at home
D)   a decrease in the number of people in the United StatesE) A) and B)
F) A) and C)

Question 16

An increase in demand shifts the demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A)   a bakery in a large city
B)   a bank in a large city
C)   a local cable television company
D)   a small group of corn farmersE) A) and D)
F) A) and C)

Question 18

The belief that tobacco is a "gateway drug" is consistent with

Accepted Answer

A)   the idea that tobacco and marijuana are substitutes.
B)   the idea that an increase in income causes a decrease in the demand for tobacco and an increase in the demand for marijuana.
C)   the idea that lower cigarette prices are associated with less use of marijuana.
D)   most of the available evidence.E) A) and D)
F) C) and D)

Question 19

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 20

Assume the market for tennis balls is perfectly competitive.When one tennis ball producer exits the market,

Accepted Answer

A)   the price of tennis balls increases.
B)   the price of tennis balls decreases.
C)   the price of tennis balls does not change.
D)   there is no longer a market for tennis balls.E) All of the above
F) None of the above

Exam 4: The Market Forces of Supply and Demand

Assume a market is perfectly competitive.When a new producer enters the market,

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

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An increase in the number of college scholarships issued by private foundations would

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Figure 4-4 -Refer to Figure 4-4.Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?

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A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied.

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The law of demand states that,other things equal,when the price of a good rises,the quantity demanded of the good rises,and when the price falls,the quantity demanded falls.

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Assume the market for tennis balls is perfectly competitive.When one tennis ball producer exits the market,

Correct AnswerverifiedShow Answer

Which of the following sets of events must cause an increase in the price of a new house?

Correct AnswerverifiedShow Answer

If scientists discover that steamed milk,which is used to make lattés,prevents heart attacks,what would happen to the equilibrium price and quantity of lattés?

Correct AnswerverifiedShow Answer

The demand curve for a good is a line that relates

Correct AnswerverifiedShow Answer

In competitive markets,which of the following is not correct?

Correct AnswerverifiedShow Answer

Figure 4-22 -Refer to Figure 4-22.Panel (a) shows which of the following?

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Suppose roses are currently selling for $40 per dozen,but the equilibrium price of roses is $30 per dozen.We would expect a

Correct AnswerverifiedShow Answer

In a competitive market,the price of a product

Correct AnswerverifiedShow Answer

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months.As a result,we can expect the supply of lumber to

Correct AnswerverifiedShow Answer

Which of the following would most likely serve as an example of a monopoly?

Correct AnswerverifiedShow Answer

In a market economy,supply and demand determine both the quantity of each good produced and the price at which it is sold.

Correct AnswerverifiedShow Answer

Which of the following would shift the demand curve for gasoline to the right?

Correct AnswerverifiedShow Answer

The belief that tobacco is a "gateway drug" is consistent with

Correct AnswerverifiedShow Answer

An increase in demand shifts the demand curve to the left.

Correct AnswerverifiedShow Answer

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