Question 1

Figure 4-8
 
-Refer to Figure 4-8. The movement from Point A to Point B represents a(n)

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) A) and B)
F) All of the above

Question 2

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)   Different sellers sell identical products.
B)   There are many sellers.
C)   Sellers must accept the price the market determines.
D)   All of the above are characteristics of a perfectly competitive market.E) C) and D)
F) A) and C)

Question 3

When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.

Accepted Answer

A) True 
 B)False

Question 4

In competitive markets,

Accepted Answer

A)   firms produce identical products.
B)   no individual buyer can influence the market price.
C)   no individual seller can influence the market price.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 5

The sum of all the individual supply curves for a product is called

Accepted Answer

A)   total supply.
B)   market supply.
C)   aggregate supply.
D)   total output.E) B) and C)
F) A) and C)

Question 6

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 B)
F) A) and D)

Question 7

Figure 4-21
 
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) A) and B)
F) A) and C)

Question 8

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

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 D)

Question 9

Figure 4-13
 
-Refer to Figure 4-13. The shift from S to S' in the market for peaches could be caused by a(n)

Accepted Answer

A)   increase in the price of peaches.
B)   decrease in the price of pears.
C)   increase in income.
D)   decrease in the labor costs of the workers who pick peaches.E) C) and D)
F) B) and D)

Question 10

If there is a shortage of farm laborers, we would expect

Accepted Answer

A)   the wage of farm laborers to increase.
B)   the wage of farm laborers to decrease.
C)   the price of farm commodities to decrease.
D)   a decrease in the demand for substitutes for farm labor.E) All of the above
F) A) and B)

Question 11

Figure 4-6
 
-Refer to Figure 4-6. The shift from D to D' is called

Accepted Answer

A)   an increase in demand.
B)   a decrease in demand.
C)   a decrease in quantity demanded.
D)   an increase in quantity demanded.E) A) and B)
F) None of the above

Question 12

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

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) A) and B)
F) C) and D)

Question 13

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Accepted Answer

A)   Price will fall, and the effect on quantity is ambiguous.
B)   Price will rise, and the effect on quantity is ambiguous.
C)   Quantity will fall, and the effect on price is ambiguous.
D)   Quantity will rise, and the effect on price is ambiguous.E) None of the above
F) B) and C)

Question 14

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) B) and C)
F) C) and D)

Question 15

In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4-10
 
-Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for winter coats?

Accepted Answer

A)   an increase in the price of winter coats
B)   a decrease in the number of firms selling winter coats
C)   a decrease in the price of zippers and snaps
D)   a decrease in the price of winter hats and glovesE) A) and B)
F) B) and D)

Question 17

Figure 4-9
 
-Refer to Figure 4-9. The movement from point A to point B on the graph is caused by

Accepted Answer

A)   a decrease in the price of the good.
B)   an increase in the price of the good.
C)   an advance in production technology.
D)   a decrease in input prices.E) A) and B)
F) A) and C)

Question 18

Figure 4-21
 
-Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for Ramen noodles of a decrease in the incomes of young adults, assuming that Ramen noodles are an inferior good?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) All of the above
F) A) and B)

Question 19

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following events could shift the demand curve for gasoline to the left?

Accepted Answer

A)   The income of gasoline buyers rises, and gasoline is a normal good.
B)   The income of gasoline buyers falls, and gasoline is an inferior good.
C)   Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars.
D)   The price of gasoline rises.E) B) and D)
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

Which of the following is not a characteristic of a perfectly competitive market?

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

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The sum of all the individual supply curves for a product is called

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Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for Ramen noodles of a decrease in the incomes of young adults, assuming that Ramen noodles are an inferior good?

Correct AnswerverifiedShow Answer

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

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Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Correct AnswerverifiedShow Answer

Which of the following events could shift the demand curve for gasoline to the left?

Correct AnswerverifiedShow Answer

If there is a shortage of farm laborers, we would expect

Correct AnswerverifiedShow Answer

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Correct AnswerverifiedShow Answer

Figure 4-6 -Refer to Figure 4-6. The shift from D to D' is called

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Figure 4-13 -Refer to Figure 4-13. The shift from S to S' in the market for peaches could be caused by a(n)

Correct AnswerverifiedShow Answer

Figure 4-21 -Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Correct AnswerverifiedShow Answer

Figure 4-9 -Refer to Figure 4-9. The movement from point A to point B on the graph is caused by

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

Correct AnswerverifiedShow Answer

In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

Correct AnswerverifiedShow Answer

Figure 4-8 -Refer to Figure 4-8. The movement from Point A to Point B represents a(n)

Correct AnswerverifiedShow Answer

Figure 4-10 -Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for winter coats?

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When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.

Correct AnswerverifiedShow Answer

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

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In competitive markets,

Correct AnswerverifiedShow Answer

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