Question 1

Once the supply curve for a product or service is drawn, it

Accepted Answer

A)   remains stable over time.
B)   can shift either rightward or leftward.
C)   is possible to move along the curve, but the curve will not shift.
D)   tends to become steeper over time.E) A) and D)
F) None of the above

Question 2

When we move along a given supply curve,

Accepted Answer

A)   only price is held constant.
B)   technology and price are held constant.
C)   all nonprice determinants of supply are held constant.
D)   all determinants of quantity supplied are held constant.E) A) and D)
F) B) and D)

Question 3

The University of Iowa was voted the #1 "party school" in 2013. The University of Iowa is located in Iowa City. At the end of August each year, the market demand for beer in Iowa City

Accepted Answer

A)   decreases.
B)   increases.
C)   remains constant, but we observe a movement downward and to the right along the demand curve.
D)   remains constant, but we observe a movement upward and to the left along the demand curve.E) B) and D)
F) All of the above

Question 4

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Accepted Answer

A)   the CPA to supply more expert tax advice now than she was supplying previously.
B)   the CPA to supply less expert tax advice now than she was supplying previously.
C)   the demand for this CPA's expert tax advice to fall.
D)   no change in the CPA's current supply; instead, future supply will be affected.E) A) and B)
F) A) and C)

Question 5

In a competitive market, each seller has limited control over the price of his product because

Accepted Answer

A)   other sellers are offering similar products.
B)   buyers exert more control over the price than do sellers.
C)   these markets are highly regulated by the government.
D)   sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.E) C) and D)
F) B) and C)

Question 6

Figure 4-8 
-Refer to Figure 4-8. Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur?

Accepted Answer

A)   a movement along D2 from point A to point B
B)   a movement along D2 from point B to point A
C)   a shift from D1 to D2
D)   a shift from D2 to D1E) A) and C)
F) A) and D)

Question 7

Figure 4-27
Panel a)  Panel b) 
   Panel c)  Panel d) 
  
-Refer to Figure 4-27. Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Accepted Answer

A)   Panel a) 
B)   Panel b) 
C)   Panel c) 
D)   Panel d) E) A) and C)
F) A) and B)

Question 8

For a market for a good or service to exist, there must be a

Accepted Answer

A)   group of buyers and sellers.
B)   specific time and place at which the good or service is traded.
C)   high degree of organization present.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 9

Table 4-11
 
-Refer to Table 4-11. If the price were $8, a

Accepted Answer

A)   shortage of 20 units would exist, and price would tend to rise.
B)   surplus of 25 units would exist, and price would tend to fall.
C)   shortage of 25 units would exist, and price would tend to rise.
D)   surplus of 45 units would exist, and price would tend to fall.E) All of the above
F) A) and B)

Question 10

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

Accepted Answer

A)   The number of people who purchase olives decreases.
B)   Consumer income decreases, and olives are a normal good.
C)   The price of pickles decreases, and pickles are a substitute for olives.
D)   The price of olives rises.E) A) and B)
F) None of the above

Question 11

Assume Diana buys computers in a competitive market. It follows that

Accepted Answer

A)   Diana has a limited number of sellers to turn to when she buys a computer.
B)   Diana will find herself negotiating with sellers whenever she buys a computer.
C)   if Diana buys a large number of computers, the price of computers will rise noticeably.
D)   None of the above is correct.E) C) and D)
F) B) and D)

Question 12

Which of the following might cause the supply curve for an inferior good to shift to the right?

Accepted Answer

A)   an increase in input prices
B)   a decrease in consumer income
C)   an improvement in production technology that makes production of the good more profitable
D)   a decrease in the number of sellers in the marketE) All of the above
F) A) and D)

Question 13

Figure 4-1 
-Refer to Figure 4-1. The movement from point A to point B on the graph shows a(n)

Accepted Answer

A)   decrease in demand.
B)   increase in demand.
C)   decrease in quantity demanded.
D)   increase in quantity demanded.E) A) and C)
F) A) and D)

Question 14

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

Question 15

Figure 4-18 
-Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

Accepted Answer

A)   $15
B)   $20
C)   $30
D)   $35E) None of the above
F) C) and D)

Question 16

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

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) None of the above
F) B) and C)

Question 17

When quantity demanded has increased at every price, it might be because

Accepted Answer

A)   the number of buyers in the market has decreased.
B)   income has increased, and the good is an inferior good.
C)   the costs incurred by sellers producing the good have decreased.
D)   the price of a complementary good has decreased.E) None of the above
F) All of the above

Question 18

When the price of peaches changes, the demand curve for peaches

Accepted Answer

A)   shifts because the price of peaches is measured on the vertical axis of the graph.
B)   shifts because the quantity demanded of peaches is measured on the horizontal axis of the graph.
C)   does not shift because the price of peaches is measured on the vertical axis of the graph.
D)   does not shift because the price of peaches is measured on the horizontal axis of the graph.E) None of the above
F) C) and D)

Question 19

Price will rise to eliminate a surplus.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

Accepted Answer

A)   an increase in the price of wool shirts and a decrease in the price of raw cotton
B)   a decrease in the price of wool shirts and a decrease in the price of raw cotton
C)   an increase in the price of wool shirts and an increase in the price of raw cotton
D)   a decrease in the price of wool shirts and an increase in the price of raw cottonE) A) and B)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

When we move along a given supply curve,

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Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur?

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

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A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

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Assume Diana buys computers in a competitive market. It follows that

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Price will rise to eliminate a surplus.

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Figure 4-18 -Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

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Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

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The University of Iowa was voted the #1 "party school" in 2013. The University of Iowa is located in Iowa City. At the end of August each year, the market demand for beer in Iowa City

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Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph shows a(n)

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Figure 4-27 Panel a) Panel b) Panel c) Panel d) -Refer to Figure 4-27. Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

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Once the supply curve for a product or service is drawn, it

Correct AnswerverifiedShow Answer

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

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In a competitive market, each seller has limited control over the price of his product because

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Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

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When quantity demanded has increased at every price, it might be because

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For a market for a good or service to exist, there must be a

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Which of the following might cause the supply curve for an inferior good to shift to the right?

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When the price of peaches changes, the demand curve for peaches

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Table 4-11 -Refer to Table 4-11. If the price were $8, a

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