Question 1

In the market for chewing gum,the current price is 50 cents per pack and 100,000 packs are sold.Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?

Accepted Answer

A)  an increase in the price of other kinds of candy
B)  an increase in the price of the ingredients used to make chewing gum
C)  a decrease in the number of young people in the population
D)  an agreement by workers in the chewing gum industry to work for lower wages
E)  an increase in incomeF) C) and D)
G) A) and B)

Question 2

Which of the following will cause the demand curve for a normal good to shift to the right?

Accepted Answer

A)  a decrease in income
B)  an increase in the price of a complementary good
C)  a decrease in the price of the good
D)  an increase in the price of a substitute good
E)  an expectation of a future price declineF) B) and D)
G) B) and C)

Question 3

The explanation for the law of demand begins with

Accepted Answer

A)  a small number of wants satisfied by scarce resources
B)  finite wants satisfied by infinite resources
C)  unlimited wants confronting scarce resources
D)  unlimited wants matching up with unlimited resources
E)  prices acting as signals to existing and potential suppliersF) C) and E)
G) A) and B)

Question 4

Suppose the current equilibrium price of pizza is $5.If the government decides the price of pizza cannot rise above $4,the result of this policy would be

Accepted Answer

A)  a shortage
B)  a surplus
C)  that the market would remain in equilibrium but with a larger quantity bought and sold than at $5
D)  at the $4 price,the quantity sold would be greater than the quantity bought
E)  a shift of demand to the rightF) D) and E)
G) None of the above

Question 5

The income effect of an increase in the price of hominy grits (an inferior good) is a(n)

Accepted Answer

A)  decrease in the demand for hominy grits
B)  decrease in the quantity demanded of hominy grits
C)  increase in the demand for hominy grits
D)  increase in the quantity demanded of hominy grits
E)  new demand curve because everything else is no longer constantF) B) and E)
G) B) and D)

Question 6

Which of the following is most likely to be an inferior good?

Accepted Answer

A)  airline travel
B)  restaurant meals
C)  a subscription to the Wall Street Journal
D)  soft drinks
E)  used clothingF) B) and D)
G) B) and C)

Question 7

Markets reduce transactions costs

Accepted Answer

A)  by decreasing the time spent searching for information about goods and services
B)  only when they have a highly structured set of rules like the New York Stock Exchange
C)  because each market uses the same set of rules for buying and selling goods and services
D)  only when the government can coordinate the plans of many buyers and sellers
E)  when prices are set by the sellers and are not determined by negotiation between the buyers and the sellersF) A) and E)
G) B) and E)

Question 8

Which of the following explains the relationship between price and the quantity supplied?

Accepted Answer

A)  When expanding output,firms will incur greater total costs.
B)  As the price of a commodity falls,producers will find it more profitable to use higher-priced inputs in their production process.
C)  As a result of rising production costs,firms can increase profits by expanding output only if the price of output increases.
D)  To expand output,firms must hire more resources,which are always of poorer quality.
E)  Consumers want more at lower prices.F) C) and D)
G) C) and E)

Question 9

A decrease in the price of peanuts will cause a leftward shift of the supply curve of peanut butter.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 4-8 
-Based on Exhibit 4-8,a rent ceiling of $750 per month would result in a number of units rented of

Accepted Answer

A)  There is not enough information to determine the answer.
B)  50,000
C)  greater than 50,000 but less than 90,000
D)  90,000
E)  130,000F) C) and D)
G) B) and E)

Question 11

Exhibit 4-2 1 to S0? A) a decrease in the price cattle feed B) the expectation of a higher price in the near future C) an increase in the price of milk D) an increase in the price of beef E) a new and improved cattle food that increases the yield per dairy cow" class="answers-bank-image d-inline" rel="preload" >
-Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S0?

Accepted Answer

A)  a decrease in the price cattle feed
B)  the expectation of a higher price in the near future
C)  an increase in the price of milk
D)  an increase in the price of beef
E)  a new and improved cattle food that increases the yield per dairy cowF) C) and D)
G) A) and B)

Question 12

If there is a shortage in the market for jeans,

Accepted Answer

A)  producers' inventories will increase
B)  the price should begin to rise
C)  the demand curve will shift to restore equilibrium in the market
D)  the supply curve will shift to restore equilibrium in the market
E)  producers expect government to impose a price ceilingF) A) and E)
G) A) and B)

Question 13

Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price.Which of the following will happen?

Accepted Answer

A)  quantity demanded will decrease
B)  a surplus will develop
C)  a shortage will develop
D)  the quantity sold will rise
E)  the market will remain in equilibriumF) B) and E)
G) D) and E)

Question 14

A decrease in demand for a good could mean that

Accepted Answer

A)  consumers are willing to pay a higher price for each quantity of the good
B)  consumers are willing to buy larger quantities of the good at each price
C)  the demand curve has undergone a parallel shift to the right
D)  the demand curve has undergone a nonparallel shift to the right
E)  the demand curve has shifted to the leftF) C) and D)
G) B) and D)

Question 15

If the demand for bicycles increases,

Accepted Answer

A)  the quantity demanded decreases
B)  equilibrium price increases and equilibrium quantity decreases
C)  equilibrium price decreases and equilibrium quantity increases
D)  quantity supplied increases
E)  quantity supplied decreasesF) B) and E)
G) B) and D)

Question 16

Which of the following will increase the supply of vanilla ice cream?

Accepted Answer

A)  an increase in the price of vanilla beans (an ingredient in ice cream) 
B)  a decrease in the sales tax on restaurant bills
C)  an increase in the price of chocolate ice cream
D)  a decrease in the price of milk (an ingredient in ice cream) 
E)  an increase in the price of hot fudgeF) A) and E)
G) All of the above

Question 17

If supply increases and demand decreases,then equilibrium price will fall.

Accepted Answer

A) True 
 B)False

Question 18

Along a given demand curve,a decrease in supply will typically

Accepted Answer

A)  decrease price,but the change in quantity could be in either direction
B)  increase price and decrease the quantity
C)  decrease price but leave quantity unchanged
D)  decrease both quantity and price
E)  increase both quantity and priceF) All of the above
G) A) and B)

Question 19

A decrease in the price of a good will cause a leftward shift of the demand curve,if it is a normal good.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is correct when a price is set below a market's equilibrium price?

Accepted Answer

A)  quantity demanded exceeds quantity supplied at the set price
B)  quantity demanded is less than quantity supplied at the set price
C)  quantity demanded is equal to quantity supplied at the set price
D)  at the set price there is a surplus
E)  the market price is less than the ceiling priceF) B) and D)
G) C) and D)

Exam 4: Demand, supply, and Markets

Along a given demand curve,a decrease in supply will typically

Correct AnswerverifiedShow Answer

A decrease in the price of peanuts will cause a leftward shift of the supply curve of peanut butter.

Correct AnswerverifiedShow Answer

Exhibit 4-2 -Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S0?

Correct AnswerverifiedShow Answer

Markets reduce transactions costs

Correct AnswerverifiedShow Answer

The income effect of an increase in the price of hominy grits (an inferior good) is a(n)

Correct AnswerverifiedShow Answer

A decrease in demand for a good could mean that

Correct AnswerverifiedShow Answer

If there is a shortage in the market for jeans,

Correct AnswerverifiedShow Answer

A decrease in the price of a good will cause a leftward shift of the demand curve,if it is a normal good.

Correct AnswerverifiedShow Answer

In the market for chewing gum,the current price is 50 cents per pack and 100,000 packs are sold.Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?

Correct AnswerverifiedShow Answer

Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price.Which of the following will happen?

Correct AnswerverifiedShow Answer

Which of the following explains the relationship between price and the quantity supplied?

Correct AnswerverifiedShow Answer

Which of the following will increase the supply of vanilla ice cream?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

Which of the following will cause the demand curve for a normal good to shift to the right?

Correct AnswerverifiedShow Answer

If supply increases and demand decreases,then equilibrium price will fall.

Correct AnswerverifiedShow Answer

Exhibit 4-8 -Based on Exhibit 4-8,a rent ceiling of $750 per month would result in a number of units rented of

Correct AnswerverifiedShow Answer

Suppose the current equilibrium price of pizza is $5.If the government decides the price of pizza cannot rise above $4,the result of this policy would be

Correct AnswerverifiedShow Answer

If the demand for bicycles increases,

Correct AnswerverifiedShow Answer

Which of the following is correct when a price is set below a market's equilibrium price?

Correct AnswerverifiedShow Answer

The explanation for the law of demand begins with

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Exhibit 4-2 -Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S₁ to S₀?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified