Question 1

Which of the following events could cause an increase in the supply of ceiling fans?

Accepted Answer

A)  The number of sellers of ceiling fans increases.
B)  There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes.
C)  There is an increase in the price of the motor that powers ceiling fans.
D)  All of the above are correct.E) C) and D)
F) B) and D)

Question 2

Figure 4-10
 
-Refer to Figure 4-10.Graph C 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 supply and an increase in quantity demandedE) A) and D)
F) A) and B)

Question 3

The table shows individual demand schedules for a market.
Table 4-1
 
-Refer to Table 4-1.For whom is the good a normal good?

Accepted Answer

A)  for Aaron
B)  for Austin
C)  for all of the four demanders
D)  This cannot be determined from the table.E) A) and B)
F) C) and D)

Question 4

If,at the current price,there is a shortage of a good,

Accepted Answer

A)  sellers are producing more than buyers wish to buy.
B)  the market must be in equilibrium.
C)  the price is below the equilibrium price.
D)  quantity demanded equals quantity supplied.E) C) and D)
F) A) and B)

Question 5

The law of supply states that,other things equal,when the price of a good rises,the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 6

When we move along a given demand curve,

Accepted Answer

A)  only price is held constant.
B)  income and the price of the good are held constant.
C)  all nonprice determinants of demand are held constant.
D)  all determinants of quantity demanded are held constant.E) None of the above
F) A) and B)

Question 7

Figure 4-10
 
-Refer to Figure 4-10.Which of the four graphs illustrates a decrease in quantity demanded?

Accepted Answer

A)  a.
B)  B.
C)  C.
D)  D.E) None of the above
F) C) and D)

Question 8

Figure 4-3
 
-Refer to Figure 4-3.The graph shows the demand for cigarettes.The arrows are consistent with which of the following events?

Accepted Answer

A)  Tobacco and marijuana are complements and the price of marijuana decreased.
B)  Tobacco is a "gateway drug" and the price of marijuana increased.
C)  The price of cigarettes increased.
D)  The arrows are consistent with all of these events.E) A) and B)
F) A) and C)

Question 9

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) fell,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was good for you?

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)  The effect on both price and quantity is ambiguous.E) C) and D)
F) B) and C)

Question 10

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

Accepted Answer

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

Question 11

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Accepted Answer

A) True 
 B)False

Question 12

Most markets in the economy are

Accepted Answer

A)  markets in which sellers, rather than buyers, control the price of the product.
B)  markets in which buyers, rather than sellers, control the price of the product.
C)  markets in which each seller of the product is aware that there are few, if any, similar products offered by other sellers.
D)  highly competitive.E) None of the above
F) A) and C)

Question 13

A technological advance will shift the

Accepted Answer

A)  supply curve to the right.
B)  supply curve to the left.
C)  demand curve to the right.
D)  demand curve to the left.E) A) and D)
F) All of the above

Question 14

Most studies indicate that tobacco and marijuana tend to be

Accepted Answer

A)  substitutes.
B)  complements.
C)  not related since one is legal and one is illegal.
D)  inferior goods.E) A) and B)
F) B) and C)

Question 15

If the price of a good is low,

Accepted Answer

A)  firms would increase profit by increasing output.
B)  the quantity supplied of the good could be zero.
C)  the supply curve for the good will shift to the left.
D)  firms can and should raise the price of the product.E) All of the above
F) A) and C)

Question 16

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 D)
F) None of the above

Question 17

An example of a perfectly competitive market would be the

Accepted Answer

A)  cable TV market.
B)  soybean market.
C)  new car market.
D)  blue jean market.E) None of the above
F) A) and C)

Question 18

To say that the quantity demanded of a good is negatively related to the price of the good is to say that

Accepted Answer

A)  an increase in the quantity demanded of the good leads to a decrease in the price of the good.
B)  an increase in the price of the good leads to a decrease in the quantity demanded of the good.
C)  there is a weak relationship between the quantity demanded of a good and the price of the good.
D)  there is no relationship between the quantity demanded of a good and the price of the good.E) A) and D)
F) B) and D)

Question 19

If the number of sellers in a market increases,the

Accepted Answer

A)  demand in that market will increase.
B)  supply in that market will increase.
C)  supply in that market will decrease.
D)  demand in that market will decrease.E) B) and C)
F) A) and D)

Question 20

Figure 4-10
 
-Refer to Figure 4-10.Which of the four graphs represents the market for winter coats as we progress from winter to spring?

Accepted Answer

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

Exam 4: The Market Forces of Supply and Demand

If the number of sellers in a market increases,the

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If the price of a good is low,

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A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

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Most studies indicate that tobacco and marijuana tend to be

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Figure 4-10 -Refer to Figure 4-10.Which of the four graphs represents the market for winter coats as we progress from winter to spring?

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When we move along a given demand curve,

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Which of the following events could cause an increase in the supply of ceiling fans?

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The law of supply states that,other things equal,when the price of a good rises,the quantity supplied of the good falls.

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Figure 4-10 -Refer to Figure 4-10.Graph C shows which of the following?

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What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) fell,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was good for you?

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If,at the current price,there is a shortage of a good,

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Most markets in the economy are

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The table shows individual demand schedules for a market. Table 4-1 -Refer to Table 4-1.For whom is the good a normal 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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An example of a perfectly competitive market would be the

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Figure 4-10 -Refer to Figure 4-10.Which of the four graphs illustrates a decrease in quantity demanded?

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To say that the quantity demanded of a good is negatively related to the price of the good is to say that

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

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A technological advance will shift the

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Figure 4-3 -Refer to Figure 4-3.The graph shows the demand for cigarettes.The arrows are consistent with which of the following events?

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