Question 1

A movement upward and to the right along a supply curve is called a(n)

Accepted Answer

A)   increase in supply.
B)   decrease in supply.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) B) and D)
F) B) and C)

Question 2

The quantity supplied of a good is the amount that

Accepted Answer

A)   buyers are willing and able to purchase.
B)   sellers are able to produce.
C)   buyers and sellers agree will be brought to market.
D)   sellers are willing and able to sell.E) B) and C)
F) A) and B)

Question 3

Which of the following events must cause equilibrium price to fall?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increaseE) C) and D)
F) B) and D)

Question 4

Figure 4-15
 
-Refer to Figure 4-15. At a price of $35, there would be

Accepted Answer

A)   a shortage, and the price would tend to rise from $35 to a higher price.
B)   a surplus, and the price would tend to rise from $35 to a higher price.
C)   excess demand, and the price would tend to fall from $35 to a lower price.
D)   excess supply, and the price would tend to fall from $35 to a lower price.E) B) and C)
F) None of the above

Question 5

An early frost in the vineyards of Napa Valley would cause a(n)

Accepted Answer

A)   increase in the demand for wine, increasing price.
B)   increase in the supply of wine, decreasing price.
C)   decrease in the demand for wine, decreasing price.
D)   decrease in the supply of wine, increasing price.E) A) and D)
F) A) and B)

Question 6

A yard sale is an example of a market.

Accepted Answer

A) True 
 B)False

Question 7

Figure 4-13
 
-Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

Accepted Answer

A)   increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live.
B)   newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months.
C)   decrease in the price of lumber.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 8

If sellers expect higher basket prices in the near future, the current

Accepted Answer

A)   supply of baskets will increase.
B)   supply of baskets will decrease.
C)   supply of baskets will be unaffected.
D)   demand for baskets will decrease.E) A) and B)
F) B) and C)

Question 9

If the demand for a good falls when income falls, then the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following might cause the demand curve for an inferior good to shift to the left?

Accepted Answer

A)   a decrease in income
B)   an increase in the price of a substitute
C)   an increase in the price of a complement
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 11

Figure 4-22
 
-Refer to Figure 4-22. Which of the four panels illustrates a decrease in quantity demanded?

Accepted Answer

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

Question 12

When the market price is below the equilibrium price, suppliers are unable to sell all they want to sell.

Accepted Answer

A) True 
 B)False

Question 13

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Accepted Answer

A) True 
 B)False

Question 14

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded

Accepted Answer

A)   applies to most goods in the economy.
B)   is represented by a downward-sloping demand curve.
C)   is referred to as the law of demand.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 15

Figure 4-17
 
-Refer to Figure 4-17. If the price is $10, then there would be a

Accepted Answer

A)   shortage of 400 units, and price would rise.
B)   surplus of 400 units, and price would rise.
C)   shortage of 600 units, and price would rise.
D)   surplus of 600 units, and price would rise.E) A) and D)
F) C) and D)

Question 16

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

Accepted Answer

A)   decrease in the number of commercial bakers.
B)   improvement in oven technology.
C)   decrease in the price of butter.
D)   decrease in the price of chocolate cake.E) A) and B)
F) A) and D)

Question 17

The equilibrium price is the same as the market-clearing price.

Accepted Answer

A) True 
 B)False

Question 18

If the price of apple pies rose to $100 per pie, consumers would purchase fewer pies than if the price were $5 per pie. If the price of ice cream fell to $0.30 per scoop, consumers would purchase more ice cream than if the price were $5 per scoop. These relationships illustrate the

Accepted Answer

A)   law of demand.
B)   law of supply.
C)   difference between normal and inferior goods.
D)   difference between substitute and complement goods.E) A) and C)
F) None of the above

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Table 4-3
 
-Refer to Table 4-3. Whose demand does not obey the law of demand?

Accepted Answer

A)   Bert's
B)   Ernie's
C)   Grover's
D)   Oscar'sE) None of the above
F) All of the above

Exam 4: The Market Forces of Supply and Demand

When the market price is below the equilibrium price, suppliers are unable to sell all they want to sell.

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"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded

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Table 4-3 -Refer to Table 4-3. Whose demand does not obey the law of demand?

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Figure 4-22 -Refer to Figure 4-22. Which of the four panels illustrates a decrease in quantity demanded?

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If sellers expect higher basket prices in the near future, the current

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

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

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The equilibrium price is the same as the market-clearing price.

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If the price of apple pies rose to $100 per pie, consumers would purchase fewer pies than if the price were $5 per pie. If the price of ice cream fell to $0.30 per scoop, consumers would purchase more ice cream than if the price were $5 per scoop. These relationships illustrate the

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The quantity supplied of a good is the amount that

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A yard sale is an example of a market.

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The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

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If the demand for a good falls when income falls, then the good is called an inferior good.

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Figure 4-15 -Refer to Figure 4-15. At a price of $35, there would be

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Figure 4-17 -Refer to Figure 4-17. If the price is $10, then there would be a

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Which of the following might cause the demand curve for an inferior good to shift to the left?

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An early frost in the vineyards of Napa Valley would cause a(n)

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Which of the following events must cause equilibrium price to fall?

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A movement upward and to the right along a supply curve is called a(n)

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Figure 4-13 -Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

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