Question 1

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

The law of supply states that, other things equal, when the price of a good

Accepted Answer

A)  falls, the supply of the good rises.
B)  rises, the quantity supplied of the good rises.
C)  rises, the supply of the good falls.
D)  falls, the quantity supplied of the good rises.E) A) and C)
F) B) and C)

Question 4

Figure 4-27
Panel (a) 
Panel (b)    Panel (c) 
Panel (d)   
-Refer to Figure 4-27. Panel (d)  shows which of the following?

Accepted Answer

A)  a decrease in demand and a decrease in quantity supplied
B)  a decrease in demand and a decrease in supply
C)  a decrease in quantity demanded and a decrease in quantity supplied
D)  a decrease in quantity demanded and a decrease in supplyE) B) and C)
F) A) and C)

Question 5

If a surplus exists in a market, then we know that the actual price is

Accepted Answer

A)  above the equilibrium price, and quantity supplied is greater than quantity demanded.
B)  above the equilibrium price, and quantity demanded is greater than quantity supplied.
C)  below the equilibrium price, and quantity demanded is greater than quantity supplied.
D)  below the equilibrium price, and quantity supplied is greater than quantity demanded.E) A) and B)
F) All of the above

Question 6

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

Question 7

Table 4-8 
-Refer to Table 4-8. Suppose Firm X and Firm Y are the only two sellers in the market. If the market price decreases from $12 to $9, quantity supplied will

Accepted Answer

A)  decrease by 6 units.
B)  decrease by 12 units.
C)  increase by 6 units.
D)  increase by 12 units.E) A) and D)
F) A) and C)

Question 8

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A)  a bakery in a large city
B)  a bank in a large city
C)  a local cable television company
D)  a small group of corn farmersE) All of the above
F) None of the above

Question 9

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-16 
-Refer to Figure 4-16. 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) All of the above
F) B) and C)

Question 11

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Accepted Answer

A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.E) B) and C)
F) A) and D)

Question 12

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Accepted Answer

A)  Price will rise.
B)  Price will fall.
C)  Price will stay exactly the same.
D)  The price change will be ambiguous.E) All of the above
F) A) and C)

Question 13

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Accepted Answer

A)  The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
B)  The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
C)  The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
D)  The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.E) None of the above
F) A) and D)

Question 14

All goods and services are sold in perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 15

Figure 4-30
​ 
-Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Accepted Answer

Demand shi...

Question 16

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

Question 17

A group of buyers and sellers of a particular good or service is called a

Accepted Answer

The answer of A group of buyers and sellers of...

Question 18

If the demand for a product decreases, then we would expect equilibrium price

Accepted Answer

A)  to increase and equilibrium quantity to decrease.
B)  to decrease and equilibrium quantity to increase.
C)  and equilibrium quantity to both increase.
D)  and equilibrium quantity to both decrease.E) A) and B)
F) A) and C)

Question 19

Table 4-3 
-Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is

Accepted Answer

A)  4 units.
B)  7.75 units.
C)  14 units.
D)  31 units.E) A) and B)
F) None of the above

Question 20

Figure 4-2  
-Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

Accepted Answer

A)  0 units.
B)  2 units.
C)  4 units.
D)  6 units.E) A) and B)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Correct AnswerverifiedShow Answer

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Correct AnswerverifiedShow Answer

The law of supply states that, other things equal, when the price of a good

Correct AnswerverifiedShow Answer

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Correct AnswerverifiedShow Answer

If the demand for a product decreases, then we would expect equilibrium price

Correct AnswerverifiedShow Answer

Figure 4-30 ​ -Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Correct AnswerverifiedDemand shi...View AnswerShow Answer

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

Correct AnswerverifiedShow Answer

Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Panel (d) shows which of the following?

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

Correct AnswerverifiedShow Answer

A group of buyers and sellers of a particular good or service is called a

Correct AnswerverifiedShow Answer

If a surplus exists in a market, then we know that the actual price is

Correct AnswerverifiedShow Answer

Which of the following would most likely serve as an example of a monopoly?

Correct AnswerverifiedShow Answer

Table 4-3 -Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Correct AnswerverifiedShow Answer

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Correct AnswerverifiedShow Answer

Figure 4-16 -Refer to Figure 4-16. The shift from S' to S in the market for chocolate cake could be caused by a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 4-8 -Refer to Table 4-8. Suppose Firm X and Firm Y are the only two sellers in the market. If the market price decreases from $12 to $9, quantity supplied will

Correct AnswerverifiedShow Answer

All goods and services are sold in perfectly competitive markets.

Correct AnswerverifiedShow Answer

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Figure 4-30 -Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Correct Answer
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Demand shi...
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