Question 1

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?

Accepted Answer

A)  Both the equilibrium price and quantity would increase.
B)  Both the equilibrium price and quantity would decrease.
C)  The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
D)  The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.E) B) and D)
F) B) and C)

Question 2

If the number of sellers in a market increases, then 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) None of the above
F) A) and C)

Question 3

Figure 4-17 
-Refer to Figure 4-17. At a price of

Accepted Answer

A)  $2, there is a surplus of 6 units.
B)  $5, there is a surplus of 25 units.
C)  $5, there is a shortage of $25.
D)  $7, there is a surplus of 4 units.E) A) and D)
F) B) and C)

Question 4

Figure 4-11 
-Refer to Figure 4-11. The movement from point A to point B on the graph is called

Accepted Answer

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

Question 5

Table 4-16
The following table shows the supply and demand schedules in a market. 
-Refer to Table 4-16. What is the equilibrium quantity in this market?

Accepted Answer

The answer of Table 4-16
The following table shows the supply...

Question 6

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

Accepted Answer

A)  luxury good.
B)  inferior good.
C)  normal good.
D)  complementary good.E) All of the above
F) A) and B)

Question 7

An increase in the price of a substitute good will shift the demand curve for a good to the right.

Accepted Answer

A) True 
 B)False

Question 8

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Accepted Answer

A)  decrease.
B)  increase.
C)  be unaffected.
D)  There is insufficient information given to answer the question.E) A) and C)
F) A) and B)

Question 9

In a market economy, supply and demand determine

Accepted Answer

A)  both the quantity of each good produced and the price at which it is sold.
B)  the quantity of each good produced but not the price at which it is sold.
C)  the price at which each good is sold but not the quantity of each good produced.
D)  neither the quantity of each good produced nor the price at which it is sold.E) All of the above
F) C) and D)

Question 10

A movement downward and to the right along a demand curve is called a(n)

Accepted Answer

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

Question 11

A likely example of complementary goods for most people would be

Accepted Answer

A)  butter and margarine.
B)  lawnmowers and automobiles.
C)  chips and salsa.
D)  cola and lemonade.E) A) and B)
F) B) and C)

Question 12

A yard sale is an example of a market.

Accepted Answer

A) True 
 B)False

Question 13

Figure 4-7 
-Refer to Figure 4-7. If the demand curve for Good X shifts from Db to Da, then

Accepted Answer

A)  firms would be willing to supply more of Good X than before at each possible price.
B)  people are willing to buy less of Good X than before at each possible price.
C)  people's incomes must have increased.
D)  the price of Good X has increased.E) A) and D)
F) B) and C)

Question 14

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

Accepted Answer

A)  demand for flour to increase.
B)  demand for flour to decrease.
C)  supply of flour to increase.
D)  supply of flour to decrease.E) B) and D)
F) B) and C)

Question 15

Which of these statements does not apply to market economies?

Accepted Answer

A)  Prices prevent decentralized decision making from degenerating into chaos.
B)  Prices coordinate the actions of millions of people with varying abilities and desires.
C)  Prices ensure that anyone who wants a product can get it.
D)  Prices ensure that what needs to get done does in fact get done.E) A) and D)
F) None of the above

Question 16

Which of the following is an example of a market?

Accepted Answer

A)  a gas station
B)  a garage sale
C)  a barber shop
D)  All of the above are examples of markets.E) C) and D)
F) None of the above

Question 17

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 18

If the demand for a product increases, 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 both to increase.
D)  and equilibrium quantity both to decrease.E) C) and D)
F) None of the above

Question 19

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 D)

Question 20

Once the demand 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 B)
F) All of the above

Exam 4: The Market Forces of Supply and Demand

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

Correct AnswerverifiedShow Answer

A movement downward and to the right along a demand curve is called a(n)

Correct AnswerverifiedShow Answer

A likely example of complementary goods for most people would be

Correct AnswerverifiedShow Answer

Figure 4-7 -Refer to Figure 4-7. If the demand curve for Good X shifts from Db to Da, then

Correct AnswerverifiedShow Answer

If the number of sellers in a market increases, then the

Correct AnswerverifiedShow Answer

An increase in the price of a substitute good will shift the demand curve for a good to the right.

Correct AnswerverifiedShow Answer

Figure 4-11 -Refer to Figure 4-11. The movement from point A to point B on the graph is called

Correct AnswerverifiedShow Answer

In a market economy, supply and demand determine

Correct AnswerverifiedShow Answer

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

Correct AnswerverifiedShow Answer

A yard sale is an example of a market.

Correct AnswerverifiedShow Answer

Which of these statements does not apply to market economies?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Baseballs and baseball bats are substitute goods.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?

Correct AnswerverifiedShow Answer

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Correct AnswerverifiedShow Answer

Which of the following is an example of a market?

Correct AnswerverifiedShow Answer

Figure 4-17 -Refer to Figure 4-17. At a price of

Correct AnswerverifiedShow Answer

Table 4-16 The following table shows the supply and demand schedules in a market. -Refer to Table 4-16. What is the equilibrium quantity in this market?

Correct AnswerverifiedShow Answer

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