Question 1

Individual demand curves are summed horizontally to obtain the market demand curve.

Accepted Answer

A) True 
 B)False

Question 2

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 $2 is

Accepted Answer

A)   0 units.
B)   3.5 units.
C)   12 units.
D)   14 units.E) A) and B)
F) B) and D)

Question 3

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) A) and B)
F) None of the above

Question 4

If the supply of tennis balls, a complement to tennis racquets, decreases, what will happen to the equilibrium price of tennis balls and to the equilibrium price of tennis racquets?

Accepted Answer

The equilibrium pric...

Question 5

If a decrease in income increases the demand for a good, then the good is an)

Accepted Answer

A)   substitute good.
B)   complementary good.
C)   normal good.
D)   inferior good.E) C) and D)
F) B) and D)

Question 6

A decrease in the number of sellers in the market causes

Accepted Answer

A)   the supply curve to shift to the left.
B)   the supply curve to shift to the right.
C)   a movement up and to the right along a stationary supply curve.
D)   a movement downward and to the left along a stationary supply curve.E) All of the above
F) None of the above

Question 7

An increase in the price of a good will

Accepted Answer

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

Question 8

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

Accepted Answer

A)   shortage to exist and the market price of roses to increase.
B)   shortage to exist and the market price of roses to decrease.
C)   surplus to exist and the market price of roses to increase.
D)   surplus to exist and the market price of roses to decrease.E) B) and D)
F) A) and B)

Question 9

If suppliers expect the price of their product to fall in the future, then they will

Accepted Answer

A)   decrease supply now.
B)   increase supply now.
C)   decrease supply in the future but not now.
D)   increase supply in the future but not now.E) A) and B)
F) None of the above

Question 10

Whenever a determinant of supply other than price changes, the supply curve shifts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following events would cause the price of oranges to fall?

Accepted Answer

A)   There is a shortage of oranges.
B)   The FDA announces that bananas cause strokes, and oranges and bananas are substitutes.
C)   The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 12

Table 4-1
 
-Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) All of the above
F) A) and B)

Question 13

A demand schedule is a table that shows the relationship between

Accepted Answer

A)   quantity demanded and quantity supplied.
B)   income and quantity demanded.
C)   price and quantity demanded.
D)   price and income.E) C) and D)
F) B) and D)

Question 14

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Accepted Answer

A) True 
 B)False

Question 15

If something happens to alter the quantity demanded at any given price, then

Accepted Answer

A)   the demand curve becomes steeper.
B)   the demand curve becomes flatter.
C)   the demand curve shifts.
D)   we move along the demand curve.E) C) and D)
F) A) and B)

Question 16

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

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 D)
F) All of the above

Question 17

A decrease in the price of a good will

Accepted Answer

A)   increase demand.
B)   decrease demand.
C)   increase quantity demanded.
D)   decrease quantity demanded.E) All of the above
F) C) and D)

Question 18

Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price

Accepted Answer

A)   and quantity both decrease.
B)   and quantity both increase.
C)   increases, and the equilibrium quantity decreases.
D)   decreases, and the equilibrium quantity increases.E) A) and B)
F) None of the above

Question 19

Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?

Accepted Answer

The demand...

Question 20

The following table contains a supply schedule for a good.

If the law of supply applies to this good, then Q1 could be

Accepted Answer

A)   0.
B)   50.
C)   100.
D)   150.E) A) and D)
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

An increase in the price of a good will

Correct AnswerverifiedShow Answer

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

Correct AnswerverifiedShow Answer

If suppliers expect the price of their product to fall in the future, then they will

Correct AnswerverifiedShow Answer

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Correct AnswerverifiedShow Answer

Which of the following events would cause the price of oranges to fall?

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If something happens to alter the quantity demanded at any given price, then

Correct AnswerverifiedShow Answer

If the supply of tennis balls, a complement to tennis racquets, decreases, what will happen to the equilibrium price of tennis balls and to the equilibrium price of tennis racquets?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

A decrease in the number of sellers in the market causes

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If the price of a good is low,

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The following table contains a supply schedule for a good. If the law of supply applies to this good, then Q1 could be

Correct AnswerverifiedShow Answer

A decrease in the price of a good will

Correct AnswerverifiedShow Answer

Whenever a determinant of supply other than price changes, the supply curve shifts.

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 $2 is

Correct AnswerverifiedShow Answer

If a decrease in income increases the demand for a good, then the good is an)

Correct AnswerverifiedShow Answer

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

Correct AnswerverifiedShow Answer

Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?

Correct AnswerverifiedThe demand...View AnswerShow Answer

A demand schedule is a table that shows the relationship between

Correct AnswerverifiedShow Answer

Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price

Correct AnswerverifiedShow Answer

Individual demand curves are summed horizontally to obtain the market demand curve.

Correct AnswerverifiedShow Answer

Table 4-1 -Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

Correct AnswerverifiedShow Answer

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The equilibrium pric...
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The demand...
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