Question 1

Figure 4-27

-Refer to Figure 4-27. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?

Accepted Answer

A)   Panel a) 
B)   Panel b) 
C)   Panel c) 
D)   Panel d) E) A) and B)
F) All of the above

Question 2

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) B) and D)
F) B) and C)

Question 3

Monopolists are price takers.

Accepted Answer

A) True 
 B)False

Question 4

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Accepted Answer

A) True 
 B)False

Question 5

Figure 4-1 
-Refer to Figure 4-1. It is apparent from the figure that the

Accepted Answer

A)   good is inferior.
B)   demand for the good decreases as income increases.
C)   demand for the good conforms to the law of demand.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 6

Figure 4-28 
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Accepted Answer

The answer of Figure 4-28 
-Refer to Figure 4-28. Using...

Question 7

Figure 4-5 
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

Accepted Answer

A)   an increase in the price of tennis balls
B)   a decrease in the price of tennis racquets
C)   an expectation by buyers that their incomes will increase in the very near future
D)   a decrease in the number of people in the United States under age 70E) All of the above
F) A) and B)

Question 8

A likely example of substitute goods for most people would be

Accepted Answer

A)   tables and chairs.
B)   bicycles and helmets.
C)   apple juice and orange juice.
D)   coffee and sugar.E) A) and B)
F) A) and C)

Question 9

Holding the nonprice determinants of supply constant, a change in price would

Accepted Answer

A)   result in either a decrease in supply or an increase in supply.
B)   result in a movement along a stationary supply curve.
C)   result in a shift of demand.
D)   have no effect on the quantity supplied.E) A) and B)
F) B) and C)

Question 10

In a market economy, supply and demand are important because they

Accepted Answer

A)   play a critical role in the allocation of the economy's scarce resources.
B)   determine how much of each good gets produced.
C)   can be used to predict the impact on the economy of various events and policies.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 11

Figure 4-12

-Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

Accepted Answer

A)   2 units.
B)   10 units.
C)   12 units.
D)   22 units.E) None of the above
F) B) and C)

Question 12

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

Accepted Answer

A) True 
 B)False

Question 13

Figure 4-5 
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States?

Accepted Answer

A)   a decrease in the price of golf balls
B)   an increase in the price of green fees
C)   an expectation by buyers that their incomes will increase in the very near future
D)   a change in consumer tastes away from golf and toward tennisE) B) and D)
F) C) and D)

Question 14

Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

A)   Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
C)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)   None of the above is correct.E) B) and D)
F) All of the above

Question 15

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Accepted Answer

A) True 
 B)False

Question 16

Suppose roses are currently selling for $20 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) None of the above
F) C) and D)

Question 17

A shortage exists in a market if

Accepted Answer

A)   there is an excess supply of the good.
B)   quantity supplied exceeds quantity demanded.
C)   the current price is below its equilibrium price.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 18

Figure 4-24
The diagram below pertains to the demand for turkey in the United States. 
-Refer to Figure 4-24. All else equal, the approach of Thanksgiving would cause a move from

Accepted Answer

A)   DA to DB.
B)   DB to DA.
C)   x to y.
D)   y to x.E) C) and D)
F) All of the above

Question 19

Figure 4-14 
-Refer to Figure 4-14. Which of the following best describes the movement from E1 to E2?

Accepted Answer

A)   a decrease in supply
B)   an increase in supply
C)   a movement along the supply curve
D)   a decrease in demandE) A) and B)
F) B) and D)

Question 20

If there is a shortage of farm laborers, we would expect

Accepted Answer

A)   the wage of farm laborers to increase.
B)   the wage of farm laborers to decrease.
C)   the price of farm commodities to decrease.
D)   a decrease in the demand for substitutes for farm labor.E) A) and D)
F) None of the above

Exam 4: The Market Forces of Supply and Demand

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

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At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

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Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?

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Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States?

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Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, the approach of Thanksgiving would cause a move from

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Figure 4-14 -Refer to Figure 4-14. Which of the following best describes the movement from E1 to E2?

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Price cannot fall so low that some sellers choose to supply a quantity of zero.

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Holding the nonprice determinants of supply constant, a change in price would

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If there is a shortage of farm laborers, we would expect

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Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

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Figure 4-12 -Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is

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A likely example of substitute goods for most people would be

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Figure 4-1 -Refer to Figure 4-1. It is apparent from the figure that the

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A shortage exists in a market if

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In a market economy, supply and demand are important because they

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

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Monopolists are price takers.

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Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

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Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?

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Figure 4-27 -Refer to Figure 4-27. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?

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