Question 1

In competitive markets,

Accepted Answer

A)   firms produce identical products.
B)   buyers can influence the market price more easily than sellers.
C)   markets are more likely to be in equilibrium.
D)   sellers are price setters.E) None of the above
F) B) and D)

Question 2

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Accepted Answer

A) True 
 B)False

Question 3

There is no shortage of scarce resources in a market economy because

Accepted Answer

A)   the government makes shortages illegal.
B)   resources are abundant in market economies.
C)   prices adjust to eliminate shortages.
D)   quantity supplied is always greater than quantity demanded in market economies.E) C) and D)
F) A) and D)

Question 4

Figure 4-18 
-Refer to Figure 4-18. At a price of $15, there would be a

Accepted Answer

A)   surplus of 400 units.
B)   shortage of 200 units.
C)   shortage of 400 units.
D)   shortage of 600 units.E) A) and D)
F) A) and C)

Question 5

Figure 4-31
Consider the market for 2-packs of light bulbs below. 
-Refer to Figure 4-31. At a price of $3, is there a shortage or surplus, and how large is the shortage/surplus?

Accepted Answer

There is a...

Question 6

An early frost in the vineyards of Napa Valley would cause an)

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) C) and D)
F) None of the above

Question 7

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

Accepted Answer

A) True 
 B)False

Question 8

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

Accepted Answer

A)   supply curve for diamond rings 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)   supply curve for diamond rings 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)   demand curve for diamond rings 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)   demand curve for diamond rings 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) All of the above
F) A) and B)

Question 9

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Accepted Answer

A)   the CPA to supply more expert tax advice now than she was supplying previously.
B)   the CPA to supply less expert tax advice now than she was supplying previously.
C)   the demand for this CPA's expert tax advice to fall.
D)   no change in the CPA's current supply; instead, future supply will be affected.E) All of the above
F) C) and D)

Question 10

Figure 4-28 
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good.

Accepted Answer

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

Question 11

An example of a perfectly competitive market would be the market for

Accepted Answer

A)   tennis racquets.
B)   pizza.
C)   garbage collection.
D)   wheat.E) A) and C)
F) A) and D)

Question 12

The market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding constant all the other factors that influence producers' decisions about how much to sell.

Accepted Answer

A) True 
 B)False

Question 13

Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices listed.
 
-Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 500 cases when the price is $5.00, which of the following statements is correct?

Accepted Answer

A)   The market is in equilibrium at a price of $5.00.
B)   There is a surplus of 100 cases at a price of $5.00.
C)   There is a shortage of 100 cases at a price of $5.00.
D)   There is a shortage of 50 cases at a price of $5.00.E) C) and D)
F) A) and B)

Question 14

In a perfectly competitive market, at the market price, buyers

Accepted Answer

A)   cannot buy all they want, and sellers cannot sell all they want.
B)   cannot buy all they want, but sellers can sell all they want.
C)   can buy all they want, but sellers cannot sell all they want.
D)   can buy all they want, and sellers can sell all they want.E) A) and B)
F) A) and C)

Question 15

In competitive markets,

Accepted Answer

A)   firms produce identical products.
B)   no individual buyer can influence the market price.
C)   no individual seller can influence the market price.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 16

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

Accepted Answer

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

Question 17

Table 4-4
 
-Refer to Table 4-4. Suppose the market consists of Adam, Barb, and Carl. If the price falls by $2, the quantity demanded in the market increases by

Accepted Answer

A)   4 units.
B)   6 units.
C)   8 units.
D)   10 units.E) B) and D)
F) A) and D)

Question 18

Which of the following would increase in response to a increase in the price of ironing boards?

Accepted Answer

A)   the quantity of irons demanded at each possible price of irons
B)   the equilibrium quantity of irons
C)   the equilibrium price of irons
D)   None of the above is correct.E) B) and D)
F) A) and B)

Question 19

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Accepted Answer

A) True 
 B)False

Question 20

A competitive market is one in which there

Accepted Answer

A)   is only one seller, but there are many buyers.
B)   are many sellers, and each seller has the ability to set the price of his product.
C)   are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market.
D)   are so many buyers and so many sellers that each has a negligible impact on the price of the product.E) C) and D)
F) B) and D)

Exam 4: The Market Forces of Supply and Demand

Correct Answer
verified

In competitive markets,

Correct Answer
verified

An early frost in the vineyards of Napa Valley would cause an)

Correct Answer
verified

Table 4-4 -Refer to Table 4-4. Suppose the market consists of Adam, Barb, and Carl. If the price falls by $2, the quantity demanded in the market increases by

Correct Answer
verified

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

Correct Answer
verified

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Correct Answer
verified

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

Correct Answer
verified

In a perfectly competitive market, at the market price, buyers

Correct Answer
verified

There is no shortage of scarce resources in a market economy because

Correct Answer
verified

Figure 4-18 -Refer to Figure 4-18. At a price of $15, there would be a

Correct Answer
verified

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Correct Answer
verified

Figure 4-31 Consider the market for 2-packs of light bulbs below. -Refer to Figure 4-31. At a price of $3, is there a shortage or surplus, and how large is the shortage/surplus?

Correct Answer
verified
There is a...
View Answer

In competitive markets,

Correct Answer
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Which of the following would increase in response to a increase in the price of ironing boards?

Correct Answer
verified

The market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding constant all the other factors that influence producers' decisions about how much to sell.

Correct Answer
verified

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Correct Answer
verified

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good.

Correct Answer
verified

A competitive market is one in which there

Correct Answer
verified

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

Correct Answer
verified

An example of a perfectly competitive market would be the market for

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Correct AnswerverifiedShow Answer

In competitive markets,

Correct AnswerverifiedShow Answer

An early frost in the vineyards of Napa Valley would cause an)

Correct AnswerverifiedShow Answer

Table 4-4 -Refer to Table 4-4. Suppose the market consists of Adam, Barb, and Carl. If the price falls by $2, the quantity demanded in the market increases by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Correct AnswerverifiedShow Answer

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

Correct AnswerverifiedShow Answer

In a perfectly competitive market, at the market price, buyers

Correct AnswerverifiedShow Answer

There is no shortage of scarce resources in a market economy because

Correct AnswerverifiedShow Answer

Figure 4-18 -Refer to Figure 4-18. At a price of $15, there would be a

Correct AnswerverifiedShow Answer

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Correct AnswerverifiedShow Answer

Figure 4-31 Consider the market for 2-packs of light bulbs below. -Refer to Figure 4-31. At a price of $3, is there a shortage or surplus, and how large is the shortage/surplus?

Correct AnswerverifiedThere is a...View AnswerShow Answer

In competitive markets,

Correct AnswerverifiedShow Answer

Which of the following would increase in response to a increase in the price of ironing boards?

Correct AnswerverifiedShow Answer

The market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding constant all the other factors that influence producers' decisions about how much to sell.

Correct AnswerverifiedShow Answer

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Correct AnswerverifiedShow Answer

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good.

Correct AnswerverifiedShow Answer

A competitive market is one in which there

Correct AnswerverifiedShow Answer

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

Correct AnswerverifiedShow Answer

An example of a perfectly competitive market would be the market for

Correct AnswerverifiedShow Answer

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There is a...
View Answer

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