Question 1

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Accepted Answer

A) True 
 B)False

Question 2

When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity change.

Accepted Answer

A) True 
 B)False

Question 3

Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and equilibrium quantity would change.
a. Winter starts, and the weather turns sharply colder.
b. The price of tea, a substitute for hot chocolate, falls.
c. The price of cocoa beans decreases.
d. The price of whipped cream falls.
e. A better method of harvesting cocoa beans is introduced.
f. The Surgeon General of the U.S. announces that hot chocolate cures acne.
g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.
h. Consumer income falls because of a recession, and hot chocolate is considered a normal good.
i. Producers expect the price of hot chocolate to increase next month.
j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.

Accepted Answer

In j), a price above equi...

Question 4

Table 4-7
 
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

Accepted Answer

A)   decreases by 10 gallons.
B)   decreases by 20 gallons.
C)   increases by 10 gallons.
D)   increases by 20 gallons.E) B) and D)
F) B) and C)

Question 5

If the supply of 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 to both increase.
D)   and equilibrium quantity to both decrease.E) B) and C)
F) All of the above

Question 6

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Accepted Answer

A)   shift rightward.
B)   shift leftward.
C)   become flatter.
D)   remain unchanged.E) C) and D)
F) B) and D)

Question 7

Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

Accepted Answer

The demand...

Question 8

Table 4-11
 
-Refer to Table 4-11. The equilibrium price and quantity, respectively, are

Accepted Answer

A)   $2 and 50 units.
B)   $6 and 30 units.
C)   $6 and 60 units.
D)   $12 and 30 units.E) A) and B)
F) C) and D)

Question 9

The equilibrium price is the same as the market-clearing price.

Accepted Answer

A) True 
 B)False

Question 10

When it comes to people's tastes, economists generally believe that

Accepted Answer

A)   tastes are based on forces that are well within the realm of economics.
B)   tastes are based on historical and psychological forces that are beyond the realm of economics.
C)   tastes can only be studied through well-constructed, real-life models.
D)   because tastes do not directly affect demand, there is little need to explain people's tastes.E) B) and C)
F) A) and D)

Question 11

A movement upward and to the left along a given demand curve is called a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 12

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 curves) shifts) and in which direction?

Accepted Answer

Demand shi...

Question 13

Figure 4-22 
-Refer to Figure 4-22. At a price of $24, there is a

Accepted Answer

A)   surplus of 4 units.
B)   surplus of 8 units.
C)   shortage of 4 units.
D)   shortage of 8 units.E) All of the above
F) B) and D)

Question 14

If a good or service has only one seller, then the seller is called a monopoly.

Accepted Answer

A) True 
 B)False

Question 15

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Accepted Answer

A)   Price will fall, and the effect on quantity is ambiguous.
B)   Price will rise, and the effect on quantity is ambiguous.
C)   Quantity will fall, and the effect on price is ambiguous.
D)   Quantity will rise, and the effect on price is ambiguous.E) A) and B)
F) None of the above

Question 16

Table 4-4
 
-Refer to Table 4-4. Suppose the market consists of Barb and Carl only. 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) C) and D)
F) All of the above

Question 17

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

Question 18

Table 4-1
 
-Refer to Table 4-1. If the market consists of Michelle and Hillary only 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) C) and D)
F) None of the above

Question 19

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

Accepted Answer

A)   0.
B)   100.
C)   200.
D)   400.E) C) and D)
F) B) and D)

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 $10, 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) None of the above

Exam 4: The Market Forces of Supply and Demand

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

Correct Answer
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Correct Answer
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In j), a price above equi...
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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 Answer
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Figure 4-22 -Refer to Figure 4-22. At a price of $24, there is a

Correct Answer
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If the supply of a product increases, then we would expect equilibrium price

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

Correct Answer
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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 curves) shifts) and in which direction?

Correct Answer
verified
Demand shi...
View Answer

If a good or service has only one seller, then the seller is called a monopoly.

Correct Answer
verified

When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity change.

Correct Answer
verified

Table 4-11 -Refer to Table 4-11. The equilibrium price and quantity, respectively, are

Correct Answer
verified

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

Correct Answer
verified

The equilibrium price is the same as the market-clearing price.

Correct Answer
verified

A movement upward and to the left along a given demand curve is called a decrease in demand.

Correct Answer
verified

When it comes to people's tastes, economists generally believe that

Correct Answer
verified

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

Correct Answer
verified

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $10, then the market quantity demanded is

Correct Answer
verified

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Correct Answer
verified

Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

Correct Answer
verified
The demand...
View Answer

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Correct Answer
verified

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

Correct AnswerverifiedShow Answer

Correct Answerverified In j), a price above equi...View AnswerShow Answer

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

Figure 4-22 -Refer to Figure 4-22. At a price of $24, there is a

Correct AnswerverifiedShow Answer

If the supply of a product increases, then we would expect equilibrium price

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 curves) shifts) and in which direction?

Correct AnswerverifiedDemand shi...View AnswerShow Answer

If a good or service has only one seller, then the seller is called a monopoly.

Correct AnswerverifiedShow Answer

When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity change.

Correct AnswerverifiedShow Answer

Table 4-11 -Refer to Table 4-11. The equilibrium price and quantity, respectively, are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The equilibrium price is the same as the market-clearing price.

Correct AnswerverifiedShow Answer

A movement upward and to the left along a given demand curve is called a decrease in demand.

Correct AnswerverifiedShow Answer

When it comes to people's tastes, economists generally believe that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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 $10, then the market quantity demanded is

Correct AnswerverifiedShow Answer

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Correct AnswerverifiedShow Answer

Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

Correct AnswerverifiedThe demand...View AnswerShow Answer

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Correct AnswerverifiedShow Answer

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Correct AnswerverifiedShow Answer

Correct Answer
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In j), a price above equi...
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Demand shi...
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The demand...
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