Question 1

The forces that make market economies work are

Accepted Answer

A)   work and leisure.
B)   politics and religion.
C)   supply and demand.
D)   taxes and government spending.E) B) and D)
F) All of the above

Question 2

Local cable television companies frequently are monopolists.

Accepted Answer

A) True 
 B)False

Question 3

When a shortage exists in a market, sellers

Accepted Answer

A)   raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated.
B)   raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.
C)   lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated.
D)   lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.E) None of the above
F) B) and D)

Question 4

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) All of the above
F) B) and D)

Question 5

If a firm is a price taker, it operates in a

Accepted Answer

A)   competitive market.
B)   monopoly market.
C)   oligopoly market.
D)   monopolistically competitive market.E) C) and D)
F) B) and D)

Question 6

All goods and services are sold in perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

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 9

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film?

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

Question 10

If Max experiences a decrease in his income, then we would expect Max's demand for

Accepted Answer

A)   each good he purchases to remain unchanged.
B)   normal goods to decrease.
C)   luxury goods to increase.
D)   inferior goods to decrease.E) A) and B)
F) None of the above

Question 11

Table 4-13
The demand schedule below pertains to sandwiches demanded per week. 
-Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2.
-The current price of a sandwich is $5.00.
-The market quantity supplied of sandwiches is 10.
-The law of supply applies to the supply of sandwiches.
Then there is a

Accepted Answer

A)   shortage of 5 sandwiches, and the price would be expected to rise from its current level of $5.00.
B)   shortage of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.
C)   surplus of 5 sandwiches, and the price would be expected to rise from its current level of $5.00.
D)   surplus of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.E) A) and C)
F) B) and D)

Question 12

A decrease in the price of sugar will shift the supply curve for cookies to the right.

Accepted Answer

A) True 
 B)False

Question 13

In a market economy, who or what determines who produces each good and how much is produced?

Accepted Answer

A)   the government
B)   lawyers
C)   lotteries
D)   pricesE) A) and B)
F) A) and C)

Question 14

Which of the following would shift the demand curve for gasoline to the right?

Accepted Answer

A)   a decrease in the price of gasoline
B)   an increase in consumer income, assuming gasoline is a normal good
C)   an increase in the price of cars, a complement for gasoline
D)   a decrease in the expected future price of gasolineE) B) and D)
F) A) and B)

Question 15

The market demand curve

Accepted Answer

A)   is found by vertically adding the individual demand curves.
B)   slopes upward.
C)   represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
D)   represents the sum of the quantities demanded by all the buyers at each price of the good.E) A) and B)
F) None of the above

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A movement along the demand curve might be caused by a change in

Accepted Answer

A)   income.
B)   the prices of substitutes or complements.
C)   expectations about future prices.
D)   the price of the good or service that is being demanded.E) None of the above
F) A) and D)

Question 18

In a market, to find the total amount supplied at a particular price, we must

Accepted Answer

A)   sum the quantities that individual firms are willing and able to supply at that price.
B)   calculate the average of the quantities that individual firms are willing and able to supply at that price.
C)   sum the costs that individual firms incur to supply the product at that price.
D)   account for all determinants of demand.E) C) and D)
F) A) and B)

Question 19

An increase in the price of a good will

Accepted Answer

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

Question 20

Figure 4-9
Panel (a)  Panel (b)   
-Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

Accepted Answer

A)   The price of marijuana, a complement to cigarettes, increased.
B)   Mandatory health warnings were placed on cigarette packages.
C)   Several foreign countries banned U.S. cigarettes in their countries.
D)   A tax was placed on cigarettes.E) C) and D)
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

All goods and services are sold in perfectly competitive markets.

Correct Answer
verified

If Max experiences a decrease in his income, then we would expect Max's demand for

Correct Answer
verified

The market demand curve

Correct Answer
verified

A movement along the demand curve might be caused by a change in

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

An increase in the price of a good will

Correct Answer
verified

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

Correct Answer
verified

If a firm is a price taker, it operates in a

Correct Answer
verified

Which of the following would shift the demand curve for gasoline to the right?

Correct Answer
verified

A decrease in the price of sugar will shift the supply curve for cookies to the right.

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

In a market economy, who or what determines who produces each good and how much is produced?

Correct Answer
verified

In a market, to find the total amount supplied at a particular price, we must

Correct Answer
verified

Local cable television companies frequently are monopolists.

Correct Answer
verified

Figure 4-9 Panel (a) Panel (b) -Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

Correct Answer
verified

When a shortage exists in a market, sellers

Correct Answer
verified

The forces that make market economies work are

Correct Answer
verified

Correct Answer
verified

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film?

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

All goods and services are sold in perfectly competitive markets.

Correct AnswerverifiedShow Answer

If Max experiences a decrease in his income, then we would expect Max's demand for

Correct AnswerverifiedShow Answer

The market demand curve

Correct AnswerverifiedShow Answer

A movement along the demand curve might be caused by a change in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price of a good will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a firm is a price taker, it operates in a

Correct AnswerverifiedShow Answer

Which of the following would shift the demand curve for gasoline to the right?

Correct AnswerverifiedShow Answer

A decrease in the price of sugar will shift the supply curve for cookies to the right.

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

In a market economy, who or what determines who produces each good and how much is produced?

Correct AnswerverifiedShow Answer

In a market, to find the total amount supplied at a particular price, we must

Correct AnswerverifiedShow Answer

Local cable television companies frequently are monopolists.

Correct AnswerverifiedShow Answer

Figure 4-9 Panel (a) Panel (b) -Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

Correct AnswerverifiedShow Answer

When a shortage exists in a market, sellers

Correct AnswerverifiedShow Answer

The forces that make market economies work are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film?

Correct AnswerverifiedShow Answer

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