Question 1

Table 4-1
 
-Refer to Table 4-1. If the market consists of Laura 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) B) and C)
F) B) and D)

Question 2

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would increase, and the equilibrium quantity would decrease.
D)   The equilibrium price would decrease, and the equilibrium quantity would increase.E) A) and B)
F) None of the above

Question 3

Figure 4-2 
-Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

Accepted Answer

A)   0 units.
B)   2 units.
C)   4 units.
D)   6 units.E) C) and D)
F) B) and C)

Question 4

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

Accepted Answer

A) True 
 B)False

Question 5

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-27

-Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity supplied?

Accepted Answer

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

Question 7

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

Question 8

In a given market, how are the equilibrium price and the market-clearing price related?

Accepted Answer

A)   There is no relationship.
B)   They are the same price.
C)   The market-clearing price exceeds the equilibrium price.
D)   The equilibrium price exceeds the market-clearing price.E) None of the above
F) C) and D)

Question 9

Table 4-6
 
-Refer to Table 4-6. If these are the only four sellers in the market, then when the price decreases from $4 to $2, the market quantity supplied

Accepted Answer

A)   increases by 10 units.
B)   decreases by 10 units.
C)   decreases by 20 units.
D)   decreases by 30 units.E) None of the above
F) A) and C)

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

Question 11

In competitive markets, buyers

Accepted Answer

A)   are price takers, but sellers are price setters.
B)   are price setters, but sellers are price takers.
C)   and sellers are price takers.
D)   and sellers are price setters.E) All of the above
F) A) and B)

Question 12

When the price of a good or service changes,

Accepted Answer

A)   the demand curve shifts in the opposite direction.
B)   the supply curve shifts in the opposite direction.
C)   the supply curve shifts in the same direction.
D)   there is a movement along a given supply curve.E) B) and C)
F) All of the above

Question 13

Figure 4-9
Panel a) 
 
 Panel b)

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

Accepted Answer

A)   an increase in the price of cigarettes
B)   placing a tax on cigarettes
C)   the prohibition of cigarette advertisements on television
D)   decreasing the price of marijuana, given that tobacco and marijuana are complementsE) A) and B)
F) All of the above

Question 14

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Accepted Answer

A)   supply curve for Ashley's bread will increase.
B)   supply curve for Ashley's bread will decrease.
C)   demand curve for Ashley's bread will increase.
D)   demand curve for Ashley's bread will decrease.E) B) and D)
F) B) and C)

Question 15

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

Accepted Answer

The answer of Studies show that lower cigarette prices are...

Question 16

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A)   will increase but not until the end of the year.
B)   increases today.
C)   decreases as you look for a substitute good.
D)   shifts left today.E) None of the above
F) B) and D)

Question 17

Which of these statements best represents the law of demand?

Accepted Answer

A)   When buyers' tastes for a good increase, they purchase more of the good.
B)   When income levels increase, buyers purchase more of most goods.
C)   When the price of a good decreases, buyers purchase more of the good.
D)   When buyers' demands for a good increase, the price of the good increases.E) All of the above
F) B) and D)

Question 18

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Accepted Answer

A)   price.
B)   supply.
C)   demand.
D)   income.E) A) and B)
F) None of the above

Question 19

Figure 4-25
The graph below pertains to the supply of paper to colleges and universities. 
-Refer to Figure 4-25. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from

Accepted Answer

A)   x to y.
B)   y to x.
C)   SA to SB.
D)   SB to SA.E) A) and B)
F) A) and C)

Question 20

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

Accepted Answer

A)   demand for flour to increase.
B)   demand for flour to decrease.
C)   supply of flour to increase.
D)   supply of flour to decrease.E) None of the above
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

Correct AnswerverifiedShow Answer

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

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 $12, then the market quantity demanded is

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Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

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When a shortage exists in a market, sellers

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When the price of a good or service changes,

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Figure 4-25 The graph below pertains to the supply of paper to colleges and universities. -Refer to Figure 4-25. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from

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Which of these statements best represents the law of demand?

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When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

Correct AnswerverifiedShow Answer

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

Correct AnswerverifiedShow Answer

In competitive markets, buyers

Correct AnswerverifiedShow Answer

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Correct AnswerverifiedShow Answer

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

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

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

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Figure 4-27 -Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity supplied?

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Table 4-6 -Refer to Table 4-6. If these are the only four sellers in the market, then when the price decreases from $4 to $2, the market quantity supplied

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In a given market, how are the equilibrium price and the market-clearing price related?

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Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Correct AnswerverifiedShow Answer

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