Question 1

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

Question 2

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Accepted Answer

A) True 
 B)False

Question 3

Figure 4-16 
-Refer to Figure 4-16. The shift from S to S' in the market for peaches could be caused by a(n)

Accepted Answer

A)  increase in the price of peaches.
B)  decrease in the price of pears.
C)  increase in income.
D)  decrease in the labor costs of the workers who pick peaches.E) A) and B)
F) A) and C)

Question 4

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

Accepted Answer

A)  the price of tennis balls increases.
B)  the price of tennis balls decreases.
C)  the price of tennis balls does not change.
D)  there is no longer a market for tennis balls.E) A) and D)
F) A) and C)

Question 5

Most studies have found that tobacco and marijuana are substitutes rather than complements.

Accepted Answer

A) True 
 B)False

Question 6

Today's demand curve for gasoline could shift in response to a change in

Accepted Answer

A)  today's price of gasoline.
B)  the expected future price of gasoline.
C)  the number of sellers of gasoline.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 7

Suppose you make jewelry. If the price of gold falls, then we would expect you to

Accepted Answer

A)  be willing and able to produce less jewelry than before at each possible price.
B)  be willing and able to produce more jewelry than before at each possible price.
C)  face a greater demand for your jewelry.
D)  face a weaker demand for your jewelry.E) C) and D)
F) A) and B)

Question 8

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 9

Figure 4-19 
-Refer to Figure 4-19. If there is currently a shortage of 20 units of the good, then the law of

Accepted Answer

A)  demand predicts that the price will rise by $2 to eliminate the shortage.
B)  supply predicts that the price will rise by $2 to eliminate the shortage.
C)  supply and demand predicts that the price will rise by $2 to eliminate the shortage.
D)  supply and demand predicts that the price will fall by $2 to eliminate the shortage.E) B) and C)
F) A) and B)

Question 10

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Accepted Answer

A)  The supply curve for saddle shoes 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)  The supply curve for saddle shoes 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)  The demand curve for saddle shoes 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)  The demand curve for saddle shoes 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) B) and C)
F) A) and D)

Question 11

If a seller in a competitive market chooses to charge more than the going price, then

Accepted Answer

A)  the sellers' profits must increase.
B)  the owners of the raw materials used in production would raise the prices for the raw materials.
C)  other sellers would also raise their prices.
D)  buyers will make purchases from other sellers.E) None of the above
F) All of the above

Question 12

A likely example of substitute goods for most people would be

Accepted Answer

A)  peanut butter and jelly.
B)  tennis balls and tennis rackets.
C)  televisions and subscriptions to cable television services.
D)  pencils and pens.E) A) and D)
F) B) and C)

Question 13

Figure 4-13  
-Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $6 is

Accepted Answer

A)  4 units.
B)  6 units.
C)  12 units.
D)  18 units.E) None of the above
F) B) and C)

Question 14

Equilibrium quantity must increase when demand

Accepted Answer

A)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase.
B)  increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
C)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase.
D)  decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.E) B) and C)
F) A) and B)

Question 15

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 x = 2. Then

Accepted Answer

A)  the slope of Jake's demand curve is -1/2, and the slope of the market demand curve is -5/2.
B)  the slope of Jake's demand curve is -1/2, and the slope of the market demand curve is -2/5.
C)  the slope of Jake's demand curve is -2, and the slope of the market demand curve is -5/2.
D)  the slope of Jake's demand curve is -2, and the slope of the market demand curve is -2/5.E) A) and C)
F) A) and D)

Question 16

Which of the following events could shift the demand curve for gasoline to the left?

Accepted Answer

A)  The income of gasoline buyers rises, and gasoline is a normal good.
B)  The income of gasoline buyers falls, and gasoline is an inferior good.
C)  Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars.
D)  The price of gasoline rises.E) All of the above
F) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The line that relates the price of a good and the quantity demanded of that good is called the demand

Accepted Answer

A)  schedule, and it usually slopes upward.
B)  schedule, and it usually slopes downward.
C)  curve, and it usually slopes upward.
D)  curve, and it usually slopes downward.E) All of the above
F) C) and D)

Question 19

Which of the following would most likely serve as an example of a monopoly?

Accepted Answer

A)  a restaurant in a large city
B)  a dry cleaners in a large city
C)  a local gas station
D)  a local electrical companyE) None of the above
F) All of the above

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 $6, then the market quantity demanded is

Accepted Answer

A)  4 units.
B)  6 units.
C)  8 units.
D)  12 units.E) C) and D)
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

Equilibrium quantity must increase when demand

Correct AnswerverifiedShow Answer

Suppose you make jewelry. If the price of gold falls, then we would expect you to

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Which of the following events could shift the demand curve for gasoline to the left?

Correct AnswerverifiedShow Answer

Today's demand curve for gasoline could shift in response to a change in

Correct AnswerverifiedShow Answer

The line that relates the price of a good and the quantity demanded of that good is called the demand

Correct AnswerverifiedShow Answer

Which of the following would most likely serve as an example of a monopoly?

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 $6, then the market quantity demanded is

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Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

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In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Correct AnswerverifiedShow Answer

Figure 4-13 -Refer to Figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $6 is

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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 x = 2. Then

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

Correct AnswerverifiedShow Answer

Most studies have found that tobacco and marijuana are substitutes rather than complements.

Correct AnswerverifiedShow Answer

If a seller in a competitive market chooses to charge more than the going price, then

Correct AnswerverifiedShow Answer

Figure 4-16 -Refer to Figure 4-16. The shift from S to S' in the market for peaches could be caused by a(n)

Correct AnswerverifiedShow Answer

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

Correct AnswerverifiedShow Answer

Figure 4-19 -Refer to Figure 4-19. If there is currently a shortage of 20 units of the good, then the law of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Correct AnswerverifiedShow Answer

A likely example of substitute goods for most people would be

Correct AnswerverifiedShow Answer

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