Question 1

Figure 4-8 
-Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's e­readers, a substitute good, decreases. Which of the following changes would occur?

Accepted Answer

A)   a movement along D2 from point A to point B
B)   a movement along D2 from point B to point A
C)   a shift from D1 to D2
D)   a shift from D2 to D1E) A) and B)
F) A) and C)

Question 2

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for Ramen noodles of a decrease in the incomes of young adults, assuming that Ramen noodles are an inferior good?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) All of the above
F) None of the above

Question 3

The actions of buyers and sellers naturally move markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not held constant in a demand schedule?

Accepted Answer

A)   income
B)   tastes
C)   price
D)   expectationsE) All of the above
F) C) and D)

Question 5

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 D)

Question 6

If buyers and sellers in a certain market are price takers, then individually

Accepted Answer

A)   they have no influence on market price.
B)   they have some influence on market price but that influence is limited.
C)   buyers will be able to find prices lower than those determined in the market.
D)   sellers will find it difficult to sell all they want to sell at the market price.E) B) and C)
F) None of the above

Question 7

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) B) and C)
F) A) and B)

Question 8

Which of the following would cause price to increase?

Accepted Answer

A)   an increase in supply
B)   a decrease in demand
C)   a surplus of the good
D)   a shortage of the goodE) All of the above
F) B) and D)

Question 9

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 D)
F) None of the above

Question 10

In a market economy,

Accepted Answer

A)   supply determines demand and demand, in turn, determines prices.
B)   demand determines supply and supply, in turn, determines prices.
C)   the allocation of scarce resources determines prices and prices, in turn, determine supply and demand.
D)   supply and demand determine prices and prices, in turn, allocate the economy's scarce resources.E) B) and D)
F) A) and D)

Question 11

Figure 4-22 
-Refer to Figure 4-22. What is the equilibrium price in this market?

Accepted Answer

A)   $8
B)   $12
C)   $16
D)   $20E) A) and C)
F) B) and C)

Question 12

The sum of all the individual supply curves for a product is called

Accepted Answer

A)   total supply.
B)   market supply.
C)   aggregate supply.
D)   total output.E) A) and B)
F) B) and C)

Question 13

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Accepted Answer

A) True 
 B)False

Question 14

A likely example of complementary goods for most people would be

Accepted Answer

A)   canoes and paddles.
B)   snow mobiles and sofas.
C)   coffee and tea.
D)   tennis balls and basketballs.E) A) and B)
F) C) and D)

Question 15

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Accepted Answer

A)   each good she purchases to remain unchanged.
B)   normal goods to decrease.
C)   substitute goods to increase.
D)   inferior goods to decrease.E) All of the above
F) C) and D)

Question 16

Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers wish to sell.

Accepted Answer

A) True 
 B)False

Question 17

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

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 $2 is

Accepted Answer

A)   4 units.
B)   6 units.
C)   8 units.
D)   10 units.E) None of the above
F) A) and D)

Question 20

Which of the following is not a determinant of the demand for a particular good?

Accepted Answer

A)   the prices of related goods
B)   income
C)   tastes
D)   the prices of the inputs used to produce the goodE) C) and D)
F) A) and D)

Exam 4: The Market Forces of Supply and Demand

Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers wish to sell.

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Figure 4-22 -Refer to Figure 4-22. What is the equilibrium price in this market?

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Which of the following is not a determinant of the demand for a particular good?

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The sum of all the individual supply curves for a product is called

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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 $2 is

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A likely example of complementary goods for most people would be

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Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's e­readers, a substitute good, decreases. Which of the following changes would occur?

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

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Which of the following would cause price to increase?

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Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?

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Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

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Prices allocate a market economy's scarce resources.

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The actions of buyers and sellers naturally move markets toward equilibrium.

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Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for Ramen noodles of a decrease in the incomes of young adults, assuming that Ramen noodles are an inferior good?

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Which of the following is not held constant in a demand schedule?

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If buyers and sellers in a certain market are price takers, then individually

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In a market economy,

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Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

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

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Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's ereaders, a substitute good, decreases. Which of the following changes would occur?

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