Question 1

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

Question 2

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

Accepted Answer

A)   is greater than the quantity that sellers are willing and able to sell.
B)   exactly equals the quantity that sellers are willing and able to sell.
C)   is less than the quantity that sellers are willing and able to sell.
D)   Either a)  or c)  could be correct.E) B) and D)
F) B) and C)

Question 3

Figure 4-5 
-Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

Accepted Answer

A)   a freeze in Florida
B)   a technological advance that allows oranges to ripen faster
C)   a decrease in the price of apples
D)   an announcement by the FDA that oranges prevent heart diseaseE) A) and D)
F) A) and C)

Question 4

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

Accepted Answer

A)   Consumers have experienced an increase in income, and beef-production technology has improved.
B)   The price of chicken has risen, and the price of steak sauce has fallen.
C)   New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.
D)   The demand curve for beef must be positively sloped.E) A) and C)
F) B) and C)

Question 5

A decrease in supply shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 6

If suppliers expect the price of their product to fall in the future, then they will

Accepted Answer

A)   decrease supply now.
B)   increase supply now.
C)   decrease supply in the future but not now.
D)   increase supply in the future but not now.E) A) and B)
F) C) and D)

Question 7

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)   Different sellers sell identical products.
B)   There are many sellers.
C)   Sellers must accept the price the market determines.
D)   All of the above are characteristics of a perfectly competitive market.E) A) and B)
F) None of the above

Question 8

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

Accepted Answer

A)   complementary goods.
B)   normal goods.
C)   inferior goods.
D)   substitute goods.E) B) and C)
F) A) and B)

Question 9

Figure 4-28 
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good.

Accepted Answer

The answer of Figure 4-28 
-Refer to Figure 4-28. Using...

Question 10

In a market economy, prices are the signals that guide the allocation of scarce resources.

Accepted Answer

A) True 
 B)False

Question 11

Figure 4-16 
-Refer to Figure 4-16. The shift from S to S' is called a(n)

Accepted Answer

A)   decrease in supply.
B)   decrease in quantity supplied.
C)   increase in supply.
D)   increase in quantity supplied.E) A) and C)
F) A) and D)

Question 12

Table 4-15
The following table shows the number of cases of water each seller is willing to sell at the prices listed.
 
-Refer to Table 4-15. If only Brook Mountain and Cascade Waters operate in this market, what is the market quantity supplied when the price is $3.00 per case?

Accepted Answer

The answer of Table 4-15
The following table shows the number...

Question 13

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 decreases from $10 to $8, the market quantity supplied decreases by

Accepted Answer

A)   2.5 gallons.
B)   4 gallons.
C)   10 gallons.
D)   50 gallons.E) A) and C)
F) None of the above

Question 14

Figure 4-16 
-Refer to Figure 4-16. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

Accepted Answer

A)   increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live.
B)   newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months.
C)   decrease in the price of lumber.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 15

Which of the following changes would not shift the supply curve for a good or service?

Accepted Answer

A)   a change in production technology
B)   a change in the price of the good or service
C)   a change in expectations about the future price of the good or service
D)   a change in input pricesE) C) and D)
F) B) and D)

Question 16

Table 4-11
 
-Refer to Table 4-11. If the price were $4, a

Accepted Answer

A)   surplus of 15 units would exist, and price would tend to fall.
B)   shortage of 25 units would exist, and price would tend to rise.
C)   surplus of 25 units would exist, and price would tend to fall.
D)   shortage of 40 units would exist, and price would tend to rise.E) A) and B)
F) None of the above

Question 17

Assume Leo buys coffee beans in a competitive market. It follows that

Accepted Answer

A)   Leo has a limited number of sellers from which to buy coffee beans.
B)   Leo will negotiate with sellers whenever he buys coffee beans.
C)   Leo cannot influence the price of coffee beans even if he buys a large quantity of them.
D)   None of the above is correct.E) B) and C)
F) C) and D)

Question 18

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) A) and B)

Question 19

Table 4-1
 
-Refer to Table 4-1. Which of the following illustrates the market demand curve?

Accepted Answer

A)   
B)   
C)   
D)   E) B) and C)
F) A) and D)

Question 20

A market supply curve shows how the total quantity supplied of a good varies as

Accepted Answer

A)   production technology varies.
B)   price varies.
C)   input prices vary.
D)   demand varies.E) A) and B)
F) B) and D)

Exam 4: The Market Forces of Supply and Demand

Table 4-15 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-15. If only Brook Mountain and Cascade Waters operate in this market, what is the market quantity supplied when the price is $3.00 per case?

Correct AnswerverifiedShow Answer

Figure 4-16 -Refer to Figure 4-16. The shift from S to S' is called a(n)

Correct AnswerverifiedShow Answer

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good.

Correct AnswerverifiedShow Answer

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

Correct AnswerverifiedShow Answer

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

A market supply curve shows how the total quantity supplied of a good varies as

Correct AnswerverifiedShow Answer

Which of the following changes would not shift the supply curve for a good or service?

Correct AnswerverifiedShow Answer

In a market economy, prices are the signals that guide the allocation of scarce resources.

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

If suppliers expect the price of their product to fall in the future, then they will

Correct AnswerverifiedShow Answer

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

Correct AnswerverifiedShow Answer

Assume Leo buys coffee beans in a competitive market. It follows that

Correct AnswerverifiedShow Answer

Figure 4-16 -Refer to Figure 4-16. If the supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by a(n)

Correct AnswerverifiedShow Answer

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 decreases from $10 to $8, the market quantity supplied decreases by

Correct AnswerverifiedShow Answer

Table 4-1 -Refer to Table 4-1. Which of the following illustrates the market demand curve?

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A decrease in supply shifts the supply curve to the left.

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Table 4-11 -Refer to Table 4-11. If the price were $4, a

Correct AnswerverifiedShow Answer

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