Question 1

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

Accepted Answer

A)   Consumers have experienced an increase in income and sugar-production technology has improved.
B)   The price of artificial sweetener has risen and the price of coffee has fallen.
C)   Consumer tastes have changed so as to prefer sugar less than before.
D)   The demand curve for sugar must be positively sloped.E) A) and C)
F) All of the above

Question 2

If buyers and/or sellers are price takers, what can they do individually?

Accepted Answer

A)   They have no influence on market price.
B)   They have ultimate control over market price.
C)   Buyers will be able to find prices lower than those determined in the market.
D)   They can somewhat influence the market price.E) B) and D)
F) C) and D)

Question 3

When it comes to people's tastes, what do economists generally believe?

Accepted Answer

A)   Tastes are based on forces beyond the realm of economics.
B)   Tastes are based on historical and psychological forces.
C)   Tastes don't change.
D)   Tastes do not directly affect demand.E) All of the above
F) B) and D)

Question 4

What would happen to the equilibrium price and quantity of apples if the wages of apple pickers fell and the price of peaches fell?

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 ambiguousE) A) and B)
F) A) and C)

Question 5

What will happen to the equilibrium price and quantity of gasoline powered lawnmowers if the prices of battery powered lawnmowers goes down and, at the same time, firms switch from producing gasoline powered lawnmowers to producing battery powered lawnmowers?

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 ambiguousE) B) and D)
F) A) and D)

Question 6

What is a table called that shows the relationship between the price of a good and the quantity demanded?

Accepted Answer

A)   demand table
B)   demand schedule
C)   market table
D)   quantity-demanded scheduleE) All of the above
F) B) and C)

Question 7

-Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium price and an indeterminate change in equilibrium quantity?

Accepted Answer

A)   space A
B)   space B
C)   space C
D)   space DE) A) and C)
F) A) and D)

Question 8

What is the term for buyers and sellers who have no influence on market price?

Accepted Answer

A)   price makers
B)   market pawns
C)   price takers
D)   powerlessE) C) and D)
F) B) and C)

Question 9

Figure 4-6 
-Refer to the Figure 4-6. What happens if the demand curve shifts from D1 to D?

Accepted Answer

A)   Firms would be willing to supply less than before.
B)   People are less willing to buy the product at any price than before.
C)   People are now more willing to buy the product at any price than before.
D)   The price of the product has decreased, causing consumers to buy more of the product.E) B) and C)
F) C) and D)

Question 10

Figure 4-9 
-Refer to the Figure 4-9. Which graph could be used to show the result of 5 percent of the country's smokers deciding to stop smoking?

Accepted Answer

A)   graph a
B)   graph b
C)   graph c
D)   both a and c could be used to show the resultE) C) and D)
F) B) and D)

Question 11

-Refer to the Table 4-2. What is the space that would represent an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Accepted Answer

A)   space A
B)   space B
C)   space C
D)   space DE) B) and C)
F) A) and D)

Question 12

What is on the vertical axis of a demand graph?

Accepted Answer

A)   income
B)   quantity
C)   cost of production
D)   priceE) A) and D)
F) B) and C)

Question 13

If Nick receives a decrease in his pay, what would we expect?

Accepted Answer

A)   Nick's demand for each good he purchases to remain unchanged
B)   Nick's demand for normal goods to increase
C)   Nick's demand for luxury goods to increase
D)   Nick's demand for inferior goods to increaseE) B) and C)
F) A) and D)

Question 14

An increase in the price of pizza will shift the demand curve for pizza to the left.

Accepted Answer

A) True 
 B)False

Question 15

New iPhones are normal goods. What will happen to the equilibrium price and quantity in the market for iPhones if the price of Android phones rises, the wages for iPhone chip makers increase, more buyers enter the market for iPhones, and the price of iPhone batteries increase?

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 ambiguousE) None of the above
F) A) and D)

Question 16

Figure 4-10 
-Refer to the Figure 4-10. What would cause the movement from point A to point B on the graph?

Accepted Answer

A)   a decrease in the price of the good
B)   an increase in the price of the good
C)   an increase in technology
D)   a decrease in input pricesE) A) and B)
F) None of the above

Question 17

In a free market, who determines how much of a good will be sold and the price at which it is sold?

Accepted Answer

A)   suppliers
B)   demanders
C)   the government
D)   suppliers and demanders togetherE) None of the above
F) All of the above

Question 18

Market demand is given as Qd = 80 - P. Market supply is given as Qs = 3P. What would result if the market price were $10?

Accepted Answer

A)   a shortage of 20
B)   a surplus of 20
C)   a surplus of 40
D)   a shortage of 40E) A) and B)
F) A) and D)

Question 19

Figure 4-6 
-Refer to the Figure 4-6. What could cause the shift from D to D1?

Accepted Answer

A)   an increase in price
B)   a decrease in the price of a complement
C)   an increase in technology
D)   a decrease in the price of a substituteE) None of the above
F) A) and B)

Question 20

Which of the following would be most likely to decrease the price of a new house?

Accepted Answer

A)   higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future
B)   higher wages for carpenters, lower wood prices, reductions in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future
C)   lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future
D)   lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the futureE) A) and C)
F) C) and D)

Exam 4: The Market Forces of Supply and Demand

Figure 4-9 -Refer to the Figure 4-9. Which graph could be used to show the result of 5 percent of the country's smokers deciding to stop smoking?

Correct AnswerverifiedShow Answer

New iPhones are normal goods. What will happen to the equilibrium price and quantity in the market for iPhones if the price of Android phones rises, the wages for iPhone chip makers increase, more buyers enter the market for iPhones, and the price of iPhone batteries increase?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 80 - P. Market supply is given as Qs = 3P. What would result if the market price were $10?

Correct AnswerverifiedShow Answer

What is a table called that shows the relationship between the price of a good and the quantity demanded?

Correct AnswerverifiedShow Answer

If Nick receives a decrease in his pay, what would we expect?

Correct AnswerverifiedShow Answer

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point A to point B on the graph?

Correct AnswerverifiedShow Answer

Which of the following would be most likely to decrease the price of a new house?

Correct AnswerverifiedShow Answer

-Refer to the Table 4-2. What is the space that would represent an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Correct AnswerverifiedShow Answer

-Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium price and an indeterminate change in equilibrium quantity?

Correct AnswerverifiedShow Answer

An increase in the price of pizza will shift the demand curve for pizza to the left.

Correct AnswerverifiedShow Answer

In a free market, who determines how much of a good will be sold and the price at which it is sold?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 4-6 -Refer to the Figure 4-6. What could cause the shift from D to D1?

Correct AnswerverifiedShow Answer

What will happen to the equilibrium price and quantity of gasoline powered lawnmowers if the prices of battery powered lawnmowers goes down and, at the same time, firms switch from producing gasoline powered lawnmowers to producing battery powered lawnmowers?

Correct AnswerverifiedShow Answer

Figure 4-6 -Refer to the Figure 4-6. What happens if the demand curve shifts from D1 to D?

Correct AnswerverifiedShow Answer

What is the term for buyers and sellers who have no influence on market price?

Correct AnswerverifiedShow Answer

When it comes to people's tastes, what do economists generally believe?

Correct AnswerverifiedShow Answer

If buyers and/or sellers are price takers, what can they do individually?

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of apples if the wages of apple pickers fell and the price of peaches fell?

Correct AnswerverifiedShow Answer

What is on the vertical axis of a demand graph?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified