Question 1

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

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 decrease, and the effect on equilibrium quantity would be ambiguous.
D)  The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.E) A) and C)
F) All of the above

Question 2

Figure 4-10 
-Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

Accepted Answer

A)  shift in the supply curve.
B)  decrease in the quantity supplied.
C)  increase in the quantity supplied.
D)  Both a and b are correct.E) A) and B)
F) B) and C)

Question 3

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

Accepted Answer

A)  hair gel to increase.
B)  razors to increase.
C)  combs to increase.
D)  shampoo to increase.E) A) and C)
F) B) and C)

Question 4

An increase in the price of a good will

Accepted Answer

A)  increase supply.
B)  decrease supply.
C)  increase quantity supplied.
D)  decrease quantity supplied.E) All of the above
F) A) and B)

Question 5

Figure 4-23 
-Refer to Figure 4-23. In this market for sunscreen, there is a decrease in the price of zinc oxide, an input into sunscreen, and more producers enter the market. The equilibrium price

Accepted Answer

A)  increases and the equilibrium quantity decreases.
B)  decreases and the equilibrium quantity increases.
C)  is ambiguous and the equilibrium quantity increases.
D)  decreases and the equilibrium quantity is ambiguous.E) None of the above
F) B) and C)

Question 6

In a perfectly competitive market, at the market price, buyers

Accepted Answer

A)  cannot buy all they want, and sellers cannot sell all they want.
B)  cannot buy all they want, but sellers can sell all they want.
C)  can buy all they want, but sellers cannot sell all they want.
D)  can buy all they want, and sellers can sell all they want.E) B) and C)
F) B) and D)

Question 7

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

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

Question 8

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Accepted Answer

A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)  Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.E) A) and D)
F) B) and C)

Question 9

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 increases from $4 to $6, the market quantity supplied

Accepted Answer

A)  decreases by 10 gallons.
B)  decreases by 20 gallons.
C)  increases by 10 gallons.
D)  increases by 20 gallons.E) All of the above
F) None of the above

Question 10

Figure 4-25
The graph below pertains to the supply of paper to colleges and universities. A to SB. D) SB to SA." class="answers-bank-image d-inline" rel="preload" >
-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) None of the above
F) A) and B)

Question 11

If the number of buyers in a market decreases, then

Accepted Answer

A)  demand will increase.
B)  demand will decrease.
C)  supply will increase.
D)  supply will decrease.E) All of the above
F) C) and D)

Question 12

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

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 $4 is

Accepted Answer

A)  4 units.
B)  8 units.
C)  12 units.
D)  16 units.E) All of the above
F) B) and C)

Question 14

Sellers respond to a surplus by cutting their prices.

Accepted Answer

A) True 
 B)False

Question 15

A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  The price of marijuana, a complement to cigarettes, increased.
B)  Mandatory health warnings were placed on cigarette packages.
C)  Several foreign countries banned U.S. cigarettes in their countries.
D)  A tax was placed on cigarettes.E) A) and D)
F) B) and D)

Question 17

Figure 4-24
The diagram below pertains to the demand for turkey in the United States. A to DB. B) DB to DA. C) x to y. D) y to x." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 4-24. All else equal, the premature deaths of thousands of turkeys would cause a move from

Accepted Answer

A)  DA to DB.
B)  DB to DA.
C)  x to y.
D)  y to x.E) A) and B)
F) B) and D)

Question 18

Figure 4-27
Panel (a) 
Panel (b)    Panel (c) 
Panel (d)   
-Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Panel (c) 
D)  Panel (d) E) A) and B)
F) A) and C)

Question 19

Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices listed. 
-Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

Accepted Answer

A)  -200 cases
B)  -100 cases
C)  100 cases
D)  200 casesE) None of the above
F) B) and D)

Question 20

Figure 4-22 
-Refer to Figure 4-22. At a price of $24, there is a

Accepted Answer

A)  surplus of 4 units.
B)  surplus of 8 units.
C)  shortage of 4 units.
D)  shortage of 8 units.E) A) and C)
F) B) and D)

Exam 4: The Market Forces of Supply and Demand

Figure 4-22 -Refer to Figure 4-22. At a price of $24, there is a

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Figure 4-10 -Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

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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 increases from $4 to $6, the market quantity supplied

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What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

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Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

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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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In a perfectly competitive market, at the market price, buyers

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What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

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If the number of buyers in a market decreases, then

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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 $4 is

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Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?

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An increase in the price of a good will

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Figure 4-23 -Refer to Figure 4-23. In this market for sunscreen, there is a decrease in the price of zinc oxide, an input into sunscreen, and more producers enter the market. The equilibrium price

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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 (a) , the arrows are consistent with which of the following events?

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Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

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Table 4-10 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

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Figure 4-24 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-24. All else equal, the premature deaths of thousands of turkeys would cause a move from

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When a shortage exists in a market, sellers

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A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded.

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Sellers respond to a surplus by cutting their prices.

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