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Exam 4: The Market Forces of Supply and Demand

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Question 121

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Who gets scarce resources in a market economy?

A) The government
B) Whoever the government decides gets them
C) Whoever wants them
D) Whoever is willing and able to pay the price

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

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Question 122

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Equilibrium quantity must decrease when

A) demand increases and supply decreases.
B) demand decreases and supply increases.
C) demand increases and supply does not change.
D) demand does not change and supply decreases.

E) All of the above
F) A) and B)

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Question 123

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Table 4-9 The following table shows the supply and demand schedules in a market. $\begin{array} { | l | l | l | } \hline \text { Price (\$) } & \begin{array} { l } \text { Quantity } \\\text { Demanded } \\\text { (units) }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Supplied } \\\text { (units) }\end{array} \\\hline 0 & 50 & 0 \\\hline 2 & 40 & 15 \\\hline 4 & 30 & 30 \\\hline 6 & 20 & 45 \\\hline 8 & 10 & 60 \\\hline 10 & 0 & 75 \\\hline\end{array}$ -Refer to Table 4-9. At a price of $2, will there be a surplus or shortage of units in this market?

Figure 4-4 -Refer to Figure 4-4. The movement from point A to point B on the graph is called

Scenario 4-1 Suppose the demand schedule in a market can be represented by the equation Q^D = 500 - 10P, where Q^D is the quantity demanded and P is the price. Also, suppose the supply schedule can be represented by the equation Q^S = 200 + 10P, where Q^S is the quantity supplied. -Refer to Scenario 4-1. What is the equilibrium quantity in this market?

Since individual buyers and individual sellers in a competitive market have no influence on the market price, what do we call the buyers and sellers in a competitive market?

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

The market demand curve

Figure 4-11 ​ ​ -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

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

A newspaper's classified ads are an example of a market.

If a surplus exists in a market, then we know that the actual price is

Equilibrium price must increase when

A yard sale is an example of a market.

Figure 4-9 ​ -Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from

A market is a group of buyers and sellers of a particular good or service.