Question 1

If the demand for a good falls when income falls, then the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 2

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

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 D)
F) None of the above

Question 3

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation  , where  is the quantity demanded and  is the price. Also, suppose the supply schedule can be represented by the equation  , where  is the quantity supplied.
-Refer to Scenario 4-1. Suppose the supply curve shifts to  
. What is the new equilibrium price and quantity in this market?

Accepted Answer

The new eq...

Question 4

An increase in the price of a good would

Accepted Answer

A)  increase the supply of the good.
B)  increase the amount purchased by buyers.
C)  give producers an incentive to produce more.
D)  decrease both the quantity demanded of the good and the quantity supplied of the good.E) A) and B)
F) A) and C)

Question 5

A decrease in supply is represented by a

Accepted Answer

A)  movement downward and to the left along a supply curve.
B)  movement upward and to the right along a supply curve.
C)  rightward shift of a supply curve.
D)  leftward shift of a supply curve.E) A) and D)
F) None of the above

Question 6

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Accepted Answer

A)  an increase in the price of sailboats
B)  a decrease in the number of firms selling sailboats
C)  a decrease in the price of fiberglass and sail cloth
D)  a decrease in the price of America's Cup sailing t-shirtsE) A) and D)
F) All of the above

Question 7

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

Question 8

Which of the following events must cause equilibrium quantity to fall?

Accepted Answer

A)  demand increases and supply decreases
B)  demand and supply both decrease
C)  demand decreases and supply increases
D)  demand and supply both increaseE) A) and C)
F) C) and D)

Question 9

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

Accepted Answer

A)  the price of pork increases.
B)  the price of pork decreases.
C)  the price of pork does not change.
D)  there is no longer a market for pork.E) B) and C)
F) C) and D)

Question 10

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Accepted Answer

A)  "fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply.
B)  increase the supply of its doll now before the other doll hits the market.
C)  increase the price of its doll now.
D)  discontinue its doll.E) C) and D)
F) A) and B)

Question 11

Table 4-11 
-Refer to Table 4-11. If the price were $8, a

Accepted Answer

A)  shortage of 20 units would exist, and price would tend to rise.
B)  surplus of 25 units would exist, and price would tend to fall.
C)  shortage of 25 units would exist, and price would tend to rise.
D)  surplus of 45 units would exist, and price would tend to fall.E) B) and C)
F) A) and B)

Question 12

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

Accepted Answer

The answer of Studies show that lower cigarette prices are...

Question 13

A rightward shift of a demand curve is called a(n)

Accepted Answer

A)  increase in demand.
B)  decrease in demand.
C)  decrease in quantity demanded.
D)  increase in quantity demanded.E) A) and B)
F) All of the above

Question 14

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Accepted Answer

A)  luxury good.
B)  inferior good.
C)  normal good.
D)  complementary good.E) A) and B)
F) A) and C)

Question 15

An early frost in the vineyards of Napa Valley would cause a(n)

Accepted Answer

A)  increase in the demand for wine, increasing price.
B)  increase in the supply of wine, decreasing price.
C)  decrease in the demand for wine, decreasing price.
D)  decrease in the supply of wine, increasing price.E) None of the above
F) B) and C)

Question 16

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Accepted Answer

A)  will increase but not until the end of the year.
B)  increases today.
C)  decreases as you look for a substitute good.
D)  shifts left today.E) A) and B)
F) B) and C)

Question 17

There is no shortage of scarce resources in a market economy because

Accepted Answer

A)  the government makes shortages illegal.
B)  resources are abundant in market economies.
C)  prices adjust to eliminate shortages.
D)  quantity supplied is always greater than quantity demanded in market economies.E) B) and C)
F) A) and B)

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If Miguel expects to earn a higher income next month, he may choose to

Accepted Answer

A)  save more now and spend less of his current income on goods and services.
B)  save less now and spend more of his current income on goods and services.
C)  decrease his current demand for goods and services.
D)  move along his current demand curves for goods and services.E) A) and B)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

Correct Answer
verified

Which of the following events must cause equilibrium quantity to fall?

Correct Answer
verified

If the demand for a good falls when income falls, then the good is called an inferior good.

Correct Answer
verified

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

Correct Answer
verified

An increase in the price of a good would

Correct Answer
verified

If Miguel expects to earn a higher income next month, he may choose to

Correct Answer
verified

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Correct Answer
verified

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Correct Answer
verified

Correct Answer
verified
The new eq...
View Answer

A rightward shift of a demand curve is called a(n)

Correct Answer
verified

Table 4-11 -Refer to Table 4-11. If the price were $8, a

Correct Answer
verified

When a shortage exists in a market, sellers

Correct Answer
verified

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

Correct Answer
verified

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Correct Answer
verified

A decrease in supply is represented by a

Correct Answer
verified

An early frost in the vineyards of Napa Valley would cause a(n)

Correct Answer
verified

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

Correct Answer
verified

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Correct Answer
verified

There is no shortage of scarce resources in a market economy because

Correct Answer
verified

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Studies show that lower cigarette prices are associated with greater use of marijuana; therefore, tobacco and marijuana are

Correct AnswerverifiedShow Answer

Which of the following events must cause equilibrium quantity to fall?

Correct AnswerverifiedShow Answer

If the demand for a good falls when income falls, then the good is called an inferior good.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price of a good would

Correct AnswerverifiedShow Answer

If Miguel expects to earn a higher income next month, he may choose to

Correct AnswerverifiedShow Answer

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Correct AnswerverifiedShow Answer

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe new eq...View AnswerShow Answer

A rightward shift of a demand curve is called a(n)

Correct AnswerverifiedShow Answer

Table 4-11 -Refer to Table 4-11. If the price were $8, a

Correct AnswerverifiedShow Answer

When a shortage exists in a market, sellers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Correct AnswerverifiedShow Answer

A decrease in supply is represented by a

Correct AnswerverifiedShow Answer

An early frost in the vineyards of Napa Valley would cause a(n)

Correct AnswerverifiedShow Answer

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

Correct AnswerverifiedShow Answer

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

Correct AnswerverifiedShow Answer

There is no shortage of scarce resources in a market economy because

Correct AnswerverifiedShow Answer

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Correct AnswerverifiedShow Answer

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verified
The new eq...
View Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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