Question 1

The slope of the demand curve for a normal good must be positive.

Accepted Answer

A) True 
 B)False

Question 2

A demand curve shows how quantity demanded changes as the price changes. It implies that

Accepted Answer

A)   only a change in price can shift a demand curve
B)   everything else that affects demand is assumed to be constant
C)   quantity demanded is unrelated to price
D)   economists are concerned only with money
E)   it is impossible to show how anything but price affects demand

Question 3

The difference between normal and inferior goods is that

Accepted Answer

A)   normal goods are of better quality than inferior goods
B)   an increase in price will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward
C)   if the price of a normal good increases, individuals who buy it are poorer; for inferior goods, the opposite is true
D)   an inferior good is something that will not be demanded until quantities of the normal good have been exhausted
E)   an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward

Question 4

Exhibit 4-14 2 to D1 B)  movement from b to a on demand curve D1 C)  demand shift from D1 to D2 D)  movement from d to c on demand curve D2 E)  none of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to exhibit 4-14. An increase in consumer income will cause which of the following to happen if baby formula is an inferior good?

Accepted Answer

A)   demand shift from D2 to D1
B)   movement from b to a on demand curve D1
C)   demand shift from D1 to D2
D)   movement from d to c on demand curve D2
E)   none of the above

Question 5

An increase in the price of a good normally increases the

Accepted Answer

A)   demand for its substitutes
B)   supply of complements for the good
C)   purchasing power of consumers' dollar incomes
D)   money income of the consumer
E)   quantity demanded of all goods that are unrelated to the good in question

Question 6

Exhibit 4-4 
-In Exhibit 4-4, which of the following could not cause the shift from D to D'?

Accepted Answer

A)   a decrease in the price of a complement
B)   an increase in the price of a substitute
C)   a decrease in the price of the good in question
D)   an increase in the number of consumers
E)   a decrease in income if the good in question is an inferior good

Question 7

A shortage of textbooks will cause

Accepted Answer

A)   a decrease in the supply of textbooks
B)   a decrease in the demand for textbooks
C)   both an increase in the supply of textbooks and a decrease in the demand for textbooks
D)   an increase in the price of textbooks, caused by a shift of either the supply curve or the demand curve
E)   an increase in the price of textbooks

Question 8

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Accepted Answer

A)   equilibrium price will fall and equilibrium quantity will rise
B)   equilibrium price will rise and equilibrium quantity will fall
C)   equilibrium price will rise and equilibrium quantity will rise
D)   equilibrium price will fall and equilibrium quantity will fall
E)   neither equilibrium price nor equilibrium quantity will change

Question 9

For a given supply curve, an increase in demand will typically

Accepted Answer

A)   increase price, but quantity could change in either direction
B)   increase quantity, but price could change in either direction
C)   increase price but leave quantity unchanged
D)   decrease both quantity and price
E)   increase both quantity and price

Question 10

If supply increases, then quantity demanded decreases.

Accepted Answer

A) True 
 B)False

Question 11

The market supply curve of a particular product indicates the total quantities

Accepted Answer

A)   that are actually sold during a given time period
B)   that buyers are willing to purchase at alternative prices
C)   that sellers are willing and able to offer at alternative prices
D)   that sellers are willing to offer for sale
E)   of complements offered for sale

Question 12

Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen. Which of the following best explains this situation?

Accepted Answer

A)   When the price falls, the quantity supplied increases.
B)   There has been a shortage of DVDs.
C)   The supply of DVDs must have decreased.
D)   The demand curve for DVDs slopes upward, so an increase in demand leads to a lower price.
E)   The supply of DVDs must have increased more than the demand for DVDs increased.

Question 13

If the demand for bicycles increases,

Accepted Answer

A)   the quantity demanded decreases
B)   equilibrium price increases and equilibrium quantity decreases
C)   equilibrium price decreases and equilibrium quantity increases
D)   quantity supplied increases
E)   quantity supplied decreases

Question 14

Economists

Accepted Answer

A)   believe that tastes are the major influence on consumers' income expectations
B)   have observed that tastes vary with changes in the number of consumers
C)   recognize that tastes have an important impact on demand
D)   can say a great deal about the origin of tastes
E)   suspect that tastes can cause a movement along the demand curve

Question 15

Exhibit 4-15 2 to S1 B)  movement from c to d on supply curve S2 C)  supply shift from S1 to S2 D)  movement from b to a on supply curve S1 E)  none of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to exhibit 4-15. A decrease in the price of baby formula will cause which of the following to happen?

Accepted Answer

A)   supply shift from S2 to S1
B)   movement from c to d on supply curve S2
C)   supply shift from S1 to S2
D)   movement from b to a on supply curve S1
E)   none of the above

Question 16

Exhibit 4-15 2 to S1 B)  movement from a to b on supply curve S1 C)  supply shift from S1 to S2 D)  movement from c to d on supply curve S2 E)  movement from d to c on supply curve S2" class="answers-bank-image d-inline" rel="preload" >
-Refer to exhibit 4-15. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?

Accepted Answer

A)   supply shift from S2 to S1
B)   movement from a to b on supply curve S1
C)   supply shift from S1 to S2
D)   movement from c to d on supply curve S2
E)   movement from d to c on supply curve S2

Question 17

Exhibit 4-8 
-Based on Exhibit 4-8, a rent ceiling of $750 per month would result in a number of units rented of

Accepted Answer

A)   There is not enough information to determine the answer.
B)   50,000
C)   greater than 50,000 but less than 90,000
D)   90,000
E)   130,000

Question 18

Exhibit 4-2 
-Consider Exhibit 4-2. Which of the following represents a decrease in the quantity supplied?

Accepted Answer

A)   a movement from C to D
B)   a movement from C to B
C)   a movement from E to D
D)   a movement from F to E
E)   none of the above represents an increase in the quantity supplied

Question 19

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

Accepted Answer

A)   increase the supply of corn
B)   increase the supply of soybeans
C)   decrease the supply of soybeans
D)   decrease the supply of corn
E)   have no effect on the supplies of corn and soybeans

Question 20

If both demand and supply increase, price will

Accepted Answer

A)   always increase
B)   always decrease
C)   increase only if supply increases more than demand does
D)   increase only if demand increases more than supply does
E)   decrease only if supply increases less than demand does

Exam 4: Demand, Supply, and Markets

Economists

Correct AnswerverifiedShow Answer

Exhibit 4-2 -Consider Exhibit 4-2. Which of the following represents a decrease in the quantity supplied?

Correct AnswerverifiedShow Answer

If both demand and supply increase, price will

Correct AnswerverifiedShow Answer

If supply increases, then quantity demanded decreases.

Correct AnswerverifiedShow Answer

The slope of the demand curve for a normal good must be positive.

Correct AnswerverifiedShow Answer

A demand curve shows how quantity demanded changes as the price changes. It implies that

Correct AnswerverifiedShow Answer

Exhibit 4-15 -Refer to exhibit 4-15. A decrease in the price of baby formula will cause which of the following to happen?

Correct AnswerverifiedShow Answer

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

Correct AnswerverifiedShow Answer

The difference between normal and inferior goods is that

Correct AnswerverifiedShow Answer

Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen. Which of the following best explains this situation?

Correct AnswerverifiedShow Answer

Exhibit 4-8 -Based on Exhibit 4-8, a rent ceiling of $750 per month would result in a number of units rented of

Correct AnswerverifiedShow Answer

For a given supply curve, an increase in demand will typically

Correct AnswerverifiedShow Answer

Exhibit 4-4 -In Exhibit 4-4, which of the following could not cause the shift from D to D'?

Correct AnswerverifiedShow Answer

If the demand for bicycles increases,

Correct AnswerverifiedShow Answer

The market supply curve of a particular product indicates the total quantities

Correct AnswerverifiedShow Answer

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

Correct AnswerverifiedShow Answer

Exhibit 4-15 -Refer to exhibit 4-15. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?

Correct AnswerverifiedShow Answer

A shortage of textbooks will cause

Correct AnswerverifiedShow Answer

Exhibit 4-14 -Refer to exhibit 4-14. An increase in consumer income will cause which of the following to happen if baby formula is an inferior good?

Correct AnswerverifiedShow Answer

An increase in the price of a good normally increases the

Correct AnswerverifiedShow Answer

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