Question 1

Air fares are generally lower on Tuesdays and Wednesdays each week.What is a likely explanation for this occurrence?

Accepted Answer

A)  Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price.
B)  Demand is relatively variable, and lower supply leads to a lower equilibrium price.
C)  Lower levels of both supply and demand on these days lead to a lower equilibrium price.
D)  Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price.
E)  Demand is relatively fixed, and lower supply leads to a lower equilibrium price.

Question 2

Normally, when a governmental price control affects the price, it can be expected to result in a

Accepted Answer

A)  reduction in the number of units purchased only when the price is forced down.
B)  reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up.
C)  decrease in the number of units purchased when the price is forced up or down.
D)  increase in the number of units purchased when the price is forced up or down.

Question 3

Legal limits on prices will tend to cause misallocation of resources because

Accepted Answer

A)  the market price does not reflect the costs of production.
B)  people are unable to determine their preferences at the high or low price.
C)  producers are able to produce less efficiently.
D)  consumers no longer have incentive to spend their income efficiently.
E)  All of these responses are correct.

Question 4

A change in the price of a good has no effect on the supply schedule.

Accepted Answer

A) True 
 B)False

Question 5

Any factor that shifts the supply curve inward and to the left and does not affect the demand curve will raise the equilibrium price and reduce the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 6

If the demand for steak shifts to the left, a likely reason is that

Accepted Answer

A)  the price of cattle feed has risen.
B)  the price of pork has fallen.
C)  the price of steak has fallen.
D)  cattle production has fallen.

Question 7

Price floors lead to market surpluses.

Accepted Answer

A) True 
 B)False

Question 8

If the supply curve for housing has the usual positive slope, rent controls are likely to

Accepted Answer

A)  increase the quantity of housing.
B)  improve the quality of housing.
C)  aggravate the housing shortage.
D)  help low-income families find suitable housing.
E)  increase the demand for housing.

Question 9

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the impact on the wooden bat market would be

Accepted Answer

A)  a higher price for wooden bats.
B)  a lower price for wooden bats.
C)  an increase in the number of firms producing wooden bats.
D)  higher wages for workers in the wooden bat industry.

Question 10

A price above equilibrium always yields a surplus.

Accepted Answer

A) True 
 B)False

Question 11

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

Accepted Answer

A)  It increases.
B)  It decreases.
C)  It does not change.
D)  The demand for money will increase.

Question 12

A supply schedule can be plotted on a graph to yield a supply curve.

Accepted Answer

A) True 
 B)False

Question 13

The laws of supply and demand force prices to an equilibrium.

Accepted Answer

A) True 
 B)False

Question 14

Rent controls are designed to protect consumers from high rents.

Accepted Answer

A) True 
 B)False

Question 15

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

Accepted Answer

A)  a decrease in price and no predictable impact on output.
B)  a definite decrease in price and increase in output.
C)  an increase in output with no predictable change in price.
D)  no predictable changes in either price or output.

Question 16

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Accepted Answer

A) True 
 B)False

Question 17

An important assumption made when constructing a demand curve is that

Accepted Answer

A)  only price and quantity matter in determining the demand for a good.
B)  people always want a certain amount of the good.
C)  demand is always dependent on the supply of a good.
D)  all other determinants of demand are held constant.
E)  the demand curve has a positive slope.

Question 18

As price increases, additional suppliers are willing to produce a commodity.

Accepted Answer

A) True 
 B)False

Question 19

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

Accepted Answer

A) True 
 B)False

Question 20

-An increase in supply will have what effect on equilibrium price and quantity?

Accepted Answer

A)  Price will increase; quantity will decrease.
B)  Price will decrease; quantity will increase.
C)  Both price and quantity will increase.
D)  Both price and quantity will decrease.

Exam 4: Supply and Demand: an Initial Look

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

Correct AnswerverifiedShow Answer

-An increase in supply will have what effect on equilibrium price and quantity?

Correct AnswerverifiedShow Answer

If the demand for steak shifts to the left, a likely reason is that

Correct AnswerverifiedShow Answer

A change in the price of a good has no effect on the supply schedule.

Correct AnswerverifiedShow Answer

Rent controls are designed to protect consumers from high rents.

Correct AnswerverifiedShow Answer

An important assumption made when constructing a demand curve is that

Correct AnswerverifiedShow Answer

The laws of supply and demand force prices to an equilibrium.

Correct AnswerverifiedShow Answer

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

Correct AnswerverifiedShow Answer

If the supply curve for housing has the usual positive slope, rent controls are likely to

Correct AnswerverifiedShow Answer

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

Correct AnswerverifiedShow Answer

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Correct AnswerverifiedShow Answer

As price increases, additional suppliers are willing to produce a commodity.

Correct AnswerverifiedShow Answer

A supply schedule can be plotted on a graph to yield a supply curve.

Correct AnswerverifiedShow Answer

Normally, when a governmental price control affects the price, it can be expected to result in a

Correct AnswerverifiedShow Answer

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the impact on the wooden bat market would be

Correct AnswerverifiedShow Answer

Any factor that shifts the supply curve inward and to the left and does not affect the demand curve will raise the equilibrium price and reduce the equilibrium quantity.

Correct AnswerverifiedShow Answer

A price above equilibrium always yields a surplus.

Correct AnswerverifiedShow Answer

Price floors lead to market surpluses.

Correct AnswerverifiedShow Answer

Air fares are generally lower on Tuesdays and Wednesdays each week.What is a likely explanation for this occurrence?

Correct AnswerverifiedShow Answer

Legal limits on prices will tend to cause misallocation of resources because

Correct AnswerverifiedShow Answer

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