Question 1

Figure 4-4 1 to D2. B) D2 to D1. C) D3 to D2. D) D3 to D1." class="answers-bank-image d-inline" rel="preload" >
-Assume that Figure 4-4 shows demand for soda.An increase in the price of bottled water will change demand from

Accepted Answer

A)  D1 to D2.
B)  D2 to D1.
C)  D3 to D2.
D)  D3 to D1.

Question 2

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to

Accepted Answer

A)  increase.
B)  decrease.
C)  not change.
D)  Uncertain-economic theory has no answer to this question.

Question 3

The demand curve shows graphically how much consumers

Accepted Answer

A)  purchased at different prices over time.
B)  purchase at different prices in different periods.
C)  are willing and able to buy over a range of prices during a particular period.
D)  are willing and able to buy over a range of prices in over time.

Question 4

The supply curve of books (which are produced using paper made from trees)  will shift to the left in response to

Accepted Answer

A)  a decline in college tuition.
B)  an increase in home building.
C)  an increase in the supply of lumberjacks.
D)  an end to government regulations that limit timber harvesting in national forests.

Question 5

Are markets always in equilibrium?

Accepted Answer

A)  Yes, they are always at the equilibrium point, or very close to it.
B)  Yes, because few things tend to alter supply and demand.
C)  No, but if there is no interference, they tend to move toward equilibrium.
D)  No, they never "settle down" into a stable price and quantity.
E)  Uncertain, economic theory has no answer to this question.

Question 6

When a demand schedule is drawn as a graph,

Accepted Answer

A)  price is measured on the vertical axis.
B)  quantity is measured on the horizontal axis.
C)  the resulting curve has a negative slope.
D)  the other variables (besides price and quantity)  are held constant.
E)  All of these responses are correct.

Question 7

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

Accepted Answer

A) True 
 B)False

Question 8

The major drawback of a price ceiling is

Accepted Answer

A)  it causes a surplus.
B)  government regulations of this kind are difficult to enforce.
C)  it causes a shortage.
D)  there is no drawback.

Question 9

The laws of supply and demand did not apply to elephant tusks.

Accepted Answer

A) True 
 B)False

Question 10

Equilibrium in a market is

Accepted Answer

A)  a situation in which there are no inherent forces that produce change.
B)  the natural state of affairs in the market.
C)  the actual price and quantity that will exist in a market.
D)  the best price and quantity that can exist in a market.
E)  All of these responses are correct.

Question 11

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 12

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Accepted Answer

A) True 
 B)False

Question 13

1 to S2. B) S2 to S1. C) S3 to S2. D) S3 to S1." class="answers-bank-image d-inline" rel="preload" >
-In Figure 4-16, an increase in the number of producers will shift supply from

Accepted Answer

A)  S1 to S2.
B)  S2 to S1.
C)  S3 to S2.
D)  S3 to S1.

Question 14

A key assumption made when a supply schedule is constructed is that

Accepted Answer

A)  the only factors that matter in determining supply are price and quantity.
B)  firms only want to sell a certain amount of a product.
C)  supply is too important to be left to the marketplace.
D)  only price and quantity vary, all other determinants of supply are held constant.
E)  demand has a positive slope.

Question 15

In the 1990s, Congress considered an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved, what would most likely happen to the number of families employed in agriculture?

Accepted Answer

A)  It would decrease, because agricultural prices would fall.
B)  It would decrease, because agricultural prices would rise.
C)  It would increase, because agricultural prices would fall.
D)  It would increase, because agricultural prices would rise.

Question 16

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Accepted Answer

A) True 
 B)False

Question 17

Sugar price supports ensure an abundance of sugar, and hence reasonable prices for consumers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 4-4 1 to D2. B) D2 to D1 C) D3 to D2. D) D3 to D1." class="answers-bank-image d-inline" rel="preload" >
-Assume that Figure 4-4 shows demand for skirt steak, which is used to make fajitas.A decrease in the price of tortillas will change demand from

Accepted Answer

A)  D1 to D2.
B)  D2 to D1
C)  D3 to D2.
D)  D3 to D1.

Question 19

When there is an increase in demand,

Accepted Answer

A)  the demand curve shifts to the right of the original demand curve.
B)  the demand curve rotates clockwise.
C)  the demand curve shifts to the left of the original demand curve.
D)  the demand curve rotates counterclockwise.
E)  a lower price has increased the amount of the good that consumers will buy.

Question 20

1 to S2. B) S2 to S1. C) S2 to S3. D) S1 to S3." class="answers-bank-image d-inline" rel="preload" >
-Assume that Figure 4-16 shows the supply of steak.An increase in the price of cattle feed will change the supply from

Accepted Answer

A)  S1 to S2.
B)  S2 to S1.
C)  S2 to S3.
D)  S1 to S3.

Exam 4: Supply and Demand: an Initial Look

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to

Correct AnswerverifiedShow Answer

Equilibrium in a market is

Correct AnswerverifiedShow Answer

-In Figure 4-16, an increase in the number of producers will shift supply from

Correct AnswerverifiedShow Answer

The laws of supply and demand did not apply to elephant tusks.

Correct AnswerverifiedShow Answer

Are markets always in equilibrium?

Correct AnswerverifiedShow Answer

The major drawback of a price ceiling is

Correct AnswerverifiedShow Answer

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

Correct AnswerverifiedShow Answer

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

Correct AnswerverifiedShow Answer

-Assume that Figure 4-16 shows the supply of steak.An increase in the price of cattle feed will change the supply from

Correct AnswerverifiedShow Answer

At equilibrium, the market will clear, with no surpluses or shortages occurring.

Correct AnswerverifiedShow Answer

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

Correct AnswerverifiedShow Answer

In the 1990s, Congress considered an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved, what would most likely happen to the number of families employed in agriculture?

Correct AnswerverifiedShow Answer

When there is an increase in demand,

Correct AnswerverifiedShow Answer

Sugar price supports ensure an abundance of sugar, and hence reasonable prices for consumers.

Correct AnswerverifiedShow Answer

Figure 4-4 -Assume that Figure 4-4 shows demand for soda.An increase in the price of bottled water will change demand from

Correct AnswerverifiedShow Answer

Figure 4-4 -Assume that Figure 4-4 shows demand for skirt steak, which is used to make fajitas.A decrease in the price of tortillas will change demand from

Correct AnswerverifiedShow Answer

The demand curve shows graphically how much consumers

Correct AnswerverifiedShow Answer

When a demand schedule is drawn as a graph,

Correct AnswerverifiedShow Answer

A key assumption made when a supply schedule is constructed is that

Correct AnswerverifiedShow Answer

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Correct AnswerverifiedShow Answer

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