Question 1

If a good is "normal," what will an increase in income result in?

Accepted Answer

A)  no change in the demand for the good
B)  an increase in the demand for the good
C)  a decrease in the demand for the good
D)  a lower market price

Question 2

Figure 4-5 
-Refer to Figure 4-5. Which of the four graphs represents the market for pizza delivery in a university town in September?

Accepted Answer

A)  graph A
B)  graph B
C)  graph C
D)  graph D

Question 3

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians receive higher royalties, compact disc players become more expensive, fewer firms produce music compact discs, and music lovers experience a decrease 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

Question 4

Which of the following would be most likely to increase the price of a new house?

Accepted Answer

A)  Higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future.
B)  Lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future.
C)  Lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future.
D)  Lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future.

Question 5

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Accepted Answer

A)  an increase in supply and demand
B)  an increase in supply and a decrease in demand
C)  a decrease in supply and an increase in demand
D)  a decrease in supply and demand

Question 6

What is the unique point at which the supply and demand curves intersect?

Accepted Answer

A)  market unity
B)  an agreement
C)  cohesion
D)  equilibrium

Question 7

What will happen to the demand curve for lemonade in a very hot summer in Toronto?

Accepted Answer

A)  It will shift to the left.
B)  It will shift to the right.
C)  It will remain stable but we would move down the curve.
D)  It will remain stable but we would move up the curve.

Question 8

How do the variables price and quantity demanded relate to each other?

Accepted Answer

A)  Price and quantity demanded are independent of each other.
B)  Price is the dependent variable and quantity demanded is the independent variable.
C)  Price is the independent variable and quantity demanded is the dependent variable.
D)  Price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers.

Question 9

Anyone willing to pay the market price for a resource may have it.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would NOT be a determinant of demand?

Accepted Answer

A)  the price of related goods
B)  income
C)  expectations
D)  the prices of the inputs used to produce the good

Question 11

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

A)  similar products
B)  numerous sellers
C)  market power
D)  numerous buyers

Question 12

Pens are normal goods. What will happen to the equilibrium price of pens if the prices of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?

Accepted Answer

A)  price will rise
B)  price will fall
C)  price will stay exactly the same
D)  price change will be ambiguous

Question 13

What happens if there is a shortage of a good at the current price?

Accepted Answer

A)  Sellers are producing more than buyers wish to buy.
B)  The market must be in equilibrium.
C)  The price is below the equilibrium price.
D)  Quantity demanded equals quantity supplied.

Question 14

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

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

Question 15

In a competitive market, why does each seller have limited control over the price of his product?

Accepted Answer

A)  because other sellers are offering similar products
B)  because in competitive markets, buyers have more influence over price than sellers
C)  because the products sold in competitive markets are generally in abundant supply
D)  because sellers in competitive markets prefer to meet and set a price that each will profit from

Question 16

Morgan tells you that the price of DVDs at the video store will be going up next week. How will you probably respond?

Accepted Answer

A)  by decreasing your current demand for DVDs
B)  by increasing your current demand for DVDs.
C)  by not changing your current demand for DVDs
D)  by refusing to ever buy any more DVDs at that store

Question 17

Figure 4-3 
-Refer to Figure 4-3. If price in this market is currently $8, what would happen?

Accepted Answer

A)  Quantity supplied would be 40 and quantity demanded would be 60.
B)  Quantity supplied would be 60 and quantity demanded would be 40.
C)  Quantity supplied would be 50 and quantity demanded would be 50.
D)  Quantity supplied would be 70 and quantity demanded would be 30.

Question 18

Figure 4-5 
-Refer to Figure 4-5. Which of the four graphs shown illustrates an increase in quantity supplied?

Accepted Answer

A)  graph A
B)  graph B
C)  graph C
D)  graph D

Question 19

What would the market for ice cream generally be considered?

Accepted Answer

A)  a monopolistic market
B)  a competitive market
C)  more organized than an auction
D)  a market where individual sellers have significant pricing power

Question 20

Figure 4-6 1, what do we know? A) Firms would be willing to supply less than before. B) People are less willing to buy the product at any price than before. C) People are now more willing to buy the product at any price than before. D) The price of the product has decreased, causing consumers to buy more of the product." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 4-6. If the demand curve shifts from D to D1, what do we know?

Accepted Answer

A)  Firms would be willing to supply less than before.
B)  People are less willing to buy the product at any price than before.
C)  People are now more willing to buy the product at any price than before.
D)  The price of the product has decreased, causing consumers to buy more of the product.

Exam 4: The Market Forces of Supply and Demand

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians receive higher royalties, compact disc players become more expensive, fewer firms produce music compact discs, and music lovers experience a decrease in income?

Correct Answer
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Figure 4-5 -Refer to Figure 4-5. Which of the four graphs shown illustrates an increase in quantity supplied?

Correct Answer
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Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Correct Answer
verified

In a competitive market, why does each seller have limited control over the price of his product?

Correct Answer
verified

Morgan tells you that the price of DVDs at the video store will be going up next week. How will you probably respond?

Correct Answer
verified

Which of the following is NOT a characteristic of a perfectly competitive market?

Correct Answer
verified

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

Correct Answer
verified

Correct Answer
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What is the unique point at which the supply and demand curves intersect?

Correct Answer
verified

Which of the following would be most likely to increase the price of a new house?

Correct Answer
verified

Which of the following would NOT be a determinant of demand?

Correct Answer
verified

If a good is "normal," what will an increase in income result in?

Correct Answer
verified

What will happen to the demand curve for lemonade in a very hot summer in Toronto?

Correct Answer
verified

Figure 4-6 -Refer to Figure 4-6. If the demand curve shifts from D to D₁, what do we know?

Correct Answer
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What happens if there is a shortage of a good at the current price?

Correct Answer
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Figure 4-3 -Refer to Figure 4-3. If price in this market is currently $8, what would happen?

Correct Answer
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Figure 4-5 -Refer to Figure 4-5. Which of the four graphs represents the market for pizza delivery in a university town in September?

Correct Answer
verified

What would the market for ice cream generally be considered?

Correct Answer
verified

How do the variables price and quantity demanded relate to each other?

Correct Answer
verified

Anyone willing to pay the market price for a resource may have it.

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians receive higher royalties, compact disc players become more expensive, fewer firms produce music compact discs, and music lovers experience a decrease in income?

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to Figure 4-5. Which of the four graphs shown illustrates an increase in quantity supplied?

Correct AnswerverifiedShow Answer

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Correct AnswerverifiedShow Answer

In a competitive market, why does each seller have limited control over the price of his product?

Correct AnswerverifiedShow Answer

Morgan tells you that the price of DVDs at the video store will be going up next week. How will you probably respond?

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the unique point at which the supply and demand curves intersect?

Correct AnswerverifiedShow Answer

Which of the following would be most likely to increase the price of a new house?

Correct AnswerverifiedShow Answer

Which of the following would NOT be a determinant of demand?

Correct AnswerverifiedShow Answer

If a good is "normal," what will an increase in income result in?

Correct AnswerverifiedShow Answer

What will happen to the demand curve for lemonade in a very hot summer in Toronto?

Correct AnswerverifiedShow Answer

Figure 4-6 -Refer to Figure 4-6. If the demand curve shifts from D to D1, what do we know?

Correct AnswerverifiedShow Answer

What happens if there is a shortage of a good at the current price?

Correct AnswerverifiedShow Answer

Figure 4-3 -Refer to Figure 4-3. If price in this market is currently $8, what would happen?

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to Figure 4-5. Which of the four graphs represents the market for pizza delivery in a university town in September?

Correct AnswerverifiedShow Answer

What would the market for ice cream generally be considered?

Correct AnswerverifiedShow Answer

How do the variables price and quantity demanded relate to each other?

Correct AnswerverifiedShow Answer

Anyone willing to pay the market price for a resource may have it.

Correct AnswerverifiedShow Answer

Correct Answer
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Figure 4-6 -Refer to Figure 4-6. If the demand curve shifts from D to D₁, what do we know?

Correct Answer
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Correct Answer
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Correct Answer
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