Question 1

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises,we would expect

Accepted Answer

A)   the demand for honey to increase
B)   the demand for honey to decrease
C)   the quantity demanded of honey to decrease
D)   the price of honey to decrease
E)   the quantity demanded of honey to increase

Question 2

A price ceiling set below the equilibrium price will result in a shortage.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 4-14
 
-In Exhibit 4-14,a decrease in price from $10 to $4 leads to:

Accepted Answer

A)   An increase in supply
B)   A decrease in supply
C)   An increase in quantity demanded
D)   A downward movement along the supply curve
E)   An upward movement along the supply curve

Question 4

Economists emphasize the importance of equilibrium in markets because

Accepted Answer

A)   trading in markets can only occur at the equilibrium price and quantity
B)   the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity
C)   all buyers and sellers are better off at the equilibrium point than any other price and quantity combination
D)   it represents a compromise between sellers hoping for low prices and buyers searching for high prices
E)   it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service

Question 5

The income effect of a decrease in the price of potatoes (an inferior good)  is a(n)

Accepted Answer

A)   decrease in the demand for potatoes
B)   decrease in the quantity demanded of potatoes
C)   increase in the demand for potatoes
D)   increase in the quantity demanded of potatoes
E)   new demand curve because everything else is no longer constant

Question 6

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

Accepted Answer

A)   a leftward shift of the demand curve
B)   a movement leftward along the demand curve
C)   a rightward shift of the demand curve
D)   a movement rightward along the demand curve
E)   a rightward shift of the supply curve

Question 7

Suppose you drink more tea because the price of coffee has increased.Which of the following best explains your action?

Accepted Answer

A)   the law of supply
B)   tea and coffee are complements
C)   the substitution effect
D)   the income effect
E)   your nominal income has increased

Question 8

A decrease in the price of peanuts will cause a leftward shift of the supply curve of peanut butter.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 4-13
 
-In Exhibit 4-13 depicting the market for pizza,a movement from point B to point C represents:

Accepted Answer

A)   An increase in the quantity demanded of pizza caused by an increase in the price of pizza
B)   An increase in the quantity demanded of pizza caused by a decrease in the price of pizza
C)   An increase in the demand for pizza
D)   A decrease in the demand for pizza
E)   A decrease in the quantity demanded for pizza caused by a decrease in the price of pizza

Question 10

The income effect of an increase in the price of hominy grits (an inferior good)  is a(n)

Accepted Answer

A)   decrease in the demand for hominy grits
B)   decrease in the quantity demanded of hominy grits
C)   increase in the demand for hominy grits
D)   increase in the quantity demanded of hominy grits
E)   new demand curve because everything else is no longer constant

Question 11

If the price of vanilla ice cream decreases,it is likely that

Accepted Answer

A)   demand for vanilla ice cream will increase
B)   demand for vanilla ice cream will decrease
C)   demand for chocolate ice cream will increase
D)   demand for chocolate ice cream will decrease
E)   the quantity demanded of vanilla ice cream will decrease

Question 12

Which of the following events is likely to reduce the demand for on-campus student housing?

Accepted Answer

A)   a rise in rents for off-campus housing
B)   more students enrolling at the university
C)   it becomes less fashionable to live "on campus"
D)   a rise in dorm fees
E)   a rise in the incomes of students

Question 13

A shortage occurs whenever

Accepted Answer

A)   quantity demanded exceeds quantity supplied at the equilibrium price
B)   price is less than equilibrium price
C)   quantity demanded is less than quantity supplied
D)   goods are scarce
E)   some of the people who need the product are not willing and able to buy it at the equilibrium price

Question 14

A leftward shift of a supply curve represents a decrease in supply.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 4-16
 
-If the market described in Exhibit 4-16 experiences a surplus of computers,then an economist would expect the:

Accepted Answer

A)   Price of computers to increase to $600
B)   Price of computers to decrease to $600
C)   Quantity demanded of computers to decrease to 40
D)   Quantity supplied of computers to increase to 120
E)   Quantity supplied of computers to increase to 80

Question 16

If the supply of a product increases,then

Accepted Answer

A)   more will be purchased at the same price
B)   the price of the product must have declined
C)   demand for the good must have increased
D)   producers are willing to accept a lower price for each unit sold
E)   producers offer less for sale at each possible price

Question 17

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

Accepted Answer

A)   supply
B)   demand
C)   averages
D)   variable proportions
E)   increasing costs

Question 18

When a market is in equilibrium,

Accepted Answer

A)   producers earn profits
B)   the minimum possible price is achieved
C)   there is no incentive for consumers or producers to change their current behavior
D)   excess demand is less than excess supply
E)   the maximum possible price is achieved

Question 19

The income effect of a decrease in the price of legal services (a normal good)  is a(n)

Accepted Answer

A)   decrease in the demand for legal services
B)   decrease in the quantity demanded of legal services
C)   increase in the demand for legal services
D)   increase in the quantity demanded of legal services
E)   new demand curve because everything else is no longer constant

Question 20

Which of the following will not shift the market supply curve for corn?

Accepted Answer

A)   a change in the price of corn
B)   a change in the price of soybeans
C)   a change in the price of herbicides and pesticides
D)   a change in storage technology
E)   a change in the number of acres planted in corn

Exam 4: Demand, supply, and Markets

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises,we would expect

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When a market is in equilibrium,

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A shortage occurs whenever

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Which of the following will not shift the market supply curve for corn?

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A decrease in the price of peanuts will cause a leftward shift of the supply curve of peanut butter.

Correct AnswerverifiedShow Answer

Suppose you drink more tea because the price of coffee has increased.Which of the following best explains your action?

Correct AnswerverifiedShow Answer

A leftward shift of a supply curve represents a decrease in supply.

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Exhibit 4-13 -In Exhibit 4-13 depicting the market for pizza,a movement from point B to point C represents:

Correct AnswerverifiedShow Answer

The income effect of a decrease in the price of potatoes (an inferior good) is a(n)

Correct AnswerverifiedShow Answer

The effect of a decrease in the price of personal computers,other things constant,is likely to be best represented by which of the following?

Correct AnswerverifiedShow Answer

Exhibit 4-14 -In Exhibit 4-14,a decrease in price from $10 to $4 leads to:

Correct AnswerverifiedShow Answer

Economists emphasize the importance of equilibrium in markets because

Correct AnswerverifiedShow Answer

If the price of vanilla ice cream decreases,it is likely that

Correct AnswerverifiedShow Answer

The income effect of an increase in the price of hominy grits (an inferior good) is a(n)

Correct AnswerverifiedShow Answer

The income effect of a decrease in the price of legal services (a normal good) is a(n)

Correct AnswerverifiedShow Answer

Exhibit 4-16 -If the market described in Exhibit 4-16 experiences a surplus of computers,then an economist would expect the:

Correct AnswerverifiedShow Answer

Which of the following events is likely to reduce the demand for on-campus student housing?

Correct AnswerverifiedShow Answer

As the price of milk increases,producers are normally willing to supply greater quantities.This response is known as the law of

Correct AnswerverifiedShow Answer

If the supply of a product increases,then

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price will result in a shortage.

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