Question 1

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following events must result in a higher price in the market for cigars?

Accepted Answer

A)   Demand for cigars increases, and supply of cigars decreases.
B)   Demand for cigars and supply of cigars both decrease.
C)   Demand for cigars decreases, and supply of cigars increases.
D)   Demand for cigars and supply of cigars both increaseE) B) and C)
F) All of the above

Question 3

If a firm is a price taker, it operates in a

Accepted Answer

A)   competitive market.
B)   monopoly market.
C)   oligopoly market.
D)   monopolistically competitive market.E) C) and D)
F) A) and C)

Question 4

Figure 4-9
Panel (a)  Panel (b) 
  
-Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

Accepted Answer

A)   Tobacco and marijuana are complements, and the price of marijuana decreased.
B)   Tobacco is a "gateway drug," and the price of marijuana increased.
C)   The price of cigarettes increased.
D)   The arrows are consistent with all of these events.E) None of the above
F) All of the above

Question 5

A likely example of substitute goods for most people would be

Accepted Answer

A)   peanut butter and jelly.
B)   tennis balls and tennis rackets.
C)   televisions and subscriptions to cable television services.
D)   pencils and pens.E) A) and C)
F) B) and C)

Question 6

If a person expects the price of pumpkins to increase next month, then that person's current demand for pumpkins will increase.

Accepted Answer

A) True 
 B)False

Question 7

When quantity demanded increases at every possible price, the demand curve has

Accepted Answer

A)   shifted to the left.
B)   shifted to the right.
C)   not shifted; rather, we have moved along the demand curve to a new point on the same curve.
D)   not shifted; rather, the demand curve has become steeper.E) B) and D)
F) B) and C)

Question 8

Table 4-13
The demand schedule below pertains to sandwiches demanded per week.
 
-Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches and that the market demand violates the law of demand. Then, in the table, the value of x must be

Accepted Answer

A)   less than or equal to 5.
B)   greater than or equal to 5.
C)   greater than or equal to 7.
D)   greater than or equal to 10.E) None of the above
F) C) and D)

Question 9

In a perfectly competitive market, the goods offered for sale are all exactly the same.

Accepted Answer

A) True 
 B)False

Question 10

If a increase in income decreases the demand for a good, then the good is a(n)

Accepted Answer

A)   substitute good.
B)   complementary good.
C)   normal good.
D)   inferior good.E) A) and B)
F) C) and D)

Question 11

An increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens.

Accepted Answer

A) True 
 B)False

Question 12

Table 4-3
 
-Refer to Table 4-3. Whose demand does not obey the law of demand?

Accepted Answer

A)   Bert's
B)   Ernie's
C)   Grover's
D)   Oscar'sE) A) and B)
F) A) and C)

Question 13

When drawing a demand curve,

Accepted Answer

A)   demand is measured along the vertical axis, and price is measured along the horizontal axis.
B)   quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis.
C)   price is measured along the vertical axis, and demand is measured along the horizontal axis.
D)   price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.E) None of the above
F) A) and B)

Question 14

Figure 4-18 
-Refer to Figure 4-18. At a price of $15, there would be a

Accepted Answer

A)   surplus of 400 units.
B)   shortage of 200 units.
C)   shortage of 400 units.
D)   shortage of 600 units.E) None of the above
F) B) and D)

Question 15

An increase in supply is represented by a

Accepted Answer

A)   movement downward and to the left along a supply curve.
B)   movement upward and to the right along a supply curve.
C)   rightward shift of a supply curve.
D)   leftward shift of a supply curve.E) C) and D)
F) A) and C)

Question 16

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 17

Assume Leo buys coffee beans in a competitive market. It follows that

Accepted Answer

A)   Leo has a limited number of sellers from which to buy coffee beans.
B)   Leo will negotiate with sellers whenever he buys coffee beans.
C)   Leo can influence the price of coffee beans if he buys a large quantity of them.
D)   None of the above is correct.E) None of the above
F) A) and D)

Question 18

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) B) and C)
F) A) and D)

Question 19

Table 4-1
 
-Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) A) and D)
F) All of the above

Question 20

Price will rise to eliminate a surplus.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

Prices allocate a market economy's scarce resources.

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Figure 4-9 Panel (a) Panel (b) -Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a) , the arrows are consistent with which of the following events?

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Price will rise to eliminate a surplus.

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In a perfectly competitive market, the goods offered for sale are all exactly the same.

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Assume Leo buys coffee beans in a competitive market. It follows that

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Which of the following events must result in a higher price in the market for cigars?

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If a firm is a price taker, it operates in a

Correct AnswerverifiedShow Answer

If a increase in income decreases the demand for a good, then the good is a(n)

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Figure 4-18 -Refer to Figure 4-18. At a price of $15, there would be a

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An increase in supply is represented by a

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Table 4-13 The demand schedule below pertains to sandwiches demanded per week. -Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches and that the market demand violates the law of demand. Then, in the table, the value of x must be

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Table 4-3 -Refer to Table 4-3. Whose demand does not obey the law of demand?

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When quantity demanded increases at every possible price, the demand curve has

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Baseballs and baseball bats are substitute goods.

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Table 4-1 -Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

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A likely example of substitute goods for most people would be

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When drawing a demand curve,

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If a person expects the price of pumpkins to increase next month, then that person's current demand for pumpkins will increase.

Correct AnswerverifiedShow Answer

An increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens.

Correct AnswerverifiedShow Answer

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?

Correct AnswerverifiedShow Answer

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