Question 1

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would increase, and the equilibrium quantity would decrease.
D)   The equilibrium price would decrease, and the equilibrium quantity would increase.E) All of the above
F) C) and D)

Question 2

Which of these statements does not apply to market economies?

Accepted Answer

A)   Prices prevent decentralized decision making from degenerating into chaos.
B)   Prices coordinate the actions of millions of people with varying abilities and desires.
C)   Prices ensure that anyone who wants a product can get it.
D)   Prices ensure that what needs to get done does in fact get done.E) B) and D)
F) B) and C)

Question 3

Table 4-7
 
-Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Accepted Answer

A)   2.5 gallons.
B)   4 gallons.
C)   10 gallons.
D)   50 gallons.E) B) and C)
F) All of the above

Question 4

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would increase, and the equilibrium quantity would decrease.
D)   The equilibrium price would decrease, and the equilibrium quantity would increase.E) A) and D)
F) B) and C)

Question 5

Which of these statements best represents the law of supply?

Accepted Answer

A)   When input prices increase, sellers produce less of the good.
B)   When production technology improves, sellers produce less of the good.
C)   When the price of a good decreases, sellers produce less of the good.
D)   When sellers' supplies of a good increase, the price of the good increases.E) A) and D)
F) B) and C)

Question 6

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following events must cause equilibrium quantity to fall?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increaseE) None of the above
F) All of the above

Question 8

A decrease in income will shift the demand curve for an inferior good to the right.

Accepted Answer

A) True 
 B)False

Question 9

Figure 4-4
Yasmine 
 
Mercedes 
-Refer to Figure 4-4. Which of the following statements is correct?

Accepted Answer

A)   If the price is $6, the market quantity demanded is 15 units.
B)   If the price is $9, the market quantity demanded is 24 units.
C)   If the price is $12, the market quantity demanded is 9 units.
D)   If the price is $15, the market quantity demanded is 39 units.E) A) and B)
F) B) and C)

Question 10

Table 4-9
 
-Refer to Table 4-9. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Accepted Answer

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

Question 11

A leftward shift of a supply curve is called an)

Accepted Answer

A)   increase in supply.
B)   decrease in supply.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) A) and B)
F) None of the above

Question 12

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Accepted Answer

A) True 
 B)False

Question 13

Figure 4-27

-Refer to Figure 4-27. Panel c)  shows which of the following?

Accepted Answer

A)   an increase in demand and an increase in quantity supplied
B)   an increase in demand and an increase in supply
C)   an increase in quantity demanded and an increase in quantity supplied
D)   an increase in quantity demanded and an increase in supplyE) C) and D)
F) All of the above

Question 14

A decrease in input costs to firms in a market will result in an)

Accepted Answer

A)   decrease in equilibrium price and an increase in equilibrium quantity.
B)   decrease in equilibrium price and a decrease in equilibrium quantity.
C)   increase in equilibrium price and a decrease in equilibrium quantity.
D)   increase in equilibrium price and an increase in equilibrium quantity.E) C) and D)
F) A) and B)

Question 15

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Accepted Answer

A) True 
 B)False

Question 16

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would increase, and the equilibrium quantity would decrease.
D)   The equilibrium price would decrease, and the equilibrium quantity would increase.E) B) and D)
F) B) and C)

Question 17

For the general population, a 10 percent increase in the price of cigarettes leads to a

Accepted Answer

A)   1 percent reduction in the quantity demanded of cigarettes.
B)   4 percent reduction in the quantity demanded of cigarettes.
C)   10 percent reduction in the quantity demanded of cigarettes.
D)   12 percent reduction in the quantity demanded of cigarettes.E) B) and C)
F) None of the above

Question 18

Assume Diana buys computers in a competitive market. It follows that

Accepted Answer

A)   Diana has a limited number of sellers to turn to when she buys a computer.
B)   Diana will find herself negotiating with sellers whenever she buys a computer.
C)   if Diana buys a large number of computers, the price of computers will rise noticeably.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 19

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation
     , where  is the quantity demanded and is the price. Also, suppose the supply schedule can be represented by the equation , where is the quantity supplied.
-Refer to Scenario 4-1. What is the equilibrium price in this market?

Accepted Answer

The answer of Scenario 4-1
Suppose the demand schedule in a...

Question 20

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Accepted Answer

A)   each good she purchases to remain unchanged.
B)   normal goods to decrease.
C)   substitute goods to increase.
D)   inferior goods to decrease.E) All of the above
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

Correct Answer
verified

A decrease in income will shift the demand curve for an inferior good to the right.

Correct Answer
verified

For the general population, a 10 percent increase in the price of cigarettes leads to a

Correct Answer
verified

Figure 4-27 -Refer to Figure 4-27. Panel c) shows which of the following?

Correct Answer
verified

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Correct Answer
verified

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?

Correct Answer
verified

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?

Correct Answer
verified

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

Correct Answer
verified

A decrease in input costs to firms in a market will result in an)

Correct Answer
verified

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Correct Answer
verified

Assume Diana buys computers in a competitive market. It follows that

Correct Answer
verified

Which of these statements best represents the law of supply?

Correct Answer
verified

Figure 4-4 Yasmine Mercedes -Refer to Figure 4-4. Which of the following statements is correct?

Correct Answer
verified

Which of the following events must cause equilibrium quantity to fall?

Correct Answer
verified

Which of these statements does not apply to market economies?

Correct Answer
verified

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Correct Answer
verified

A leftward shift of a supply curve is called an)

Correct Answer
verified

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.

Correct Answer
verified

Table 4-9 -Refer to Table 4-9. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Correct Answer
verified

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Correct AnswerverifiedShow Answer

A decrease in income will shift the demand curve for an inferior good to the right.

Correct AnswerverifiedShow Answer

For the general population, a 10 percent increase in the price of cigarettes leads to a

Correct AnswerverifiedShow Answer

Figure 4-27 -Refer to Figure 4-27. Panel c) shows which of the following?

Correct AnswerverifiedShow Answer

Kara receives a promotion at work, which increases her income. We would expect Kara's demand for

Correct AnswerverifiedShow Answer

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?

Correct AnswerverifiedShow Answer

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?

Correct AnswerverifiedShow Answer

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

Correct AnswerverifiedShow Answer

A decrease in input costs to firms in a market will result in an)

Correct AnswerverifiedShow Answer

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Correct AnswerverifiedShow Answer

Assume Diana buys computers in a competitive market. It follows that

Correct AnswerverifiedShow Answer

Which of these statements best represents the law of supply?

Correct AnswerverifiedShow Answer

Figure 4-4 Yasmine Mercedes -Refer to Figure 4-4. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following events must cause equilibrium quantity to fall?

Correct AnswerverifiedShow Answer

Which of these statements does not apply to market economies?

Correct AnswerverifiedShow Answer

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price decreases from $10 to $8, the market quantity supplied decreases by

Correct AnswerverifiedShow Answer

A leftward shift of a supply curve is called an)

Correct AnswerverifiedShow Answer

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.

Correct AnswerverifiedShow Answer

Table 4-9 -Refer to Table 4-9. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?

Correct AnswerverifiedShow Answer

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Correct AnswerverifiedShow Answer

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