Question 1

If, at the current price, there is a surplus of a good, then

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.E) B) and C)
F) None of the above

Question 2

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 3

Figure 4-18 
-Refer to Figure 4-18. At a price of $20, there would be a(n)

Accepted Answer

A)   shortage. The law of supply and demand predicts that the price will fall from $20 to a lower price.
B)   surplus. The law of supply and demand predicts that the price will rise from $20 to a higher price.
C)   excess demand. The law of supply and demand predicts that the price will rise from $20 to a higher price.
D)   excess supply. The law of supply and demand predicts that the price will fall from $20 to a lower price.E) A) and D)
F) B) and C)

Question 4

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

Accepted Answer

A)   Consumers have experienced an increase in income, and beef-production technology has improved.
B)   The price of chicken has risen, and the price of steak sauce has fallen.
C)   New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.
D)   The demand curve for beef must be positively sloped.E) None of the above
F) A) and B)

Question 5

When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-3
Consumer 1 Consumer 2  
-Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $10 is

Accepted Answer

A)   0 units.
B)   5 units.
C)   8.33 units.
D)   25 units.E) A) and B)
F) None of the above

Question 7

A demand schedule is a table that shows the relationship between

Accepted Answer

A)   quantity demanded and quantity supplied.
B)   income and quantity demanded.
C)   price and quantity demanded.
D)   price and income.E) B) and C)
F) A) and C)

Question 8

An example of a perfectly competitive market would be the market for

Accepted Answer

A)   tennis racquets.
B)   pizza.
C)   garbage collection.
D)   wheat.E) All of the above
F) A) and B)

Question 9

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

Accepted Answer

A)   shortage to exist and the market price of roses to increase.
B)   shortage to exist and the market price of roses to decrease.
C)   surplus to exist and the market price of roses to increase.
D)   surplus to exist and the market price of roses to decrease.E) A) and B)
F) None of the above

Question 10

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)

Accepted Answer

A)   substitute good.
B)   normal good.
C)   inferior good.
D)   complementary good.E) None of the above
F) All of the above

Question 11

Today's supply curve for gasoline could shift in response to a change in

Accepted Answer

A)   today's price of gasoline.
B)   the expected future price of gasoline.
C)   the number of buyers of gasoline.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 12

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Accepted Answer

A)   supply curve for Ashley's bread will increase.
B)   supply curve for Ashley's bread will decrease.
C)   demand curve for Ashley's bread will increase.
D)   demand curve for Ashley's bread will decrease.E) B) and C)
F) B) and D)

Question 13

An increase in quantity demanded

Accepted Answer

A)   results in a movement downward and to the right along a demand curve.
B)   results in a movement upward and to the left along a demand curve.
C)   shifts the demand curve to the left.
D)   shifts the demand curve to the right.E) C) and D)
F) None of the above

Question 14

Another term for equilibrium price is

Accepted Answer

A)   dynamic price.
B)   market-clearing price.
C)   quantity-defining price.
D)   balance price.E) None of the above
F) A) and C)

Question 15

Table 4-16
The following table shows the supply and demand schedules in a market. 
-Refer to Table 4-16. At a price of $2, will there be a surplus or shortage of units in this market?

Accepted Answer

The answer of Table 4-16
The following table shows the supply...

Question 16

If a good or service has only one seller, then the seller is called a monopoly.

Accepted Answer

A) True 
 B)False

Question 17

Good X and good Y are substitutes. If the price of good Y increases, then the

Accepted Answer

A)   demand for good X will decrease.
B)   quantity demanded of good X will decrease.
C)   demand for good X will increase.
D)   quantity demanded of good X will increase.E) B) and C)
F) A) and D)

Question 18

The supply of a good or service is determined by

Accepted Answer

A)   those who buy the good or service.
B)   the government.
C)   those who sell the good or service.
D)   both those who buy and those who sell the good or service.E) All of the above
F) A) and B)

Question 19

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Accepted Answer

A)   an increase in the price of sailboats
B)   a decrease in the number of firms selling sailboats
C)   a decrease in the price of fiberglass and sail cloth
D)   a decrease in the price of America's Cup sailing t­shirtsE) A) and C)
F) B) and C)

Question 20

A leftward shift of a supply curve is called a(n)

Accepted Answer

A)   increase in supply.
B)   decrease in supply.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) A) and C)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

A leftward shift of a supply curve is called a(n)

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When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

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The supply of a good or service is determined by

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If, at the current price, there is a surplus of a good, then

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Figure 4-3 Consumer 1 Consumer 2 -Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $10 is

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If a good or service has only one seller, then the seller is called a monopoly.

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Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

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An example of a perfectly competitive market would be the market for

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Prices allocate a market economy's scarce resources.

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Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

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Good X and good Y are substitutes. If the price of good Y increases, then the

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Figure 4-18 -Refer to Figure 4-18. At a price of $20, there would be a(n)

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Today's supply curve for gasoline could shift in response to a change in

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Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

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Another term for equilibrium price is

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Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Correct AnswerverifiedShow Answer

Table 4-16 The following table shows the supply and demand schedules in a market. -Refer to Table 4-16. At a price of $2, will there be a surplus or shortage of units in this market?

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Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)

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An increase in quantity demanded

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A demand schedule is a table that shows the relationship between

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