Question 1

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Accepted Answer

A)   decrease.
B)   increase.
C)   be unaffected.
D)   There is insufficient information given to answer the question.

Question 2

A market is a group of buyers and sellers of a particular good or service.

Accepted Answer

A) True 
 B)False

Question 3

When supply and demand both increase, equilibrium

Accepted Answer

A)   price will increase.
B)   price will decrease.
C)   quantity may increase, decrease, or remain unchanged.
D)   price may increase, decrease, or remain unchanged.

Question 4

Table 4-2
 
-Refer to Table 4-2. Whose demand does not obey the law of demand?

Accepted Answer

A)   Abby's
B)   Brandi's
C)   Carrie's
D)   DeeDee's

Question 5

The supply curve for stand up paddle boards

Accepted Answer

A)   shifts when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph.
B)   shifts when the price of stand up paddle boards changes because the quantity supplied of stand up paddle boards is measured on the horizontal axis of the graph.
C)   does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph.
D)   does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the horizontal axis of the graph.

Question 6

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 increases from $4 to $6, the market quantity supplied

Accepted Answer

A)   decreases by 10 gallons.
B)   decreases by 20 gallons.
C)   increases by 10 gallons.
D)   increases by 20 gallons.

Question 7

The market demand curve

Accepted Answer

A)   is found by vertically adding the individual demand curves.
B)   slopes upward.
C)   represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
D)   represents the sum of the quantities demanded by all the buyers at each price of the good.

Question 8

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for fences of a decrease in the price of wood?

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 D

Question 9

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

Accepted Answer

A)   tennis racquets.
B)   pizza.
C)   garbage collection.
D)   wheat.

Question 10

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   a decrease in the price of beer
B)   an expectation by firms that the price of beer will increase in the very near future
C)   a decrease in the price of hops
D)   an improvement in technology that allows firms to use less labor in the production of beer

Question 12

Whenever a determinant of supply other than price changes, the supply curve shifts.

Accepted Answer

A) True 
 B)False

Question 13

A market demand curve shows

Accepted Answer

A)   the relationship between price and the number of buyers in a market.
B)   how quantity demanded changes when the number of sellers changes.
C)   the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good.
D)   how much of a good all buyers are willing and able to buy at each possible price.

Question 14

Equilibrium price must decrease when demand

Accepted Answer

A)   increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously.
B)   increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously.
C)   decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.
D)   decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

Question 15

If the price of a good is low,

Accepted Answer

A)   firms would increase profit by increasing output.
B)   the quantity supplied of the good could be zero.
C)   the supply curve for the good will shift to the left.
D)   firms can and should raise the price of the product.

Question 16

When a surplus exists in a market, sellers

Accepted Answer

A)   raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
B)   raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.
C)   lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
D)   lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.

Question 17

A very hot summer in Atlanta will cause

Accepted Answer

A)   the demand curve for lemonade to shift to the left.
B)   the demand for air conditioners to decrease.
C)   the demand for jackets to decrease.
D)   a movement downward and to the right along the demand curve for tank tops.

Question 18

Soup is an inferior good if the demand

Accepted Answer

A)   for soup falls when the price of a substitute for soup rises.
B)   for soup rises when the price of soup falls.
C)   curve for soup slopes upward.
D)   for soup falls when income rises.

Question 19

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

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 D

Question 20

The two words economists use most often are

Accepted Answer

A)   inflation and trade.
B)   supply and demand.
C)   competition and prices.
D)   markets and equilibrium.

Exam 4: The Market Forces of Supply and Demand

A market demand curve shows

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If the price of a good is low,

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A market is a group of buyers and sellers of a particular good or service.

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Equilibrium price must decrease when demand

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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 increases from $4 to $6, the market quantity supplied

Correct AnswerverifiedShow Answer

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

Correct AnswerverifiedShow Answer

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for fences of a decrease in the price of wood?

Correct AnswerverifiedShow Answer

When a surplus exists in a market, sellers

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A very hot summer in Atlanta will cause

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The market demand curve

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Whenever a determinant of supply other than price changes, the supply curve shifts.

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

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When supply and demand both increase, equilibrium

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Soup is an inferior good if the demand

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Table 4-2 -Refer to Table 4-2. Whose demand does not obey the law of demand?

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The two words economists use most often are

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Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

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The supply curve for stand up paddle boards

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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 B to Supply A in the market for beer?

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When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

Correct AnswerverifiedShow Answer

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