Question 1

The market supply curve

Accepted Answer

A)   is found by vertically adding the individual supply curves.
B)   slopes downward.
C)   represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good.
D)   represents the sum of the quantities supplied by all the sellers at each price of the good.E) B) and D)
F) B) and C)

Question 2

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 3

A decrease in quantity supplied

Accepted Answer

A)   results in a movement downward and to the left along a fixed supply curve.
B)   results in a movement upward and to the right along a fixed supply curve.
C)   shifts the supply curve to the left.
D)   shifts the supply curve to the right.E) A) and C)
F) B) and C)

Question 4

A decrease in the price of a good will

Accepted Answer

A)   increase demand.
B)   decrease demand.
C)   increase quantity demanded.
D)   decrease quantity demanded.E) C) and D)
F) All of the above

Question 5

A decrease in supply will cause an increase in price,which will cause a decrease in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 6

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs.As a result of this information,today's demand curve for Mustangs

Accepted Answer

A)   shifts to the right.
B)   shifts to the left.
C)   shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information.
D)   will not shift; rather, the demand curve for Mustangs will shift to the right next month.E) A) and D)
F) C) and D)

Question 7

Economists normally

Accepted Answer

A)   do not try to explain people's tastes, but they do try to explain what happens when tastes change.
B)   believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
C)   do not believe that people's tastes determine demand, so they ignore the subject of tastes.
D)   incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.E) A) and B)
F) A) and C)

Question 8

Figure 4-16
 
-Refer to Figure 4-16.In this market,equilibrium price and quantity,respectively,are

Accepted Answer

A)   $10 and 30 units.
B)   $10 and 50 units.
C)   $10 and 70 units.
D)   $4 and 50 units.E) A) and D)
F) B) and C)

Question 9

Prices allocate a market economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,a decrease in the price of the grain fed to turkeys would cause a move from

Accepted Answer

A)   DA to DB.
B)   DB to DA.
C)   x to y.
D)   y to x.E) A) and B)
F) B) and D)

Question 11

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) All of the above
F) C) and D)

Question 12

Which of the following events must cause equilibrium price 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) A) and C)
F) A) and B)

Question 13

The law of supply states that,other things equal,when the price of a good

Accepted Answer

A)   falls, the supply of the good rises.
B)   rises, the quantity supplied of the good rises.
C)   rises, the supply of the good falls.
D)   falls, the quantity supplied of the good rises.E) A) and C)
F) B) and D)

Question 14

A surplus exists in a market if

Accepted Answer

A)   there is an excess demand for the good.
B)   quantity demanded exceeds quantity supplied.
C)   the current price is above its equilibrium price.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 15

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 16

The law of supply states that,other things equal,when the price of a good falls,the quantity supplied falls as well.

Accepted Answer

A) True 
 B)False

Question 17

If the demand for a good falls when income falls,then the good is called a(n)

Accepted Answer

A)   normal good.
B)   regular good.
C)   luxury good.
D)   inferior good.E) A) and D)
F) All of the above

Question 18

Figure 4-17
 
-Refer to Figure 4-17.If the price is $25,then there would be an excess

Accepted Answer

A)   supply of 100 units, and price would fall.
B)   supply of 300 units, and price would fall.
C)   demand of 100 units, and price would fall.
D)   demand of 300 units, and price would fall.E) A) and B)
F) None of the above

Question 19

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) A) and C)

Question 20

For a market for a good or service to exist,there must be a

Accepted Answer

A)   group of buyers and sellers.
B)   specific time and place at which the good or service is traded.
C)   high degree of organization present.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Exam 4: The Market Forces of Supply and Demand.

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs.As a result of this information,today's demand curve for Mustangs

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For a market for a good or service to exist,there must be a

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Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,a decrease in the price of the grain fed to turkeys would cause a move from

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The market supply curve

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Figure 4-16 -Refer to Figure 4-16.In this market,equilibrium price and quantity,respectively,are

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

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A decrease in supply will cause an increase in price,which will cause a decrease in quantity demanded.

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When drawing a demand curve,

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A decrease in quantity supplied

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Economists normally

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A decrease in the price of a good will

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The law of supply states that,other things equal,when the price of a good

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If the demand for a good falls when income falls,then the good is called a(n)

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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.

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Prices allocate a market economy's scarce resources.

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A surplus exists in a market if

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Baseballs and baseball bats are substitute goods.

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The law of supply states that,other things equal,when the price of a good falls,the quantity supplied falls as well.

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Figure 4-17 -Refer to Figure 4-17.If the price is $25,then there would be an excess

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

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