Question 1

An important assumption that is made when constructing a demand schedule is that

Accepted Answer

A)  only price and quantity matter in determining demand.
B)  people always want a certain amount of a product.
C)  demand is too important to be left to the economists.
D)  all other determinants of demand are held constant.
E)  demand has a positive slope.F) B) and D)
G) A) and E)

Question 2

Changes in the size of an industry may cause supply to shift.

Accepted Answer

A) True 
 B)False

Question 3

Figure 4-5
 
-If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph in Figure 4-5?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4E) B) and C)
F) None of the above

Question 4

The quantity of newspapers sold will decline if

Accepted Answer

A)  newsprint becomes more expensive.
B)  the printers' union makes wage concessions.
C)  prices are reduced.
D)  magazine prices rise.E) B) and C)
F) None of the above

Question 5

The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

Accepted Answer

A)  raise the world price of gold to pay for the new machinery.
B)  lower the world price of gold because any amount can now be produced more cheaply.
C)  raise the world price of gold because miners' wages must double as their productivity doubles.
D)  lower the world price of gold only if new mining companies are not allowed to enter the industry.E) None of the above
F) A) and B)

Question 6

When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

At equilibrium, quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

In some markets, demand can be approximated by?
Q = 50 − 5P + 10Y?
where Q is quantity, P price per unit, and Y = buyers' income.Supply can be approximated by?
Q = −5 + 10P.
a.If Y = 20, what is equilibrium price and output?
b.If Y rises to 25, what is the new equilibrium price and output?

Accepted Answer

a.Equate the supply and demand equations...

Question 9

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

Accepted Answer

A)  It increases.
B)  It decreases.
C)  It does not change.
D)  Uncertain-economic theory has no answer to this question.E) B) and C)
F) All of the above

Question 10

A supply schedule shows

Accepted Answer

A)  the "market potential" for a product.
B)  how much producers are willing and able to sell at different prices.
C)  possible combinations of output under different conditions.
D)  how much consumers would like to buy at different prices.
E)  All of the above are correct.F) A) and D)
G) B) and D)

Question 11

​Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?

Accepted Answer

A)  ​Service station operators pass along the tax to you, adding the 10 cents to the price of a gallon of gas. 
B)  ​Service station operators grumble, but pay the tax without passing the cost along to you. 
C)  ​Service station operators pass along as much of the tax to you as they can, probably about 6 cents/gallon. 
D)  ​None of these choices.E) B) and D)
F) C) and D)

Question 12

Any factor that shifts the demand curve to the left but does not affect the supply curve will lower the equilibrium price and raise the equilibrium quantity.

Accepted Answer

A) True 
 B)False

Question 13

Figure 4-21
 
-A surplus will tend to occur at which price in Figure 4-21?

Accepted Answer

A)  P₁  
B)  P₂ 
C)  P₃D) A) and B)
E) A) and C)

Question 14

Which of the following will tend to occur if price floors are imposed on a product?

Accepted Answer

A)  persistent surpluses 
B)  problems of disposal of goods 
C)  disguised discounts developing to eliminate excess production 
D)  overinvestment in the industry 
E)  All of the above are correct.F) A) and B)
G) C) and E)

Question 15

When people suddenly want to buy something, supply increases.

Accepted Answer

A) True 
 B)False

Question 16

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4-4
 
-Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice will change demand from

Accepted Answer

A)  D₁ to D₂.
B)  D₂ to D₁ .
C)  D₂ to D₃.
D)  D₁ to D₃.E) None of the above
F) All of the above

Question 18

How does rent control tend to cause persistent imbalances in the market for housing?

Accepted Answer

A)  Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
B)  Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
C)  Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
D)  Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.E) B) and C)
F) None of the above

Question 19

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports, the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

Accepted Answer

A)  price ceiling.
B)  price floor.
C)  opportunity cost.
D)  shortage.
E)  efficiency move.F) A) and B)
G) A) and C)

Question 20

The slope of a demand curve is almost always

Accepted Answer

A)  positive, because when people buy more of a good the cost of producing it will rise.
B)  positive, because the more money a person has, the more of a particular good will be bought.
C)  negative, because when people buy more of a good the cost of producing it will fall.
D)  negative, because with everything else equal, the same people will buy more of a good when its price is lower.
E)  positive, because as the price rises, people want to sell more of the good.F) B) and C)
G) C) and D)

Exam 4: Supply and Demand: an Initial Look

A supply schedule shows

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The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports, the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

Correct AnswerverifiedShow Answer

The slope of a demand curve is almost always

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Figure 4-21 -A surplus will tend to occur at which price in Figure 4-21?

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Figure 4-4 -Assume that Figure 4-4 shows demand for soda.A decrease in the price of apple juice will change demand from

Correct AnswerverifiedShow Answer

Changes in the size of an industry may cause supply to shift.

Correct AnswerverifiedShow Answer

At equilibrium, quantity demanded equals quantity supplied.

Correct AnswerverifiedShow Answer

When people suddenly want to buy something, supply increases.

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The quantity of newspapers sold will decline if

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Which of the following will tend to occur if price floors are imposed on a product?

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The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to

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When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.

Correct AnswerverifiedShow Answer

​Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?

Correct AnswerverifiedShow Answer

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

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An important assumption that is made when constructing a demand schedule is that

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How does rent control tend to cause persistent imbalances in the market for housing?

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Figure 4-5 -If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph in Figure 4-5?

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A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Correct AnswerverifiedShow Answer

In some markets, demand can be approximated by? Q = 50 − 5P + 10Y? where Q is quantity, P price per unit, and Y = buyers' income.Supply can be approximated by? Q = −5 + 10P. a.If Y = 20, what is equilibrium price and output? b.If Y rises to 25, what is the new equilibrium price and output?

Correct Answerverifieda.Equate the supply and demand equations...View AnswerShow Answer

Any factor that shifts the demand curve to the left but does not affect the supply curve will lower the equilibrium price and raise the equilibrium quantity.

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Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon.What most likely happens next?

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a.Equate the supply and demand equations...
View Answer

Correct Answer
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