Question 1

Suppose a consumer can choose to consume either apples or oranges. Which of the following results when the price of each fruit increases by 15 percent?

Accepted Answer

A)   The consumer substitutes apples for oranges.
B)   The income effect of this price change is positive.
C)   The substitution effect of this price change is zero.
D)   The consumer demands more of both the goods.
E)   The consumer substitutes oranges for apples.F) A) and B)
G) A) and E)

Question 2

Consider the market for a good that is initially in equilibrium. Which of these is most likely to occur if both demand and supply for this good increases during a particular point in time?

Accepted Answer

A)   Equilibrium price will increase
B)   Equilibrium price will decrease
C)   Equilibrium quantity will increase
D)   Equilibrium quantity will decrease
E)   Both equilibrium price and equilibrium quantity will decreaseF) C) and E)
G) B) and D)

Question 3

Which of the following is the best example of a pair of complements?

Accepted Answer

A)   Milk and coffee
B)   Coffee and tea
C)   CDs and DVDs
D)   Hiking boots and athletic shoes
E)   Paperback books and hard cover booksF) B) and C)
G) None of the above

Question 4

In the figure given below that shows the demand for baby formula, an increase in the birth rate is likely to cause which of the following changes?
1 to D2 B)  A movement along the demand curve D1 from point a to point b C)  A shift in the demand curve from D2 to D1 D)  A movement along the demand curve D2 from point d to point c E)  A movement from point b on demand curve D1 to point c on demand curve D2" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   A shift in the demand curve from D1 to D2
B)   A movement along the demand curve D1 from point a to point b
C)   A shift in the demand curve from D2 to D1
D)   A movement along the demand curve D2 from point d to point c
E)   A movement from point b on demand curve D1 to point c on demand curve D2F) A) and E)
G) A) and D)

Question 5

Which of the following is likely to shift the market supply curve for corn in the short run?

Accepted Answer

A)   A change in the price of corn
B)   A change in the price of pesticides
C)   A change in the number of corn consumers
D)   A change in the expectations of consumers about the future price of corn
E)   A change in the money income of corn consumersF) None of the above
G) A) and B)

Question 6

A movement along a demand curve can be attributed to a change in:

Accepted Answer

A)   the demand for a good.
B)   the opportunity cost of producing a good.
C)   the quantity demanded of a good.
D)   the substitution effect of consuming a good.
E)   the income and preference of a consumer.F) A) and D)
G) A) and C)

Question 7

Which of the following statements about a demand curve is true?

Accepted Answer

A)   The demand curve for a good will not shift when money income of consumers increases.
B)   If price increases, the demand curve shifts to the right.
C)   The demand curve for a good will not shift when its price changes.
D)   If a supply curve shifts, thereby changing the price, the demand curve will shift as well.
E)   If a demand curve shifts, the supply curve will shift as well, whether or not the price changes.F) A) and B)
G) A) and C)

Question 8

Which of the following is likely to change the quantity supplied of wheat?

Accepted Answer

A)   A government subsidy to farmers who do not grow wheat
B)   An increase in the price of soybeans
C)   A decrease in the price of fertilizer
D)   A fall in the price of wheat
E)   An expectation of a future price increaseF) A) and D)
G) All of the above

Question 9

The impact of a $200 increase in income on quantity of housing demanded would be called an income effect.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following will lead to an increase in quantity supplied of a given good?

Accepted Answer

A)   An increase in resource prices
B)   A technological improvement
C)   An increase in population
D)   An increase in the price of the good
E)   An increase in the price of an alternative goodF) A) and D)
G) A) and B)

Question 11

In the figure given below that shows the demand for baby formula, which of the following changes will be caused by the discovery that breast milk provides more protection against a life threatening disease than baby formula?
1 to D2 B)  A movement along the demand curve D1 from point a to point b C)  A shift in the demand curve from D2 to D1 D)  A movement along the demand curve D2 from point d to point c E)  A movement from point b on the demand curve D1 to point c on the demand curve D2" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   A shift in the demand curve from D1 to D2
B)   A movement along the demand curve D1 from point a to point b
C)   A shift in the demand curve from D2 to D1
D)   A movement along the demand curve D2 from point d to point c
E)   A movement from point b on the demand curve D1 to point c on the demand curve D2F) B) and E)
G) A) and D)

Question 12

Markets reduce transactions costs:

Accepted Answer

A)   by decreasing the time spent searching for information about goods and services.
B)   only when they have a highly structured set of rules like the New York Stock Exchange.
C)   because each market uses the same set of rules for buying and selling goods and services.
D)   only when the government coordinates the plans of many buyers and sellers.
E)   when prices are set by the sellers and are not determined by negotiation between the buyers and the sellers.F) D) and E)
G) B) and D)

Question 13

If we say that demand for a good has increased, we mean that there has been:

Accepted Answer

A)   a leftward movement along the demand curve.
B)   a rightward movement along the demand curve.
C)   a leftward shift of the demand curve.
D)   a rightward shift of the demand curve.
E)   an increase in the slope of the demand curve.F) A) and E)
G) A) and D)

Question 14

The law of demand states that as the price of a good rises, _____.

Accepted Answer

A)   buyers purchase more of the good, because they expect prices to be even higher in the future
B)   buyers purchase less of the good, because they expect prices to fall in the future
C)   buyers purchase less of the good, because their real income decreases with an increase in price
D)   buyers purchase more of the good, because the price of a substitute has risen
E)   buyers purchase more of the good, because the higher price reflects an improvement in product qualityF) B) and D)
G) B) and C)

Question 15

Figure 4.4 shows the supply curve for a good. According to the figure given below, which of these will result when price increases from P to P'?

Accepted Answer

A)   Quantity supplied will increase.
B)   Supply will become elastic.
C)   Supply will increase.
D)   Supply will become inelastic.
E)   Supply will decrease.F) C) and D)
G) A) and D)

Question 16

Which of the following is most likely to be a normal good?

Accepted Answer

A)   Bologna sandwiches
B)   Second-hand electronic appliances
C)   Tickets to major league baseball games
D)   Bus rides
E)   Used paperback booksF) A) and D)
G) None of the above

Question 17

Which of the following is most likely to be an inferior good?

Accepted Answer

A)   Airline travel
B)   Restaurant meals
C)   A subscription to the Wall Street Journal
D)   Soft drinks
E)   Used clothingF) None of the above
G) B) and E)

Question 18

The figure given below depicts the milk market. The horizontal line, P, represents a price ceiling imposed by the government. Which of the following is true?

Accepted Answer

A)   In equilibrium, the quantity demanded is 800 gallons.
B)   There is a surplus when price per gallon is $1.
C)   The quantity demanded at the price ceiling will equal the quantity produced.
D)   The equilibrium price would be $1 per unit without the price ceiling.
E)   The quantity supplied at the price ceiling is 500 gallons.F) C) and E)
G) A) and B)

Question 19

Demand for an inferior good decreases as consumer income increases.

Accepted Answer

A) True 
 B)False

Question 20

The table given below shows the quantity supplied and the quantity demanded for a good at different prices. If the price of the good described in the table given below is $1.60, then there is a:

Accepted Answer

A)   shortage of 30 units.
B)   surplus of 30 units.
C)   shortage of 20 units.
D)   surplus of 20 units.
E)   surplus of 10 units.F) A) and B)
G) None of the above

Exam 4: Demand, Supply, and Markets

Which of the following is likely to shift the market supply curve for corn in the short run?

Correct AnswerverifiedShow Answer

Which of the following will lead to an increase in quantity supplied of a given good?

Correct AnswerverifiedShow Answer

A movement along a demand curve can be attributed to a change in:

Correct AnswerverifiedShow Answer

The figure given below depicts the milk market. The horizontal line, P, represents a price ceiling imposed by the government. Which of the following is true?

Correct AnswerverifiedShow Answer

In the figure given below that shows the demand for baby formula, an increase in the birth rate is likely to cause which of the following changes?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

Which of the following statements about a demand curve is true?

Correct AnswerverifiedShow Answer

In the figure given below that shows the demand for baby formula, which of the following changes will be caused by the discovery that breast milk provides more protection against a life threatening disease than baby formula?

Correct AnswerverifiedShow Answer

If we say that demand for a good has increased, we mean that there has been:

Correct AnswerverifiedShow Answer

Suppose a consumer can choose to consume either apples or oranges. Which of the following results when the price of each fruit increases by 15 percent?

Correct AnswerverifiedShow Answer

Which of the following is the best example of a pair of complements?

Correct AnswerverifiedShow Answer

Consider the market for a good that is initially in equilibrium. Which of these is most likely to occur if both demand and supply for this good increases during a particular point in time?

Correct AnswerverifiedShow Answer

The table given below shows the quantity supplied and the quantity demanded for a good at different prices. If the price of the good described in the table given below is $1.60, then there is a:

Correct AnswerverifiedShow Answer

Which of the following is likely to change the quantity supplied of wheat?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a normal good?

Correct AnswerverifiedShow Answer

The impact of a $200 increase in income on quantity of housing demanded would be called an income effect.

Correct AnswerverifiedShow Answer

Markets reduce transactions costs:

Correct AnswerverifiedShow Answer

Demand for an inferior good decreases as consumer income increases.

Correct AnswerverifiedShow Answer

The law of demand states that as the price of a good rises, _____.

Correct AnswerverifiedShow Answer

Figure 4.4 shows the supply curve for a good. According to the figure given below, which of these will result when price increases from P to P'?

Correct AnswerverifiedShow Answer

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