ECO chap 4 by TRANGXINHDEP

c

The two words most often used by economists are a. prices and quantities. b. resources and allocation. c. supply and demand. d. efficiency and equity.

c

The forces that make market economies work are a. work and leisure. b. politics and religion. c. supply and demand. d. taxes and government spending.

a

In a market economy, supply and demand determine a. both the quantity of each good produced and the price at which it is sold. b. the quantity of each good produced, but not the price at which it is sold. c. the price at which each good is sold, but not the quantity of each good produced. d. neither the quantity of each good produced nor the price at which it is sold.

d

In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy's scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.

d

In a market economy, a. supply determines demand and demand, in turn, determines prices. b. demand determines supply and supply, in turn, determines prices. c. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand. d. supply and demand determine prices and prices, in turn, allocate the economy's scarce resources.

c

A group of buyers and sellers of a particular good or service is called a(n) a. coalition. b. economy. c. market. d. competition.

b

Which of the following statements is correct? a. Buyers determine supply and sellers determine demand. b. Buyers determine demand and sellers determine supply. c. Buyers determine both demand and supply. d. Sellers determine both demand and supply.

a

The demand for a good or service is determined by 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.

c

The supply of a good or service is determined by 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.

a

For a market for a good or service to exist, a. there must be a group of buyers and sellers. b. there must be a specific time and place at which the good or service is traded. c. there must be a high degree of organization present. d. All of the above are correct.

d

Which of the following is an example of a market? a. a gas station b. a garage sale c. a barber shop d. All of the above are examples of markets.

b

The market for ice cream is a. a monopolistic market. b. a highly competitive market. c. a highly organized market. d. both (b) and (c) are correct.

d

Most markets in the economy are a. markets in which sellers, rather than buyers, control the price of the product. b. markets in which buyers, rather than sellers, control the price of the product. c. perfectly competitive. d. highly competitive.

c

In a competitive market, the price of a product a. is determined by buyers and the quantity of the product produced is determined by sellers. b. is determined by sellers and the quantity of the product produced is determined by buyers. c. and the quantity of the product produced are both determined by sellers. d. None of the above is correct.

d

In a competitive market, the quantity of a product produced and the price of the product are determined by a. a single buyer. b. a single seller. c. one buyer and one seller working together. d. all buyers and all sellers.

d

A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price.

d

A competitive market is one in which a. there is only one seller, but there are many buyers. b. there are many sellers and each seller has the ability to set the price of his product. c. there are many sellers and they compete with one another in such a way that some sellers are always being forced out of the market. d. there are so many buyers and so many sellers that each has a negligible impact on the price of the product.

d

Assume Tibana buys computers in a competitive market. It follows that a. Tibana has a limited number of sellers to turn to when she buys a computer. b. Tibana will find herself negotiating with sellers whenever she buys a computer. c. if Tibana buys a large number of computers, the price of computers will rise noticeably. d. None of the above is correct.

a

In a competitive market, each seller has limited control over the price of his product because a. other sellers are offering similar products. b. buyers exert more control over the price than do sellers. c. these markets are highly regulated by the government. d. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

b

For a competitive market, which of the following statements is correct? a. A seller can always increase her profit by raising the price of her product. b. If a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. A seller often charges less than the going price to increase sales and profit. d. A single buyer can influence the price of the product, but only when purchasing from several sellers in a short period of time.

d

If a seller in a competitive market chooses to charge more than the going price, then a. the sellers' profits definitely would increase. b. the owners of the raw materials used in production would raise the prices for the raw materials. c. other sellers would also raise their prices. d. buyers will make purchases from other sellers.

c

The highest form of competition is called a. absolute competition. b. cutthroat competition. c. perfect competition. d. market competition.

d

Which of the following is not a characteristic of a perfectly competitive market? a. Different sellers sell identical products. b. There are many sellers. c. Sellers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.

a

Which of the following is not a characteristic of a perfectly competitive market? a. Sellers set the price of the product. b. There are many sellers. c. Buyers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.

a

The term price takers refers to buyers and sellers in a. perfectly competitive markets. b. monopolistic markets. c. markets that are regulated by the government. d. markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.

c

Buyers and sellers who have no influence on market price are referred to as a. market pawns. b. monopolists. c. price takers. d. price makers.

d

All market participants are price takers that have no influence over prices in markets that feature a. only a few buyers and a few sellers. b. numerous sellers but only a few buyers. c. numerous buyers but only a few sellers. d. numerous buyers and numerous sellers.

a

If buyers and sellers in a certain market are price takers, then individually a. they have no influence on market price. b. they have some influence on market price, but that influence is limited. c. buyers will be able to find prices lower than those determined in the market. d. sellers will find it difficult to sell all they want to sell at the market price.

d

In a perfectly competitive market, at the market price, a. buyers cannot buy all they want and sellers cannot sell all they want. b. buyers cannot buy all they want, but sellers can sell all they want. c. buyers can buy all they want, but sellers cannot sell all they want. d. buyers can buy all they want and sellers can sell all they want.

b

An example of a perfectly competitive market would be the a. cable TV market. b. soybean market. c. breakfast cereal market. d. shampoo market.

c

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market, a. the price of tennis balls increases. b. the price of tennis balls decreases. c. the price of tennis balls does not change. d. there is no longer a market for tennis balls.

b

A monopoly is a market a. with one seller, and that seller is a price taker. b. with one seller, and that seller sets the price. c. with one buyer, and that buyer is a price taker. d. with one buyer, and that buyer sets the price.

c

Which of the following would most likely serve as an example of a monopoly? a. a bakery in a large city b. a bank in a large city c. a local cable television company d. a small group of corn farmers

c

Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world? a. Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. b. Some degree of competition is present in most markets. c. There are many buyers and many sellers in all types of markets. d. Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well.

b

The quantity demanded of a good is the amount that buyers a. are willing to purchase. b. are willing and able to purchase. c. are willing and able and need to purchase. d. are able to purchase.

d

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded a. applies to most goods in the economy. b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct.

c

Which of these statements best represents the law of demand? a. When buyers' tastes for a good increase, they purchase more of the good. b. When income levels increase, buyers purchase more of most goods. c. When the price of a good decreases, buyers purchase more of the good. d. When buyers' demands for a good increase, the price of the good increases.

d

A downward-sloping demand curve illustrates a. that demand decreases over time. b. that prices fall over time. c. the relationship between income and quantity demanded. d. the law of demand.

c

Benny rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental. Benny's demand demonstrates the law of a. price. b. supply. c. demand. d. income.

c

Which of the following demonstrates the law of demand? a. After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise. b. Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal. c. Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal. d. Kendra buys fewer Snickers at $0.60 per Snickers since the price of Milky Ways fell to $0.50 per Milky Way.

a

The following table contains a demand schedule for a good. Price Quantity Demanded $10 100 $20 ? If the law of demand applies to this good, then "?" could be a. 0. b. 100. c. 200. d. 400.

c

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a a. price-quantity schedule. b. buyer schedule. c. demand schedule. d. demand curve.

c

A demand schedule is a table that shows the relationship between a. quantity demanded and quantity supplied. b. income and quantity demanded. c. price and quantity demanded. d. price and income.

c

Which of the following is not held constant in a demand schedule? a. income b. tastes c. price d. expectations

a

The demand curve for a good is a. a line that relates price and quantity demanded. b. a line that relates income and quantity demanded. c. a line that relates quantity demanded and quantity supplied. d. a line that relates price and income.

d

The line that relates the price of a good and the quantity demanded of that good is called the a. demand schedule, and it usually slopes upward. b. demand schedule, and it usually slopes downward. c. demand curve, and it usually slopes upward. d. demand curve, and it usually slopes downward.

d

When drawing a demand curve, a. demand is on the vertical axis and price is on the horizontal axis. b. quantity demanded is on the vertical axis and price is on the horizontal axis. c. price is on the vertical axis and demand is on the horizontal axis. d. price is on the vertical axis and quantity demanded is on the horizontal axis.

d

The sum of all the individual demand curves for a product is called a. total demand. b. consumer demand. c. aggregate demand. d. market demand.

d

The market demand curve 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.

a

The market demand curve a. is the sum of all individual demand curves. b. is the demand curve for every product in an industry. c. shows the average quantity demanded by individual demanders at each price. d. is always flatter than an individual demand curve.

c

To obtain the market demand curve for a product, sum the individual demand curves a. vertically. b. diagonally. c. horizontally. d. and then average them.

d

A market demand curve shows a. the relationship between price and the number of buyers in a market. b. how quantity demanded changes when the number of buyers 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.

b

A market demand curve shows how the total quantity demanded of a good varies as a. income varies. b. price varies. c. the number of buyers varies. d. supply varies.

c

Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve? a. (quantity demanded = 2, price = $1.50) b. (quantity demanded = 4, price = $2.50) c. (quantity demanded = 10, price = $1.00) d. (quantity demanded = 16, price = $2.50)

c

When we move along a given demand curve, a. only price is held constant. b. income and price are held constant. c. all nonprice determinants of demand are held constant. d. all determinants of quantity demanded are held constant.

b

Once the demand curve for a product or service is drawn, it a. remains stable over time. b. can shift either rightward or leftward. c. is possible to move along the curve, but the curve will not shift. d. tends to become steeper over time.

c

If something happens to alter the quantity demanded at any given price, then a. the demand curve becomes steeper. b. the demand curve becomes flatter. c. the demand curve shifts. d. we move along the demand curve.

a

When quantity demanded decreases at every possible price, we know that the demand curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become flatter.

b

When quantity demanded increases at every possible price, we know that the demand curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become steeper.

c

An increase in demand is represented by a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve.

d

A decrease in demand is represented by a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve.

a

An increase in quantity demanded a. results in a movement downward and to the right along a fixed demand curve. b. results in a movement upward and to the left along a fixed demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right.

b

A decrease in quantity demanded a. results in a movement downward and to the right along a fixed demand curve. b. results in a movement upward and to the left along a fixed demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right.

b

A leftward shift of a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

a

A rightward shift of a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

c

A movement upward and to the left along a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

d

A movement downward and to the right along a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

d

An increase in the price of a good will a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.

c

A decrease in the price of a good will a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.

d

When the price of a good or service changes, a. the supply curve shifts in the opposite direction. b. the demand curve shifts in the opposite direction. c. the demand curve shifts in the same direction. d. there is a movement along a given demand curve.

c

The demand curve for hot dogs a. shifts when the price of hot dogs changes because the price of hot dogs is measured on the vertical axis of the graph. b. shifts when the price of hot dogs changes because the quantity demanded of hot dogs is measured on the horizontal axis of the graph. c. does not shift when the price of hot dogs changes because the price of hot dogs is measured on the vertical axis of the graph. d. does not shift when the price of hot dogs changes because the quantity demanded of hot dogs is measured on the horizontal axis of the graph.

b

Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in the price of a related good or service

a

Which of the following would not shift the demand curve for mp3 players? a. a decrease in the price of mp3 players b. a fad that makes mp3 players more popular among 12-25 year olds c. an increase in the price of CDs, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players

d

Which of the following events would cause a movement upward and to the left along the demand curve for olives? a. The number of buyers of olives decreases. b. Consumer income decreases, and olives are a normal good. c. The price of pickles decreases, and pickles are a substitute for olives. d. The price of olives rises.

d

A movement along the demand curve might be caused by a change in a. income. b. the prices of substitutes or complements. c. expectations about future prices. d. the price of the good or service that is being demanded.

b

Holding the nonprice determinants of demand constant, a change in price would a. result in either a decrease in demand or an increase in demand. b. result in a movement along a stationary demand curve. c. result in a shift of supply. d. have no effect on the quantity demanded.

b

A decrease in the price of a good would a. increase the supply of the good. b. increase the quantity demanded of the good. c. give producers an incentive to produce more to keep profits from falling. d. shift the supply curve for the good to the left.

b

The demand curve for textbooks shifts a. when a determinant of the demand for textbooks other than income changes. b. when a determinant of the demand for textbooks other than the price of textbooks changes. c. when any determinant of the demand for textbooks changes. d. only when the number of textbook-buyers changes.

d

Which of the following is not a determinant of the demand for a particular good? a. the prices of related goods b. income c. tastes d. the prices of the inputs used to produce the good

b

Each of the following is a determinant of demand except a. tastes. b. technology. c. expectations. d. the prices of related goods.

a

Which of the following is not a determinant of demand? a. the price of a resource that is used to produce the good b. the price of a complementary good c. the price of the good next month d. the price of a substitute good

a

If the demand for a good falls when income falls, then the good is called a. a normal good. b. a regular good. c. a luxury good. d. an inferior good.

a

If a good is normal, then an increase in income will result in a. an increase in the demand for the good. b. a decrease in the demand for the good. c. a movement down and to the right along the demand curve for the good. d. a movement up and to the left along the demand curve for the good.

b

If Francis experiences a decrease in his income, then we would expect Francis's demand for a. each good he purchases to remain unchanged. b. normal goods to decrease. c. luxury goods to increase. d. inferior goods to decrease.

c

You lose your job and, as a result, you buy fewer romance novels. This shows that you consider romance novels to be a(n) a. luxury good. b. inferior good. c. normal good. d. complementary good.

a

Pizza is a normal good if a. the demand for pizza rises when income rises. b. the demand for pizza rises when the price of pizza falls. c. the demand curve for pizza slopes downward. d. the demand curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

b

Suppose that when income rises, the demand curve for computers shifts to the right. In this case, we know computers are a. inferior goods. b. normal goods. c. perfectly competitive goods. d. durable goods.

b

Which of the following would shift the demand curve for gasoline to the right? a. a decrease in the price of gasoline b. an increase in consumer income, assuming gasoline is a normal good c. an increase in the price of cars, a complement for gasoline d. a decrease in the expected future price of gasoline

d

If a decrease in income increases the demand for a good, then the good is a. a substitute good. b. a complementary good. c. a normal good. d. an inferior good.

b

If a good is inferior, then an increase in income will result in a. an increase in the demand for the good. b. a decrease in the demand for the good. c. a movement down and to the right along the demand curve for the good. d. a movement up and to the left along the demand curve for the good.

c

Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are a. a substitute good. b. a normal good. c. an inferior good. d. a complementary good.

d

Soup is an inferior good if a. the demand for soup falls when the price of a substitute for soup rises. b. the demand for soup rises when the price of soup falls. c. the demand curve for soup slopes upward. d. the demand for soup falls when income rises.

b

Suppose that Carolyn receives a pay increase. We would expect a. to observe Carolyn moving down and to the right along her given demand curve. b. Carolyn's demand for inferior goods to decrease. c. Carolyn's demand for each of two goods that are complements to increase. d. Carolyn's demand for normal goods to decrease.

a

Two goods are substitutes when a decrease in the price of one good a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.

d

Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods.

c

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

d

A likely example of substitute goods for most people would be a. peanut butter and jelly. b. tennis balls and tennis rackets. c. televisions and subscriptions to cable television services. d. pencils and pens.

c

A higher price for bagels would result in a(n) a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins.

d

You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for a. sweatpants will increase. b. sweatpants will decrease. c. shorts will increase. d. shorts will decrease.

c

If goods A and B are complements, then an increase in the price of good A will result in a. more of good A being sold. b. more of good B being sold. c. less of good B being sold. d. no difference in the quantity sold of either good.

c

A likely example of complementary goods for most people would be a. butter and margarine. b. lawnmowers and automobiles. c. chips and salsa. d. cola and lemonade.

b

A higher price for batteries would result in a(n) a. increase in the demand for flashlights. b. decrease in the demand for flashlights. c. increase in the demand for batteries. d. decrease in the demand for batteries.

a

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. How would this price increase affect your demand for vanilla pudding? a. It would decrease. b. It would increase. c. It would be unaffected. d. There is insufficient information given to answer the question.

c

Holding all other things constant, a higher price for ski lift tickets would a. increase the number of skiers. b. increase the price of skis. c. decrease the number of skis sold. d. decrease the demand for other winter recreational activities.

d

When quantity demanded has increased at every price, it might be because a. the number of buyers in the market has decreased. b. income has increased and the good is an inferior good. c. the costs incurred by sellers producing the good have decreased. d. the price of a complementary good has decreased.

c

Which of the following might cause the demand curve for an inferior good to shift to the left? a. a decrease in income b. an increase in the price of a substitute c. an increase in the price of a complement d. None of the above is correct.

b

When it comes to people's tastes, economists generally believe that a. tastes are based on forces that are well within the realm of economics. b. tastes are based on historical and psychological forces that are beyond the realm of economics. c. tastes can only be studied through well-constructed, real-life models. d. since tastes do not directly affect demand, there is little need to explain people's tastes.

a

Economists normally 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 and therefore 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.

b

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for a. hair gel to increase. b. razors to increase. c. combs to increase. d. shampoo to increase.

b

Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who eat it. We would expect to see a. no change in the demand for chocolate pudding. b. a decrease in the demand for chocolate pudding. c. an increase in the demand for chocolate pudding. d. a decrease in the supply of chocolate pudding.

c

If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at each price of Vanilla Coke, then a. we will observe a movement downward and to the right along the demand curve for Vanilla Coke. b. we will observe a movement upward and to the left along the demand curve for Vanilla Coke. c. the demand curve for Vanilla Coke will shift to the right. d. the demand curve for Vanilla Coke will shift to the left.

c

A very hot summer in Atlanta will cause 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.

a

If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight gain, then we likely would see a. an increase in demand for brown sugar and a decrease in demand for white sugar. b. a decrease in demand for brown sugar and an increase in demand for white sugar. c. an increase in demand for both brown sugar and white sugar. d. no change in demand for either type of sugar because weight loss is not a determinant of demand.

c

Which of the following events could shift the demand curve for gasoline to the left? a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. d. The price of gasoline rises.

c

An increase in the number of college scholarships issued by private foundations would a. increase the supply of education. b. decrease the supply of education. c. increase the demand for education. d. decrease the demand for education.

c

Today, people changed their expectations about the future. This change a. can cause a movement along a demand curve. b. can affect future demand, but not today's demand. c. can affect today's demand. d. cannot affect either today's demand or future demand.

b

If Juan expects to earn a higher income next month, he may choose to a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services. c. decrease his current demand for goods and services. d. move along his current demand curves for goods and services.

b

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result, a. your demand for peanut butter will increase, but not until the end of the year. b. your demand for peanut butter increases today. c. your demand for peanut butter decreases as you look for a substitute good. d. your demand for peanut butter shifts left today.

b

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 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.

a

What will happen in the rice market now if buyers expect higher rice prices in the near future? a. The demand for rice will increase. b. The demand for rice will decrease. c. The demand for rice will be unaffected. d. The supply of rice will increase.

b

Today's demand curve for gasoline could shift in response to a. a change in today's price of gasoline. b. a change in the expected future price of gasoline. c. a change in the number of sellers of gasoline. d. All of the above are correct.

b

If the number of buyers in a market decreases, then a. demand will increase. b. demand will decrease. c. supply will increase. d. supply will decrease.

d

Which of the following does not affect an individual's demand curve? a. expectations b. income c. prices of related goods d. the number of buyers

a

Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast food in Warrensburg a. increases. b. decreases. c. remains constant, but we observe a movement downward and to the right along the demand curve. d. remains constant, but we observe a movement upward and to the left along the demand curve.

b

For the general population, a 10 percent increase in the price of cigarettes leads to a a. 1 percent reduction in the quantity demanded of cigarettes. b. 4 percent reduction in the quantity demanded of cigarettes. c. 10 percent reduction in the quantity demanded of cigarettes. d. 12 percent reduction in the quantity demanded of cigarettes.

d

For teenagers, a 10 percent increase in the price of cigarettes leads to a a. 1 percent reduction in the quantity demanded of cigarettes. b. 4 percent reduction in the quantity demanded of cigarettes. c. 10 percent reduction in the quantity demanded of cigarettes. d. 12 percent reduction in the quantity demanded of cigarettes.

b

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices a. encourage marijuana use, and the evidence supports this argument. b. encourage marijuana use, but the evidence does not support this argument. c. discourage marijuana use, and the evidence supports this argument. d. discourage marijuana use, but the evidence does not support this argument.

d

The belief that tobacco is a "gateway drug" is consistent with a. the idea that tobacco and marijuana are substitutes. b. the idea that an increase in income causes a decrease in the demand for tobacco and an increase in the demand for marijuana. c. the idea that lower cigarette prices are associated with less use of marijuana. d. most of the available evidence.

b

Most studies indicate that tobacco and marijuana tend to be a. substitutes. b. complements. c. not related since one is legal and one is illegal. d. inferior goods.

d

The quantity supplied of a good is the amount that a. buyers are willing and able to purchase. b. sellers are able to produce. c. buyers and sellers agree will be brought to market. d. sellers are willing and able to sell.

b

If the price of a good is low, 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.

a

"Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well." This relationship between price and quantity supplied a. is referred to as the law of supply. b. applies only to a few goods in the economy. c. is represented by a downward-sloping supply curve. d. All of the above are correct.

b

The law of supply states that, other things equal, a. when the price of a good falls, the supply of the good rises. b. when the price of a good rises, the quantity supplied of the good rises. c. when the price of a good rises, the supply of the good falls. d. when the price of a good falls, the quantity supplied of the good rises.

a

The law of supply states that, other things equal, a. an increase in price causes quantity supplied to increase. b. an increase in price causes quantity supplied to decrease. c. an increase in quantity supplied causes price to increase. d. an increase in quantity supplied causes price to decrease.

c

Other things equal, when the price of a good falls, the a. quantity demanded of the good decreases. b. supply decreases. c. quantity supplied of the good decreases. d. demand increases.

c

Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers' supplies of a good increase, the price of the good increases.

d

A supply curve slopes upward because a. as more is produced, total cost of production falls. b. an increase in input prices increases supply. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity.

d

Which of the following demonstrates the law of supply? a. When leather became more expensive, belt producers decreased their supply of belts. b. When car production technology improved, car producers increased their supply of cars. c. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. d. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

d

The following table contains a supply schedule for a good. Price Quantity Supplied $10 100 $20 ? If the law of supply applies to this good, then "?" could be a. 0. b. 50. c. 100. d. 150.

a

A supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. profit and quantity supplied.

b

Which of the following is not held constant in a supply schedule? a. technology b. the price of the good c. the prices of inputs d. expectations

d

The difference between a supply schedule and a supply curve is that a. a supply schedule incorporates demand and a supply curve does not. b. a supply schedule incorporates profit and a supply curve does not. c. a supply schedule can shift, but a supply curve cannot shift. d. a supply schedule is a table and a supply curve is drawn on a graph.

c

The supply curve for a good is a. a line that relates profit and quantity supplied. b. a line that relates input prices and quantity supplied. c. a line that relates price and quantity supplied. d. a line that relates price and profit.

c

The line that relates the price of a good and the quantity supplied of that good is called the a. supply schedule, and it usually slopes upward. b. supply schedule, and it usually slopes downward. c. supply curve, and it usually slopes upward. d. supply curve, and it usually slopes downward.

b

The sum of all the individual supply curves for a product is called a. total supply. b. market supply. c. aggregate supply. d. total output.

d

The market supply curve 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.

a

In a market, to find the total amount supplied at a particular price, a. we must add up all of the amounts that firms are willing and able to supply at that price. b. we must take the average of the amounts that firms are willing and able to supply at that price. c. we must add all of the costs that firms incur to supply the product at that price. d. all determinants of demand must be taken into account.

b

A market supply curve is determined by a. vertically summing individual supply curves. b. horizontally summing individual supply curves. c. finding the average quantity supplied by sellers at each possible price. d. finding the average price at which sellers are willing and able to sell a particular quantity of the good.

a

A market supply curve shows a. the total quantity supplied at all possible prices. b. the average quantity supplied by producers at all possible prices. c. how quantity supplied changes when the number of sellers changes. d. suppliers' responses, in terms of the amounts they will supply, to the demands of buyers.

b

A market supply curve shows how the total quantity supplied of a good varies as a. technology varies. b. price varies. c. input prices vary. d. demand varies.

c

When we move along a given supply curve, a. only price is held constant. b. technology and price are held constant. c. all nonprice determinants of supply are held constant. d. all determinants of quantity supplied are held constant.

b

Once the supply curve for a product or service is drawn, it a. remains stable over time. b. can shift either rightward or leftward. c. is possible to move along the curve, but the curve will not shift. d. tends to become steeper over time.

b

If something happens to alter the quantity supplied at any given price, then a. we move along the supply curve. b. the supply curve shifts. c. the supply curve becomes steeper. d. the supply curve becomes flatter.

a

When quantity supplied decreases at every possible price, we know that the supply curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the supply curve to a new point on the same curve. d. not shifted; rather, the supply curve has become flatter.

b

When quantity supplied increases at every possible price, we know that the supply curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the supply curve to a new point on the same curve. d. not shifted; rather, the supply curve has become flatter.

c

An increase in supply is represented by a. a movement downward and to the left along a supply curve. b. a movement upward and to the right along a supply curve. c. a rightward shift of a supply curve. d. a leftward shift of a supply curve.

d

A decrease in supply is represented by a. a movement downward and to the left along a supply curve. b. a movement upward and to the right along a supply curve. c. a rightward shift of a supply curve. d. a leftward shift of a supply curve.

b

An increase in quantity supplied 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.

a

A decrease in quantity supplied 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.

b

A leftward shift of a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

a

A rightward shift of a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

d

A movement upward and to the right along a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

c

A movement downward and to the left along a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

d

A decrease in the price of a good will a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.

c

An increase in the price of a good will a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.

d

When the price of a good or service changes, a. the demand curve shifts in the opposite direction. b. the supply curve shifts in the opposite direction. c. the supply curve shifts in the same direction. d. there is a movement along a given supply curve.

c

The supply curve for coffee a. shifts when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. b. shifts when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph. c. does not shift when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. d. does not shift when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph.

b

Which of the following changes would not shift the supply curve for a good or service? a. a change in technology b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in input prices

a

Which of the following would not shift the supply curve for mp3 players? a. an increase in the price of mp3 players b. a decrease in the number of sellers of mp3 players c. an increase in the price of plastic, an input into the production of mp3 players d. an improvement in the technology used to produce mp3 players

d

Which of the following events would cause a movement upward and to the right along the supply curve for tomatoes? a. The number of sellers of tomatoes increases. b. There is an advance in technology that reduces the cost of producing tomatoes. c. The price of fertilizer decreases, and fertilizer is an input in the production of tomatoes. d. The price of tomatoes rises.

d

A movement along the supply curve might be caused by a change in a. technology. b. input prices. c. expectations about future prices. d. the price of the good or service that is being supplied.

b

Holding the nonprice determinants of supply constant, a change in price would a. result in either a decrease in supply or an increase in supply. b. result in a movement along a stationary supply curve. c. result in a shift of demand. d. have no effect on the quantity supplied.

c

An increase in the price of a good would a. increase the supply of the good. b. increase the amount purchased by buyers. c. give producers an incentive to produce more. d. decrease both the quantity demanded of the good and the quantity supplied of the good.

d

An increase in the price of oranges would lead to a. an increased supply of oranges. b. a reduction in the prices of inputs used in orange production. c. an increased demand for oranges. d. a movement up and to the right along the supply curve for oranges.

b

The supply curve for cookbooks shifts a. when a determinant of the supply of cookbooks other than technology changes. b. when a determinant of the supply of cookbooks other than the price of cookbooks changes. c. when any determinant of the supply of cookbooks changes. d. only when the number of cookbook-sellers changes.

c

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of a. crystal to be unaffected. b. crystal to decrease. c. crystal to increase. d. lead to increase.

b

Suppose you make jewelry. If the price of gold falls, then we would expect you to a. be willing and able to produce less jewelry than before at each possible price. b. be willing and able to produce more jewelry than before at each possible price. c. face a greater demand for your jewelry. d. face a weaker demand for your jewelry.

c

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels.

b

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams a. to shift rightward. b. to shift leftward. c. to become flatter. d. to remain unchanged.

c

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the a. demand for flour to increase. b. demand for flour to decrease. c. supply of flour to increase. d. supply of flour to decrease.

d

An increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, a. the demand for tires decreases and the supply of tires increases. b. the demand for tires is unaffected and the supply of tires decreases. c. the demand for tires is unaffected and the supply of tires increases. d. None of the above is necessarily correct.

a

A technological advance will shift the a. supply curve to the right. b. supply curve to the left. c. demand curve to the right. d. demand curve to the left.

c

An advance in production technology will a. increase a firm's costs and increase its supply. b. increase a firm's costs and decrease its supply. c. decrease a firm's costs and increase its supply. d. decrease a firm's costs and decrease its supply.

d

If car manufacturers begin utilizing new labor-saving technology on their assembly lines, we would not expect a. a smaller quantity of labor to be used. b. the supply of cars to increase. c. the firms' costs to fall. d. individual car manufacturers to move up and to the right along their individual supply curves.

c

Which of the following might cause the supply curve for an inferior good to shift to the right? a. An increase in input prices. b. A decrease in consumer income. c. An improvement in production technology that makes production of the good more profitable. d. A decrease in the number of sellers in the market.

c

Today, producers changed their expectations about the future. This change a. can cause a movement along a supply curve. b. can affect future supply, but not today's supply. c. can affect today's supply. d. cannot affect either today's supply or future supply.

b

If suppliers expect the price of their product to fall in the future, then they will a. decrease supply now. b. increase supply now. c. decrease supply in the future but not now. d. increase supply in the future but not now.

b

What will happen in the rice market now if sellers expect higher rice prices in the near future? a. The supply of rice will increase. b. The supply of rice will decrease. c. The supply of rice will be unaffected. d. The demand for rice will decrease.

b

Today's supply curve for gasoline could shift in response to a. a change in today's price of gasoline. b. a change in the expected future price of gasoline. c. a change in the number of buyers of gasoline. d. All of the above are correct.

b

A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect a. the dress manufacturer to supply more dresses now than it was supplying previously. b. the dress manufacturer to supply fewer dresses now than it was supplying previously. c. the demand for this manufacturer's dresses to fall. d. no change in the dress manufacturer's current supply; instead, future supply will be affected.

c

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next 6 months. As a result, we can expect the supply of lumber to a. fall in 6 months, but not now. b. increase in 6 months when the price goes up. c. fall now. d. increase now to meet as much demand as possible.

b

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funsters should a. "fight fire with fire" by decreasing supply of its doll for 6 weeks and then increasing the supply. b. increase the supply of their doll now before the other doll hits the market. c. increase the price of their doll now. d. discontinue their doll.

d

Which of the following is a determinant of the market supply curve but not a determinant of an individual seller's supply? a. technology b. expectations c. input prices d. the number of sellers

b

If the number of sellers in a market increases, then the a. demand in that market will increase. b. supply in that market will increase. c. supply in that market will decrease. d. demand in that market will decrease.

a

A decrease in the number of sellers in the market causes a. the supply curve to shift to the left. b. the supply curve to shift to the right. c. a movement up and to the right along a stationary supply curve. d. a movement downward and to the left along a stationary supply curve.

c

Which of the following would shift the supply curve for gasoline to the right? a. An increase in the demand for gasoline. b. An increase in the price of gasoline. c. An increase in the number of producers of gasoline d. An increase in the price of oil, an input into the production of gasoline.

a

Which of the following events could cause an increase in the supply of ceiling fans? a. The number of sellers of ceiling fans increases. b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. c. There is an increase in the price of the motor that powers ceiling fans. d. All of the above are correct.

d

The unique point at which the supply and demand curves intersect is called a. market harmony. b. coincidence. c. equivalence. d. equilibrium.

a

The dictionary defines equilibrium as a situation in which forces a. are in balance. b. are the same. c. clash. d. remain constant.

b

At the equilibrium price, the quantity of the good that buyers are willing and able to buy a. is greater than the quantity that sellers are willing and able to sell. b. exactly equals the quantity that sellers are willing and able to sell. c. is less than the quantity that sellers are willing and able to sell. d. (a) and (c) could both be correct.

b

Another term for equilibrium price is a. dynamic price. b. market-clearing price. c. quantity-defining price. d. balance price.

b

In a given market, how are the equilibrium price and the market-clearing price related? a. There is no relationship. b. They are the same price. c. The market-clearing price exceeds the equilibrium price. d. The equilibrium price exceeds the market-clearing price.

d

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell a. at prices at and above the equilibrium price. b. at prices at and below the equilibrium price. c. at prices above and below the equilibrium price, but not at the equilibrium price. d. at the equilibrium price, but not above or below the equilibrium price.

a

In markets, prices move toward equilibrium because of a. the actions of buyers and sellers. b. government regulations placed on market participants. c. increased competition among sellers. d. buyers' ability to affect market outcomes.

c

When the price of a good is higher than the equilibrium price, a. a shortage will exist. b. buyers desire to purchase more than is produced. c. sellers desire to produce and sell more than buyers wish to purchase. d. quantity demanded exceeds quantity supplied.

c

A surplus exists in a market if a. there is an excess demand for the good. b. the situation is such that the law of supply and demand would predict an increase in the price of the good from its current level. c. the current price is above its equilibrium price. d. quantity demanded exceeds quantity supplied.

a

If a surplus exists in a market, then we know that the actual price is a. above the equilibrium price and quantity supplied is greater than quantity demanded. b. above the equilibrium price and quantity demanded is greater than quantity supplied. c. below the equilibrium price and quantity demanded is greater than quantity supplied. d. below the equilibrium price and quantity supplied is greater than quantity demanded.

a

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

c

Which of the following would cause price to decrease? a. a decrease in supply b. an increase in demand c. a surplus of the good d. a shortage of the good

c

When a surplus exists in a market, sellers 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.

d

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a 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.

d

The current price of neckties is $30, but the equilibrium price of neckties is $25. As a result, a. the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price. b. the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price. c. there is a surplus of neckties at the $30 price. d. All of the above are correct.

a

A university's football stadium is never more than half-full during football games. This indicates a. the ticket price is above the equilibrium price. b. the ticket price is below the equilibrium price. c. the ticket price is at the equilibrium price. d. nothing about the equilibrium price.

b

When the price of a good is lower than the equilibrium price, a. a surplus will exist. b. buyers desire to purchase more than is produced. c. sellers desire to produce and sell more than buyers wish to purchase. d. quantity supplied exceeds quantity demanded.

c

A shortage exists in a market if a. there is an excess supply of the good. b. the situation is such that the law of supply and demand would predict a decrease in the price of the good from its current level. c. the current price is below its equilibrium price. d. quantity supplied exceeds quantity demanded.

c

If a shortage exists in a market, then we know that the actual price is a. above the equilibrium price and quantity supplied is greater than quantity demanded. b. above the equilibrium price and quantity demanded is greater than quantity supplied. c. below the equilibrium price and quantity demanded is greater than quantity supplied. d. below the equilibrium price and quantity supplied is greater than quantity demanded.

c

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

d

Which of the following would cause price to increase? a. an increase in supply b. a decrease in demand c. a surplus of the good d. a shortage of the good

b

When a shortage exists in a market, sellers a. raise price, which increases quantity demanded and decreases quantity supplied, until the shortage is eliminated. b. raise price, which decreases quantity demanded and increases quantity supplied, until the shortage is eliminated. c. lower price, which increases quantity demanded and decreases quantity supplied, until the shortage is eliminated. d. lower price, which decreases quantity demanded and increases quantity supplied, until the shortage is eliminated.

a

If there is a shortage of farm laborers, we would expect a. the wage of farm laborers to increase. b. the wage of farm laborers to decrease. c. the price of farm commodities to decrease. d. a decrease in the demand for substitutes for farm labor.

a

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

b

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates a. the ticket price was above the equilibrium price. b. the ticket price was below the equilibrium price. c. the ticket price was at the equilibrium price. d. nothing about the equilibrium price.

b

The law of supply and demand asserts that a. demand curves and supply curves tend to shift to the right as time goes by. b. the price of a good will eventually rise in response to an excess demand for that good. c. when the supply curve for a good shifts, the demand curve for that good shifts in response. d. the equilibrium price of a good will be rising more often than it will be falling.

b

Step one of the "Three Steps for Analyzing Changes in Equilibrium" is a. decide which direction the curve shifts. b. decide whether the event shifts the supply or demand curve. c. use the supply-and-demand diagram to see how the shift changes the equilibrium. d. Any of these could be used first.

b

You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would be to a. decide which direction to shift the curve. b. decide whether the fires affected demand or supply. c. graph the shift to see the effect on equilibrium. d. None of the above are correct.

c

If the demand for a product increases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

d

If the demand for a product decreases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity to both increase. d. equilibrium price and equilibrium quantity to both decrease.

a

Suppose buyers of computers and printers regard those two goods as complements. Then an increase in the price of computers will cause a. a decrease in the demand for printers and a decrease in the quantity supplied of printers. b. a decrease in the supply of printers and a decrease in the quantity demanded of printers. c. a decrease in the equilibrium price of printers and an increase in the equilibrium quantity of printers. d. an increase in the equilibrium price of printers and a decrease in the equilibrium quantity of printers.

d

Which of the following would increase in response to a decrease in the price of ironing boards? a. the quantity of irons demanded at each possible price of irons b. the equilibrium quantity of irons c. the equilibrium price of irons d. All of the above are correct.

c

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes? a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

b

If the supply of a product increases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

a

If the supply of a product decreases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

a

A decrease in input costs to firms in a market will result in a. a decrease in equilibrium price and an increase in equilibrium quantity. b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and a decrease in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity.

c

Suppose there is an earthquake that destroys several corn canneries. Which of the following would not be a direct result of this event? a. Sellers would not be able to produce and sell as much as before at each relevant price. b. The supply would decrease. c. Buyers would not be willing to buy as much as before at each relevant price. d. The equilibrium price would rise.

d

An early frost in the vineyards of Napa Valley would cause a. an increase in the demand for wine, increasing price. b. an increase in the supply of wine, decreasing price. c. a decrease in the demand for wine, decreasing price. d. a decrease in the supply of wine, increasing price.

b

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high-quality diamonds enters the market, then a. the supply curve for diamond rings will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. the supply curve for diamond rings will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. the demand curve for diamond rings will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. the demand curve for diamond rings will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

d

When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged.

b

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

A weaker demand together with a stronger supply would necessarily result in a. a lower price. b. a higher price. c. an increase in equilibrium quantity. d. a decrease in equilibrium quantity.

c

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

d

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? a. Price would fall and the effect on quantity would be ambiguous. b. Price would rise and the effect on quantity would be ambiguous. c. Quantity would fall and the effect on price would be ambiguous. d. Quantity would rise and the effect on price would be ambiguous.

d

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

d

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

b

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

b

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

a

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

a

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

b

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

c

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

d

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then we could safely conclude that the equilibrium price of a new DVD would a. rise. b. fall. c. stay the same. d. We couldn't be sure what it might do.

b

Which of the following events will definitely cause equilibrium quantity to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

d

Equilibrium quantity will unambiguously decrease when a. demand increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. demand decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. d. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

d

Which of the following events will definitely cause equilibrium quantity to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

a

Equilibrium quantity will unambiguously increase when a. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase. b. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase. d. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

c

Which of the following events will definitely cause equilibrium price to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c

Equilibrium price will unambiguously decrease when a. demand increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. demand increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. demand decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. demand decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

a

Which of the following events will definitely cause equilibrium price to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

b

Equilibrium price will unambiguously increase when a. demand increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. demand increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. demand decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. demand decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

b

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes (an inferior good) to increase? a. an increase in consumer income b. a decrease in consumer income c. greater government restrictions on agricultural chemicals d. fewer government restrictions on agricultural chemicals

c

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? 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 his or her longevity. d. The demand curve for beef must be positively sloped.

c

During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? a. Beef producers, concerned about the health of their customers, decided to produce relatively less beef. b. Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. c. Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce. d. Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.

b

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and a decrease in the price of raw cotton b. a decrease in the price of wool shirts and a decrease in the price of raw cotton c. an increase in the price of wool shirts and an increase in the price of raw cotton d. a decrease in the price of wool shirts and an increase in the price of raw cotton

c

Which of the following events would cause the price of oranges to fall? a. There is a shortage of oranges. b. An article is published in which it is claimed that tangerines cause a serious disease, and oranges and tangerines are substitutes. c. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges. d. All of the above are correct.

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c

The two words most often used by economists are a. prices and quantities. b. resources and allocation. c. supply and demand. d. efficiency and equity.

c

The forces that make market economies work are a. work and leisure. b. politics and religion. c. supply and demand. d. taxes and government spending.

a

In a market economy, supply and demand determine a. both the quantity of each good produced and the price at which it is sold. b. the quantity of each good produced, but not the price at which it is sold. c. the price at which each good is sold, but not the quantity of each good produced. d. neither the quantity of each good produced nor the price at which it is sold.

d

In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy’s scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.

d

In a market economy, a. supply determines demand and demand, in turn, determines prices. b. demand determines supply and supply, in turn, determines prices. c. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand. d. supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources.

c

A group of buyers and sellers of a particular good or service is called a(n) a. coalition. b. economy. c. market. d. competition.

b

Which of the following statements is correct? a. Buyers determine supply and sellers determine demand. b. Buyers determine demand and sellers determine supply. c. Buyers determine both demand and supply. d. Sellers determine both demand and supply.

a

The demand for a good or service is determined by 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.

c

The supply of a good or service is determined by 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.

a

For a market for a good or service to exist, a. there must be a group of buyers and sellers. b. there must be a specific time and place at which the good or service is traded. c. there must be a high degree of organization present. d. All of the above are correct.

d

Which of the following is an example of a market? a. a gas station b. a garage sale c. a barber shop d. All of the above are examples of markets.

b

The market for ice cream is a. a monopolistic market. b. a highly competitive market. c. a highly organized market. d. both (b) and (c) are correct.

d

Most markets in the economy are a. markets in which sellers, rather than buyers, control the price of the product. b. markets in which buyers, rather than sellers, control the price of the product. c. perfectly competitive. d. highly competitive.

c

In a competitive market, the price of a product a. is determined by buyers and the quantity of the product produced is determined by sellers. b. is determined by sellers and the quantity of the product produced is determined by buyers. c. and the quantity of the product produced are both determined by sellers. d. None of the above is correct.

d

In a competitive market, the quantity of a product produced and the price of the product are determined by a. a single buyer. b. a single seller. c. one buyer and one seller working together. d. all buyers and all sellers.

d

A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price.

d

A competitive market is one in which a. there is only one seller, but there are many buyers. b. there are many sellers and each seller has the ability to set the price of his product. c. there are many sellers and they compete with one another in such a way that some sellers are always being forced out of the market. d. there are so many buyers and so many sellers that each has a negligible impact on the price of the product.

d

Assume Tibana buys computers in a competitive market. It follows that a. Tibana has a limited number of sellers to turn to when she buys a computer. b. Tibana will find herself negotiating with sellers whenever she buys a computer. c. if Tibana buys a large number of computers, the price of computers will rise noticeably. d. None of the above is correct.

a

In a competitive market, each seller has limited control over the price of his product because a. other sellers are offering similar products. b. buyers exert more control over the price than do sellers. c. these markets are highly regulated by the government. d. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

b

For a competitive market, which of the following statements is correct? a. A seller can always increase her profit by raising the price of her product. b. If a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. A seller often charges less than the going price to increase sales and profit. d. A single buyer can influence the price of the product, but only when purchasing from several sellers in a short period of time.

d

If a seller in a competitive market chooses to charge more than the going price, then a. the sellers’ profits definitely would increase. b. the owners of the raw materials used in production would raise the prices for the raw materials. c. other sellers would also raise their prices. d. buyers will make purchases from other sellers.

c

The highest form of competition is called a. absolute competition. b. cutthroat competition. c. perfect competition. d. market competition.

d

Which of the following is not a characteristic of a perfectly competitive market? a. Different sellers sell identical products. b. There are many sellers. c. Sellers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.

a

Which of the following is not a characteristic of a perfectly competitive market? a. Sellers set the price of the product. b. There are many sellers. c. Buyers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.

a

The term price takers refers to buyers and sellers in a. perfectly competitive markets. b. monopolistic markets. c. markets that are regulated by the government. d. markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.

c

Buyers and sellers who have no influence on market price are referred to as a. market pawns. b. monopolists. c. price takers. d. price makers.

d

All market participants are price takers that have no influence over prices in markets that feature a. only a few buyers and a few sellers. b. numerous sellers but only a few buyers. c. numerous buyers but only a few sellers. d. numerous buyers and numerous sellers.

a

If buyers and sellers in a certain market are price takers, then individually a. they have no influence on market price. b. they have some influence on market price, but that influence is limited. c. buyers will be able to find prices lower than those determined in the market. d. sellers will find it difficult to sell all they want to sell at the market price.

d

In a perfectly competitive market, at the market price, a. buyers cannot buy all they want and sellers cannot sell all they want. b. buyers cannot buy all they want, but sellers can sell all they want. c. buyers can buy all they want, but sellers cannot sell all they want. d. buyers can buy all they want and sellers can sell all they want.

b

An example of a perfectly competitive market would be the a. cable TV market. b. soybean market. c. breakfast cereal market. d. shampoo market.

c

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market, a. the price of tennis balls increases. b. the price of tennis balls decreases. c. the price of tennis balls does not change. d. there is no longer a market for tennis balls.

b

A monopoly is a market a. with one seller, and that seller is a price taker. b. with one seller, and that seller sets the price. c. with one buyer, and that buyer is a price taker. d. with one buyer, and that buyer sets the price.

c

Which of the following would most likely serve as an example of a monopoly? a. a bakery in a large city b. a bank in a large city c. a local cable television company d. a small group of corn farmers

c

Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world? a. Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. b. Some degree of competition is present in most markets. c. There are many buyers and many sellers in all types of markets. d. Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well.

b

The quantity demanded of a good is the amount that buyers a. are willing to purchase. b. are willing and able to purchase. c. are willing and able and need to purchase. d. are able to purchase.

d

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded a. applies to most goods in the economy. b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct.

c

Which of these statements best represents the law of demand? a. When buyers’ tastes for a good increase, they purchase more of the good. b. When income levels increase, buyers purchase more of most goods. c. When the price of a good decreases, buyers purchase more of the good. d. When buyers’ demands for a good increase, the price of the good increases.

d

A downward-sloping demand curve illustrates a. that demand decreases over time. b. that prices fall over time. c. the relationship between income and quantity demanded. d. the law of demand.

c

Benny rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental. Benny’s demand demonstrates the law of a. price. b. supply. c. demand. d. income.

c

Which of the following demonstrates the law of demand? a. After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise. b. Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal. c. Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal. d. Kendra buys fewer Snickers at $0.60 per Snickers since the price of Milky Ways fell to $0.50 per Milky Way.

a

The following table contains a demand schedule for a good. Price Quantity Demanded $10 100 $20 ? If the law of demand applies to this good, then "?" could be a. 0. b. 100. c. 200. d. 400.

c

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a a. price-quantity schedule. b. buyer schedule. c. demand schedule. d. demand curve.

c

A demand schedule is a table that shows the relationship between a. quantity demanded and quantity supplied. b. income and quantity demanded. c. price and quantity demanded. d. price and income.

c

Which of the following is not held constant in a demand schedule? a. income b. tastes c. price d. expectations

a

The demand curve for a good is a. a line that relates price and quantity demanded. b. a line that relates income and quantity demanded. c. a line that relates quantity demanded and quantity supplied. d. a line that relates price and income.

d

The line that relates the price of a good and the quantity demanded of that good is called the a. demand schedule, and it usually slopes upward. b. demand schedule, and it usually slopes downward. c. demand curve, and it usually slopes upward. d. demand curve, and it usually slopes downward.

d

When drawing a demand curve, a. demand is on the vertical axis and price is on the horizontal axis. b. quantity demanded is on the vertical axis and price is on the horizontal axis. c. price is on the vertical axis and demand is on the horizontal axis. d. price is on the vertical axis and quantity demanded is on the horizontal axis.

d

The sum of all the individual demand curves for a product is called a. total demand. b. consumer demand. c. aggregate demand. d. market demand.

d

The market demand curve 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.

a

The market demand curve a. is the sum of all individual demand curves. b. is the demand curve for every product in an industry. c. shows the average quantity demanded by individual demanders at each price. d. is always flatter than an individual demand curve.

c

To obtain the market demand curve for a product, sum the individual demand curves a. vertically. b. diagonally. c. horizontally. d. and then average them.

d

A market demand curve shows a. the relationship between price and the number of buyers in a market. b. how quantity demanded changes when the number of buyers 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.

b

A market demand curve shows how the total quantity demanded of a good varies as a. income varies. b. price varies. c. the number of buyers varies. d. supply varies.

c

Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve? a. (quantity demanded = 2, price = $1.50) b. (quantity demanded = 4, price = $2.50) c. (quantity demanded = 10, price = $1.00) d. (quantity demanded = 16, price = $2.50)

c

When we move along a given demand curve, a. only price is held constant. b. income and price are held constant. c. all nonprice determinants of demand are held constant. d. all determinants of quantity demanded are held constant.

b

Once the demand curve for a product or service is drawn, it a. remains stable over time. b. can shift either rightward or leftward. c. is possible to move along the curve, but the curve will not shift. d. tends to become steeper over time.

c

If something happens to alter the quantity demanded at any given price, then a. the demand curve becomes steeper. b. the demand curve becomes flatter. c. the demand curve shifts. d. we move along the demand curve.

a

When quantity demanded decreases at every possible price, we know that the demand curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become flatter.

b

When quantity demanded increases at every possible price, we know that the demand curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become steeper.

c

An increase in demand is represented by a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve.

d

A decrease in demand is represented by a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve.

a

An increase in quantity demanded a. results in a movement downward and to the right along a fixed demand curve. b. results in a movement upward and to the left along a fixed demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right.

b

A decrease in quantity demanded a. results in a movement downward and to the right along a fixed demand curve. b. results in a movement upward and to the left along a fixed demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right.

b

A leftward shift of a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

a

A rightward shift of a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

c

A movement upward and to the left along a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

d

A movement downward and to the right along a demand curve is called a. an increase in demand. b. a decrease in demand. c. a decrease in quantity demanded. d. an increase in quantity demanded.

d

An increase in the price of a good will a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.

c

A decrease in the price of a good will a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.

d

When the price of a good or service changes, a. the supply curve shifts in the opposite direction. b. the demand curve shifts in the opposite direction. c. the demand curve shifts in the same direction. d. there is a movement along a given demand curve.

c

The demand curve for hot dogs a. shifts when the price of hot dogs changes because the price of hot dogs is measured on the vertical axis of the graph. b. shifts when the price of hot dogs changes because the quantity demanded of hot dogs is measured on the horizontal axis of the graph. c. does not shift when the price of hot dogs changes because the price of hot dogs is measured on the vertical axis of the graph. d. does not shift when the price of hot dogs changes because the quantity demanded of hot dogs is measured on the horizontal axis of the graph.

b

Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in the price of a related good or service

a

Which of the following would not shift the demand curve for mp3 players? a. a decrease in the price of mp3 players b. a fad that makes mp3 players more popular among 12-25 year olds c. an increase in the price of CDs, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players

d

Which of the following events would cause a movement upward and to the left along the demand curve for olives? a. The number of buyers of olives decreases. b. Consumer income decreases, and olives are a normal good. c. The price of pickles decreases, and pickles are a substitute for olives. d. The price of olives rises.

d

A movement along the demand curve might be caused by a change in a. income. b. the prices of substitutes or complements. c. expectations about future prices. d. the price of the good or service that is being demanded.

b

Holding the nonprice determinants of demand constant, a change in price would a. result in either a decrease in demand or an increase in demand. b. result in a movement along a stationary demand curve. c. result in a shift of supply. d. have no effect on the quantity demanded.

b

A decrease in the price of a good would a. increase the supply of the good. b. increase the quantity demanded of the good. c. give producers an incentive to produce more to keep profits from falling. d. shift the supply curve for the good to the left.

b

The demand curve for textbooks shifts a. when a determinant of the demand for textbooks other than income changes. b. when a determinant of the demand for textbooks other than the price of textbooks changes. c. when any determinant of the demand for textbooks changes. d. only when the number of textbook-buyers changes.

d

Which of the following is not a determinant of the demand for a particular good? a. the prices of related goods b. income c. tastes d. the prices of the inputs used to produce the good

b

Each of the following is a determinant of demand except a. tastes. b. technology. c. expectations. d. the prices of related goods.

a

Which of the following is not a determinant of demand? a. the price of a resource that is used to produce the good b. the price of a complementary good c. the price of the good next month d. the price of a substitute good

a

If the demand for a good falls when income falls, then the good is called a. a normal good. b. a regular good. c. a luxury good. d. an inferior good.

a

If a good is normal, then an increase in income will result in a. an increase in the demand for the good. b. a decrease in the demand for the good. c. a movement down and to the right along the demand curve for the good. d. a movement up and to the left along the demand curve for the good.

b

If Francis experiences a decrease in his income, then we would expect Francis’s demand for a. each good he purchases to remain unchanged. b. normal goods to decrease. c. luxury goods to increase. d. inferior goods to decrease.

c

You lose your job and, as a result, you buy fewer romance novels. This shows that you consider romance novels to be a(n) a. luxury good. b. inferior good. c. normal good. d. complementary good.

a

Pizza is a normal good if a. the demand for pizza rises when income rises. b. the demand for pizza rises when the price of pizza falls. c. the demand curve for pizza slopes downward. d. the demand curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

b

Suppose that when income rises, the demand curve for computers shifts to the right. In this case, we know computers are a. inferior goods. b. normal goods. c. perfectly competitive goods. d. durable goods.

b

Which of the following would shift the demand curve for gasoline to the right? a. a decrease in the price of gasoline b. an increase in consumer income, assuming gasoline is a normal good c. an increase in the price of cars, a complement for gasoline d. a decrease in the expected future price of gasoline

d

If a decrease in income increases the demand for a good, then the good is a. a substitute good. b. a complementary good. c. a normal good. d. an inferior good.

b

If a good is inferior, then an increase in income will result in a. an increase in the demand for the good. b. a decrease in the demand for the good. c. a movement down and to the right along the demand curve for the good. d. a movement up and to the left along the demand curve for the good.

c

Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are a. a substitute good. b. a normal good. c. an inferior good. d. a complementary good.

d

Soup is an inferior good if a. the demand for soup falls when the price of a substitute for soup rises. b. the demand for soup rises when the price of soup falls. c. the demand curve for soup slopes upward. d. the demand for soup falls when income rises.

b

Suppose that Carolyn receives a pay increase. We would expect a. to observe Carolyn moving down and to the right along her given demand curve. b. Carolyn’s demand for inferior goods to decrease. c. Carolyn’s demand for each of two goods that are complements to increase. d. Carolyn’s demand for normal goods to decrease.

a

Two goods are substitutes when a decrease in the price of one good a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.

d

Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods.

c

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

d

A likely example of substitute goods for most people would be a. peanut butter and jelly. b. tennis balls and tennis rackets. c. televisions and subscriptions to cable television services. d. pencils and pens.

c

A higher price for bagels would result in a(n) a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins.

d

You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for a. sweatpants will increase. b. sweatpants will decrease. c. shorts will increase. d. shorts will decrease.

c

If goods A and B are complements, then an increase in the price of good A will result in a. more of good A being sold. b. more of good B being sold. c. less of good B being sold. d. no difference in the quantity sold of either good.

c

A likely example of complementary goods for most people would be a. butter and margarine. b. lawnmowers and automobiles. c. chips and salsa. d. cola and lemonade.

b

A higher price for batteries would result in a(n) a. increase in the demand for flashlights. b. decrease in the demand for flashlights. c. increase in the demand for batteries. d. decrease in the demand for batteries.

a

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. How would this price increase affect your demand for vanilla pudding? a. It would decrease. b. It would increase. c. It would be unaffected. d. There is insufficient information given to answer the question.

c

Holding all other things constant, a higher price for ski lift tickets would a. increase the number of skiers. b. increase the price of skis. c. decrease the number of skis sold. d. decrease the demand for other winter recreational activities.

d

When quantity demanded has increased at every price, it might be because a. the number of buyers in the market has decreased. b. income has increased and the good is an inferior good. c. the costs incurred by sellers producing the good have decreased. d. the price of a complementary good has decreased.

c

Which of the following might cause the demand curve for an inferior good to shift to the left? a. a decrease in income b. an increase in the price of a substitute c. an increase in the price of a complement d. None of the above is correct.

b

When it comes to people’s tastes, economists generally believe that a. tastes are based on forces that are well within the realm of economics. b. tastes are based on historical and psychological forces that are beyond the realm of economics. c. tastes can only be studied through well-constructed, real-life models. d. since tastes do not directly affect demand, there is little need to explain people’s tastes.

a

Economists normally 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 and therefore 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.

b

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for a. hair gel to increase. b. razors to increase. c. combs to increase. d. shampoo to increase.

b

Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who eat it. We would expect to see a. no change in the demand for chocolate pudding. b. a decrease in the demand for chocolate pudding. c. an increase in the demand for chocolate pudding. d. a decrease in the supply of chocolate pudding.

c

If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at each price of Vanilla Coke, then a. we will observe a movement downward and to the right along the demand curve for Vanilla Coke. b. we will observe a movement upward and to the left along the demand curve for Vanilla Coke. c. the demand curve for Vanilla Coke will shift to the right. d. the demand curve for Vanilla Coke will shift to the left.

c

A very hot summer in Atlanta will cause 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.

a

If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight gain, then we likely would see a. an increase in demand for brown sugar and a decrease in demand for white sugar. b. a decrease in demand for brown sugar and an increase in demand for white sugar. c. an increase in demand for both brown sugar and white sugar. d. no change in demand for either type of sugar because weight loss is not a determinant of demand.

c

Which of the following events could shift the demand curve for gasoline to the left? a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. d. The price of gasoline rises.

c

An increase in the number of college scholarships issued by private foundations would a. increase the supply of education. b. decrease the supply of education. c. increase the demand for education. d. decrease the demand for education.

c

Today, people changed their expectations about the future. This change a. can cause a movement along a demand curve. b. can affect future demand, but not today’s demand. c. can affect today’s demand. d. cannot affect either today’s demand or future demand.

b

If Juan expects to earn a higher income next month, he may choose to a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services. c. decrease his current demand for goods and services. d. move along his current demand curves for goods and services.

b

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result, a. your demand for peanut butter will increase, but not until the end of the year. b. your demand for peanut butter increases today. c. your demand for peanut butter decreases as you look for a substitute good. d. your demand for peanut butter shifts left today.

b

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 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.

a

What will happen in the rice market now if buyers expect higher rice prices in the near future? a. The demand for rice will increase. b. The demand for rice will decrease. c. The demand for rice will be unaffected. d. The supply of rice will increase.

b

Today’s demand curve for gasoline could shift in response to a. a change in today’s price of gasoline. b. a change in the expected future price of gasoline. c. a change in the number of sellers of gasoline. d. All of the above are correct.

b

If the number of buyers in a market decreases, then a. demand will increase. b. demand will decrease. c. supply will increase. d. supply will decrease.

d

Which of the following does not affect an individual’s demand curve? a. expectations b. income c. prices of related goods d. the number of buyers

a

Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast food in Warrensburg a. increases. b. decreases. c. remains constant, but we observe a movement downward and to the right along the demand curve. d. remains constant, but we observe a movement upward and to the left along the demand curve.

b

For the general population, a 10 percent increase in the price of cigarettes leads to a a. 1 percent reduction in the quantity demanded of cigarettes. b. 4 percent reduction in the quantity demanded of cigarettes. c. 10 percent reduction in the quantity demanded of cigarettes. d. 12 percent reduction in the quantity demanded of cigarettes.

d

For teenagers, a 10 percent increase in the price of cigarettes leads to a a. 1 percent reduction in the quantity demanded of cigarettes. b. 4 percent reduction in the quantity demanded of cigarettes. c. 10 percent reduction in the quantity demanded of cigarettes. d. 12 percent reduction in the quantity demanded of cigarettes.

b

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices a. encourage marijuana use, and the evidence supports this argument. b. encourage marijuana use, but the evidence does not support this argument. c. discourage marijuana use, and the evidence supports this argument. d. discourage marijuana use, but the evidence does not support this argument.

d

The belief that tobacco is a "gateway drug" is consistent with a. the idea that tobacco and marijuana are substitutes. b. the idea that an increase in income causes a decrease in the demand for tobacco and an increase in the demand for marijuana. c. the idea that lower cigarette prices are associated with less use of marijuana. d. most of the available evidence.

b

Most studies indicate that tobacco and marijuana tend to be a. substitutes. b. complements. c. not related since one is legal and one is illegal. d. inferior goods.

d

The quantity supplied of a good is the amount that a. buyers are willing and able to purchase. b. sellers are able to produce. c. buyers and sellers agree will be brought to market. d. sellers are willing and able to sell.

b

If the price of a good is low, 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.

a

"Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well." This relationship between price and quantity supplied a. is referred to as the law of supply. b. applies only to a few goods in the economy. c. is represented by a downward-sloping supply curve. d. All of the above are correct.

b

The law of supply states that, other things equal, a. when the price of a good falls, the supply of the good rises. b. when the price of a good rises, the quantity supplied of the good rises. c. when the price of a good rises, the supply of the good falls. d. when the price of a good falls, the quantity supplied of the good rises.

a

The law of supply states that, other things equal, a. an increase in price causes quantity supplied to increase. b. an increase in price causes quantity supplied to decrease. c. an increase in quantity supplied causes price to increase. d. an increase in quantity supplied causes price to decrease.

c

Other things equal, when the price of a good falls, the a. quantity demanded of the good decreases. b. supply decreases. c. quantity supplied of the good decreases. d. demand increases.

c

Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers’ supplies of a good increase, the price of the good increases.

d

A supply curve slopes upward because a. as more is produced, total cost of production falls. b. an increase in input prices increases supply. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity.

d

Which of the following demonstrates the law of supply? a. When leather became more expensive, belt producers decreased their supply of belts. b. When car production technology improved, car producers increased their supply of cars. c. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. d. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

d

The following table contains a supply schedule for a good. Price Quantity Supplied $10 100 $20 ? If the law of supply applies to this good, then "?" could be a. 0. b. 50. c. 100. d. 150.

a

A supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. profit and quantity supplied.

b

Which of the following is not held constant in a supply schedule? a. technology b. the price of the good c. the prices of inputs d. expectations

d

The difference between a supply schedule and a supply curve is that a. a supply schedule incorporates demand and a supply curve does not. b. a supply schedule incorporates profit and a supply curve does not. c. a supply schedule can shift, but a supply curve cannot shift. d. a supply schedule is a table and a supply curve is drawn on a graph.

c

The supply curve for a good is a. a line that relates profit and quantity supplied. b. a line that relates input prices and quantity supplied. c. a line that relates price and quantity supplied. d. a line that relates price and profit.

c

The line that relates the price of a good and the quantity supplied of that good is called the a. supply schedule, and it usually slopes upward. b. supply schedule, and it usually slopes downward. c. supply curve, and it usually slopes upward. d. supply curve, and it usually slopes downward.

b

The sum of all the individual supply curves for a product is called a. total supply. b. market supply. c. aggregate supply. d. total output.

d

The market supply curve 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.

a

In a market, to find the total amount supplied at a particular price, a. we must add up all of the amounts that firms are willing and able to supply at that price. b. we must take the average of the amounts that firms are willing and able to supply at that price. c. we must add all of the costs that firms incur to supply the product at that price. d. all determinants of demand must be taken into account.

b

A market supply curve is determined by a. vertically summing individual supply curves. b. horizontally summing individual supply curves. c. finding the average quantity supplied by sellers at each possible price. d. finding the average price at which sellers are willing and able to sell a particular quantity of the good.

a

A market supply curve shows a. the total quantity supplied at all possible prices. b. the average quantity supplied by producers at all possible prices. c. how quantity supplied changes when the number of sellers changes. d. suppliers’ responses, in terms of the amounts they will supply, to the demands of buyers.

b

A market supply curve shows how the total quantity supplied of a good varies as a. technology varies. b. price varies. c. input prices vary. d. demand varies.

c

When we move along a given supply curve, a. only price is held constant. b. technology and price are held constant. c. all nonprice determinants of supply are held constant. d. all determinants of quantity supplied are held constant.

b

Once the supply curve for a product or service is drawn, it a. remains stable over time. b. can shift either rightward or leftward. c. is possible to move along the curve, but the curve will not shift. d. tends to become steeper over time.

b

If something happens to alter the quantity supplied at any given price, then a. we move along the supply curve. b. the supply curve shifts. c. the supply curve becomes steeper. d. the supply curve becomes flatter.

a

When quantity supplied decreases at every possible price, we know that the supply curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the supply curve to a new point on the same curve. d. not shifted; rather, the supply curve has become flatter.

b

When quantity supplied increases at every possible price, we know that the supply curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the supply curve to a new point on the same curve. d. not shifted; rather, the supply curve has become flatter.

c

An increase in supply is represented by a. a movement downward and to the left along a supply curve. b. a movement upward and to the right along a supply curve. c. a rightward shift of a supply curve. d. a leftward shift of a supply curve.

d

A decrease in supply is represented by a. a movement downward and to the left along a supply curve. b. a movement upward and to the right along a supply curve. c. a rightward shift of a supply curve. d. a leftward shift of a supply curve.

b

An increase in quantity supplied 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.

a

A decrease in quantity supplied 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.

b

A leftward shift of a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

a

A rightward shift of a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

d

A movement upward and to the right along a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

c

A movement downward and to the left along a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

d

A decrease in the price of a good will a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.

c

An increase in the price of a good will a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.

d

When the price of a good or service changes, a. the demand curve shifts in the opposite direction. b. the supply curve shifts in the opposite direction. c. the supply curve shifts in the same direction. d. there is a movement along a given supply curve.

c

The supply curve for coffee a. shifts when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. b. shifts when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph. c. does not shift when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. d. does not shift when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph.

b

Which of the following changes would not shift the supply curve for a good or service? a. a change in technology b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in input prices

a

Which of the following would not shift the supply curve for mp3 players? a. an increase in the price of mp3 players b. a decrease in the number of sellers of mp3 players c. an increase in the price of plastic, an input into the production of mp3 players d. an improvement in the technology used to produce mp3 players

d

Which of the following events would cause a movement upward and to the right along the supply curve for tomatoes? a. The number of sellers of tomatoes increases. b. There is an advance in technology that reduces the cost of producing tomatoes. c. The price of fertilizer decreases, and fertilizer is an input in the production of tomatoes. d. The price of tomatoes rises.

d

A movement along the supply curve might be caused by a change in a. technology. b. input prices. c. expectations about future prices. d. the price of the good or service that is being supplied.

b

Holding the nonprice determinants of supply constant, a change in price would a. result in either a decrease in supply or an increase in supply. b. result in a movement along a stationary supply curve. c. result in a shift of demand. d. have no effect on the quantity supplied.

c

An increase in the price of a good would a. increase the supply of the good. b. increase the amount purchased by buyers. c. give producers an incentive to produce more. d. decrease both the quantity demanded of the good and the quantity supplied of the good.

d

An increase in the price of oranges would lead to a. an increased supply of oranges. b. a reduction in the prices of inputs used in orange production. c. an increased demand for oranges. d. a movement up and to the right along the supply curve for oranges.

b

The supply curve for cookbooks shifts a. when a determinant of the supply of cookbooks other than technology changes. b. when a determinant of the supply of cookbooks other than the price of cookbooks changes. c. when any determinant of the supply of cookbooks changes. d. only when the number of cookbook-sellers changes.

c

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of a. crystal to be unaffected. b. crystal to decrease. c. crystal to increase. d. lead to increase.

b

Suppose you make jewelry. If the price of gold falls, then we would expect you to a. be willing and able to produce less jewelry than before at each possible price. b. be willing and able to produce more jewelry than before at each possible price. c. face a greater demand for your jewelry. d. face a weaker demand for your jewelry.

c

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels.

b

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams a. to shift rightward. b. to shift leftward. c. to become flatter. d. to remain unchanged.

c

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the a. demand for flour to increase. b. demand for flour to decrease. c. supply of flour to increase. d. supply of flour to decrease.

d

An increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, a. the demand for tires decreases and the supply of tires increases. b. the demand for tires is unaffected and the supply of tires decreases. c. the demand for tires is unaffected and the supply of tires increases. d. None of the above is necessarily correct.

a

A technological advance will shift the a. supply curve to the right. b. supply curve to the left. c. demand curve to the right. d. demand curve to the left.

c

An advance in production technology will a. increase a firm’s costs and increase its supply. b. increase a firm’s costs and decrease its supply. c. decrease a firm’s costs and increase its supply. d. decrease a firm’s costs and decrease its supply.

d

If car manufacturers begin utilizing new labor-saving technology on their assembly lines, we would not expect a. a smaller quantity of labor to be used. b. the supply of cars to increase. c. the firms’ costs to fall. d. individual car manufacturers to move up and to the right along their individual supply curves.

c

Which of the following might cause the supply curve for an inferior good to shift to the right? a. An increase in input prices. b. A decrease in consumer income. c. An improvement in production technology that makes production of the good more profitable. d. A decrease in the number of sellers in the market.

c

Today, producers changed their expectations about the future. This change a. can cause a movement along a supply curve. b. can affect future supply, but not today’s supply. c. can affect today’s supply. d. cannot affect either today’s supply or future supply.

b

If suppliers expect the price of their product to fall in the future, then they will a. decrease supply now. b. increase supply now. c. decrease supply in the future but not now. d. increase supply in the future but not now.

b

What will happen in the rice market now if sellers expect higher rice prices in the near future? a. The supply of rice will increase. b. The supply of rice will decrease. c. The supply of rice will be unaffected. d. The demand for rice will decrease.

b

Today’s supply curve for gasoline could shift in response to a. a change in today’s price of gasoline. b. a change in the expected future price of gasoline. c. a change in the number of buyers of gasoline. d. All of the above are correct.

b

A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect a. the dress manufacturer to supply more dresses now than it was supplying previously. b. the dress manufacturer to supply fewer dresses now than it was supplying previously. c. the demand for this manufacturer’s dresses to fall. d. no change in the dress manufacturer’s current supply; instead, future supply will be affected.

c

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next 6 months. As a result, we can expect the supply of lumber to a. fall in 6 months, but not now. b. increase in 6 months when the price goes up. c. fall now. d. increase now to meet as much demand as possible.

b

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funsters should a. "fight fire with fire" by decreasing supply of its doll for 6 weeks and then increasing the supply. b. increase the supply of their doll now before the other doll hits the market. c. increase the price of their doll now. d. discontinue their doll.

d

Which of the following is a determinant of the market supply curve but not a determinant of an individual seller’s supply? a. technology b. expectations c. input prices d. the number of sellers

b

If the number of sellers in a market increases, then the a. demand in that market will increase. b. supply in that market will increase. c. supply in that market will decrease. d. demand in that market will decrease.

a

A decrease in the number of sellers in the market causes a. the supply curve to shift to the left. b. the supply curve to shift to the right. c. a movement up and to the right along a stationary supply curve. d. a movement downward and to the left along a stationary supply curve.

c

Which of the following would shift the supply curve for gasoline to the right? a. An increase in the demand for gasoline. b. An increase in the price of gasoline. c. An increase in the number of producers of gasoline d. An increase in the price of oil, an input into the production of gasoline.

a

Which of the following events could cause an increase in the supply of ceiling fans? a. The number of sellers of ceiling fans increases. b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. c. There is an increase in the price of the motor that powers ceiling fans. d. All of the above are correct.

d

The unique point at which the supply and demand curves intersect is called a. market harmony. b. coincidence. c. equivalence. d. equilibrium.

a

The dictionary defines equilibrium as a situation in which forces a. are in balance. b. are the same. c. clash. d. remain constant.

b

At the equilibrium price, the quantity of the good that buyers are willing and able to buy a. is greater than the quantity that sellers are willing and able to sell. b. exactly equals the quantity that sellers are willing and able to sell. c. is less than the quantity that sellers are willing and able to sell. d. (a) and (c) could both be correct.

b

Another term for equilibrium price is a. dynamic price. b. market-clearing price. c. quantity-defining price. d. balance price.

b

In a given market, how are the equilibrium price and the market-clearing price related? a. There is no relationship. b. They are the same price. c. The market-clearing price exceeds the equilibrium price. d. The equilibrium price exceeds the market-clearing price.

d

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell a. at prices at and above the equilibrium price. b. at prices at and below the equilibrium price. c. at prices above and below the equilibrium price, but not at the equilibrium price. d. at the equilibrium price, but not above or below the equilibrium price.

a

In markets, prices move toward equilibrium because of a. the actions of buyers and sellers. b. government regulations placed on market participants. c. increased competition among sellers. d. buyers’ ability to affect market outcomes.

c

When the price of a good is higher than the equilibrium price, a. a shortage will exist. b. buyers desire to purchase more than is produced. c. sellers desire to produce and sell more than buyers wish to purchase. d. quantity demanded exceeds quantity supplied.

c

A surplus exists in a market if a. there is an excess demand for the good. b. the situation is such that the law of supply and demand would predict an increase in the price of the good from its current level. c. the current price is above its equilibrium price. d. quantity demanded exceeds quantity supplied.

a

If a surplus exists in a market, then we know that the actual price is a. above the equilibrium price and quantity supplied is greater than quantity demanded. b. above the equilibrium price and quantity demanded is greater than quantity supplied. c. below the equilibrium price and quantity demanded is greater than quantity supplied. d. below the equilibrium price and quantity supplied is greater than quantity demanded.

a

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

c

Which of the following would cause price to decrease? a. a decrease in supply b. an increase in demand c. a surplus of the good d. a shortage of the good

c

When a surplus exists in a market, sellers 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.

d

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a 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.

d

The current price of neckties is $30, but the equilibrium price of neckties is $25. As a result, a. the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price. b. the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price. c. there is a surplus of neckties at the $30 price. d. All of the above are correct.

a

A university’s football stadium is never more than half-full during football games. This indicates a. the ticket price is above the equilibrium price. b. the ticket price is below the equilibrium price. c. the ticket price is at the equilibrium price. d. nothing about the equilibrium price.

b

When the price of a good is lower than the equilibrium price, a. a surplus will exist. b. buyers desire to purchase more than is produced. c. sellers desire to produce and sell more than buyers wish to purchase. d. quantity supplied exceeds quantity demanded.

c

A shortage exists in a market if a. there is an excess supply of the good. b. the situation is such that the law of supply and demand would predict a decrease in the price of the good from its current level. c. the current price is below its equilibrium price. d. quantity supplied exceeds quantity demanded.

c

If a shortage exists in a market, then we know that the actual price is a. above the equilibrium price and quantity supplied is greater than quantity demanded. b. above the equilibrium price and quantity demanded is greater than quantity supplied. c. below the equilibrium price and quantity demanded is greater than quantity supplied. d. below the equilibrium price and quantity supplied is greater than quantity demanded.

c

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

d

Which of the following would cause price to increase? a. an increase in supply b. a decrease in demand c. a surplus of the good d. a shortage of the good

b

When a shortage exists in a market, sellers a. raise price, which increases quantity demanded and decreases quantity supplied, until the shortage is eliminated. b. raise price, which decreases quantity demanded and increases quantity supplied, until the shortage is eliminated. c. lower price, which increases quantity demanded and decreases quantity supplied, until the shortage is eliminated. d. lower price, which decreases quantity demanded and increases quantity supplied, until the shortage is eliminated.

a

If there is a shortage of farm laborers, we would expect a. the wage of farm laborers to increase. b. the wage of farm laborers to decrease. c. the price of farm commodities to decrease. d. a decrease in the demand for substitutes for farm labor.

a

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

b

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates a. the ticket price was above the equilibrium price. b. the ticket price was below the equilibrium price. c. the ticket price was at the equilibrium price. d. nothing about the equilibrium price.

b

The law of supply and demand asserts that a. demand curves and supply curves tend to shift to the right as time goes by. b. the price of a good will eventually rise in response to an excess demand for that good. c. when the supply curve for a good shifts, the demand curve for that good shifts in response. d. the equilibrium price of a good will be rising more often than it will be falling.

b

Step one of the "Three Steps for Analyzing Changes in Equilibrium" is a. decide which direction the curve shifts. b. decide whether the event shifts the supply or demand curve. c. use the supply-and-demand diagram to see how the shift changes the equilibrium. d. Any of these could be used first.

b

You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would be to a. decide which direction to shift the curve. b. decide whether the fires affected demand or supply. c. graph the shift to see the effect on equilibrium. d. None of the above are correct.

c

If the demand for a product increases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

d

If the demand for a product decreases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity to both increase. d. equilibrium price and equilibrium quantity to both decrease.

a

Suppose buyers of computers and printers regard those two goods as complements. Then an increase in the price of computers will cause a. a decrease in the demand for printers and a decrease in the quantity supplied of printers. b. a decrease in the supply of printers and a decrease in the quantity demanded of printers. c. a decrease in the equilibrium price of printers and an increase in the equilibrium quantity of printers. d. an increase in the equilibrium price of printers and a decrease in the equilibrium quantity of printers.

d

Which of the following would increase in response to a decrease in the price of ironing boards? a. the quantity of irons demanded at each possible price of irons b. the equilibrium quantity of irons c. the equilibrium price of irons d. All of the above are correct.

c

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes? a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

b

If the supply of a product increases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

a

If the supply of a product decreases, then we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.

a

A decrease in input costs to firms in a market will result in a. a decrease in equilibrium price and an increase in equilibrium quantity. b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and a decrease in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity.

c

Suppose there is an earthquake that destroys several corn canneries. Which of the following would not be a direct result of this event? a. Sellers would not be able to produce and sell as much as before at each relevant price. b. The supply would decrease. c. Buyers would not be willing to buy as much as before at each relevant price. d. The equilibrium price would rise.

d

An early frost in the vineyards of Napa Valley would cause a. an increase in the demand for wine, increasing price. b. an increase in the supply of wine, decreasing price. c. a decrease in the demand for wine, decreasing price. d. a decrease in the supply of wine, increasing price.

b

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high-quality diamonds enters the market, then a. the supply curve for diamond rings will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. the supply curve for diamond rings will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. the demand curve for diamond rings will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. the demand curve for diamond rings will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

d

When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged.

b

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

A weaker demand together with a stronger supply would necessarily result in a. a lower price. b. a higher price. c. an increase in equilibrium quantity. d. a decrease in equilibrium quantity.

c

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

d

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? a. Price would fall and the effect on quantity would be ambiguous. b. Price would rise and the effect on quantity would be ambiguous. c. Quantity would fall and the effect on price would be ambiguous. d. Quantity would rise and the effect on price would be ambiguous.

d

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

d

What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

b

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

b

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

a

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

a

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

b

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

c

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous.

d

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then we could safely conclude that the equilibrium price of a new DVD would a. rise. b. fall. c. stay the same. d. We couldn’t be sure what it might do.

b

Which of the following events will definitely cause equilibrium quantity to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

d

Equilibrium quantity will unambiguously decrease when a. demand increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. demand decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. d. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

d

Which of the following events will definitely cause equilibrium quantity to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

a

Equilibrium quantity will unambiguously increase when a. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase. b. demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase. d. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

c

Which of the following events will definitely cause equilibrium price to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c

Equilibrium price will unambiguously decrease when a. demand increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. demand increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. demand decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. demand decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

a

Which of the following events will definitely cause equilibrium price to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

b

Equilibrium price will unambiguously increase when a. demand increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. demand increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. demand decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. demand decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

b

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes (an inferior good) to increase? a. an increase in consumer income b. a decrease in consumer income c. greater government restrictions on agricultural chemicals d. fewer government restrictions on agricultural chemicals

c

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? 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 his or her longevity. d. The demand curve for beef must be positively sloped.

c

During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? a. Beef producers, concerned about the health of their customers, decided to produce relatively less beef. b. Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. c. Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce. d. Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.

b

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and a decrease in the price of raw cotton b. a decrease in the price of wool shirts and a decrease in the price of raw cotton c. an increase in the price of wool shirts and an increase in the price of raw cotton d. a decrease in the price of wool shirts and an increase in the price of raw cotton

c

Which of the following events would cause the price of oranges to fall? a. There is a shortage of oranges. b. An article is published in which it is claimed that tangerines cause a serious disease, and oranges and tangerines are substitutes. c. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation’s oranges. d. All of the above are correct.

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