Question 1

Most studies have found that tobacco and marijuana are complements rather than substitutes.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   electricity.
B)   soybeans.
C)   coffee shops.
D)   restaurants.E) C) and D)
F) B) and C)

Question 3

For a competitive market,

Accepted Answer

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.E) C) and D)
F) B) and C)

Question 4

Assume Leo buys coffee beans in a competitive market. It follows that

Accepted Answer

A)   Leo has a limited number of sellers from which to buy coffee beans.
B)   Leo will negotiate with sellers whenever he buys coffee beans.
C)   Leo can influence the price of coffee beans if he buys a large quantity of them.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 5

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-22 
-Refer to Figure 4-22. At a price of $8, there is a

Accepted Answer

A)   surplus of 4 units.
B)   surplus of 8 units.
C)   shortage of 4 units.
D)   shortage of 8 units.E) A) and B)
F) A) and C)

Question 7

A competitive market is a market in which

Accepted Answer

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.E) A) and B)
F) All of the above

Question 8

A market demand curve shows how the total quantity demanded of a good varies as

Accepted Answer

A)   income varies.
B)   price varies.
C)   price of the nearest substitute good varies.
D)   supply varies.E) A) and D)
F) All of the above

Question 9

Figure 4-18 
-Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

Accepted Answer

A)   $15
B)   $20
C)   $30
D)   $35E) A) and C)
F) None of the above

Question 10

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?

Accepted Answer

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.E) B) and D)
F) C) and D)

Question 11

When drawing a demand curve,

Accepted Answer

A)   demand is measured along the vertical axis, and price is measured along the horizontal axis.
B)   quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis.
C)   price is measured along the vertical axis, and demand is measured along the horizontal axis.
D)   price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.E) None of the above
F) A) and B)

Question 12

Figure 4-2 
-Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is

Accepted Answer

A)   4 units.
B)   6 units.
C)   8 units.
D)   12 units.E) A) and B)
F) A) and D)

Question 13

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

Accepted Answer

A)   Point A to Point B
B)   Point C to Point B
C)   Point C to Point D
D)   Point A to Point DE) A) and C)
F) A) and D)

Question 14

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Accepted Answer

A) True 
 B)False

Question 15

When the price of a good is higher than the equilibrium price,

Accepted Answer

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.E) A) and C)
F) All of the above

Question 16

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Accepted Answer

A)   price.
B)   supply.
C)   demand.
D)   income.E) A) and C)
F) None of the above

Question 17

A leftward shift of a demand curve is called a(n)

Accepted Answer

A)   increase in demand.
B)   decrease in demand.
C)   decrease in quantity demanded.
D)   increase in quantity demanded.E) A) and B)
F) A) and C)

Question 18

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?

Accepted Answer

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.E) C) and D)
F) B) and D)

Question 19

Equilibrium quantity must increase when demand

Accepted Answer

A)   increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase.
B)   increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
C)   decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase.
D)   decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.E) A) and B)
F) B) and C)

Question 20

A rightward shift of a supply curve is called a(n)

Accepted Answer

A)   increase in supply.
B)   decrease in supply.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) A) and C)
F) A) and B)

Exam 4: The Market Forces of Supply and Demand

Most studies have found that tobacco and marijuana are complements rather than substitutes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Correct AnswerverifiedShow Answer

When drawing a demand curve,

Correct AnswerverifiedShow Answer

A competitive market is a market in which

Correct AnswerverifiedShow Answer

When the price of a good is higher than the equilibrium price,

Correct AnswerverifiedShow Answer

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

Correct AnswerverifiedShow Answer

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A rightward shift of a supply curve is called a(n)

Correct AnswerverifiedShow Answer

A market demand curve shows how the total quantity demanded of a good varies as

Correct AnswerverifiedShow Answer

For a competitive market,

Correct AnswerverifiedShow Answer

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Correct AnswerverifiedShow Answer

Assume Leo buys coffee beans in a competitive market. It follows that

Correct AnswerverifiedShow Answer

Figure 4-22 -Refer to Figure 4-22. At a price of $8, there is a

Correct AnswerverifiedShow Answer

A leftward shift of a demand curve is called a(n)

Correct AnswerverifiedShow Answer

Equilibrium quantity must increase when demand

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Figure 4-18 -Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

Correct AnswerverifiedShow Answer

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is

Correct AnswerverifiedShow Answer

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