Question 1

Most studies indicate that tobacco and marijuana tend to be

Accepted Answer

A)   substitutes.
B)   complements.
C)   unrelated because one good is legal while the other one is illegal.
D)   inferior goods.E) C) and D)
F) A) and B)

Question 2

In a competitive market, the quantity of a product produced and the price of the product are determined by

Accepted Answer

A)   buyers.
B)   sellers.
C)   both buyers and sellers.
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 3

Figure 4-17 
-Refer to Figure 4-17. At a price of

Accepted Answer

A)   $2, there is a shortage of 6 units.
B)   $5, there is a surplus of 25 units.
C)   $5, there is a shortage of $25.
D)   $7, there is a shortage of 4 units.E) A) and B)
F) None of the above

Question 4

Figure 4-1 
-Refer to Figure 4-1. The movement from point A to point B on the graph shows a(n)

Accepted Answer

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

Question 5

In a market economy, supply and demand are important because they

Accepted Answer

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.E) A) and B)
F) A) and C)

Question 6

Figure 4-8 
-Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's e­readers, a substitute good, decreases. Which of the following changes would occur?

Accepted Answer

A)   a movement along D2 from point A to point B
B)   a movement along D2 from point B to point A
C)   a shift from D1 to D2
D)   a shift from D2 to D1E) A) and C)
F) B) and C)

Question 7

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.
D)   The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.E) A) and B)
F) C) and D)

Question 8

Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation
     , where  is the quantity demanded and is the price. Also, suppose the supply schedule can be represented by the equation , where is the quantity supplied.
-Refer to Scenario 4-1. What is the equilibrium price in this market?

Accepted Answer

The answer of Scenario 4-1
Suppose the demand schedule in a...

Question 9

If toast and butter are complements, then which of the following would increase the demand for toast?

Accepted Answer

A)   a decrease in the price of toast
B)   a decrease in the price of butter
C)   an increase in the price of butter
D)   Both a and b are correct.E) A) and B)
F) A) and C)

Question 10

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) A) and C)

Question 11

"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

Accepted Answer

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.E) A) and B)
F) None of the above

Question 12

Figure 4-28 
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Accepted Answer

The answer of Figure 4-28 
-Refer to Figure 4-28. Using...

Question 13

A improvement in production technology will shift the

Accepted Answer

A)   supply curve to the right.
B)   supply curve to the left.
C)   demand curve to the right.
D)   demand curve to the left.E) All of the above
F) C) and D)

Question 14

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Accepted Answer

A)   shift rightward.
B)   shift leftward.
C)   become flatter.
D)   remain unchanged.E) C) and D)
F) A) and D)

Question 15

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4-27
Panel (a)  Panel (b) 
   Panel (c)  Panel (d) 
  
-Refer to Figure 4-27. Panel (b)  shows which of the following?

Accepted Answer

A)   a decrease in demand and a decrease in quantity supplied
B)   a decrease in demand and a decrease in supply
C)   a decrease in quantity demanded and a decrease in quantity supplied
D)   a decrease in quantity demanded and a decrease in supplyE) B) and C)
F) All of the above

Question 17

Figure 4-26 
-Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

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

Question 18

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Accepted Answer

A) True 
 B)False

Question 19

Table 4-12
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:
 
-Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

Accepted Answer

A)   $10
B)   $15
C)   $20
D)   $25E) All of the above
F) B) and D)

Question 20

Which of these statements does not apply to market economies?

Accepted Answer

A)   Prices prevent decentralized decision making from degenerating into chaos.
B)   Prices coordinate the actions of millions of people with varying abilities and desires.
C)   Prices ensure that anyone who wants a product can get it.
D)   Prices ensure that what needs to get done does in fact get done.E) A) and D)
F) C) and D)

Exam 4: The Market Forces of Supply and Demand

A competitive market is a market in which

Correct Answer
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If toast and butter are complements, then which of the following would increase the demand for toast?

Correct Answer
verified

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Correct Answer
verified

Which of these statements does not apply to market economies?

Correct Answer
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Correct Answer
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Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Correct Answer
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In a market economy, supply and demand are important because they

Correct Answer
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Most studies indicate that tobacco and marijuana tend to be

Correct Answer
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Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Panel (b) shows which of the following?

Correct Answer
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Correct Answer
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An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Correct Answer
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In a competitive market, the quantity of a product produced and the price of the product are determined by

Correct Answer
verified

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

Correct Answer
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Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Correct Answer
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Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Correct Answer
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Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's ereaders, a substitute good, decreases. Which of the following changes would occur?

Correct Answer
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Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph shows a(n)

Correct Answer
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Figure 4-17 -Refer to Figure 4-17. At a price of

Correct Answer
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A improvement in production technology will shift the

Correct Answer
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"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

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

A competitive market is a market in which

Correct AnswerverifiedShow Answer

If toast and butter are complements, then which of the following would increase the demand for toast?

Correct AnswerverifiedShow Answer

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

Correct AnswerverifiedShow Answer

Which of these statements does not apply to market economies?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Correct AnswerverifiedShow Answer

In a market economy, supply and demand are important because they

Correct AnswerverifiedShow Answer

Most studies indicate that tobacco and marijuana tend to be

Correct AnswerverifiedShow Answer

Figure 4-27 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-27. Panel (b) shows which of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.

Correct AnswerverifiedShow Answer

In a competitive market, the quantity of a product produced and the price of the product are determined by

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

Correct AnswerverifiedShow Answer

Figure 4-26 -Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Correct AnswerverifiedShow Answer

Figure 4-28 -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of a substitute for this good becomes more expensive.

Correct AnswerverifiedShow Answer

Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's e­readers, a substitute good, decreases. Which of the following changes would occur?

Correct AnswerverifiedShow Answer

Figure 4-1 -Refer to Figure 4-1. The movement from point A to point B on the graph shows a(n)

Correct AnswerverifiedShow Answer

Figure 4-17 -Refer to Figure 4-17. At a price of

Correct AnswerverifiedShow Answer

A improvement in production technology will shift the

Correct AnswerverifiedShow Answer

"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

Correct AnswerverifiedShow Answer

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Figure 4-8 -Refer to Figure 4-8. Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's ereaders, a substitute good, decreases. Which of the following changes would occur?

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