Question 1

What will a country with an aging population generally experience?

Accepted Answer

A)   no change in either market demand or individual demand for prescription drugs
B)   a decrease in the market demand for prescription drugs
C)   an increase in individual demand for prescription drugs, but no change in market demand
D)   an increase in the market demand for prescription drugsE) A) and C)
F) B) and D)

Question 2

What happens when the price of a good or service changes?

Accepted Answer

A)   Supply shifts in the opposite direction.
B)   Demand shifts in the opposite direction.
C)   Demand shifts in the same direction.
D)   There is a movement along a stable demand curve.E) None of the above
F) All of the above

Question 3

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

A)   similar products
B)   numerous sellers
C)   market power
D)   numerous buyersE) C) and D)
F) B) and C)

Question 4

What will result from an increase in resource costs to firms in a market?

Accepted Answer

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 no change in equilibrium quantity
D)   an increase in equilibrium price and an decrease in equilibrium quantityE) A) and B)
F) B) and C)

Question 5

Market demand is given as QD = 300 - 6P. Market supply is given as QS = 4P. If price increases from $25 to $30, what is the price elasticity of demand?

Accepted Answer

A)   0.7
B)   0.8
C)   1.0
D)   1.2E) A) and B)
F) None of the above

Question 6

Once the demand curve for a product or service is drawn, what is possible?

Accepted Answer

A)   It can shift either right or left.
B)   It remains stable over time at a given price.
C)   It can shift if the price changes.
D)   It can only be accurate at one price.E) None of the above
F) B) and C)

Question 7

What is the downward-sloping line that relates prices and quantity demanded?

Accepted Answer

A)   demand schedule
B)   demand curve
C)   quantity demanded line
D)   quantity demanded curveE) A) and B)
F) A) and C)

Question 8

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Accepted Answer

A) True 
 B)False

Question 9

What could be one result of a cold snap in Florida?

Accepted Answer

A)   an increase in farm machinery prices
B)   an increase in the price of diesel fuel used in farming
C)   an increase in migrant farm workers' wages
D)   an increase in the price of orangesE) A) and B)
F) B) and C)

Question 10

What will happen to the equilibrium price and quantity of landline phone services if new technologies lower the costs of providing such services and, at the same time, alternatives such as the Internet or smart phones have become more popular?

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 ambiguousE) A) and C)
F) B) and D)

Question 11

If 50-inch flat screen TVs became cheaper and buyers expected Netflix subscription prices to fall next year, what could we safely conclude would happen to the equilibrium price of a new Netflix subscription?

Accepted Answer

A)   It would rise.
B)   It would fall.
C)   It would stay the same.
D)   It could either rise or fall.E) A) and D)
F) B) and C)

Question 12

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $30?

Accepted Answer

A)   a shortage of 30
B)   a surplus of 40
C)   a surplus of 30
D)   a shortage of 40E) A) and B)
F) B) and D)

Question 13

Market demand is given as QD = 220 - 4P. Market supply is given as QS = 2P + 40. If price increases from $12 to $14, what is the price elasticity of demand?

Accepted Answer

A)   0.3
B)   0.7
C)   1.0
D)   3.0E) A) and D)
F) All of the above

Question 14

Which chain of events is listed in the correct order?

Accepted Answer

A)   quantity supplied increases, price increases, demand increases
B)   price increases, demand increases, quantity supplied increases
C)   demand increases, price increases, quantity supplied increases
D)   demand increases, quantity supplied increases, price increasesE) A) and B)
F) None of the above

Question 15

Figure 4-6
 
-When we move up or down a given demand curve, what is held constant?

Accepted Answer

A)   Only price is held constant.
B)   Income and the price of the good are held constant.
C)   All nonprice determinants of demand are assumed to be constant.
D)   All determinants of quantity demanded are held constant.E) B) and D)
F) All of the above

Question 16

You love. You hear on the news that 50% of the world's banana crop has been wiped out because of a virus, which will cause the price to double by the end of the year. What happens as a result?

Accepted Answer

A)   Your demand for bananas will increase at the end of the year.
B)   Your demand for bananas increases today.
C)   Your demand for bananas falls as you look for a substitute good.
D)   Your demand for bananas falls because the price increases today.E) All of the above
F) B) and C)

Question 17

What impact does a person's expectations about the future have?

Accepted Answer

A)   cannot affect demand because expectations change
B)   can affect future demand
C)   can affect current demand
D)   can shift a supply curveE) A) and B)
F) B) and D)

Question 18

Nancy likes pasta today more than she did yesterday. What does this reveal about Nancy's circumstances?

Accepted Answer

A)   Nancy must now perceive pasta as a luxury.
B)   Nancy must have received an increase in income.
C)   Nancy must be now willing to pay more than before for pasta.
D)   Nancy must now perceive pasta as a normal good.E) C) and D)
F) A) and B)

Question 19

Which best describes the relationship shown by a demand table?

Accepted Answer

A)   the price of a good and the quantity supplied
B)   income and the quantity of the good demanded
C)   the price of a good and the quantity buyers are willing and able to purchase
D)   the number of buyers and the quantity demandedE) None of the above
F) A) and D)

Question 20

If Francis receives an increase in his pay, what would we expect?

Accepted Answer

A)   Francis's demand for each good he purchases to remain unchanged
B)   Francis's demand for normal goods to decrease
C)   Francis's demand for luxury goods to increase
D)   Francis's demand for inferior goods to increaseE) All of the above
F) C) and D)

Exam 4: The Market Forces of Supply and Demand

If Francis receives an increase in his pay, what would we expect?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $30?

Correct AnswerverifiedShow Answer

What impact does a person's expectations about the future have?

Correct AnswerverifiedShow Answer

What will happen to the equilibrium price and quantity of landline phone services if new technologies lower the costs of providing such services and, at the same time, alternatives such as the Internet or smart phones have become more popular?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 300 - 6P. Market supply is given as QS = 4P. If price increases from $25 to $30, what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 220 - 4P. Market supply is given as QS = 2P + 40. If price increases from $12 to $14, what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

Nancy likes pasta today more than she did yesterday. What does this reveal about Nancy's circumstances?

Correct AnswerverifiedShow Answer

What is the downward-sloping line that relates prices and quantity demanded?

Correct AnswerverifiedShow Answer

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Correct AnswerverifiedShow Answer

Figure 4-6 -When we move up or down a given demand curve, what is held constant?

Correct AnswerverifiedShow Answer

What will a country with an aging population generally experience?

Correct AnswerverifiedShow Answer

Which best describes the relationship shown by a demand table?

Correct AnswerverifiedShow Answer

If 50-inch flat screen TVs became cheaper and buyers expected Netflix subscription prices to fall next year, what could we safely conclude would happen to the equilibrium price of a new Netflix subscription?

Correct AnswerverifiedShow Answer

What happens when the price of a good or service changes?

Correct AnswerverifiedShow Answer

Which chain of events is listed in the correct order?

Correct AnswerverifiedShow Answer

What could be one result of a cold snap in Florida?

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

You love. You hear on the news that 50% of the world's banana crop has been wiped out because of a virus, which will cause the price to double by the end of the year. What happens as a result?

Correct AnswerverifiedShow Answer

Once the demand curve for a product or service is drawn, what is possible?

Correct AnswerverifiedShow Answer

What will result from an increase in resource costs to firms in a market?

Correct AnswerverifiedShow Answer

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