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Principles of Macroeconomics, Econ 1010.


Quiz 4: The Market Forces of Demand and Supply
Practice Questions and Answers: Multiple Choice
1. Which of the following shows the workings of supply and demand?

a. A cold snap hits Florida, resulting in higher orange juice prices in supermarkets.
b. A warm summer in New England results in lower hotel prices in the Caribbean.
c. A war breaks out in the Middle East, causing gasoline prices in the United States to rise.
d. All of the above are correct.

2. Which of the following are the words most commonly used by economists?

a. supply and demand


b. entrepreneurial ability
c. scarcity and human wants
d. prices and exchange

3. In a free market, who determines how much of a good will be sold and the price at which it is sold?

a. suppliers
b. demanders
c. the government
d. both suppliers and demanders

4. A market is

a. a place where only buyers come together.


b. a place where only sellers meet.
c. a group of demanders and suppliers of a particular good or service.
d. a group of people with common desires.

5. Who is it that ultimately determines the demand for a product or service?

a. the government
b. those who buy the product or service
c. the producers who create the product or service
d. those who supply the raw materials used in the production of the good or service

6. A competitive market is

a. a market in which there are many buyers and many sellers so that each has a negligible impact on price.
b. a market where consumers cannot freely interact with sellers.
c. a market where suppliers are under no government restrictions.
d. a market with many buyers but few sellers.

7. Generally, the market for ice cream would be considered

a. a monopolistic market.
b. a competitive market.
c. more organized than an auction.
d. a market where individual sellers have significant pricing power.

8. Firms that sell their products in a competitive market have limited pricing power because

a. sellers have reason to charge more than their competitors.


b. each buyer has a significant influence on the price of the product.
c. other sellers are offering very similar products.
d. None of the above are correct.
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9. If a seller in a competitive market chooses to charge more than the market price, then

a. buyers will tend to make their purchases elsewhere.


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 price.
d. buyers would tend to buy more from this seller.

10. If buyers and/or sellers are price takers, then individually

a. they can somewhat influence the market price.


b. they have ultimate control over market price.
c. buyers will be able to find prices lower than those determined in the market.
d. they have no influence on market price because there are so many in the market.

11. There are thousands of wheat farmers who produce and sell wheat and there are millions of consumers who
use wheat and wheat products. The market for wheat would be considered

a. perfectly competitive.
b. monopolistic.
c. oligopolistic.
d. monopolistically competitive.

12. As a seller, you would be considered part of a perfectly competitive market if

a. your actions are quickly followed by competitors.


b. your pricing has no impact on the amount you can sell.
c. your actions essentially have no effect on the market price.
d. increases in the price of your product have an impact on the market price.

13. A monopoly is

a. a market with few sellers.


b. a market with one seller.
c. a market with one buyer.
d. a market where the government sets the price.

14. Which of the following would be an example of a monopoly?

a. a local cable television company


b. local cement companies
c. a bakery in a large city
d. a potato farmer

15. A market with only a few sellers would be

a. a monopoly.
b. a competitive market.
c. an oligopoly.
d. a monopolistically competitive market.

16. Which of the following would be an example of an oligopolistic market?

a. a domestic wheat market


b. air travel
c. the software industry
d. electrical power for residential consumers

17. A market with many sellers offering similar but slightly different products is called

a. a monopoly.
b. oligopolistic.
c. monopolistically competitive.
d. perfectly competitive.
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18. If a seller is supplying a product that is slightly different than that of many close competitors and is able to
charge a different price than competitors, then the seller

a. is a monopolist.
b. is producing a homogeneous product.
c. will eventually have to decrease the price.
d. is participating in a monopolistically competitive market.

19. Which of the following would NOT be a determinant of demand?

a. the price of related goods


b. income
c. tastes
d. the prices of the inputs used to produce the good

20. If a good is "normal," then an increase in income will result in

a. no change in the demand for the good.


b. a decrease in the demand for the good.
c. an increase in the demand for the good.
d. a lower market price.

21. If the price of a substitute to good X increases, then

a. the demand for good X will increase.


b. the market price of good X will decrease.
c. the demand for good X will decrease.
d. the demand for good X will not change.

22. Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and Y are

a. complementary goods.
b. substitute goods.
c. unrelated goods.
d. normal goods.

23. Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you
notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

a. It would decrease.
b. It would increase.
c. It would be unaffected.
d. There is insufficient information given to answer the question.

24. A higher price for batteries would tend to

a. increase the demand for flashlights.


b. decrease the demand for electricity.
c. increase the demand for electricity.
d. increase the demand for batteries.

25. If a decrease in income increases the demand for a good, then

a. the good is a substitute good.


b. the good is a complement good.
c. the good is a normal good.
d. the good is an inferior good.
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26. Which of the following is a determinant of demand?

a. the price of a substitute good


b. the price of a complement good
c. the price of the good next month
d. all of the above

27. What will happen in the rice market if buyers are expecting higher 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.

28. When we are studying the behavior of buyers, we are studying

a. supply.
b. demand.
c. government regulation.
d. an entire market.

29. Holding all else constant, a higher price for ski lift tickets would be expected to

a. increase the number of skiers.


b. decrease ski sales.
c. decrease the demand for other winter recreational activities.
d. decrease the supply of ski resorts.

30. A demand schedule is a

a. table showing the relationship between the price of a good and the quantity supplied.
b. table showing the relationship between income and the quantity of the good demanded.
c. table showing the relationship between the price of a good and the quantity buyers are willing and able to
purchase.
d. table showing the relationship between the determinants of demand and the quantity demanded.

31. A demand curve is

a. the downward-sloping line relating the price of the good with the quantity demanded.
b. the upward-sloping line relating price with quantity supplied.
c. the curve that relates income with quantity demanded.
d. None of the above answers is correct.
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32. The movement from point A to point B on the graph would be caused by

a. an increase in price.
b. a decrease in price.
c. a decrease in the price of a substitute good.
d. an increase in income.

33. The movement from point A to point B on the graph shows

a. a decrease in demand.
b. an increase in demand.
c. an increase in quantity demanded.
d. a decrease in quantity demanded.

34. When we move up or down a given demand curve,

a. only price is held constant.


b. all nonprice determinants of demand are assumed to be constant.
c. income and the price of the good are held constant.
d. all determinants of quantity demanded are held constant.

35. Ceteris paribus is a Latin phrase that literally means

a. "other things being equal."


b. "after this therefore because of this."
c. "to respond slowly to a change in price."
d. "There's no such thing as a free lunch."

36. The term ceteris paribus refers to

a. a central market price.


b. a real world situation in which every variable is held constant.
c. a hypothetical situation in which some variables are assumed to be constant.
d. a situation in which only the price is held constant.

37. Which of the following would NOT shift the demand curve for a good or service?

a. a change in income
b. a change in the price of a related good
c. a change in expectations about the price of the good or service
d. a change in the price of the good or service
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38. If the number of buyers in the market decreases,

a. the demand in the market will increase.


b. the supply in the market will increase.
c. the demand in the market will decrease.
d. the supply in the market will decrease.

39. Sally tells you that she thinks the price of her favorite stationery will increase in the near future. She will
probably respond by

a. decreasing her current demand for the stationery.


b. increasing her current demand for the stationery.
c. not changing her demand for stationery currently.
d. currently refusing to buy anymore stationery.

40. A market demand is

a. a vertical summation of individual demand curves.


b. a horizontal summation of individual demand curves.
c. not responsive to change in tastes and preferences.
d. determined solely by the number of buyers and sellers in the market.

41. A market demand curve reflects

a. the fact that the level of income is inversely related to quantity demanded.
b. how quantity demanded changes when the number of buyers changes.
c. how much all buyers are willing and able to buy at each possible price.
d. when the buyers are willing to buy the most.

The table shows individual demand schedules for a market.

Quantities Demanded
Price of the Good John Sally Jane Billy
$0.00 25 22 10 5
0.50 20 20 6 4
1.00 15 18 2 3
1.50 10 16 0 2
2.00 5 14 0 1
2.50 0 12 0 0

42. Refer to the table shown. When the price of the good is $1.00, the quantity demanded in this market would
be

a. 38 units.
b. 18 units.
c. 15 units.
d. 5 units.

43. Refer to the table shown. If the price increases from $1.00 to $1.50,

a. the market demand increases by 20 units.


b. the quantity demanded in the market decreases by 10 units.
c. individual demands will increase.
d. the quantity demanded in the market increases by 5 units.

44. Suppose that the American Medical Association announces that men who shave their heads are less likely to
die of heart failure. We could expect

a. the current demand for razors to decrease.


b. the current demand for combs to increase.
c. the current demand for razors to increase.
d. the demand for hair dye for men to increase.
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45. Suppose that scientists find evidence that proves chocolate pudding increases hair growth in men who are
balding. 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.

46. When the price of a good or service changes,

a. there is a movement along a stable demand curve.


b. demand shifts in the opposite direction.
c. demand shifts in the same direction.
d. supply shifts in the opposite direction.

47. Suppose that John receives a pay increase. We would expect

a. John's demand for normal goods to remain unchanged.


b. John's demand for inferior goods to decrease.
c. John's demand for luxury goods to decrease.
d. John's demand for normal goods to decrease.

48. Doug likes tomatoes today more than he did yesterday.

a. Doug is now willing to pay more than before for tomatoes.


b. Doug must have received an increase in income.
c. Doug must now consider tomatoes a luxury.
d. The supply of tomatoes must have increased.

49. The downward-sloping demand curve reflects which of the following?

a. The price is positively related to quantity supplied.


b. There is an inverse relationship between price and quantity demanded.
c. There is a direct relationship between price and quantity demanded.
d. When the price falls, buyers willingly buy less.

50. What is the law of demand?

a. When the price of a good or service rises, buyers respond by purchasing more.
b. When income levels increase, buyers respond by purchasing more.
c. When buyers' tastes for the good increase, they purchase more of the good.
d. When the price of a good falls, buyers respond by purchasing more.

51. An increase in the number of scholarships issued for college education 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.
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52. On the graph, the movement from D to D1 is called

a. a decrease in demand.
b. an increase in demand.
c. a decrease in quantity demanded.
d. an increase in quantity demanded.

53. On the graph, the movement from D to D1 could be caused by

a. an increase in price.
b. a decrease in the price of a complement.
c. an increase in technology.
d. a decrease in the price of a substitute.

54. If the demand curve shifts from D1 to D on the graph, this means that

a. firms would be willing to supply less than before.


b. people are less willing to buy the product at any price than before.
c. people are now more willing to buy the product at any price than before.
d. the price of the product has decreased, causing consumers to buy more of the product.

55. The side of the market that deals with the willingness and ability to produce and sell is

a. demand.
b. competition.
c. supply.
d. a monopoly.

56. One reason why government taxes on cigarettes imposed on sellers reduces smoking is that

a. cigarette companies are successful in passing much of the tax on to consumers.


b. cigarette companies do not pass much of the tax on to consumers.
c. there are many good substitutes for cigarettes.
d. None of the above answers is correct.
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57. The relationship between price and quantity supplied is

a. positive, or direct.
b. negative, or inverse.
c. nonexistent.
d. the same as the relationship between price and quantity demanded.

58. Other things equal, when the price of a good rises, the quantity supplied of the good also rises. This is

a. the law of increasing costs.


b. the law of diminishing returns.
c. the law of supply.
d. the law of demand.

59. If the number of sellers in a market increases,

a. the demand in that market will increase.


b. the supply in that market will decrease.
c. the supply in that market will increase.
d. the demand in that market will not change.

60. Suppose you make jewelry. If the price of gold falls, we would expect

a. you to be willing and able to produce more jewelry than before at each possible price.
b. you to be willing and able to produce less jewelry than before at each possible price.
c. you will face a greater demand for your jewelry.
d. you will face a weaker demand for your jewelry.

61. A technological advancement

a. will shift the demand curve to the right.


b. will shift the demand curve to the left.
c. will shift the supply curve to the right.
d. will shift the supply curve to the left.

62. A dress manufacturer is expecting higher prices for dresses in the near future. We would expect

a. the dress manufacturer to supply more dresses now.


b. the demand for this manufacturer's dresses to fall.
c. the dress manufacturer to supply fewer dresses now.
d. the demand for this manufacturer's dresses to rise.

63. Holding the nonprice determinants of supply constant, a change in price would

a. result in a change in supply.


b. result in a movement along a stable supply curve.
c. result in a shift of demand.
d. have no effect on the quantity supplied.

64. A supply curve slopes upward because

a. an increase in price gives producers incentive to supply a larger quantity.


b. an increase in input prices increases supply.
c. a decrease in input prices decreases supply.
d. as more is produced, per unit costs of production fall.
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65. The movement from point A to point B on the graph would be caused by

a. an increase in the price of the good.


b. a decrease in the price of the good.
c. an increase in technology.
d. an increase in input prices.

66. The movement from point A to point B on the graph is called

a. a decrease in supply.
b. an increase in supply.
c. a decrease in the quantity supplied.
d. an increase in the quantity supplied.

67. In a market, to find the total amount supplied at a particular price,

a. we must add up all of the amounts firms are willing and able to supply at that price.
b. we need the demand for the good.
c. the tastes and preferences of buyers must be established.
d. the income level of buyers would need to be determined.

68. Suppose that there is an increase in input prices. We would expect

a. supply to increase.
b. supply to decrease.
c. supply could increase or decrease.
d. supply to remain unchanged.

69. An increase in the price of a good would

a. increase the supply.


b. increase the amount purchased by buyers.
c. decrease the supply.
d. give producers an incentive to produce more.
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70. Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would
expect

a. the supply of flour to be unaffected.


b. the supply of flour to decrease.
c. the supply of flour to increase.
d. the demand for flour to decrease.

71. An increase in the price of oranges would

a. lead to an increased supply of oranges.


b. lead to a movement up the supply curve for oranges.
c. lead to an increased demand for oranges.
d. lead to a reduction in the prices of inputs used in orange production.

72. All else constant, an increase in the number of cattle delivered to an auction to be marketed would

a. represent an increase in demand for cattle at the auction.


b. represent an increase in the supply of cattle at the auction.
c. represent a decrease in the number of sellers at the auction.
d. have no effect on the demand or supply at the auction.

73. On the graph, the movement from S to S1 is called

a. a decrease in supply.
b. an increase in supply.
c. a decrease in quantity supplied.
d. an increase in quantity supplied.

74. On the graph, the movement from S to S1 could be caused by

a. a decrease in the price of the good.


b. an increase in income.
c. an improvement in technology.
d. an increase in input prices.
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75. The unique point at which the supply and demand curves intersect is called

a. market unity.
b. equilibrium.
c. cohesion.
d. an agreement.

76. The price where quantity supplied equals quantity demanded is called

a. the equilibrium price.


b. the monopoly price.
c. the coordinating price.
d. All of the above are correct.

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

a. the price is below the equilibrium price.


b. the market can be in equilibrium.
c. sellers are producing more than buyers wish to buy.
d. All of the above answers are correct.

78. At the equilibrium price,

a. everyone in the market has been satisfied.


b. it is possible for there to be a shortage.
c. firms have an incentive to increase production.
d. buyers have an incentive to buy more.

79. According to the graph, equilibrium price and quantity are

a. $7, 20.
b. $7, 60.
c. $5, 40.
d. $3, 60.
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80. According to the graph, at a price of $7,

a. there would be a shortage of 40 units.


b. there would be a surplus of 40 units.
c. there would be a surplus of 20 units.
d. the market would be in equilibrium.

81. According to the graph, at a price of $3,

a. there would be a shortage of 40 units.


b. there would be a surplus of 40 units.
c. there would be a surplus of 20 units.
d. the market would be in equilibrium.

82. According to the graph, at the equilibrium price,

a. 20 units would be supplied and demanded.


b. 40 units would be supplied and demanded.
c. 60 units would be supplied and demanded.
d. 60 units would be supplied, but only 20 would be demanded.

83. According to the graph, at a price of $7,

a. a surplus would exist and the price would tend to fall.


b. a surplus would exist and the price would tend to rise.
c. a shortage would exist and the price would tend to fall.
d. the market would be in equilibrium.

PRICE QUANTITY DEMANDED QUANTITY SUPPLIED


$10 10 100
8 20 80
6 30 60
4 40 40
2 50 20

84. In the table shown, the equilibrium price and quantity would be

a. $2, 50.
b. $4, 40.
c. $8, 80.
d. $10, 100.

85. In the table shown, if the price were $8,

a. a surplus of 30 units would exist and price would tend to fall.


b. a surplus of 60 units would exist and price would tend to rise.
c. a surplus of 60 units would exist and price would tend to fall.
d. a shortage of 30 units would exist and price would tend to rise.

86. In the table shown, if the price were $2,

a. a shortage of 30 units would exist and price would tend to fall.


b. a surplus of 60 units would exist and price would tend to rise.
c. a surplus of 60 units would exist and price would tend to fall.
d. a shortage of 30 units would exist and price would tend to rise.
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87. Refer to the graph shown. In this market, equilibrium price and quantity would be

a. $15, 400.
b. $20, 600.
c. $25, 500.
d. $25, 800.

88. Refer to the graph shown. If price is $25, quantity demanded would be

a. 400.
b. 500.
c. 600.
d. 800.

89. Refer to the graph shown. If price is $15, quantity supplied would be

a. 200.
b. 400.
c. 500.
d. 700.

90. Refer to the graph shown. If the price is $25,

a. there would be a surplus of 300.


b. there would be a surplus of 200.
c. there would be a shortage of 200.
d. the market would be in equilibrium.

91. Refer to the graph shown. If the price is $10,

a. there would be a shortage of 200.


b. there would be a surplus of 200.
c. there would be a surplus of 600.
d. there would be a shortage of 600.
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92. Refer to the graph shown. At a price of $15

a. quantity demanded < quantity supplied.


b. quantity demanded = quantity supplied.
c. quantity demanded > quantity supplied.
d. none of the above

93. Refer to the graph shown. At a price of $20

a. the market would be in equilibrium.


b. 600 units would be bought and sold.
c. there would be no pressure for price to change.
d. All of the above are true.

94. When the price 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 equals quantity supplied.

95. When there is a surplus in a market,

a. there is downward pressure on price.


b. there is upward pressure on price.
c. the market could still be in equilibrium.
d. there are too many buyers chasing too few goods.

96. When there is a shortage in a market,

a. there is downward pressure on price.


b. there is upward pressure on price.
c. the market could still be in equilibrium.
d. the price must be above equilibrium.

97. At the equilibrium price

a. there can still be upward or downward pressure on price.


b. there will be no pressure on price to rise or fall.
c. sellers would eventually require a higher price.
d. buyers would not be willing to purchase the output sellers desire to sell.

98. Comparative statics involves

a. comparing the old equilibrium and the new equilibrium.


b. the estimating of buyer reluctance to pay the market price.
c. comparisons of varying prices.
d. the estimating of the friction that develops between buyer and seller.

99. Which of the following is NOT one of the steps in analyzing how some event affects a market?

a. Determine the names of the market participants.


b. Decide whether the curve shifts to the right or to the left.
c. Determine whether the event shifts the supply, the demand, or both curves.
d. Use a supply-demand diagram to examine how the shift(s) affect the equilibrium.

100. A shift in the supply curve is called

a. a "change in supply."
b. a "movement along the supply curve."
c. a "change in the quantity supplied."
d. All of the above are correct.
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101. A shift in the demand curve is called

a. a "change in demand."
b. a "movement along the demand curve."
c. a "change in the quantity demanded."
d. All of the above are correct.

102. Whenever the price of a good changes,

a. there is a change in supply and demand.


b. there is only a change in supply.
c. there would be a movement along a supply curve and/or demand curve.
d. there would be no effect in the market.

103. Suppose there is an earthquake that destroys several corn canneries. Which of the following would NOT
occur as a direct result of this event?

a. Sellers would not be willing 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.

104. Suppose that the number of buyers in a market increases and a technological advancement occurs also.
What would we expect to happen in the market?

a. The equilibrium price would increase, but the impact on the amount sold in the market would be
ambiguous.
b. The equilibrium price would decrease, but the impact on the amount sold in the market would be
ambiguous.
c. Both equilibrium price and equilibrium quantity would increase.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

105. Suppose that the incomes of buyers in a particular market for a normal good declines and there is also a
reduction in input prices. What would we expect to occur in this market?

a. The equilibrium price would increase, but the impact on the amount sold in the market would be
ambiguous.
b. The equilibrium price would decrease, but the impact on the amount sold in the market would be
ambiguous.
c. Both equilibrium price and equilibrium quantity would increase.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

106. Suppose that demand decreases AND supply decreases. What would you expect to occur in the market for
the good?

a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
c. Both equilibrium price and equilibrium quantity would increase.
d. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
PAGE 17

107. Suppose that demand increases AND supply decreases. What would happen in the market for the good?

a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
c. Both equilibrium price and quantity would increase.
d. Both equilibrium price and quantity would decrease.

108. Which of the following would result in an increase in equilibrium price and an ambiguous change in
equilibrium quantity?

a. an increase in supply and demand


b. an increase in supply and a decrease in demand
c. a decrease in supply and demand
d. a decrease in supply and an increase in demand

109. When supply and demand both increase,

a. equilibrium price will increase.


b. equilibrium price will decrease.
c. equilibrium price may increase, decrease, or remain unchanged.
d. equilibrium quantity may increase, decrease, or remain unchanged.

110. 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.

111. In a free market system, what is the mechanism for rationing scarce resources?

a. sellers
b. buyers
c. prices
d. the government

112. In a free market system, what coordinates the actions of millions of people with their varying abilities and
desires?

a. producers
b. consumers
c. prices
d. the government

113. If there is a shortage of farm laborers, we would expect

a. the wages of farm laborers to decrease.


b. the wages of farm laborers to increase.
c. the prices of farm commodities to decrease.
d. a decrease in the demand for substitutes of farm labor.

114. In market economies,

a. prices guide economic decisions and thereby allocate scarce resources.


b. prices ensure that quantity supplied and quantity demanded are in balance.
c. prices influence how much of a good buyers choose to purchase and how much sellers choose to
produce.
d. All of the above answers are correct.
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115. Which of the following 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. greater government restrictions on agricultural chemicals
c. a decrease in consumer income
d. fewer government restrictions on agricultural chemicals
(c) 2001 by Harcourt, Inc. All rights reserved.
PAGE 1

ANSWER KEY FOR TEST - QUIZ4'1

1. d. All of the above are correct.


Chapter:4 QUESTION: 1

2. a. supply and demand


Chapter:4 QUESTION: 2

3. d. both suppliers and demanders


Chapter:4 QUESTION: 3

4. c. a group of demanders and suppliers of a particular good or service.


Chapter:4 QUESTION: 4

5. b. those who buy the product or service


Chapter:4 QUESTION: 5

6. a. a market in which there are many buyers and many sellers so that each has a negligible impact on price.
Chapter:4 QUESTION: 6

7. b. a competitive market.
Chapter:4 QUESTION: 7

8. c. other sellers are offering very similar products.


Chapter:4 QUESTION: 8

9. a. buyers will tend to make their purchases elsewhere.


Chapter:4 QUESTION: 9

10. d. they have no influence on market price because there are so many in the market.
Chapter:4 QUESTION: 10

11. a. perfectly competitive.


Chapter:4 QUESTION: 11

12. c. your actions essentially have no effect on the market price.


Chapter:4 QUESTION: 12

13. b. a market with one seller.


Chapter:4 QUESTION: 13

14. a. a local cable television company


Chapter:4 QUESTION: 14

15. c. an oligopoly.
Chapter:4 QUESTION: 15

16. b. air travel


Chapter:4 QUESTION: 16

17. c. monopolistically competitive.


Chapter:4 QUESTION: 17

18. d. is participating in a monopolistically competitive market.


Chapter:4 QUESTION: 18

19. d. the prices of the inputs used to produce the good


Chapter:4 QUESTION: 20

20. c. an increase in the demand for the good.


Chapter:4 QUESTION: 21
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21. a. the demand for good X will increase.


Chapter:4 QUESTION: 22

22. b. substitute goods.


Chapter:4 QUESTION: 23

23. a. It would decrease.


Chapter:4 QUESTION: 24

24. c. increase the demand for electricity.


Chapter:4 QUESTION: 25

25. d. the good is an inferior good.


Chapter:4 QUESTION: 26

26. d. all of the above


Chapter:4 QUESTION: 27

27. a. The demand for rice will increase.


Chapter:4 QUESTION: 28

28. b. demand.
Chapter:4 QUESTION: 19

29. b. decrease ski sales.


Chapter:4 QUESTION: 29

30. c. table showing the relationship between the price of a good and the quantity buyers are willing and able to
purchase.
Chapter:4 QUESTION: 30

31. a. the downward-sloping line relating the price of the good with the quantity demanded.
Chapter:4 QUESTION: 31

32. b. a decrease in price.


Chapter:4 QUESTION: 32

33. c. an increase in quantity demanded.


Chapter:4 QUESTION: 33

34. b. all nonprice determinants of demand are assumed to be constant.


Chapter:4 QUESTION: 34

35. a. "other things being equal."


Chapter:4 QUESTION: 35

36. c. a hypothetical situation in which some variables are assumed to be constant.


Chapter:4 QUESTION: 36

37. d. a change in the price of the good or service


Chapter:4 QUESTION: 37

38. c. the demand in the market will decrease.


Chapter:4 QUESTION: 38

39. b. increasing her current demand for the stationery.


Chapter:4 QUESTION: 39

40. b. a horizontal summation of individual demand curves.


Chapter:4 QUESTION: 40

41. c. how much all buyers are willing and able to buy at each possible price.
Chapter:4 QUESTION: 41
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42. a. 38 units.
Chapter:4 QUESTION: 42

43. b. the quantity demanded in the market decreases by 10 units.


Chapter:4 QUESTION: 43

44. c. the current demand for razors to increase.


Chapter:4 QUESTION: 44

45. c. an increase in the demand for chocolate pudding.


Chapter:4 QUESTION: 45

46. a. there is a movement along a stable demand curve.


Chapter:4 QUESTION: 46

47. b. John's demand for inferior goods to decrease.


Chapter:4 QUESTION: 47

48. a. Doug is now willing to pay more than before for tomatoes.
Chapter:4 QUESTION: 48

49. b. There is an inverse relationship between price and quantity demanded.


Chapter:4 QUESTION: 49

50. d. When the price of a good falls, buyers respond by purchasing more.
Chapter:4 QUESTION: 50

51. c. increase the demand for education.


Chapter:4 QUESTION: 51

52. a. a decrease in demand.


Chapter:4 QUESTION: 52

53. d. a decrease in the price of a substitute.


Chapter:4 QUESTION: 53

54. c. people are now more willing to buy the product at any price than before.
Chapter:4 QUESTION: 54

55. c. supply.
Chapter:4 QUESTION: 55

56. a. cigarette companies are successful in passing much of the tax on to consumers.
Chapter:4 QUESTION: 56

57. a. positive, or direct.


Chapter:4 QUESTION: 57

58. c. the law of supply.


Chapter:4 QUESTION: 58

59. c. the supply in that market will increase.


Chapter:4 QUESTION: 59

60. a. you to be willing and able to produce more jewelry than before at each possible price.
Chapter:4 QUESTION: 60

61. c. will shift the supply curve to the right.


Chapter:4 QUESTION: 61

62. c. the dress manufacturer to supply fewer dresses now.


Chapter:4 QUESTION: 62
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63. b. result in a movement along a stable supply curve.


Chapter:4 QUESTION: 63

64. a. an increase in price gives producers incentive to supply a larger quantity.


Chapter:4 QUESTION: 64

65. a. an increase in the price of the good.


Chapter:4 QUESTION: 65

66. d. an increase in the quantity supplied.


Chapter:4 QUESTION: 66

67. a. we must add up all of the amounts firms are willing and able to supply at that price.
Chapter:4 QUESTION: 67

68. b. supply to decrease.


Chapter:4 QUESTION: 68

69. d. give producers an incentive to produce more.


Chapter:4 QUESTION: 69

70. b. the supply of flour to decrease.


Chapter:4 QUESTION: 70

71. b. lead to a movement up the supply curve for oranges.


Chapter:4 QUESTION: 71

72. b. represent an increase in the supply of cattle at the auction.


Chapter:4 QUESTION: 72

73. b. an increase in supply.


Chapter:4 QUESTION: 73

74. c. an improvement in technology.


Chapter:4 QUESTION: 74

75. b. equilibrium.
Chapter:4 QUESTION: 75

76. a. the equilibrium price.


Chapter:4 QUESTION: 76

77. a. the price is below the equilibrium price.


Chapter:4 QUESTION: 77

78. a. everyone in the market has been satisfied.


Chapter:4 QUESTION: 78

79. c. $5, 40.


Chapter:4 QUESTION: 79

80. b. there would be a surplus of 40 units.


Chapter:4 QUESTION: 80

81. a. there would be a shortage of 40 units.


Chapter:4 QUESTION: 81

82. b. 40 units would be supplied and demanded.


Chapter:4 QUESTION: 82

83. a. a surplus would exist and the price would tend to fall.
Chapter:4 QUESTION: 83
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84. b. $4, 40.


Chapter:4 QUESTION: 84

85. c. a surplus of 60 units would exist and price would tend to fall.
Chapter:4 QUESTION: 85

86. d. a shortage of 30 units would exist and price would tend to rise.
Chapter:4 QUESTION: 86

87. b. $20, 600.


Chapter:4 QUESTION: 87

88. b. 500.
Chapter:4 QUESTION: 88

89. b. 400.
Chapter:4 QUESTION: 89

90. a. there would be a surplus of 300.


Chapter:4 QUESTION: 90

91. d. there would be a shortage of 600.


Chapter:4 QUESTION: 91

92. c. quantity demanded > quantity supplied.


Chapter:4 QUESTION: 92

93. d. All of the above are true.


Chapter:4 QUESTION: 93

94. c. sellers desire to produce and sell more than buyers wish to purchase.
Chapter:4 QUESTION: 94

95. a. there is downward pressure on price.


Chapter:4 QUESTION: 95

96. b. there is upward pressure on price.


Chapter:4 QUESTION: 96

97. b. there will be no pressure on price to rise or fall.


Chapter:4 QUESTION: 97

98. a. comparing the old equilibrium and the new equilibrium.


Chapter:4 QUESTION: 98

99. a. Determine the names of the market participants.


Chapter:4 QUESTION: 99

100. a. a "change in supply."


Chapter:4 QUESTION:100

101. a. a "change in demand."


Chapter:4 QUESTION:101

102. c. there would be a movement along a supply curve and/or demand curve.
Chapter:4 QUESTION:102

103. c. Buyers would not be willing to buy as much as before at each relevant price.
Chapter:4 QUESTION:103

104. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Chapter:4 QUESTION:104
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105. b. The equilibrium price would decrease, but the impact on the amount sold in the market would be
ambiguous.
Chapter:4 QUESTION:105

106. d. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
Chapter:4 QUESTION:106

107. a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
Chapter:4 QUESTION:107

108. d. a decrease in supply and an increase in demand


Chapter:4 QUESTION:108

109. c. equilibrium price may increase, decrease, or remain unchanged.


Chapter:4 QUESTION:109

110. a. a lower price.


Chapter:4 QUESTION:110

111. c. prices
Chapter:4 QUESTION:111

112. c. prices
Chapter:4 QUESTION:112

113. b. the wages of farm laborers to increase.


Chapter:4 QUESTION:113

114. d. All of the above answers are correct.


Chapter:4 QUESTION:114

115. c. a decrease in consumer income


Chapter:4 QUESTION:115

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