Question 1

A simultaneous increase in supply and demand will always lead to an increase in the prices of a good.

Accepted Answer

A) True 
 B)False

Question 2

The basic reason that supply curves slope upward is that

Accepted Answer

A)  demand curves slope downward
B)  production is characterized by increasing costs
C)  profits decline as product prices rise
D)  greater output can only result from improved technology
E)  price and quantity supplied are inversely related

Question 3

If demand increases and supply decreases,

Accepted Answer

A)  equilibrium price will fall and equilibrium quantity will rise
B)  equilibrium price and quantity will both rise
C)  equilibrium quantity will rise; equilibrium price will either rise or fall
D)  equilibrium price will fall; equilibrium quantity will either rise or fall
E)  equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged

Question 4

A new hormone will increase the amount of milk each cow produces.If this hormone is adopted by many dairies, what will be the effect on the milk market?

Accepted Answer

A)  an increase in supply, higher equilibrium price, and lower equilibrium quantity
B)  a decrease in supply, lower equilibrium price, and lower equilibrium quantity
C)  an increase in supply, lower equilibrium price, and higher equilibrium quantity
D)  an increase in supply, higher equilibrium price, and higher equilibrium quantity
E)  a decrease in supply, lower equilibrium price, and higher equilibrium quantity

Question 5

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Accepted Answer

A)  increase; increase
B)  increase; decrease
C)  decrease; increase
D)  decrease; decrease
E)  remain constant; increase

Question 6

A decrease in supply will cause a(n)

Accepted Answer

A)  increase in demand
B)  decrease in demand
C)  increase in quantity demanded
D)  decrease in quantity demanded
E)  decrease in equilibrium price

Question 7

If demand decreases and supply increases, price will

Accepted Answer

A)  always increase
B)  always decrease
C)  increase only if supply increases more than demand decreases
D)  increase only if supply increases less than demand decreases
E)  decrease only if supply increases more than demand decreases

Question 8

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Accepted Answer

A)  the price of aspartame will increase
B)  the price of sugar will decrease
C)  the price of saccharin will increase
D)  the demand curves for aspartame and sugar will shift leftward
E)  aspartame and sugar will be complements

Question 9

If suppliers expect an increase in price, they will reduce the current supply of a good.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 4-2  Consider Exhibit 4-2.Which of the following represents a decrease in the quantity supplied?

Accepted Answer

A)  a movement from C to D
B)  a movement from C to B
C)  a movement from E to D
D)  a movement from F to E
E)  none of the above represents an increase in the quantity supplied

Question 11

A change in the composition of the population will generally

Accepted Answer

A)  change demand only if there is a change in the size of the population
B)  change demand only if there is no change in the size of the population
C)  change demand even if there is no change in the size of the population
D)  have absolutely no effect on demand
E)  result in a movement along the demand curve

Question 12

The slope of the demand curve for a normal good must be positive.

Accepted Answer

A) True 
 B)False

Question 13

The income effect of an increase in the price of hominy grits (an inferior good) is a(n)

Accepted Answer

A)  decrease in the demand for hominy grits
B)  decrease in the quantity demanded of hominy grits
C)  increase in the demand for hominy grits
D)  increase in the quantity demanded of hominy grits
E)  new demand curve because everything else is no longer constant

Question 14

An improvement in technology would shift

Accepted Answer

A)  the demand curve leftward
B)  the demand curve rightward
C)  the supply curve leftward
D)  neither the supply nor the demand curve; instead, there is movement along both of them
E)  the supply curve rightward

Question 15

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises, we would expect

Accepted Answer

A)  the demand for honey to increase
B)  the demand for honey to decrease
C)  the quantity demanded of honey to decrease
D)  the price of honey to decrease
E)  the quantity demanded of honey to increase

Question 16

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100, 000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125, 000?

Accepted Answer

A)  an increase in the price of other kinds of candy
B)  an increase in the price of the ingredients used to make chewing gum
C)  an agreement by workers in the chewing gum industry to work for lower wages
D)  a decrease in the number of young people in the population
E)  a decrease in income

Question 17

The income effect of a decrease in the price of potatoes (an inferior good) is a(n)

Accepted Answer

A)  decrease in the demand for potatoes
B)  decrease in the quantity demanded of potatoes
C)  increase in the demand for potatoes
D)  increase in the quantity demanded of potatoes
E)  new demand curve because everything else is no longer constant

Question 18

Many people argue against increasing the minimum wage because they believe the result would be increased unemployment.Which of the following best summarizes this argument? A higher minimum wage would

Accepted Answer

A)  increase the supply of labor while decreasing the demand for labor
B)  decrease the supply of labor while increasing the demand for labor
C)  increase the quantity supplied of labor while decreasing the quantity demanded of labor
D)  decrease the quantity supplied of labor while increasing the quantity demanded of labor
E)  increase the supply of labor while decreasing the quantity demanded of labor

Question 19

Exhibit 4-2 1 to S2? A) an increase in the price cattle feed B) the expectation of a lower price in the near future C) an increase in the price of milk D) an increase in the price of beef E) a new and improved cattle food that increases the yield per dairy cow" class="answers-bank-image d-inline" rel="preload" > Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

Accepted Answer

A)  an increase in the price cattle feed
B)  the expectation of a lower price in the near future
C)  an increase in the price of milk
D)  an increase in the price of beef
E)  a new and improved cattle food that increases the yield per dairy cow

Question 20

Which of the following would most likely increase the supply of college textbooks?

Accepted Answer

A)  five major publishers go out of business
B)  paper costs double
C)  the wage rate of printers increases
D)  producers expect the price to rise in the future
E)  technology of book production improves

Exam 4: Demand, Supply, and Markets

Which of the following would most likely increase the supply of college textbooks?

Correct AnswerverifiedShow Answer

Many people argue against increasing the minimum wage because they believe the result would be increased unemployment.Which of the following best summarizes this argument? A higher minimum wage would

Correct AnswerverifiedShow Answer

Exhibit 4-2 Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S1 to S2?

Correct AnswerverifiedShow Answer

Sugar and honey are viewed as substitutes for each other in many cooking applications.If the price of sugar rises, we would expect

Correct AnswerverifiedShow Answer

An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Correct AnswerverifiedShow Answer

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100, 000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125, 000?

Correct AnswerverifiedShow Answer

An improvement in technology would shift

Correct AnswerverifiedShow Answer

Exhibit 4-2 Consider Exhibit 4-2.Which of the following represents a decrease in the quantity supplied?

Correct AnswerverifiedShow Answer

The income effect of a decrease in the price of potatoes (an inferior good) is a(n)

Correct AnswerverifiedShow Answer

If demand increases and supply decreases,

Correct AnswerverifiedShow Answer

The slope of the demand curve for a normal good must be positive.

Correct AnswerverifiedShow Answer

The basic reason that supply curves slope upward is that

Correct AnswerverifiedShow Answer

If suppliers expect an increase in price, they will reduce the current supply of a good.

Correct AnswerverifiedShow Answer

A simultaneous increase in supply and demand will always lead to an increase in the prices of a good.

Correct AnswerverifiedShow Answer

A change in the composition of the population will generally

Correct AnswerverifiedShow Answer

A decrease in supply will cause a(n)

Correct AnswerverifiedShow Answer

If demand decreases and supply increases, price will

Correct AnswerverifiedShow Answer

The income effect of an increase in the price of hominy grits (an inferior good) is a(n)

Correct AnswerverifiedShow Answer

A new hormone will increase the amount of milk each cow produces.If this hormone is adopted by many dairies, what will be the effect on the milk market?

Correct AnswerverifiedShow Answer

Saccharin and aspartame are both low-calorie substitutes for sugar.If saccharin is found to cause cancer,

Correct AnswerverifiedShow Answer

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Exhibit 4-2 Consider Exhibit 4-2 which shows 3 supply curves for milk.Which of the following would shift the supply curve for milk from S₁ to S₂?

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An increase in supply will cause equilibrium price to and equilibrium quantity to .

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