Question 1

The two words most often used by economists are

Accepted Answer

A)  prices and quantities.
B)  resources and allocation.
C)  supply and demand.
D)  efficiency and equity.E) B) and D)
F) All of the above

Question 2

Figure 4-4
Yasmine
Mercedes  
-Refer to Figure 4-4. Which of the following statements is correct?

Accepted Answer

A)  If the price is $6, the market quantity demanded is 15 units.
B)  If the price is $9, the market quantity demanded is 24 units.
C)  If the price is $12, the market quantity demanded is 9 units.
D)  If the price is $15, the market quantity demanded is 39 units.E) A) and B)
F) C) and D)

Question 3

Table 4-1 
-Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Accepted Answer

A)  2 units.
B)  3 units.
C)  4 units.
D)  5 units.E) B) and D)
F) A) and B)

Question 4

An increase in the price of ink will shift the supply curve for pens to the left.

Accepted Answer

A) True 
 B)False

Question 5

Table 4-14
The table below shows the quantities demanded of milk per month by four families at various prices. 
-Refer to Table 4-14. If the four families listed are the only demanders in this market and the price of a gallon of milk is $4.00, what is the market quantity demanded?

Accepted Answer

The answer of Table 4-14
The table below shows the quantities...

Question 6

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

Question 7

In competitive markets, which of the following is not correct?

Accepted Answer

A)  Firms produce identical products.
B)  No individual buyer can influence the market price.
C)  Some sellers can set prices.
D)  Buyers are price takers.E) C) and D)
F) A) and B)

Question 8

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Accepted Answer

A) True 
 B)False

Question 9

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

Accepted Answer

A)  no change in the demand for energy drinks.
B)  a decrease in the demand for energy drinks.
C)  an increase in the demand for energy drinks.
D)  a decrease in the supply of energy drinks.E) All of the above
F) B) and D)

Question 10

The demand curve for a good is a line that relates

Accepted Answer

A)  price and quantity demanded.
B)  income and quantity demanded.
C)  quantity demanded and quantity supplied.
D)  price and income.E) A) and B)
F) A) and C)

Question 11

In a market economy, prices are the signals that guide the allocation of scarce resources.

Accepted Answer

A) True 
 B)False

Question 12

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, 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) C) and D)
F) None of the above

Question 14

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

Accepted Answer

A)  Sellers set the price of the product.
B)  There are many sellers.
C)  Buyers must accept the price the market determines.
D)  All of the above are characteristics of a perfectly competitive market.E) B) and C)
F) A) and D)

Question 15

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices

Accepted Answer

A)  encourage marijuana use, and the evidence supports this argument.
B)  encourage marijuana use, but the evidence does not support this argument.
C)  discourage marijuana use, and the evidence supports this argument.
D)  discourage marijuana use, but the evidence does not support this argument.E) A) and C)
F) C) and D)

Question 16

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

Accepted Answer

A)  Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)  None of the above is correct.E) All of the above
F) C) and D)

Question 17

Figure 4-28
​ 
-Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of this good increases.

Accepted Answer

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

Question 18

In a competitive market, the price of a product

Accepted Answer

A)  is determined by buyers, and the quantity of the product produced is determined by sellers.
B)  is determined by sellers, and the quantity of the product produced is determined by buyers.
C)  and the quantity of the product produced are both determined by sellers.
D)  None of the above is correct.E) A) and B)
F) C) and D)

Question 19

The quantity demanded of a good is the amount that buyers are

Accepted Answer

A)  willing to purchase.
B)  willing and able to purchase.
C)  willing, able, and need to purchase.
D)  able to purchase.E) A) and B)
F) None of the above

Question 20

Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

Accepted Answer

A)  an increase in the price of wool shirts and a decrease in the price of raw cotton
B)  a decrease in the price of wool shirts and a decrease in the price of raw cotton
C)  an increase in the price of wool shirts and an increase in the price of raw cotton
D)  a decrease in the price of wool shirts and an increase in the price of raw cottonE) A) and B)
F) A) and D)

Exam 4: The Market Forces of Supply and Demand

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

Correct AnswerverifiedShow Answer

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

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What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, and scientists discovered that lattés cause heart attacks?

Correct AnswerverifiedShow Answer

Table 4-1 -Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

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In a market economy, prices are the signals that guide the allocation of scarce resources.

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

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An increase in the price of ink will shift the supply curve for pens to the left.

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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 this good increases.

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Table 4-14 The table below shows the quantities demanded of milk per month by four families at various prices. -Refer to Table 4-14. If the four families listed are the only demanders in this market and the price of a gallon of milk is $4.00, what is the market quantity demanded?

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Figure 4-4 Yasmine Mercedes -Refer to Figure 4-4. Which of the following statements is correct?

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Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

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For a competitive market,

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The demand curve for a good is a line that relates

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Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices

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

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In a competitive market, the price of a product

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Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

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In competitive markets, which of the following is not correct?

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The two words most often used by economists are

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The quantity demanded of a good is the amount that buyers are

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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 this good increases.

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