Question 1

If both demand and supply increases in a market that is initially in equilibrium, price will:

Accepted Answer

A)   remain unchanged while quantity will decrease.
B)   remain unchanged while quantity will increase.
C)   increase only if supply increases more than demand.
D)   increase only if demand increases more than supply.
E)   decrease only if supply increases less than demand.

Question 2

In the figure given below that shows the demand for baby formula, if baby formula is an inferior good, then an increase in consumer income is likely to cause which of the following changes?
1 to D2 B)  A movement along the demand curve D1 from point a to point b C)  A shift in the demand curve from D2 to D1 D)  A movement along the demand curve D2 from point d to point c E)  A movement from point b on the demand curve D1 to point c on the demand curve D2" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   A shift in the demand curve from D1 to D2
B)   A movement along the demand curve D1 from point a to point b
C)   A shift in the demand curve from D2 to D1
D)   A movement along the demand curve D2 from point d to point c
E)   A movement from point b on the demand curve D1 to point c on the demand curve D2

Question 3

Which of the following is most likely to shift the supply curve for a product to the right?

Accepted Answer

A)   An increase in the price of a resource used in the good's production
B)   The expectation of a higher price in the near future
C)   An increase in the price of the product
D)   A decrease in the price of an alternative good
E)   An improvement in the technology for producing the good

Question 4

A surplus of shoes will cause:

Accepted Answer

A)   a decrease in the supply of shoes.
B)   a decrease in the demand for shoes.
C)   an increase in the price of leather.
D)   a rightward shift of the supply curve of shoes.
E)   a decrease in the price of shoes.

Question 5

Which of the following is likely to increase the supply of wheat?

Accepted Answer

A)   An increase in the cost of fertilizer
B)   A decrease in the price of bread
C)   A decrease in the price of corn
D)   An increase in land prices
E)   An expectation that the price of wheat will be higher in near future

Question 6

In the figure given below, a price floor set at $20.00 will:

Accepted Answer

A)   reduce the equilibrium quantity.
B)   lead to a surplus of 10 units.
C)   increase the equilibrium price.
D)   lead to a surplus of 20 units.
E)   have no impact on the equilibrium price and quantity.

Question 7

If demand decreases and supply increases in a market that is initially in equilibrium,

Accepted Answer

A)   price will remain unchanged.
B)   price will always decrease.
C)   price will always increase.
D)   quantity will always decrease.
E)   quantity will remain unchanged.

Question 8

The market supply curve of a particular product indicates the total quantities:

Accepted Answer

A)   that are actually sold during a given time period.
B)   that buyers are willing to purchase at alternative prices.
C)   that sellers are willing and able to offer at alternative prices.
D)   that sellers are willing to offer for sale at a fixed price.
E)   of complements offered for sale.

Question 9

A new cattle feed has been found to increase the amount of milk each cow produces. Which of these is a likely impact in the market for milk, if this cattle feed is used by most of the dairies?

Accepted Answer

A)   A rightward shift of the supply curve for milk
B)   A leftward shift of the supply curve for milk
C)   An increase in the price of milk
D)   An increase in the demand for milk
E)   A decrease in the quantity demanded of milk

Question 10

The following figure shows the demand curves for baby formula. Which of the following changes is likely to happen if the price of baby formula decreases?
1 to D2 B)  A movement along the demand curve D1 from point a to point b C)  A shift in the demand curve from D2 to D1 D)  A movement along the demand curve D2 from point d to point c E)  A movement from point b on the demand curve D1 to point c on the demand curve D2" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   A shift in the demand curve from D1 to D2
B)   A movement along the demand curve D1 from point a to point b
C)   A shift in the demand curve from D2 to D1
D)   A movement along the demand curve D2 from point d to point c
E)   A movement from point b on the demand curve D1 to point c on the demand curve D2

Question 11

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 12

Figure 4.2 shows the demand curves for a good. A shift from demand curve D to demand curve D' in the figure would be caused by a(n) :

Accepted Answer

A)   decrease in the price of the good under consideration.
B)   significant increase in population because of immigration.
C)   decrease in consumer income.
D)   decrease in the number of producers of the product.
E)   increase in the price of an important resource.

Question 13

In a rental market like the one in the figure given below, a government-imposed rule that rent cannot exceed $750 per month is referred to as:

Accepted Answer

A)   a trade barrier.
B)   a quality control.
C)   a price ceiling.
D)   a price floor.
E)   a subsidy.

Question 14

Figure 4.5 shows the supply curves of a durable good. A shift from the supply curve S to S' could be caused by a(n) :

Accepted Answer

A)   decrease in consumer income.
B)   increase in the current price of the product.
C)   patent application that restricts the use of a particular production technology.
D)   several competing producers going out of business.
E)   expectation of a higher product price in the future among suppliers.

Question 15

Consider the market for a good that is initially in equilibrium. Which of the following is most likely to happen if supply increases by a smaller amount than the increase in demand?

Accepted Answer

A)   Equilibrium price will fall and equilibrium quantity will rise.
B)   Equilibrium price will rise and equilibrium quantity will fall.
C)   Both equilibrium price and equilibrium quantity will rise.
D)   Equilibrium price will rise but the change in equilibrium quantity is indeterminate.
E)   Both equilibrium price and equilibrium quantity will fall.

Question 16

Consider a market for coffee that is initially in equilibrium. If tea harvest is bad in a particular year, then identify the most likely impact on the equilibrium price and quantity of coffee.

Accepted Answer

A)   The price of coffee will increase, while the quantity of coffee will decrease.
B)   Both the price and the quantity of coffee will increase.
C)   The price of coffee will decrease while the quantity of coffee will increase.
D)   Both the price and the quantity of coffee will decrease.
E)   There will be no impact on the equilibrium price and quantity of coffee.

Question 17

Classified ads and job web sites reduce the transaction costs of finding a new job.

Accepted Answer

A) True 
 B)False

Question 18

Consider the market for a good that is in equilibrium. Which of these is most likely to occur if both demand and supply for this good decrease during a particular point in time?

Accepted Answer

A)   The equilibrium price will increase.
B)   The equilibrium price will decrease.
C)   The equilibrium quantity will increase.
D)   The equilibrium quantity will decrease.
E)   Both equilibrium price and quantity will increase.

Question 19

Suppose a market is in equilibrium. If a price ceiling is set by the government below the equilibrium price, which of the following is most likely to happen?

Accepted Answer

A)   A decline in quantity demanded
B)   A surplus
C)   A  shortage
D)   An increase in the quantity being sold
E)   A new equilibrium

Question 20

Rent controls generally provide the tenants the most efficient housing choice in the long run and maximize economic welfare.

Accepted Answer

A) True 
 B)False

Exam 4: Demand, Supply, and Markets

Rent controls generally provide the tenants the most efficient housing choice in the long run and maximize economic welfare.

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If both demand and supply increases in a market that is initially in equilibrium, price will:

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A new cattle feed has been found to increase the amount of milk each cow produces. Which of these is a likely impact in the market for milk, if this cattle feed is used by most of the dairies?

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The following figure shows the demand curves for baby formula. Which of the following changes is likely to happen if the price of baby formula decreases?

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Consider the market for a good that is in equilibrium. Which of these is most likely to occur if both demand and supply for this good decrease during a particular point in time?

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In the figure given below that shows the demand for baby formula, if baby formula is an inferior good, then an increase in consumer income is likely to cause which of the following changes?

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Figure 4.2 shows the demand curves for a good. A shift from demand curve D to demand curve D' in the figure would be caused by a(n) :

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Suppose a market is in equilibrium. If a price ceiling is set by the government below the equilibrium price, which of the following is most likely to happen?

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Consider the market for a good that is initially in equilibrium. Which of the following is most likely to happen if supply increases by a smaller amount than the increase in demand?

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Consider a market for coffee that is initially in equilibrium. If tea harvest is bad in a particular year, then identify the most likely impact on the equilibrium price and quantity of coffee.

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Classified ads and job web sites reduce the transaction costs of finding a new job.

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The market supply curve of a particular product indicates the total quantities:

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A surplus of shoes will cause:

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

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If demand decreases and supply increases in a market that is initially in equilibrium,

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In a rental market like the one in the figure given below, a government-imposed rule that rent cannot exceed $750 per month is referred to as:

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In the figure given below, a price floor set at $20.00 will:

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Which of the following is most likely to shift the supply curve for a product to the right?

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Which of the following is likely to increase the supply of wheat?

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Figure 4.5 shows the supply curves of a durable good. A shift from the supply curve S to S' could be caused by a(n) :

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