Question 1

Which of the following best resembles a perfectly competitive market?

Accepted Answer

A)   electricity market
B)   sugar market
C)   automobile market
D)   textbook marketE) None of the above
F) B) and D)

Question 2

New iPhones are normal goods. What will happen to the equilibrium price and quantity in the market for iPhones if the price of Android phones fall, the wages of iPhone chip makers increase, some buyers exit the market for iPhones, and the price of iPhone batteries increase?

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) All of the above
F) B) and D)

Question 3

Figure 4-7 
-Refer to the Figure 4-7. What does the movement from point B to point A on the graph show?

Accepted Answer

A)   a decrease in demand
B)   an increase in demand
C)   a decrease in quantity demanded
D)   an increase in quantity demandedE) A) and D)
F) B) and C)

Question 4

Which of the following would definitely result in a higher price in the market for solar panels?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increaseE) B) and C)
F) C) and D)

Question 5

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

Accepted Answer

A)   a coffee shop in a large city
B)   a local car dealership
C)   a local utilities company
D)   a poultry farmerE) B) and C)
F) A) and D)

Question 6

Market demand is given as Qd =400 - 2P. Market supply is given as Qs = 3P + 100. What would result if the market price were $30?

Accepted Answer

A)   a shortage of 150
B)   a surplus of 150
C)   a surplus of 75
D)   a shortage of 75E) None of the above
F) A) and B)

Question 7

If suppliers of cell phone batteries expect the price of their product to fall in the future, what will they do?

Accepted Answer

A)   decrease supply now
B)   increase supply now
C)   increase supply in the future, but not now
D)   increase supply now and decrease it in the futureE) A) and C)
F) A) and B)

Question 8

What does a demand curve illustrate?

Accepted Answer

A)   the negative relationship between number of buyers and quantity demanded
B)   the positive relationship between price and quantity demanded
C)   the negative relationship between price and quantity demanded
D)   the maximum quantity of two goods an economy is capable of producing with available resources and technologyE) A) and D)
F) B) and D)

Question 9

A movement along a supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 10

Figure 4-5 
-Refer to the Figure 4-5. Which of the four graphs represents the market for oranges after a deep freeze impacts much of the Florida orange harvest?

Accepted Answer

A)   graph A
B)   graph B
C)   graph C
D)   graph DE) All of the above
F) A) and B)

Question 11

Figure 4-4 
-Refer to the Figure 4-4. If the price is $10, what would happen?

Accepted Answer

A)   There would be a shortage of 200 and the price would rise.
B)   There would be a surplus of 200 and the price would fall.
C)   There would be a shortage of 600 and the price would rise.
D)   There would be a surplus of 600 and the price would fall.E) A) and B)
F) B) and C)

Question 12

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

Accepted Answer

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)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
D)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.E) A) and B)
F) B) and D)

Question 13

Whenever a determinant of demand other than price changes, the demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 14

Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)   price will be $10 and quantity will be 20
B)   price will be $20 and quantity will be 10
C)   price will be $20 and quantity will be 40
D)   price will be $40 and quantity will be 20E) All of the above
F) None of the above

Question 15

Figure 4-2 
-Refer to the Figure 4-2. What would happen at the equilibrium price?

Accepted Answer

A)   At the equilibrium price, 200 units would be supplied and demanded.
B)   At the equilibrium price, 400 units would be supplied and demanded.
C)   At the equilibrium price, 600 units would be supplied and demanded.
D)   At the equilibrium price, 600 units would be supplied, but only 200 would be demanded.E) C) and D)
F) All of the above

Question 16

Figure 4-10 
-Refer to the Figure 4-10. What would cause the movement from point B to point A on the graph?

Accepted Answer

A)   a decrease in the price of the good
B)   an increase in the price of the good
C)   an increase in technology
D)   a decrease in input pricesE) A) and C)
F) A) and D)

Question 17

What are the forces that make market economies work?

Accepted Answer

A)   price and quantity
B)   demand and supply
C)   cost and benefit
D)   employment and incomeE) A) and B)
F) None of the above

Question 18

Suppose that the Canadian Medical Association announces that men who shave their heads are less likely to die of heart failure. What could we expect to happen?

Accepted Answer

A)   the current demand for hair gel to increase
B)   the current demand for razors to increase
C)   the current demand for combs to increase
D)   the current demand for hair dye for men to increaseE) B) and D)
F) All of the above

Question 19

How do demand and supply for banana cream pie change if the price of bananas increased?

Accepted Answer

A)   Demand decreases, and supply increases.
B)   Demand does not change, and supply decreases.
C)   Demand increases, and supply does not change.
D)   Both demand and supply increase.E) A) and D)
F) B) and C)

Question 20

Figure 4-5 
-Refer to the Figure 4-5. Which of the four graphs represents the market for toboggans in August?

Accepted Answer

A)   graph A
B)   graph B
C)   graph C
D)   graph DE) A) and B)
F) B) and C)

Exam 4: The Market Forces of Supply and Demand

If suppliers of cell phone batteries expect the price of their product to fall in the future, what will they do?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

How do demand and supply for banana cream pie change if the price of bananas increased?

Correct AnswerverifiedShow Answer

New iPhones are normal goods. What will happen to the equilibrium price and quantity in the market for iPhones if the price of Android phones fall, the wages of iPhone chip makers increase, some buyers exit the market for iPhones, and the price of iPhone batteries increase?

Correct AnswerverifiedShow Answer

Figure 4-4 -Refer to the Figure 4-4. If the price is $10, what would happen?

Correct AnswerverifiedShow Answer

What are the forces that make market economies work?

Correct AnswerverifiedShow Answer

Which of the following best resembles a perfectly competitive market?

Correct AnswerverifiedShow Answer

Figure 4-10 -Refer to the Figure 4-10. What would cause the movement from point B to point A on the graph?

Correct AnswerverifiedShow Answer

A movement along a supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Whenever a determinant of demand other than price changes, the demand curve shifts.

Correct AnswerverifiedShow Answer

Figure 4-7 -Refer to the Figure 4-7. What does the movement from point B to point A on the graph show?

Correct AnswerverifiedShow Answer

Suppose that the Canadian Medical Association announces that men who shave their heads are less likely to die of heart failure. What could we expect to happen?

Correct AnswerverifiedShow Answer

What does a demand curve illustrate?

Correct AnswerverifiedShow Answer

Market demand is given as Qd =400 - 2P. Market supply is given as Qs = 3P + 100. What would result if the market price were $30?

Correct AnswerverifiedShow Answer

Which of the following would definitely result in a higher price in the market for solar panels?

Correct AnswerverifiedShow Answer

Figure 4-2 -Refer to the Figure 4-2. What would happen at the equilibrium price?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for oranges after a deep freeze impacts much of the Florida orange harvest?

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for toboggans in August?

Correct AnswerverifiedShow Answer

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