Question 1

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 D)
F) All of the above

Question 2

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) C) and D)
F) B) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 C)
F) A) and B)

Question 5

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) All of the above
F) None of the above

Question 6

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) All of the above
F) None of the above

Question 7

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 8

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

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) A) and B)
F) None of the above

Question 12

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) B) and D)
F) A) and C)

Question 13

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 D)
F) All of the above

Question 14

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) A) and B)
F) B) and C)

Question 15

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 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) None of the above
F) C) and D)

Question 17

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 C)

Question 18

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) A) and D)
F) B) and D)

Question 19

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 20

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 D)
F) B) and D)

Exam 4: The Market Forces of Supply and Demand

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

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

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The two words most often used by economists are

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In a competitive market, the price of a product

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The demand curve for a good is a line that relates

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

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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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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?

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For a competitive market,

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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

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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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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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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 competitive markets, which of the following is not correct?

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

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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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