Question 1

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

Question 2

The term price takers refers to buyers and sellers in

Accepted Answer

A)   perfectly competitive markets.
B)   monopolistic markets.
C)   markets that are regulated by the government.
D)   markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.E) All of the above
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Figure 4-19 
-Refer to Figure 4-19. If there is currently a shortage of 20 units of the good, then the law of

Accepted Answer

A)   demand predicts that the price will rise by $2 to eliminate the shortage.
B)   supply predicts that the price will rise by $2 to eliminate the shortage.
C)   supply and demand predicts that the price will rise by $2 to eliminate the shortage.
D)   supply and demand predicts that the price will fall by $2 to eliminate the shortage.E) All of the above
F) B) and D)

Question 5

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) None of the above

Question 6

Figure 4-7 
-Refer to Figure 4-7. The movement from Db to Da in the market for potato chips could be caused by a(n)

Accepted Answer

A)   decrease in the price of potato chips.
B)   decrease in income, assuming that potato chips are a normal good.
C)   announcement by the FDA that potato chips lower cholesterol.
D)   increase in the price of a pretzels.E) None of the above
F) B) and D)

Question 7

Table 4-9 
-Refer to Table 4-9. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

Accepted Answer

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

Question 8

Figure 4-7 
-Refer to Figure 4-7. The shift from Da to Db is called

Accepted Answer

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

Question 9

A supply curve slopes upward because

Accepted Answer

A)   as more is produced, total cost of production falls.
B)   an increase in input prices increases supply.
C)   the quantity supplied of most goods and services increases over time.
D)   an increase in price gives producers an incentive to supply a larger quantity.E) A) and C)
F) A) and B)

Question 10

Which of the following is not a determinant of the demand for a particular good?

Accepted Answer

A)   the prices of related goods
B)   income
C)   tastes
D)   the prices of the inputs used to produce the goodE) A) and B)
F) A) and C)

Question 11

If buyers and sellers in a certain market are price takers, then individually

Accepted Answer

A)   they have no influence on market price.
B)   they have some influence on market price but that influence is limited.
C)   buyers will be able to find prices lower than those determined in the market.
D)   sellers will find it difficult to sell all they want to sell at the market price.E) All of the above
F) C) and D)

Question 12

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

Accepted Answer

A) True 
 B)False

Question 13

Figure 4-11 
-Refer to Figure 4-11. The movement from point A to point B on the graph is called

Accepted Answer

A)   a decrease in supply.
B)   an increase in supply.
C)   an increase in the quantity supplied.
D)   a decrease in the quantity supplied.E) A) and D)
F) B) and D)

Question 14

Table 4-8 
-Refer to Table 4-8. If these are the only three sellers in the market, then an increase in the market price from $6 to $12 will increase quantity supplied by

Accepted Answer

A)   12 units.
B)   24 units.
C)   36 units.
D)   48 units.E) B) and D)
F) A) and B)

Question 15

You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for

Accepted Answer

A)   sweatpants will increase.
B)   sweatpants will decrease.
C)   shorts will increase.
D)   shorts will decrease.E) A) and D)
F) C) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

Accepted Answer

The demand...

Question 18

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

Accepted Answer

A) True 
 B)False

Question 19

An example of a perfectly competitive market would be the

Accepted Answer

A)   cable TV market.
B)   soybean market.
C)   breakfast cereal market.
D)   shampoo market.E) None of the above
F) All of the above

Question 20

The line that relates the price of a good and the quantity supplied of that good is called the supply

Accepted Answer

A)   schedule, and it usually slopes upward.
B)   schedule, and it usually slopes downward.
C)   curve, and it usually slopes upward.
D)   curve, and it usually slopes downward.E) B) and D)
F) C) and D)

Exam 4: The Market Forces of Supply and Demand

In a competitive market, the price of a product

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Figure 4-11 -Refer to Figure 4-11. The movement from point A to point B on the graph is called

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

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Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

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Figure 4-19 -Refer to Figure 4-19. If there is currently a shortage of 20 units of the good, then the law of

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Table 4-9 -Refer to Table 4-9. Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

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You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for

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In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

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

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The line that relates the price of a good and the quantity supplied of that good is called the supply

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Which of the following is not a determinant of the demand for a particular good?

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An example of a perfectly competitive market would be the

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

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Figure 4-7 -Refer to Figure 4-7. The movement from Db to Da in the market for potato chips could be caused by a(n)

Correct AnswerverifiedShow Answer

If buyers and sellers in a certain market are price takers, then individually

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If a higher price means a greater quantity supplied, then the supply curve slopes upward.

Correct AnswerverifiedShow Answer

A supply curve slopes upward because

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Table 4-8 -Refer to Table 4-8. If these are the only three sellers in the market, then an increase in the market price from $6 to $12 will increase quantity supplied by

Correct AnswerverifiedShow Answer

The term price takers refers to buyers and sellers in

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Figure 4-7 -Refer to Figure 4-7. The shift from Da to Db is called

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The demand...
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