chapter four practice quiz

A decrease in demand for a good will lead to a decrease in the price of the good, but an increase in the quantity supplied.

False

A decrease in supply raises the price of a good, but it also decreases the quantity demanded, which lowers the price of a good. The net effect on price is ambiguous.

False

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price.

False

An increase in demand causes an increase in quantity supplied, which causes a decrease in price.

False

An increase in quantity demanded is a shift in the entire demand curve.

False

An increase in supply and a decrease in demand occur in a market. What happens to the equilibrium price and quantity?

The equilibrium price decreases; the change in the equilibrium quantity is uncertain.

An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity?

The equilibrium price increases; the change in the equilibrium quantity is uncertain

A decrease in the supply of milk will lead to a decrease in the QUANTITY DEMANDED of milk.

True

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied, at the given price.

True

An increase in quantity demanded is a movement along a fixed demand curve caused by a shift in the supply curve.

True

An increase in supply causes a temporary surplus at the old equilibrium price.

True

After a hurricane in Florida destroys half of the orange crop, economists predict:

an increase in orange prices and a decrease in orange sales.

A(n) ______ causes the equilibrium price to ______ and equilibrium quantity to ______.

decrease in supply; rise; fall

An early frost in the vineyards of Napa Valley would cause a(n):

decrease in the supply of wine, increasing price.

A demand curve shows the relationship between:

price and quantity demanded, which are negatively related.

The Arab Oil Embargo of 1973, the Iranian Revolution of 1979, and the Gulf War of 1991 all affected oil prices by:

reducing the supply of oil.

An increase in demand causes a:

temporary shortage at the old equilibrium price and a higher new equilibrium price and quantity.

A free market achieves an equilibrium price and quantity due to:

the combined actions of buyers and sellers.