Chapter 4 Review

The demand curve for most goods is normally ______. A. parallel to the x-axis B. upward sloping C. downward sloping D. parallel to the y-axis

C. downward sloping

The market demand is the ________ of the individual demand of all the potential buyers. A. sum B. product C. square of the sum D. square root of the sum

A. sum

A surplus occurs in a market when ___________. A. supply exceeds demand B. demand exceeds supply C. the price is lower than the equilibrium price D. the marginal cost of production is negligible

A. supply exceeds demand

Which of the following is NOT an example of a market? A. A cattle auction, where farmers and ranchers bring cattle to be purchased by packing plants B. A city requires homeowners to pay $500 for putting in a sidewalk on their street C. The National Residency Matching Program, where medical residents express their preferences for residencies, hospitals express their preferences for medical residents, and these preferences are used to match residents to residencies D. Etsy.com, a Web site where artists, designers, and crafts persons offer items they have made to interested buyers

B. A city requires homeowners to pay $500 for putting in a sidewalk on their street

Which of the following factors is likely to lead to an increase in the quantity demanded of pens? A. A fall in the incomes of all consumers B. A fall in the price of pens C. A fall in the price of paper D. A rise in the incomes of all consumers

B. A fall in the price of pens

Which of the following statements is true of the concept of willingness to pay? A. The willingness to pay is the lowest price that a buyer is willing to pay for an extra unit of a commodity B. If a consumer is consuming 10 units of a commodity and she is ready to pay $2 for the eleventh unit, her willingness to pay for the eleventh unit is $2 C. The willingness to pay for a commodity increases linearly as the consumption of the commodity increases D. The willingness to pay for a commodity increases exponentially as the consumption of the commodity increases

B. If a consumer is consuming 10 units of a commodity and she is ready to pay $2 for the eleventh unit, her willingness to pay for the eleventh unit is $2

At a price of $5 per table, the quantity supplied of tables is 500 units whereas the quantity demanded is 660 units. Given this information, which of the following statements is true? A. At $5 per table, there is a surplus in the market. B. $5 per table is the equilibrium price. C. At $5 per table, there is a shortage in the market. D. $5 per table is the market clearing price.

C. At $5 per table, there is a shortage in the market.

At a price of $1 per table, the quantity supplied of tables is 100 units, whereas the quantity demanded is 70 units. Given this information, which of the following statements is true? A. The equilibrium price is $1 per table B. The market clearing price is $1 per table C. At a price of $1 per table, there is a surplus in the market D. At a price of $1 per table, there is a shortage in the market

C. At a price of $1 per table, there is a surplus in the market

The Law of Demand states that _______. A. the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market B. the demand for a commodity always equals the supply of the commodity C. the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant D. the demand for a commodity is directly related to consumers' income, all other things remaining constant

C. the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant

Which of the following statements correctly describes a perfectly competitive market? A. Haggling and bargaining is commonly observed in a perfectly competitive market B. Buyers in a perfectly competitive market pay different prices according to their individual demand C. In a perfectly competitive market, individual sellers and buyers can influence the market price D. All participants in a perfectly competitive market are price-takers

D. All participants in a perfectly competitive market are price-takers

Which of the following pairs of goods is likely to be considered substitutes? A. Coffee and sugar B. Printers and printing ink C. A Nokia cell phone and a Nokia cell phone charger D. A Ford car and public transportation

D. A Ford car and public transportation

Which of the following statement is​ true? A. A government price control will always cause the quantity demanded to exceed the quantity supplied. B. Equilibrium is attained when prices are not allowed to respond to market pressure. C. A government price control can be used to bring markets into equilibrium. D. A binding price ceiling will always cause the quantity demanded to exceed the quantity supplied.

D. A binding price ceiling will always cause the quantity demanded to exceed the quantity supplied.

Which of the following is NOT a required characteristic of a market? A. A collection of economic agents (e.g., buyers and sellers) B. Rules and arrangements for trading C. Trade or exchange of a good or service D. Government setting the price of the good or service

D. Government setting the price of the good or service

Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will _______. A. increase his profit B. increase his sales C. lose only a few buyers D. lose almost all of his buyers

D. lose almost all of his buyers

A seller's willingness to accept is the same as his ________ cost of production. A. total B. fixed C. average D. marginal

D. marginal

At the competitive equilibrium, the ______. A. demand curve is tangential to the supply curve B. quantity demanded exceeds the quantity supplied of a good C. quantity supplied exceeds the quantity demanded of a good D. quantity demanded is equal to the quantity supplied of a good

D. quantity demanded is equal to the quantity supplied of a good

The quantity supplied of a good is _______. A. inversely related to the price of the good B. determined irrespective of the market price C. always equal to the quantity demanded of the good D. the amount of the good that sellers are ready to supply at a given price

D. the amount of the good that sellers are ready to supply at a given price

A seller who is a price-taker charges ______. A. a price above the market price B. different prices to different buyers C. a price below the market price D. the market price

D. the market price

Which of the following is likely to lead to a rightward shift in the supply curve of cotton? A. An increase in labor productivity due to training programs B. A rise in labor costs due to wage demands by labor unions C. An increase in the price of cotton D. A decrease in the price of cotton

A. An increase in labor productivity due to training programs

(Continue to Q33) Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most​ efficient? A. Auctioning the rooms to the highest bidders. B. Allocating rooms based on seniority. Seniors get first​ choice, then​ juniors, and so on. C. Using a random lottery to allocate​ rooms, with each student having equal odds of receiving a room. D. Allocating rooms based on​ grades, with students with the highest GPAs getting first choice.

A. Auctioning the rooms to the highest bidders.

The automobile market in the United States is often said to be highly competitive. But it is not perfectly competitive. What makes this market not perfectly competitive? A. Different car companies make different vehicles with different features. B. More than three major car companies exist in this market. C. An individual car buyer can dictate what price he or she pays for a vehicle. D. An individual seller can dictate what price a consumer pays for a vehicle.

A. Different car companies make different vehicles with different features.

Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2011 was $25 and 60 units, respectively. It was seen that, in 2014, the equilibrium price of Z had decreased to $15, but the equilibrium quantity had increased to 70 units. Other things remaining the same, which of the following could explain this change? A. Shift of the supply curve of Z to the right B. Shift of the supply curve of Z to the left C. Shift of the demand curve for Z to the left D. Shift of the demand curve for Z to the right

A. Shift of the supply curve of Z to the right

A price ceiling imposed by the government: A. can create situations of excess demand B. helps in establishing equilibrium in case of shortage or surplus. C. involves pricing a commodity above the market price. D. is a tax that increases the market price of a good.

A. can create situations of excess demand

The buyers of a good will want to purchase it as long as their willingness to pay for the good is ______. A. greater than or equal to the price B. less than the price C. greater to zero D. equal to zero

A. greater than or equal to the price

The quantity demanded of a good is___________. A. the amount of the good that buyers are willing to purchase at a given market price B. the amount of the good that sellers are willing to supply at a given market price C. determined independently of the market price of the good D. always determined by government intervention

A. the amount of the good that buyers are willing to purchase at a given market price

In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________. A. All of the above are equally likely. B. lose all or almost all of its customers. C. see no change in its number of customers. D. see a small decrease in its number of customers

B. lose all or almost all of its customers.

Which of the following factors is likely to lead to an increase in the quantity demanded of pens? A. Motorcycles and typewriters B. Pens and writing pads C. Laptops and electric heaters D. Nokia and Samsung cell phones

B. Pens and writing pads

If the demand and supply curves for a commodity both shift to the left and the shift in demand is less than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: A. the same price and quantity. B. a higher price and a lower quantity. C. a lower price and a higher quantity. D. a higher price and quantity.

B. a higher price and a lower quantity.

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. A. are able to charge more than the market​ price; cannot pay less than the market price. B. cannot charge more than the market​ price; cannot pay less than the market price. C. cannot charge more than the market​ price; are able to pay less than the market price. D. are able to charge more than the market​ price; are able to pay less than the market price.

B. cannot charge more than the market​ price; cannot pay less than the market price.

Suppose a new​ off-campus university apartment complex could rent its rooms on the open market for​ $900 a month. If, instead, the university chooses to cap the price of rooms to​ $500 a month for​ students, the result would be that​ ____________. A. quantity supplied would exceed the quantity​ demanded, resulting in a shortage. B. quantity demanded would exceed the quantity​ supplied, resulting in a shortage. C. quantity demanded would exceed the quantity​ supplied, resulting in a surplus. D. quantity supplied would exceed the quantity​ demanded, resulting in a surplus.

B. quantity demanded would exceed the quantity​ supplied, resulting in a shortage.

The supply curve represents​ ___________. A. the maximum price sellers are willing to accept to sell an extra unit of a good. B. the minimum price sellers are willing to accept to sell an extra unit of a good C. the maximum price buyers are willing to pay to buy an extra unit of a good. D. the minimum price buyers are willing to pay to buy an extra unit of a good.

B. the minimum price sellers are willing to accept to sell an extra unit of a good

The Law of Supply states that ______. A. supply creates its own demand B. the quantity supplied of a good rises when the price rises, all other things remaining constant C. at the equilibrium price, there is always some excess supply in the market D. the quantity supplied of a good will always equal the quantity of the good demand

B. the quantity supplied of a good rises when the price rises, all other things remaining constant

Does the shape of the market demand curve differ from the shape of an individual demand​ curve? A. Yes, individual demand curves tend to be​ downward-sloping, while market demand curves are​ upward-sloping. B. Yes, individual demand curves tend to be​ upward-sloping, while market demand curves are horizontal. C. No, they both tend to be​ downward-sloping curves. D. No, they both tend to be​ upward-sloping curves.

C. No, they both tend to be​ downward-sloping curves.

Which of the following is true of a market? A. A market must be under continuous surveillance and government control B. Goods and services are exchanged at fixed prices in all markets C. Price acts as a selection device for buyers and sellers in every market D. A market always requires a specific physical location

C. Price acts as a selection device for buyers and sellers in every market

If the demand and supply curves for a commodity shift to the right and the shift in demand is greater than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: A. a lower price and quantity B. a lower quantity and a higher price C. a higher price and quantity D. a higher price and a lower quantity

C. a higher price and quantity

In a perfectly competitive market, ______. A. all exchanges take place involuntarily B. there is no provision for the protection of property rights C. all sellers sell an identical good or a service D. there is only one seller and many buyers

C. all sellers sell an identical good or a service

Other things remaining same, a right shift in the demand curve will lead to: A. a decrease in the equilibrium price and an increase in the equilibrium quantity. B. a decrease in the equilibrium price and the equilibrium quantity. C. an increase in the equilibrium price and the equilibrium quantity. D. an increase in the equilibrium price and a decrease in the equilibrium quantity.

C. an increase in the equilibrium price and the equilibrium quantity.

In a marketplace, prices_________. A. optimize using total value B. are a before and after comparisons C. are a trade-off D. are a marginal optimization

C. are a trade-off

Market demand is derived by​ __________. A. fixing the quantity and adding up their prices that each buyer pays. B. dividing each​ buyer's demand by the total number of consumers in the market fixing the price and adding up the quantities that each buyer demands. C. fixing the price and adding up the quantities that each buyer demands. D. adding up both the prices each buyer pays and the quantities that each buyer demands.

C. fixing the price and adding up the quantities that each buyer demands.

Two goods are said to be complements when a fall in the price of one good ______. A. does not affect the demand for the other good B. leads to a leftward shift in the demand for the other good C. leads to a rightward shift in the demand for the other good D. leads to a fall in the price of the other good

C. leads to a rightward shift in the demand for the other good

A surplus occurs in a market when: A. demand exceeds supply B. price is lower than the equilibrium price C. price is higher than the equilibrium price D. the marginal cost of production is negligible

C. price is higher than the equilibrium price

An expected increase in the market price of oil in the coming year is likely to __________ in the current year. A. shift the demand curve for oil to the left B. shift the supply curve of oil to the right C. shift the supply curve of oil to the left D. cause no changes in the demand and supply curves of oil

C. shift the supply curve of oil to the left

Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had decreased to $15 and the equilibrium quantity had also decreased to 50 units. Other things remaining the same, which of the following could explain this change? A. Shift of the demand curve for Z to the right B. Shift of the supply curve of Z to the right C. Shift of the supply curve of Z to the left D. Shift of the demand curve for Z to the left

D. Shift of the demand curve for Z to the left

Z is a normal good. The equilibrium price and quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units. Other things remaining the same, which of the following could explain this change? A. Shift of the demand curve for Z to the left B. Shift of the demand curve for Z to the right C. Shift of the supply curve of Z to the right D. Shift of the supply curve of Z to the left

D. Shift of the supply curve of Z to the left

Suppose the market for cement is such that the output of all sellers is identical in composition and quality. While there are a large number of buyers and sellers, everyone conducts transactions at a common market price. Which of the following statements is true about the structure of the cement market? A. All participants in the cement market are price-makers B. All transactions in the cement market are likely to be involuntary C. The cement market is government regulated D. The cement market is perfectly competitive

D. The cement market is perfectly competitive

Which of the following examples best approximates a competitive market? A. The market for Tesla electric cars B. The market for Jackson Pollock paintings C. The market for F-35 fighter planes D. The market for soybeans in the United States

D. The market for soybeans in the United States

If the demand and supply curves for a commodity shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: A. a higher quantity and price B. a lower quantity and a higher price C. the same quantity and a lower price D. a higher quantity and the same price

D. a higher quantity and the same price

The gasoline market in the United States is often said to be highly competitive. It is not perfectly competitive, but it has features and results that are similar to those of a perfectly competitive market, such as _______. A. an individual gas station cannot influence the market price by itself B. gas stations located near each other tend to charge the same or very similar prices C. an individual buyer cannot influence the market price of gasoline by himself D. all of the above

D. all of the above

In a perfectly competitive market, situations of surplus or shortage of a good: A. can exist simultaneously B. are permanent phenomena C. exist till the government or any ruling authority intervenes D. are self-corrected due to the competitive nature of the market

D. are self-corrected due to the competitive nature of the market

Helium is lighter than air and thus can be used to make party balloons float. Helium is also an inert gas that is vital for many industrial applications​ (such as medical imaging​ technology) that require achieving super low temperatures. This relatively new industrial application for helium has caused the demand for helium to​ ____. This has resulted in​ a/an ____ in the price of party balloons since helium is​ a/an _____ for these balloons. A. decrease: ​ increase: substitute B. increase: ​ decrease: input C. decrease: ​ decrease: substitute D. increase: ​ increase: input

D. increase: ​ increase: input