LearnSmart Questions: Chapter 4

Suppose a market has an excess supply and price starts to fall. What is likely to happen to quantity demanded and supplied? - a rise in quantity supplied and a fall in quantity demanded - a rise in both quantity supplied and quantity demanded - a fall in both quantity supplied and quantity demanded - a fall in quantity supplied and a rise in quantity demanded

- a fall in quantity supplied and a rise in quantity demanded

A change in a factor other than price that affects demand leads to a: - a shift in demand - a change in quantity demanded

- a shift in demand

The shift of the demand curve could be due to: - an increase in the price of a complementary good - an increase in the consumers' income, assuming the good is a normal good - a decrease in the price of a substitute good - an increase in taxes

- an increase in the consumers' income, assuming the good is a normal good

Which phenomena underlie the law of demand for the market? - at lower prices, new demanders enter the market - at lower prices, individual income rises - at higher prices, existing demanders buy less - at higher prices, individual revenue falls

- at lower prices, new demanders enter the market - at higher prices, existing demanders buy less

The law of supply states that the quantity supplied of a good is: - inversely related to the good's price - directly related to the good's price - independent of the good's price

- directly related to the good's price

The demand curve is generally: - downward sloping because as price falls, demand tends to fall - upward sloping, because as price falls, demand tends to rise - downward sloping because as price rises, quantity demanded tends to fall - upward sloping because as price falls, quantity demanded tends to rise

- downward sloping because as price rises, quantity demanded tends to fall

True or False: Excess demand is the amount by which quantity supplied exceeds quantity demanded. - true - false

- false

True or False: When we consider the labor market for the entire United States, we can safely assume that changes in demand are supply are independent of one-another. - true - false

- false

The fallacy of composition is the: - false assumption that the equilibrium for supply is also the equilibrium for demand - false assumption that the composition of suppliers is homogeneous - false assumption that what is true for a part will also be true for the whole - false assumption that the composition of consumers is homogeneous

- false assumption that what is true for a part will also be true for the whole

A market demand curve is the: - the maximum of individual demand curves - horizontal sum of all individual demand curves - the minimum of individual demand curves - vertical sum of all individual demand curves

- horizontal sum of all individual demand curves

A market supply curve is the: - vertical sum of all individual supply curves - the maximum supply curve - vertical sum of some individual supply curves - horizontal sum of all individual supply curves

- horizontal sum of all individual supply curves

When upward pressure on price exactly offset by the downward pressure on price, a market is said to be: - indeterminate - competitive - in surplus - in equilibrium

- in equilibrium

The law of supply is based on the fact that a firm will want to supply: - less of a good when its price rises because the opportunity cost of supplying the good has risen - less of a good when its price rises because the opportunity cost of not supplying the good has fallen - more of a good when its price rises because the opportunity cost of not supplying the good has fallen - more of a good when its price rises because the opportunity cost of not supplying the good has risen

- more of a good when its price rises because the opportunity cost of not supplying the good has risen

Supply shifts with a change in: - the price of the good - production technology - expectations of sellers - the price of inputs for the good - consumer income

- production technology - expectations of sellers - the price of inputs for the good

A movement along the demand curve reflects a change in: - quantity demanded - demand

- quantity demanded

The law of demand states that a rise in price will cause: - quantity supplied to rise - quantity supplied to fall - quantity demanded to rise - quantity demanded to fall

- quantity demanded to fall

If the price of candy falls, the: - demand for candy will rise - demand for candy will fall - quantity of candy demanded will fall - quantity of candy demanded will rise

- quantity of candy demanded will rise

According to the law of supply, when the price of shoes rises the ____________. - input prices must have fallen - input prices must have risen - quantity supplied will fall - quantity supplied will rise

- quantity supplied will rise

When there is excess demand for a good, prices tend to: - rise - fall - stay the same

- rise

Supply refers to a: - schedule of quantities of a good that will be sold per unit of time at various prices, other things constant - specific amount that will be supplied per unit of time at a specific price, other things constant

- schedule of quantities of a good that will be sold per unit of time at various prices, other things constant

The law of demand is based on the concept of: - comparative advantage - complexity - relativization - substitution

- substitution

A change in which of the following can shift the demand curve for a good? - the cost of inputs to production - tastes and preferences of the consumers - taxes paid by and subsidies paid to by the consumer - expectations of the consumers in the future price of the good

- tastes and preferences of the consumers - taxes paid by and subsidies paid to by the consumer - expectations of the consumers in the future price of the good

A movement along a demand can be caused by a change in - the tastes and preferences of consumers - the income of consumers - the price of another good - the price of the good

- the price of the good

True or False: Excess supply is the amount by which quantity supplied exceeds quantity demanded. - true - false

- true

A typical supply curve is: - downward sloping - horizontal - upward sloping - vertical

- upward sloping