Chapter 4 Macro quiz

A competitive market is a market in which Select one: a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price.

d

A decrease in demand is represented by a Select one: a. movement downward and to the right along a demand curve. b. movement upward and to the left along a demand curve. c. rightward shift of a demand curve. d. leftward shift of a demand curve.

d

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra? Select one: a. the government b. prices c. subsidies d. the Federal Reserve

b

Each of the following is a determinant of demand except Select one: a. tastes. b. production technology. c. expectations. d. the prices of related goods.

b

If a good is inferior, then an increase in income will result in a Select one: a. increase in the demand for the good. b. decrease in the demand for the good. c. movement down and to the right along the demand curve for the good. d. movement up and to the left along the demand curve for the good.

b

If the number of buyers in a market decreases, then Select one: a. demand will increase. b. demand will decrease. c. supply will increase. d. supply will decrease.

b

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to Select one: a. shift rightward. b. shift leftward. c. become flatter. d. remain unchanged.

b

The law of demand states that, other things equal, an increase in Select one: a. price causes quantity demanded to increase. b. price causes quantity demanded to decrease. c. quantity demanded causes price to increase. d. quantity demanded causes price to decrease.

b

Good X and good Y are substitutes. If the price of good Y increases, then the Select one: a. demand for good X will decrease. b. quantity demanded of good X will decrease. c. demand for good X will increase. d. quantity demanded of good X will increase.

c

If macaroni and cheese is an inferior good, then an increase in Select one: a. the price will cause the demand curve for macaroni and cheese to shift to the left. b. the price will cause the demand curve for macaroni and cheese to shift to the right. c. a consumer's income will cause the demand curve for macaroni and cheese to shift to the left. d. a consumer's income will cause the demand curve for macaroni and cheese to shift to the right.

c

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes? Select one: a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

c

The two words most often used by economists are Select one: a. prices and quantities. b. resources and allocation. c. supply and demand. d. efficiency and equity.

c

Which of the following events must cause equilibrium price to fall? Select one: a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c

Which of the following would most likely serve as an example of a monopoly? Select one: a. a bakery in a large city b. a bank in a large city c. a local cable television company d. a small group of corn farmers

c

A decrease in quantity supplied Select one: a. results in a movement downward and to the left along a fixed supply curve. b. results in a movement upward and to the right along a fixed supply curve. c. shifts the supply curve to the left. d. shifts the supply curve to the right.

a

A rightward shift of a demand curve is called a Select one: a. increase in demand. b. decrease in demand. c. decrease in quantity demanded. d. increase in quantity demanded.

a

Consider the market for portable air conditioners in equilibrium. A summer of unseasonably cool weather would cause Select one: a. both the equilibrium price and quantity to decrease. b. both the equilibrium price and quantity to increase. c. the equilibrium price to increase and the equilibrium quantity to decrease. d. the equilibrium price to decrease and the equilibrium quantity to increase.

a

Pizza is a normal good if the demand Select one: a. for pizza rises when income rises. b. for pizza rises when the price of pizza falls. c. curve for pizza slopes upward. d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

a

Which of the following events could cause an increase in the supply of ceiling fans? Select one: a. The number of sellers of ceiling fans increases. b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. c. There is an increase in the price of the motor that powers ceiling fans. d. All of the above are correct.

a

A demand schedule is a table that shows the relationship between Select one: a. quantity demanded and quantity supplied. b. income and quantity demanded. c. price and quantity demanded. d. price and income.

c

A likely example of complementary goods for most people would be Select one: a. butter and margarine. b. lawnmowers and automobiles. c. chips and salsa. d. cola and lemonade.

c

A market includes Select one: a. buyers only. b. sellers only. c. both buyers and sellers. d. the place where transactions occur but not the people involved.

c

A shortage exists in a market if Select one: a. there is an excess supply of the good. b. quantity supplied exceeds quantity demanded. c. the current price is below its equilibrium price. d. All of the above are correct.

c

A surplus exists in a market if Select one: a. there is an excess demand for the good. b. quantity demanded exceeds quantity supplied. c. the current price is above its equilibrium price. d. All of the above are correct.

c

An increase in demand is represented by a Select one: a. movement downward and to the right along a demand curve. b. movement upward and to the left along a demand curve. c. rightward shift of a demand curve. d. leftward shift of a demand curve.

c

An increase in which of the following would shift the supply curve for gasoline to the right? Select one: a. demand for gasoline b. price of gasoline c. number of producers of gasoline d. price of oil, an input into the production of gasoline

c

A decrease in supply is represented by a Select one: a. movement downward and to the left along a supply curve. b. movement upward and to the right along a supply curve. c. rightward shift of a supply curve. d. leftward shift of a supply curve.

d

In a market economy, supply and demand are important because they Select one: a. play a critical role in the allocation of the economy's scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.

d

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income? Select one: a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.

d

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? Select one: a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

d