Quiz 2 Chapter 4

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied. T/F?

True

Whenever a determinant of supply other than price changes, the supply curve shifts. T/F?

True

In a competitive market, the quantity of a product produced and the price of the product are determined by A. a single buyer. B. a single seller. C. one buyer and one seller working together. D. all buyers and all sellers.

D

Soup is an inferior good if A. the demand for soup falls when the price of a substitute for soup rises. B. the demand for soup rises when the price of soup falls. C. the demand curve for soup slopes upward. D. the demand for soup falls when income rises.

D

A technological advance will shift the A. supply curve to the right. B. supply curve to the left. C. demand curve to the right. D. demand curve to the left.

A

Suppose that when income rises, the demand curve for computers shifts to the right. In this case, we know computers are A. inferior goods. B. normal goods. C. perfectly competitive goods. D. durable goods.

B

A decrease in income will shift the demand curve for an inferior good to the right. T/F?

True

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a A. shortage to exist and the market price of roses to increase. B. shortage to exist and the market price of roses to decrease. C. surplus to exist and the market price of roses to increase. D. surplus to exist and the market price of roses to decrease.

A

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? A. Price would fall and the effect on quantity would be ambiguous. B. Price would rise and the effect on quantity would be ambiguous. C. Quantity would fall and the effect on price would be ambiguous. D. Quantity would rise and the effect on price would be ambiguous.

A

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage and market price will likely rise in the future to eliminate the shortage. T/F?

True

Today, people changed their expectations about the future. This change A. can cause a movement along a demand curve. B. can affect future demand, but not today's demand. C. can affect today's demand. D. cannot affect either today's demand or future demand.

C

Which of the following events will definitely cause equilibrium price to fall? 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 shift the supply curve for gasoline to the right? A. An increase in the demand for gasoline. B. An increase in the price of gasoline. C. An increase in the number of producers of gasoline D. An increase in the price of oil, an input into the production of gasoline.

C

If the demand for a product decreases, then we would expect A. equilibrium price to increase and equilibrium quantity to decrease. B. equilibrium price to decrease and equilibrium quantity to increase. C. equilibrium price and equilibrium quantity to both increase. D. equilibrium price and equilibrium quantity to both decrease.

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? 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

The unique point at which the supply and demand curves intersect is called A. market harmony. B. coincidence. C. equivalence. D. equilibrium.

D

When supply and demand both increase, equilibrium A. price will increase. B. price will decrease. C. quantity may increase, decrease, or remain unchanged. D. price may increase, decrease, or remain unchanged.

D

A market demand curve shows how the total quantity demanded of a good varies as A. income varies. B. price varies. C. the number of buyers varies. D. supply varies.

B

If something happens to alter the quantity supplied at any given price, then A. we move along the supply curve. B. the supply curve shifts. C. the supply curve becomes steeper. D. the supply curve becomes flatter.

B

If the supply of a product increases, then we would expect A. equilibrium price to increase and equilibrium quantity to decrease. B. equilibrium price to decrease and equilibrium quantity to increase. C. equilibrium price and equilibrium quantity both to increase. D. equilibrium price and equilibrium quantity both to decrease.

B

When the price of a good is higher than the equilibrium price, A. a shortage will exist. B. buyers desire to purchase more than is produced. C. sellers desire to produce and sell more than buyers wish to purchase. D. quantity demanded exceeds quantity supplied.

C

The line that relates the price of a good and the quantity demanded of that good is called the A. demand schedule, and it usually slopes upward. B. demand schedule, and it usually slopes downward. C. demand curve, and it usually slopes upward. D. demand curve, and it usually slopes downward.

D

A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded. T/F?

True

A market is a group of buyers and sellers of a particular good or service. T/F?

True

Individual demand curves are summed horizontally to obtain the market demand curve. T/F?

True

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price. T/F?

True

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? 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.

B

A shortage exists in a market if A. there is an excess supply of the good. B. the situation is such that the law of supply and demand would predict a decrease in the price of the good from its current level. C. the current price is below its equilibrium price. D. quantity supplied exceeds quantity demanded.

C

When we move along a given supply curve, A. only price is held constant. B. technology and price are held constant. C. all nonprice determinants of supply are held constant. D. all determinants of quantity supplied are held constant.

C

When drawing a demand curve, A. demand is on the vertical axis and price is on the horizontal axis. B. quantity demanded is on the vertical axis and price is on the horizontal axis. C. price is on the vertical axis and demand is on the horizontal axis. D. price is on the vertical axis and quantity demanded is on the horizontal axis.

D