Question 1

Refer to the graphs shown.If the quantity demanded by consumers is the same for every price, then the demand curve would look like:

Accepted Answer

A)  I.
B)  II.
C)  III.
D)  IV.E) C) and D)
F) A) and D)

Question 2

If the price of steel rises, the law of supply predicts that, other things constant, the:

Accepted Answer

A)  supply of steel will increase.
B)  supply of steel will decrease.
C)  quantity supplied of steel will increase.
D)  quantity supplied of steel will decrease.E) A) and C)
F) A) and D)

Question 3

Suppose OPEC announces that it will increase production.Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

Accepted Answer

A)  demand curve shifting to the right.
B)  demand curve shifting to the left.
C)  supply curve shifting to the right.
D)  supply curve shifting to the left.E) A) and B)
F) B) and D)

Question 4

Suppose that the table shown shows the demand and supply schedules for pork bellies.Which of the following statements is true?

Accepted Answer

A)  There would be a surplus of pork bellies if the price were $0.50 per pound.
B)  There would be a shortage of pork bellies if the price were $0.50 per pound.
C)  There would be a shortage of pork bellies if the price were $0.25 per pound.
D)  There would be a surplus of pork bellies if the price were $0.25 per pound.E) All of the above
F) None of the above

Question 5

The increase in the availability of organic foods likely:

Accepted Answer

A)  lowers equilibrium quantity and raises equilibrium price for organic foods.
B)  raises equilibrium quantity and price for organic foods.
C)  raises equilibrium quantity and lowers equilibrium price for organic foods.
D)  lowers equilibrium quantity and price for organic foods.E) C) and D)
F) A) and C)

Question 6

Suppose that the table shown shows the demand and supply schedules for pork bellies.Based on the table, the equilibrium price of pork bellies is:

Accepted Answer

A)  $0.10/lb.
B)  $0.25/lb.
C)  $0.50/lb.
D)  $0.75/lb.E) A) and C)
F) A) and D)

Question 7

When quantity demanded is greater than quantity supplied, the resulting shortage causes the price to fall.

Accepted Answer

A) True 
 B)False

Question 8

Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane.)

Accepted Answer

A)  Supply curve shifted to the right, demand curve did not shift.
B)  Demand curve shifted to the right, supply curve did not shift.
C)  Both supply and demand curves shifted to the right.
D)  Supply curve moved right and demand curve shifted to the left.E) A) and D)
F) C) and D)

Question 9

Refer to the graphs shown.The market is computers.Which graph best represents the impact of cheaper memory chips on the computer market?

Accepted Answer

A)  a
B)  b
C)  c
D)  dE) B) and C)
F) A) and B)

Question 10

Which of the following would not move either the supply or the demand curve in the market for housing?

Accepted Answer

A)  An increase in the number of people who are retiring
B)  An increase in the cost of home insurance
C)  An increase in real-estate prices
D)  A possibility of higher construction costsE) None of the above
F) A) and B)

Question 11

Refer to the graphs shown.The arrow that best captures the impact of a decline in price on quantity supplied is:

Accepted Answer

A)  W
B)  X
C)  Y
D)  ZE) B) and C)
F) All of the above

Question 12

Refer to the graphs shown.Higher costs of production combined with an expectation on the part of consumers of higher prices in the future would result in the shifts depicted in:

Accepted Answer

A)  a.
B)  b.
C)  c.
D)  d.E) B) and D)
F) None of the above

Question 13

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the:

Accepted Answer

A)  supply of apartment units will shift leftward.
B)  supply of apartment units will shift rightward.
C)  quantity of apartment units supplied will rise.
D)  quantity of apartment units supplied will fall.E) None of the above
F) A) and B)

Question 14

Which of the following would best explain a decrease in the supply of squash?

Accepted Answer

A)  An increase in the price of other vegetables
B)  An increase in the price of squash
C)  A decrease in the price of squash
D)  A decrease in the cost of growing squashE) B) and C)
F) A) and C)

Question 15

The law of demand states that consumers buy more of a good when its price declines:

Accepted Answer

A)  because their income increases at the same time.
B)  only if their income increases at the same time.
C)  even if other demand determinants change at the same time.
D)  provided all else remains constant.E) B) and D)
F) B) and C)

Question 16

Which of the following is not likely to change the supply of personal computers?

Accepted Answer

A)  An increase in consumers' incomes
B)  A technological breakthrough that makes it much less costly to produce computer chips
C)  A decrease in the wage paid to electrical engineers
D)  An increase in taxes on computer chips paid by producersE) All of the above
F) C) and D)

Question 17

The false assumption that what is true for a part will also be true for the whole is called the:

Accepted Answer

A)  fallacy of composition.
B)  paradox of thrift.
C)  post hoc fallacy.
D)  ceteris paribus assumption.E) B) and C)
F) A) and B)

Question 18

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:

Accepted Answer

A)  increase the demand for diesel cars.
B)  decrease the demand for gasoline.
C)  decrease the demand for diesel cars.
D)  increase the demand for gasoline.E) None of the above
F) All of the above

Question 19

The law of supply states that more of a good will be supplied the lower its price, other things constant.

Accepted Answer

A) True 
 B)False

Question 20

When the number of Alaskan fishermen increased, salmon prices fell to record lows.This could be shown graphically by a shift in:

Accepted Answer

A)  the demand curve right.
B)  the supply curve left.
C)  the demand curve left.
D)  the supply curve right.E) A) and B)
F) None of the above

Exam 4: Supply and Demand

Suppose that the table shown shows the demand and supply schedules for pork bellies.Based on the table, the equilibrium price of pork bellies is:

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The law of supply states that more of a good will be supplied the lower its price, other things constant.

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The law of demand states that consumers buy more of a good when its price declines:

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Refer to the graphs shown.Higher costs of production combined with an expectation on the part of consumers of higher prices in the future would result in the shifts depicted in:

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Suppose OPEC announces that it will increase production.Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

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Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:

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When quantity demanded is greater than quantity supplied, the resulting shortage causes the price to fall.

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The false assumption that what is true for a part will also be true for the whole is called the:

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Which of the following would not move either the supply or the demand curve in the market for housing?

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When the number of Alaskan fishermen increased, salmon prices fell to record lows.This could be shown graphically by a shift in:

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The increase in the availability of organic foods likely:

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Refer to the graphs shown.The arrow that best captures the impact of a decline in price on quantity supplied is:

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If the price of steel rises, the law of supply predicts that, other things constant, the:

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If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the:

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Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane.)

Correct AnswerverifiedShow Answer

Refer to the graphs shown.The market is computers.Which graph best represents the impact of cheaper memory chips on the computer market?

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Suppose that the table shown shows the demand and supply schedules for pork bellies.Which of the following statements is true?

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Which of the following would best explain a decrease in the supply of squash?

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Which of the following is not likely to change the supply of personal computers?

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Refer to the graphs shown.If the quantity demanded by consumers is the same for every price, then the demand curve would look like:

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