Question 1

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:
A) these two effects cancel each other out and there is no change in the margarine market equilibrium.
B) the demand curve shifts left and the supply curve shifts right.
C) there is a margarine price increase.
D) there is an excess demand for margarine.
E) the equilibrium quantity of margarine must increase.

Accepted Answer

The increase in the number of margarine suppliers will shift the supply curve to the right, which would lower the price of margarine if demand remained constant. However, if consumers switch away from margarine, this will shift the demand curve to the left. The combined effect is that the market equilibrium will shift to a lower quantity and a lower price, but the exact magnitude of the shift will depend on the relative magnitudes of the supply and demand shifts.

Question 2

Exhibit 4-8 Demand and supply curves
​ 
-In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n):
A) increase in supply and demand.
B) decrease in supply and demand.
C) increase in supply that dominates a decrease in demand.
D) increase in demand that dominates a decrease supply.
E) decrease in demand that dominates an increase in supply.

Accepted Answer

A movement from A to B, where price decreases and quantity increases, is best explained by an increase in supply that dominates a decrease in demand. This results in a lower equilibrium price and a higher equilibrium quantity.

Question 3

Exhibit 4-8 Demand and supply curves
​ 
-In Exhibit 4-8, a movement from A to D is best described as a(n):
A) increase in the quantity demanded and an increase in supply.
B) increase in supply and demand.
C) increase in both the quantity demanded and supplied.
D) increase in the quantity supplied and in the demand.
E) decrease in the quantity demanded and a decrease in supply.

Accepted Answer

The answer of Exhibit 4-8 Demand and supply curves
​ 
-In...

Question 4

An increase in both supply and demand causes which of the following?
A) Equilibrium price falls.
B) Equilibrium price rises.
C) Equilibrium price change is indeterminate.
D) Equilibrium quantity decreases.
E) Equilibrium quantity change is indeterminate.

Accepted Answer

When both supply and demand increase, the equilibrium quantity will definitely increase, but the change in equilibrium price is indeterminate because it depends on the relative magnitudes of the shifts in supply and demand.

Question 5

Exhibit 4-6 Demand and supply curves -In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market. A) Market supply has decreased, and market demand has increased. B) Market supply has increased, and market demand has decreased. C) Market supply has decreased, and market demand has decreased. D) The quantity supplied has decreased, and the quantity demanded has increased. E) Market supply has increased, and market demand has increased.

Accepted Answer

The demand curve has shifted to the right, indicating an increase in demand. The supply curve has also shifted to the right, indicating an increase in supply. This means that both market supply and market demand have increased.

Question 6

Exhibit 4-7 Demand and supply schedules for movie tickets
​ $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 10 & 200 & 500 \
8 & 240 & 470 \
6 & 370 & 420 \
4 & 390 & 390 \
2 & 410 & 310 \
\hline
\end{array}$$
-In Exhibit 4-7, the equilibrium price of a movie ticket is:
A) $10.
B) $8.
C) $6.
D) $4.
E) $2.

Accepted Answer

The equilibrium price is where the quantity demanded equals the quantity supplied, which occurs at $4 with both quantities at 390.

Question 7

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?
A) Price will increase, and quantity will increase.
B) Price will decrease, and quantity will increase.
C) Price will increase, and quantity will decrease.
D) Price will decrease, and quantity will decrease.
E) Price will increase, and quantity will stay the same.

Accepted Answer

An increase in consumers' incomes will lead to an increase in the demand for restaurant meals. As demand increases, the equilibrium price and quantity will both increase. Therefore, the correct answer is A.

Question 8

An increase in the wages paid to fishermen will have what effect on the fish market equilibrium?
A) Price will decrease, and quantity will decrease.
B) Price will increase, and quantity will increase.
C) Price will decrease, and quantity will increase.
D) Price will increase, and quantity will decrease.
E) Price and quantity will stay the same.

Accepted Answer

An increase in wages paid to fishermen will increase the cost of production for fishing companies, resulting in a decrease in the supply of fish. As a result, the equilibrium price will increase, and the equilibrium quantity will decrease. This is because the increase in cost will lead to a decrease in the number of fish that fishing companies are willing and able to supply at any given price. Therefore, price will increase and quantity will decrease, as stated in choice D.

Question 9

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?
A) Price increases and quantity increases
B) Price decreases and quantity increases.
C) Price increases and quantity increases.
D) Price decreases and quantity decreases
E) No change in price and quantity

Accepted Answer

The announcement by the FDA would cause a decrease in the demand for soda X as consumers become aware of the health risks associated with it. This decrease in demand would shift the demand curve leftward, leading to a lower equilibrium quantity and a lower equilibrium price for soda X. Therefore, the correct answer is D as both price and quantity would decrease.

Question 10

Ceteris paribus, if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?
A) Price will increase, and quantity will increase.
B) Price and quantity will stay the same.
C) Price will decrease, and quantity will increase.
D) Price will increase, and quantity will decrease.
E) Price will decrease, and quantity will decrease.

Accepted Answer

If more people are eating broccoli, the demand for cabbage (a substitute good for broccoli) will decrease, leading to a decrease in both price and quantity demanded of cabbage. This will result in a decrease in market equilibrium for cabbage. Therefore, the correct answer is E, which reflects a decrease in price and quantity of cabbage.

Question 11

If the market demand and supply curves shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n):
A) increase in market price and a decrease in the quantity exchanged.
B) decrease in market price and a decrease in the quantity exchanged.
C) increase in market price and an increase in the quantity exchanged.
D) decrease in market price and an increase in the quantity exchanged.
E) decrease in market price and no change in the quantity exchanged.

Accepted Answer

The shift in demand and supply curves both result in a decrease in equilibrium price, but the effect on quantity exchanged is ambiguous. However, since the supply shift is greater than the demand shift, the quantity exchanged is likely to increase. Therefore, the new equilibrium shows a decrease in market price and an increase in the quantity exchanged.

Question 12

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?
A) The quantity of beef demanded will decrease.
B) The quantity of beef supplied will increase.
C) There will be a surplus of beef.
D) There will be a shortage of beef.

Accepted Answer

When the price of beef is below market equilibrium due to a price ceiling, the quantity demanded of beef increases but the quantity supplied decreases, resulting in a shortage of beef. This occurs because consumers are willing to buy more beef at the lower price, but producers are not willing to supply as much at the lower price.

Question 13

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:
A) market price will decrease, and market quantity exchanged could increase, decrease, or remain unchanged.
B) market price will increase, and market quantity exchanged will decrease.
C) market price will increase, and the quantity exchanged could increase, decrease, or remain the same.
D) market price could increase, decrease, or remain the same, and quantity exchanged will increase.
E) market price will increase, decrease, or remain the same, and quantity exchanged will decrease.

Accepted Answer

When market supply increases and market demand decreases, the market price will decrease. However, the change in quantity exchanged could go in one of three directions: it could increase if the increase in supply is greater than the decrease in demand, it could decrease if the decrease in demand is greater than the increase in supply, or it could remain unchanged if the two changes balance each other out perfectly. Therefore, choice A is the best answer.

Question 14

Ceteris paribus, an increase in the supply of a good causes which of the following?
A) Lowers the equilibrium price, and reduces the quantity bought and sold.
B) Raises the equilibrium price, and raises the quantity bought and sold.
C) Raises the equilibrium price, and increases the quantity bought and sold.
D) Lowers the equilibrium price, and increases the quantity bought and sold.
E) Equilibrium price and equilibrium quantity change are indeterminate.

Accepted Answer

According to the law of supply, as the supply of a good increases, the equilibrium price decreases, and the equilibrium quantity increases. Therefore, choice D is the correct answer, while the other options are incorrect.

Question 15

An increase in demand and a decrease in supply cause which of the following?
A) Equilibrium price change is indeterminate.
B) Equilibrium quantity decreases.
C) Equilibrium price falls.
D) Equilibrium price rises.
E) Equilibrium quantity increases.

Accepted Answer

An increase in demand and a decrease in supply both lead to a higher equilibrium price.

Question 16

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:
A) market price will decrease, and market quantity exchanged will increase.
B) market price will increase, and market quantity exchanged will decrease.
C) market price will increase, and the quantity exchanged could increase, decrease, or remain the same.
D) market price could increase, decrease, or remain the same, and quantity exchanged will increase.
E) market price will increase, decrease, or remain the same, and quantity exchanged will decrease.

Accepted Answer

When market supply decreases and demand simultaneously increases, the market price will increase, as there is more demand for the same amount of supply. However, the quantity exchanged could increase, decrease, or remain the same depending on the magnitude of the change in supply and demand. If the increase in demand is greater than the decrease in supply, the quantity exchanged will increase. If the decrease in supply is greater than the increase in demand, the quantity exchanged will decrease. If the changes in supply and demand are relatively equal, the quantity exchanged will remain the same.

Question 17

A price ceiling that sets the price of a good below market equilibrium will cause:
A) An increase in quantity demanded of the good.
B) A decrease in quantity supplied of the good.
C) A shortage of the good.
D) All of these.

Accepted Answer

A price ceiling below market equilibrium will cause the price to be lower than the price that would have prevailed in the absence of the price ceiling. This would increase the quantity demanded of the good (A) since consumers will now be willing and able to buy more of the good at the lower price. However, at the same time, this lower price will decrease the quantity supplied of the good (B) since producers will no longer be able to earn as much profit at the lower price. As the quantity demanded increases and the quantity supplied decreases, a shortage of the good (C) will develop. Therefore, all three choices are correct.

Question 18

Exhibit 4-8 Demand and supply curves
​ 
-In Exhibit 4-8, a movement from A to C is best described as a(n):
A) increase in the quantity supplied and an increase in the demand.
B) decrease in the quantity supplied and a decrease in demand.
C) decrease in the quantity supplied and an increase in demand.
D) decrease in the quantity demanded and a decrease in supply.
E) decrease in both quantity demanded and quantity supplied.

Accepted Answer

The answer of Exhibit 4-8 Demand and supply curves
​ 
-In...

Question 19

Exhibit 4-8 Demand and supply curves
​ 
-In Exhibit 4-8, a movement from A to B is best explained by:
A) an increase in income and in the number of suppliers.
B) an increase in the price of other goods.
C) an increase in the population.
D) a decrease in income and an improvement in the technology used to produce the good.
E) equilibrium quantity increases and the equilibrium price change is indeterminate.

Accepted Answer

The answer of Exhibit 4-8 Demand and supply curves
​ 
-In...

Question 20

Exhibit 4-7 Demand and supply schedules for movie tickets
​ $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 10 & 200 & 500 \
8 & 240 & 470 \
6 & 370 & 420 \
4 & 390 & 390 \
2 & 410 & 310 \
\hline
\end{array}$$
-In Exhibit 4-7, a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:
A) $10.
B) $8.
C) $6.
D) $4.
E) $2.

Accepted Answer

The answer of Exhibit 4-7 Demand and supply schedules for...

Quiz 4: Markets in Action

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n) :

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to D is best described as a(n) :

An increase in both supply and demand causes which of the following?

Exhibit 4-6 Demand and supply curves -In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market.

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?

An increase in the wages paid to fishermen will have what effect on the fish market equilibrium?

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?

Ceteris paribus, if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?

If the market demand and supply curves shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n) :

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

Ceteris paribus, an increase in the supply of a good causes which of the following?

An increase in demand and a decrease in supply cause which of the following?

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

A price ceiling that sets the price of a good below market equilibrium will cause:

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to C is best described as a(n) :

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to B is best explained by:

Quiz 4: Markets in Action

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:

Exhibit 4-8 Demand and supply curves ​ -In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n) :

Exhibit 4-8 Demand and supply curves ​ -In Exhibit 4-8, a movement from A to D is best described as a(n) :

An increase in both supply and demand causes which of the following?

Exhibit 4-6 Demand and supply curves ​ -In Exhibit 4-6, the demand curve has shifted from D1 to D2 and, simultaneously, the supply curve has shifted from S1 to S2. Describe these actions in this market.

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?

An increase in the wages paid to fishermen will have what effect on the fish market equilibrium?

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?

Ceteris paribus, if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?

If the market demand and supply curves shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n) :

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

Ceteris paribus, an increase in the supply of a good causes which of the following?

An increase in demand and a decrease in supply cause which of the following?

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

A price ceiling that sets the price of a good below market equilibrium will cause:

Exhibit 4-8 Demand and supply curves ​ -In Exhibit 4-8, a movement from A to C is best described as a(n) :

Exhibit 4-8 Demand and supply curves ​ -In Exhibit 4-8, a movement from A to B is best explained by:

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n) :

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to D is best described as a(n) :

Exhibit 4-6 Demand and supply curves -In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market.

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to C is best described as a(n) :

Exhibit 4-8 Demand and supply curves -In Exhibit 4-8, a movement from A to B is best explained by: