Question 1

Figure 4-14 
-Refer to Figure 4-14. Which of the following best describes the movement from E1 to E2?
A)a decrease in supply
B)an increase in supply
C)a movement along the supply curve
D)a decrease in demand

Accepted Answer

The answer of Figure 4-14 
-Refer to Figure 4-14. Which...

Question 2

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should
A)"fight fire with fire" by decreasing supply of its doll for six weeks and then increasing the supply.
B)increase the supply of its doll now before the other doll hits the market.
C)increase the price of its doll now.
D)discontinue its doll.

Accepted Answer

By increasing the supply of its doll now, Funsters can attempt to saturate the market before Toysorama's doll hits the shelves. This can potentially limit the impact of the competitor's product and maintain market share for Funsters. Decreasing supply or increasing the price could potentially discourage consumers from purchasing Funsters' doll altogether. Discontinuing its doll is also not a practical solution as it would result in lost revenue and market share.

Question 3

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for beach towels?
A)an increase in the price of beach towels
B)an expectation by firms that the price of beach towels will increase in the very near future
C)a decrease in the price of cotton
D)a decrease in the number of firms selling beach towels

Accepted Answer

A decrease in the price of cotton, which is a key input in the production of beach towels, would reduce the cost of production for firms and allow them to supply more beach towels at each price level. This would result in a rightward shift of the supply curve from Supply A to Supply C.

Question 4

If suppliers expect the price of their product to fall in the future, then they will
A)decrease supply now.
B)increase supply now.
C)decrease supply in the future but not now.
D)increase supply in the future but not now.

Accepted Answer

The answer of If suppliers expect the price of their...

Question 5

Today's supply curve for iPods could shift in response to a change in
A)today's price of iPods.
B)the expected future price of iPods.
C)the number of buyers of iPods.
D)All of the above are correct.

Accepted Answer

The supply curve for iPods would shift in response to a change in the expected future price of iPods. If suppliers expect the future price to increase, they may decrease current supply in order to take advantage of the higher price in the future. Conversely, if suppliers expect the future price to decrease, they may increase current supply in order to sell as much as possible before the price drops. Changes in today's price of iPods or the number of buyers would not necessarily shift the supply curve, although they could affect the market equilibrium.

Question 6

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?
A)an increase in the price of sailboats
B)a decrease in the number of firms selling sailboats
C)a decrease in the price of fiberglass and sail cloth
D)a decrease in the price of America's Cup sailing t-shirts

Accepted Answer

A decrease in the price of fiberglass and sail cloth would decrease the cost of producing sail boats, leading to an increase in supply and a shift of the supply curve from Supply A to Supply C. An increase in the price of sailboats (A) would decrease quantity supplied at each price point along the supply curve, but would not shift the curve itself. A decrease in the number of firms (B) would decrease the overall supply because there are fewer firms producing sail boats, but this also would not shift the curve itself. A decrease in the price of America's Cup sailing t-shirts (D) would have no impact on the market for sail boats, thus would not shift the supply curve.

Question 7

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for beer?
A)a decrease in the price of beer
B)an expectation by firms that the price of beer will increase in the very near future
C)a decrease in the price of hops
D)an improvement in technology that allows firms to use less labor in the production of beer

Accepted Answer

A decrease in the price of hops (an input in the production of beer) would lower the cost of production for firms, causing them to supply more beer at every price level. This would shift the supply curve from Supply B to Supply A, representing an increase in the quantity supplied at every price. A decrease in the price of beer (Option A) would actually result in a movement along the supply curve, not a shift. Options B and D would not have a direct impact on the supply of beer, as they relate to future price expectations and technological improvements, respectively.

Question 8

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to
A)fall in six months but not now.
B)increase in six months when the price goes up.
C)fall now.
D)increase now to meet as much demand as possible.

Accepted Answer

The recent forest fires have already caused a decrease in the supply of lumber, which is expected to continue in the near future. The rise in lumber prices in the next six months will not immediately increase the supply of lumber, but instead may encourage lumber producers to sell their existing stock at a higher price rather than increasing production.

Question 9

If the number of sellers in a market increases, then the
A)demand in that market will increase.
B)supply in that market will increase.
C)supply in that market will decrease.
D)demand in that market will decrease.

Accepted Answer

An increase in the number of sellers will increase the supply of goods or services in the market, leading to a rightward shift in the supply curve. This would result in a decrease in equilibrium price and an increase in equilibrium quantity, assuming demand remains constant.

Question 10

Figure 4-14 
-Refer to Figure 4-14. Which of the following would explain a movement from E1 to E2?
A)There is an improvement in the technology used to produce this good.
B)The cost of an input to the production of this good increases.
C)This good becomes very popular.
D)The price of a substitute good decreases.

Accepted Answer

A movement from E1 to E2 represents a decrease in supply. An increase in the cost of an input to production would decrease supply, causing the curve to shift leftward. An improvement in technology would shift the curve rightward, increasing supply. The popularity of the good or a decrease in the price of a substitute good would affect demand, not supply.

Question 11

Today's supply curve for gasoline could shift in response to a change in
A)today's price of gasoline.
B)the expected future price of gasoline.
C)the number of buyers of gasoline.
D)All of the above are correct.

Accepted Answer

The supply curve for gasoline would shift in response to the expected future price of gasoline because suppliers would adjust their production levels accordingly. A change in today's price of gasoline or the number of buyers may affect the quantity supplied, but would not necessarily shift the entire supply curve.

Question 12

A decrease in the number of sellers in the market causes
A)the supply curve to shift to the left.
B)the supply curve to shift to the right.
C)a movement up and to the right along a stationary supply curve.
D)a movement downward and to the left along a stationary supply curve.

Accepted Answer

A decrease in the number of sellers in the market means that there are fewer goods and services being produced and supplied, resulting in a decrease in supply. This leads to a leftward shift of the supply curve.

Question 13

An increase in which of the following would shift the supply curve for gasoline to the right?
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

Accepted Answer

An increase in the number of producers of gasoline would shift the supply curve for gasoline to the right. This is because with more producers, there would be an increase in the quantity of gasoline supplied at each possible price.

Question 14

Which of the following events could cause an increase in the supply of ceiling fans?
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.

Accepted Answer

The increase in the number of sellers of ceiling fans would lead to an increase in the supply of ceiling fans, as there would be more producers supplying the market. B is not correct, as it would lead to an increase in the demand for ceiling fans, not the supply. C is not correct, as an increase in the price of the motor that powers ceiling fans would raise production costs, and therefore decrease the supply of ceiling fans.

Question 15

Which of the following is a determinant of the market supply curve but not a determinant of an individual seller's supply?
A)production technology
B)expectations
C)input prices
D)the number of sellers

Accepted Answer

The number of sellers is a determinant of the market supply curve because it represents the collective output of all sellers in a market, but it is not a determinant of an individual seller's supply, as it only affects the overall supply in the market. Production technology, expectations, and input prices are all determinants of both market supply and an individual seller's supply.

Question 16

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect
A)the CPA to supply more expert tax advice now than she was supplying previously.
B)the CPA to supply less expert tax advice now than she was supplying previously.
C)the demand for this CPA's expert tax advice to fall.
D)no change in the CPA's current supply; instead, future supply will be affected.

Accepted Answer

The answer of A CPA recently has come to expect...

Question 17

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

Accepted Answer

A change in producers' expectations about the future can affect their current production decisions, leading to a change in today's supply. For example, if producers expect the price of a good to increase in the future, they may reduce their current supply in order to save some inventory for the future when they can sell at a higher price. As a result, the current supply would decrease, causing a leftward shift in the supply curve. Therefore, option C is the correct answer.

Question 18

If sellers expect higher basket prices in the near future, the current
A)supply of baskets will increase.
B)supply of baskets will decrease.
C)supply of baskets will be unaffected.
D)demand for baskets will decrease.

Accepted Answer

If sellers expect higher basket prices in the near future, they are less likely to sell their baskets at their current prices. This will lead to a decrease in the supply of baskets in the market.

Question 19

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the
A)supply curve for Ashley's bread will increase.
B)supply curve for Ashley's bread will decrease.
C)demand curve for Ashley's bread will increase.
D)demand curve for Ashley's bread will decrease.

Accepted Answer

By reducing the costs of baking bread, Ashley can produce more bread at a lower cost. This will allow her to offer more bread for sale at lower prices, which will increase the supply of her bread. Therefore, the supply curve for Ashley's bread will increase.

Question 20

Figure 4-15 
-Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for butter?
A)a decrease in the price of butter
B)an increase in the price of margarine
C)an increase in the price of milk
D)an improvement in technology that allows firms to use less labor in the production of butter

Accepted Answer

The answer of Figure 4-15 
-Refer to Figure 4-15. Which...

Quiz 4: The Market Forces of Supply and Demand

Figure 4-14 -Refer to Figure 4-14. Which of the following best describes the movement from E1 to E2?

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for beach towels?

If suppliers expect the price of their product to fall in the future, then they will

Today's supply curve for iPods could shift in response to a change in

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for beer?

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

If the number of sellers in a market increases, then the

Figure 4-14 -Refer to Figure 4-14. Which of the following would explain a movement from E1 to E2?

Today's supply curve for gasoline could shift in response to a change in

A decrease in the number of sellers in the market causes

An increase in which of the following would shift the supply curve for gasoline to the right?

Which of the following events could cause an increase in the supply of ceiling fans?

Which of the following is a determinant of the market supply curve but not a determinant of an individual seller's supply?

A CPA recently has come to expect higher prices for expert tax advice in the near future. We would expect

Today, producers changed their expectations about the future. This change

If sellers expect higher basket prices in the near future, the current

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

Figure 4-15 -Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for butter?