Question 1

Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:
A) the demand for new homes has risen.
B) the law of demand has been violated.
C) new firms have entered the construction industry.
D) construction firms must be facing higher costs.

Accepted Answer

When both prices and sales of new homes rise, it suggests that the demand for new homes has increased. This is because even with the price increase, consumers are still willing to buy new homes at a higher price point, indicating an overall greater demand for homes. Therefore, option A is the best choice. The other options do not necessarily follow from the given scenario.

Question 2

Exhibit 4-3 Supply and demand curves The market shown in Exhibit 4-3 is initially in equilibrium at E₄. Changes in market conditions result in a new equilibrium at E₃. This change is stated as a(n): A) increase in supply and an increase in quantity demanded. B) increase in supply and a decrease in demand. C) decrease in supply and a decrease in quantity demanded. D) increase in demand an increase in supply.

Accepted Answer

The answer of Exhibit 4-3 Supply and demand curves

The market...

Question 3

Exhibit 4-3 Supply and demand curves Beginning from an equilibrium at point E₂ in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to: A) E₁. B) E₂. C) E₃. D) E₄.

Accepted Answer

An increase in demand would shift the demand curve to the right, causing the equilibrium point to move to a higher quantity and a higher price. Therefore, the new equilibrium point would be at a higher intersection point of the supply curve and the new demand curve. This corresponds to point E₃.

Question 4

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) Market supply has increased, and market demand has increased.

Accepted Answer

The demand curve shifting to the right indicates an increase in market demand, while the supply curve shifting to the right indicates an increase in market supply. Therefore, the correct choice is D.

Question 5

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, which of the following might cause a shift from S₂ to S₁? A) A decrease in input prices. B) An improvement in technology. C) An increase in input prices. D) An increase in consumer income.

Accepted Answer

The answer of Exhibit 4-3 Supply and demand curves

In Exhibit...

Question 6

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 decreases
B) Price decreases and quantity increases
C) Price increases and quantity increases
D) Price decreases and quantity decreases

Accepted Answer

The announcement by the FDA about the fatal disease associated with soda X would decrease the demand for the product. As a result, the demand curve would shift to the left, causing a decrease in both the equilibrium price and equilibrium quantity of soda X. Therefore, the best option is (D).

Question 7

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium point to another, other things being equal? A) E₁ to E₂. B) E₁ to E₃. C) E₄ to E₁. D) E₁ to E₄.

Accepted Answer

The answer of Exhibit 4-3 Supply and demand curves

In Exhibit...

Question 8

Exhibit 4-6 Demand and supply curves

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.

Accepted Answer

When market supply decreases and market demand increases, the equilibrium price will increase. However, the effect on quantity exchanged is uncertain since both factors are changing. It could increase if the increase in demand is greater than the decrease in supply, or it could decrease if the decrease in supply is greater than the increase in demand, or it could remain the same if the changes in supply and demand are equal.

Question 9

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?
A) A decrease in the demand for strawberries.
B) An increase in the demand for strawberries.
C) A decrease in the supply of strawberries.
D) An increase in the supply of strawberries.

Accepted Answer

An increase in the demand for strawberries would shift the demand curve to the right, leading to an increase in both the equilibrium price and quantity. A decrease in demand (A) would lead to the opposite effect. Changes in supply (C and D) would only affect one of the two variables (higher prices with lower supply, and higher quantity with higher supply), but not both at the same time.

Question 10

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₃, Q₃ (E₃). Changes in market conditions result in a new equilibrium at P₂, Q₂ (E₂). This change is stated as a: A) decrease in demand and an increase in supply. B) decrease in demand and a decrease in quantity supplied. C) decrease in quantity demanded and an increase in quantity supplied. D) decrease in quantity demanded and an increase in supply.

Accepted Answer

The answer of Exhibit 4-3 Supply and demand curves

Initially the...

Question 11

Exhibit 4-6 Demand and supply curves

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.

Accepted Answer

A shift in demand and supply curves as shown in Exhibit 4-6 will result in a new equilibrium point where the market price will decrease and the quantity exchanged will increase. This is because the shift in demand curve towards the left indicates a decrease in demand which will lower the market price. At the same time, the shift in the supply curve towards the right indicates an increase in supply which will increase the quantity exchanged. The new equilibrium point will be where these two forces intersect and result in a lower market price and a higher quantity exchanged.

Question 12

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.

Accepted Answer

An increase in wages will increase the cost of production for fishermen, leading to a decrease in supply. This will shift the supply curve to the left, resulting in a higher equilibrium price and a lower equilibrium quantity. Therefore, the price will increase, and the quantity will decrease.

Question 13

Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:
A) decrease the demand for chicken creating a lower price and a smaller amount of chicken purchased in the market.
B) decrease the supply of chicken creating a higher price and a smaller amount of chicken purchased in the market.
C) increase the demand for chicken creating a higher price and a greater amount of chicken purchased in the market.
D) increase the supply of chicken creating a lower price and a greater amount of chicken purchased in the market.

Accepted Answer

If beef and chicken are substitutes, an increase in the price of beef will lead consumers to switch to consuming more chicken instead. This will increase the demand for chicken, leading to a higher price and a greater amount of chicken purchased in the market. Therefore, choice C is the best answer.

Question 14

Exhibit 4-7 Demand and supply schedules for movie tickets

Price	Quantity Demanded	Quantity Supplied
$10	200	500
8	240	470
6	370	420
4	390	390
2	410	310

In Exhibit 4-7, a 100 unit decrease in quantity demanded at every price level would cause the new equilibrium price to become: A) $8. B) $6. C) $4. D) $2.

Accepted Answer

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

Question 15

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal? A) E₁ to E₂. B) E₁ to E₄. C) E₄ to E₁. D) E₃ to E₄.

Accepted Answer

An increase in quantity supplied would cause a movement along the supply curve from point E₁ to E₄, resulting in a new equilibrium point where the supply and demand curves intersect at a higher quantity and price level.

Question 16

Exhibit 4-2 Supply and demand curves Beginning from an equilibrium at point E₁ in Exhibit 4-2, an increase in demand for good X, other things being equal, would move the equilibrium point to: A) E₁, no change. B) E₂. C) E₃. D) E₄.

Accepted Answer

The answer of Exhibit 4-2 Supply and demand curves

Beginning from...

Question 17

Exhibit 4-6 Demand and supply curves

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.

Accepted Answer

When market supply increases and market demand decreases, it is likely that the market price will decrease. However, the quantity exchanged could increase, decrease, or remain unchanged depending on the magnitude of the change in supply and demand. Therefore, the best answer is A.

Question 18

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 will decrease, and quantity will decrease.
C) Price will decrease, and quantity will increase.
D) Price will increase, and quantity will decrease.

Accepted Answer

When consumer tastes shift towards broccoli, demand for its substitute, cabbage, will decrease. This leads to a lower equilibrium price and quantity for cabbage.

Question 19

Exhibit 4-5 Supply and demand curves for computers

Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?
A) Lower costs for computer chips and motherboards.
B) The failure of several computer manufacturers.
C) Higher prices for computer software.
D) More features and greater ease of use.

Accepted Answer

Lower costs for computer chips and motherboards would decrease the cost of producing computers, which would shift the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.

Question 20

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂). Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄). This change is stated as a(n): A) increase in supply and an increase in demand. B) increase in supply and a decrease in demand. C) decrease in demand and a decrease in supply. D) increase in demand with supply held constant at S₂.

Accepted Answer

The answer of Exhibit 4-3 Supply and demand curves

Initially the...

Quiz 4: Markets in Action

Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:

Exhibit 4-3 Supply and demand curves The market shown in Exhibit 4-3 is initially in equilibrium at E₄. Changes in market conditions result in a new equilibrium at E₃. This change is stated as a(n) :

Exhibit 4-3 Supply and demand curves Beginning from an equilibrium at point E₂ in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to:

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 4-3 Supply and demand curves In Exhibit 4-3, which of the following might cause a shift from S₂ to S₁?

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?

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-6 Demand and supply curves If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₃, Q₃ (E₃) . Changes in market conditions result in a new equilibrium at P₂, Q₂ (E₂) . This change is stated as a:

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

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

Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-2 Supply and demand curves Beginning from an equilibrium at point E₁ in Exhibit 4-2, an increase in demand for good X, other things being equal, would move the equilibrium point to:

Exhibit 4-6 Demand and supply curves If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

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?

Exhibit 4-5 Supply and demand curves for computers Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂) . Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄) . This change is stated as a(n) :

Quiz 4: Markets in Action

Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:

Exhibit 4-3 Supply and demand curves The market shown in Exhibit 4-3 is initially in equilibrium at E4. Changes in market conditions result in a new equilibrium at E3. This change is stated as a(n) :

Exhibit 4-3 Supply and demand curves Beginning from an equilibrium at point E2 in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to:

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 4-3 Supply and demand curves In Exhibit 4-3, which of the following might cause a shift from S2 to S1?

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?

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-6 Demand and supply curves If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P3, Q3 (E3) . Changes in market conditions result in a new equilibrium at P2, Q2 (E2) . This change is stated as a:

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

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

Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:

Exhibit 4-7 Demand and supply schedules for movie tickets Price Quantity Demanded Quantity Supplied $10 200 500 8 240 470 6 370 420 4 390 390 2 410 310 In Exhibit 4-7, a 100 unit decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-2 Supply and demand curves Beginning from an equilibrium at point E1 in Exhibit 4-2, an increase in demand for good X, other things being equal, would move the equilibrium point to:

Exhibit 4-6 Demand and supply curves If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

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?

Exhibit 4-5 Supply and demand curves for computers Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P2, Q2 (E2) . Changes in market conditions result in a new equilibrium at P2, Q4 (E4) . This change is stated as a(n) :

Exhibit 4-3 Supply and demand curves The market shown in Exhibit 4-3 is initially in equilibrium at E₄. Changes in market conditions result in a new equilibrium at E₃. This change is stated as a(n) :

Exhibit 4-3 Supply and demand curves Beginning from an equilibrium at point E₂ in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to:

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 4-3 Supply and demand curves In Exhibit 4-3, which of the following might cause a shift from S₂ to S₁?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₃, Q₃ (E₃) . Changes in market conditions result in a new equilibrium at P₂, Q₂ (E₂) . This change is stated as a:

Exhibit 4-7 Demand and supply schedules for movie tickets

Price

Quantity
Demanded

Quantity
Supplied

$10

200

500

8

240

470

6

370

420

4

390

390

2

410

310

In Exhibit 4-7, a 100 unit decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Exhibit 4-2 Supply and demand curves Beginning from an equilibrium at point E₁ in Exhibit 4-2, an increase in demand for good X, other things being equal, would move the equilibrium point to:

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂) . Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄) . This change is stated as a(n) :