Chapter 4 The Market Forces of Supply and Demand

Test B
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A competitive market is one in which a. there are so many buyers and sellers that each has a negligible impact on price. b. each seller attempts to compete so consumers cannot freely interact with sellers. c. the government regulates each seller of the product. d. there is only one seller of the product. ANSWER: a. there are so many buyers and sellers that each has a negligible impact on price. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y
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A monopolistically competitive market is one that consists of a. a single seller of the product. b. a large number of sellers all offering similar but different products. c. many buyers and sellers and an identical product. d. a few sellers that do not always compete aggressively. ANSWER: b. a large number of sellers all offering similar but different products. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y
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All of the following are determinants of demand EXCEPT a. tastes. b. income. c. technology. d. the price of related goods. ANSWER: c. technology. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y
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If goods X and Y are complements, an increase in the price of X will result in a. less of good Y sold. b. more of good Y sold. c. more of good X sold. d. no difference in the quantity sold of either good. ANSWER: a. less of good Y sold. TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 2 RANDOM: Y
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If Diane receives an increase in her pay, we would expect Diane’s demand for a. each good she purchases to remain unchanged. b. for inferior goods to increase. c. for luxury goods to decrease. d. for normal goods to increase. ANSWER: d. for normal goods to increase. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y

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TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 7 . TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 9 . b. horizontal sum of all the individual demands for a particular good or service. wishes of every supplier of a good or service in a particular market. this means that a. vertical sum of all the individual demands for a particular good or service. decreasing your current demand for CDs. Copyright © Harcourt. firms would be willing to supply less than before. c. people are now more willing to buy the product at any price than before. decreasing your current demand for CDs. You will probably respond by a. A market demand curve represents the a. not currently changing your demand for CDs. maximum quantity of two goods an economy is capable of producing with available resources and technology. average demand of all consumers in the market. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y . c. . people are now more willing to buy the product at any price than before. increasing your current demand for CDs. horizontal sum of all the individual demands for a particular good or service. b. c. ANSWER: c. d. d. ANSWER: a. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y . tradeoff between inflation and unemployment.40  Chapter 4/The Market Forces of Supply and Demand 6 A demand curve illustrates the a. b. 8 If the demand curve shifts from D1 to D on the graph. negative relationship between price and quantity demanded. d. positive relationship between price and quantity supplied. ANSWER: c. negative relationship between price and quantity demanded. causing consumers to buy more of the product. Inc. refusing to ever buy anymore CDs at that store. Emily tells you that the price of CDs at the music store will be going down next week. the price of the product has decreased. people are less willing to buy the product at any price than before. b. d. c. ANSWER: d.

. inversely related. equilibrium. a change in the state of technology b. independent variables. an increase in quantity supplied. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUIZZES. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y . an increase in quantity supplied. directly related. c. supply. c. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y 11 . a change in the price of the good or service TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y . a change in expectations about future prices ANSWER: c. the same as the relationship between price and quantity demanded. a change in the price of the good or service d. a decrease in quantity supplied. Inc. b. 13 . YOUR STUDENTS MAY HAVE ALREADY SEEN THIS QUESTION AND ITS ANSWER. d. supply. b. A change in which of the following will cause a movement along the supply curve? a. ANSWER: a. d. directly related. Copyright © Harcourt. According to the law of supply. price and quantity supplied are a. a change in input prices c. c. demand. 12 The movement from point A to point B on the graph would be a.Chapter 4/The Market Forces of Supply and Demand  41 10 The willingness and ability to produce and sell a good or service is called a. b. ANSWER: b. a decrease in supply. ANSWER: d. a competitive market. d. an increase in supply.

ANSWER: a. ANSWER: a. a decrease in equilibrium price and an increase in equilibrium quantity. b. we would expect the supply of a. coordinating price. firms have an incentive to increase production. all else equal. 15 . An improvement in the state of technology in production will result in a. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 17 . ANSWER: d. YOUR STUDENTS MAY HAVE ALREADY SEEN THIS QUESTION AND ITS ANSWER. d. a decrease in equilibrium price and a decrease in equilibrium quantity. equilibrium price. c. b. d. it is possible for there to be a shortage. aluminum to increase. b. monopoly price. d. b. aluminum to decrease. ANSWER: c.42  Chapter 4/The Market Forces of Supply and Demand 14 Bauxite is an important input in the production of aluminum. an increase in equilibrium price and no change in equilibrium quantity. If the price of bauxite decreases. At the equilibrium price. c. buyers have an incentive to buy more. aluminum to be unaffected. aluminum to increase. Inc. . equilibrium price. All of the above are correct. d. bauxite to increase. everyone in the market has been satisfied. Copyright © Harcourt. c. TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 3 RANDOM: Y NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUIZZES. an increase in equilibrium price and an increase in equilibrium quantity. c. The price where quantity supplied equals quantity demanded is called the a. TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 3 RANDOM: Y 16 . a decrease in equilibrium price and an increase in equilibrium quantity. a. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y . everyone in the market has been satisfied.

a. b. 40 c. 60. 50 d. $ 8. In this market. d. c. surplus of 60 units and price would tend to fall. 50. 30. shortage of 30 units and price would tend to rise. surplus of 30 units and price would tend to fall. 70. If price in this market is currently $8. Refer to the graph shown. there would be a a. 50. equilibrium price and quantity would be a. shortage of 60 units and price would tend to rise. If price in this market is currently $16. $10. Inc.Chapter 4/The Market Forces of Supply and Demand  43 18 Refer to the graph shown. ANSWER: d. 60 b. $10. 60 TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y . 40. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 19 . $16. 50. 50. 40. surplus of 60 units and price would tend to fall. quantity supplied would be ______ and quantity demanded would be ______. 60. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 20 . d. $14. 30 ANSWER: a. b. ANSWER: c. Copyright © Harcourt. c. Refer to the graph shown. .

b. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUIZZES. surplus to exist and the market price of oranges to increase. Suppose that the incomes of buyers in a particular market for a normal good declines and there is also a reduction in input prices. producers b. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 23 . What would we expect to occur in this market? a. . the market must be in equilibrium. but the impact on the amount sold in the market would be ambiguous. Copyright © Harcourt. c. d. ANSWER: b.44  Chapter 4/The Market Forces of Supply and Demand 21 If a market is currently experiencing a shortage at the current price. c. surplus to exist and the market price of oranges to decrease. A stronger demand together with a weaker supply would necessarily result in a. b. then a. consumers c. but the impact on equilibrium price would be ambiguous. The equilibrium price would increase. Suppose oranges are currently selling for $2. but the impact on the amount sold in the market would be ambiguous. prices d. an increase in equilibrium quantity. d. c. a higher price. but the impact on the amount sold in the market would be ambiguous. Inc. c.00 per pound.56 per pound. shortage to exist and the market price of oranges to increase. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 25 . d. quantity demanded equals quantity supplied. ANSWER: b. TYPE: M KEY1: C SECTION: 4 OBJECTIVE: 4 RANDOM: Y 24 . We would expect a a. In a free market system. the price is below the equilibrium price. the government ANSWER: c. a decrease in equilibrium quantity. d. what coordinates the actions of millions of people with their varying abilities and desires? a. ANSWER: d. a higher price. ANSWER: b. surplus to exist and the market price of oranges to decrease. the price is below the equilibrium price. prices TYPE: M KEY1: D SECTION: 5 OBJECTIVE: 5 RANDOM: Y . Equilibrium quantity would increase. The equilibrium price of oranges is $1. sellers are producing more than buyers wish to buy because the price is too high. b. YOUR STUDENTS MAY HAVE ALREADY SEEN THIS QUESTION AND ITS ANSWER. The equilibrium price would decrease. shortage to exist and the market price of oranges to decrease. The equilibrium price would decrease. a lower price. b. 22 . Both equilibrium price and equilibrium quantity would increase.

a change in the price of the good or service TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y . TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 9 ANSWER: d. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 7 ANSWER: a.decreasing your current demand for CDs. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y 13 ANSWER: c.supply. people are now more willing to buy the product at any price than before. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 3 ANSWER: c. technology. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 2 ANSWER: b.1 ANSWER: a. TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 2 RANDOM: Y 5 ANSWER: d.there are so many buyers and sellers that each has a negligible impact on price. horizontal sum of all the individual demands for a particular good or service. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 10 ANSWER: b. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 4 ANSWER: a.a large number of sellers all offering similar but different products. for normal goods to increase.less of good Y sold. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y 11 ANSWER: a. negative relationship between price and quantity demanded. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 8 ANSWER: c. an increase in quantity supplied. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 6 ANSWER: c. TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 3 RANDOM: Y 12 ANSWER: d.directly related.

surplus of 60 units and price would tend to fall.40.a higher price. 50.14 ANSWER: c. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 19 ANSWER: d. but the impact on the amount sold in the market would be ambiguous. prices TYPE: M KEY1: D SECTION: 5 OBJECTIVE: 5 RANDOM: Y . TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 20 ANSWER: a. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 22 ANSWER: d. TYPE: M KEY1: C SECTION: 4 OBJECTIVE: 4 RANDOM: Y 24 ANSWER: b.equilibrium price. $10. a decrease in equilibrium price and an increase in equilibrium quantity.everyone in the market has been satisfied. aluminum to increase. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 17 ANSWER: a. The equilibrium price would decrease.the price is below the equilibrium price. TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 3 RANDOM: Y 15 ANSWER: d. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 23 ANSWER: b. TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 3 RANDOM: Y 16 ANSWER: a. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 25 ANSWER: c. TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 18 ANSWER: c. surplus to exist and the market price of oranges to decrease. 60 TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 21 ANSWER: b.