Chapter 4 The Market Forces of Supply and Demand
MULTIPLE CHOICE
1. The two words most often used by economists are
a. prices and quantities.
b. resources and allocation.
c. supply and demand.
d. efficiency and equity.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
2. The two words economists use most often are
a. inflation and trade.
b. supply and demand.
c. competition and prices.
d. markets and equilibrium.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-0
TOP: Economists
1
REF: 4-0
TOP: Markets
3. The forces that make market economies work are
a. work and leisure.
b. politics and religion.
c. supply and demand.
d. taxes and government spending.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-0
TOP: Market economies
4. In a market economy, supply and demand determine
a. both the quantity of each good produced and the price at which it is sold.
b. the quantity of each good produced but not the price at which it is sold.
c. the price at which each good is sold but not the quantity of each good produced.
d. neither the quantity of each good produced nor the price at which it is sold.
ANS: A
PTS: 1
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Supply and demand
TOP: Market economies
MSC: Definitional
5. In a market economy, supply and demand are important because they
a. play a critical role in the allocation of the economy’s scarce resources.
b. determine how much of each good gets produced.
c. can be used to predict the impact on the economy of various events and policies.
d. All of the above are correct.
ANS: D
PTS: 1
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Supply and demand
TOP: Market economies
MSC: Definitional
1
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2 ❖ Chapter 4/The Market Forces of Supply and Demand
6. In a market economy, supply and demand are important because they
a. are direct policy tools used by government agencies to regulate the economy.
b. illustrate when an market is in equilibrium, but they are not helpful when a market is out of
equilibrium.
c. can be used to predict the impact on the economy of various events and policies.
d. All of the above are correct.
ANS: C
PTS: 1
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Supply and demand
TOP: Market economies
MSC: Definitional
7. In a market economy,
a. supply determines demand and demand, in turn, determines prices.
b. demand determines supply and supply, in turn, determines prices.
c. the allocation of scarce resources determines prices and prices, in turn, determine supply and
demand.
d. supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources.
ANS: D
PTS: 1
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Supply and demand
TOP: Market economies
MSC: Definitional
MARKETS AND COMPETITION
1. Which of the following statements is correct?
a. Buyers determine supply, and sellers determine demand.
b. Buyers determine demand, and sellers determine supply.
c. Buyers determine both demand and supply.
d. Sellers determine both demand and supply.
ANS: B
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
2. The demand for a good or service is determined by
a. those who buy the good or service.
b. the government.
c. those who sell the good or service.
d. both those who buy and those who sell the good or service.
ANS: A
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
3. The supply of a good or service is determined by
a. those who buy the good or service.
b. the government.
c. those who sell the good or service.
d. both those who buy and those who sell the good or service.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-1
TOP: Demand | Supply
REF: 4-1
TOP: Demand
REF: 4-1
TOP: Supply
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter 4/The Market Forces of Supply and Demand ❖ 3
4. A group of buyers and sellers of a particular good or service is called a(n)
a. coalition.
b. economy.
c. market.
d. competition.
ANS: C
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Markets
MSC: Definitional
5. For a market for a good or service to exist, there must be a
a. group of buyers and sellers.
b. specific time and place at which the good or service is traded.
c. high degree of organization present.
d. All of the above are correct.
ANS: A
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Markets
MSC: Definitional
6. Which of the following is an example of a market?
a. a gas station
b. a garage sale
c. a barber shop
d. All of the above are examples of markets.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
7. The market for ice cream is a
a. monopolistic market.
b. highly competitive market.
c. highly organized market.
d. Both b) and c) are correct.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-1
TOP: Markets
1
REF: 4-1
TOP: Markets
8. Most markets in the economy are
a. markets in which sellers, rather than buyers, control the price of the product.
b. markets in which buyers, rather than sellers, control the price of the product.
c. perfectly competitive.
d. highly competitive.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Markets
MSC: Definitional
9. A market includes
a. buyers only.
b. sellers only.
c. both buyers and sellers.
d. the place where transactions occur but not the people involved.
ANS: C
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Markets
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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4 ❖ Chapter 4/The Market Forces of Supply and Demand
10. Which of the following is not an example of a market?
a. A small town has only one seller of electricity.
b. In the United States, a sick person cannot legally purchase a kidney.
c. In Florida, there are many buyers and sellers of key lime pie.
d. The availability of Internet shopping has expanded the clothing choices for buyers who do not live
near large cities.
ANS: B
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Markets
MSC: Applicative
11. In a competitive market, the price of a product
a. is determined by buyers, and the quantity of the product produced is determined by sellers.
b. is determined by sellers, and the quantity of the product produced is determined by buyers.
c. and the quantity of the product produced are both determined by sellers.
d. None of the above is correct.
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Interpretive
12. In a competitive market, the quantity of a product produced and the price of the product are determined by
a. buyers.
b. sellers.
c. both buyers and sellers.
d. None of the above is correct.
ANS: C
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Interpretive
13. In a competitive market, the quantity of a product produced and the price of the product are determined by
a. a single buyer.
b. a single seller.
c. one buyer and one seller working together.
d. all buyers and all sellers.
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Interpretive
14. A competitive market is a market in which
a. an auctioneer helps set prices and arrange sales.
b. there are only a few sellers.
c. the forces of supply and demand do not apply.
d. no individual buyer or seller has any significant impact on the market price.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
15. A competitive market is one in which there
a. is only one seller, but there are many buyers.
b. are many sellers, and each seller has the ability to set the price of his product.
c. are many sellers, and they compete with one another in such a way that some sellers are always
being forced out of the market.
d. are so many buyers and so many sellers that each has a negligible impact on the price of the
product.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter 4/The Market Forces of Supply and Demand ❖ 5
16. Assume Diana buys computers in a competitive market. It follows that
a. Diana has a limited number of sellers to turn to when she buys a computer.
b. Diana will find herself negotiating with sellers whenever she buys a computer.
c. if Diana buys a large number of computers, the price of computers will rise noticeably.
d. None of the above is correct.
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Applicative
17. In a competitive market, each seller has limited control over the price of his product because
a. other sellers are offering similar products.
b. buyers exert more control over the price than do sellers.
c. these markets are highly regulated by the government.
d. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.
ANS: A
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
18. For a competitive market,
a. a seller can always increase her profit by raising the price of her product.
b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases.
c. a seller often charges less than the going price to increase sales and profit.
d. a single buyer can influence the price of the product but only when purchasing from several sellers
in a short period of time.
ANS: B
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
19. If a seller in a competitive market chooses to charge more than the going price, then
a. the sellers’ profits must increase.
b. the owners of the raw materials used in production would raise the prices for the raw materials.
c. other sellers would also raise their prices.
d. buyers will make purchases from other sellers.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
20. In competitive markets, buyers
a. are price takers, but sellers are price setters.
b. are price setters, but sellers are price takers.
c. and sellers are price takers.
d. and sellers are price setters.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-1
TOP: Competitive markets
21. The term price takers refers to buyers and sellers in
a. perfectly competitive markets.
b. monopolistic markets.
c. markets that are regulated by the government.
d. markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.
ANS: A
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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6 ❖ Chapter 4/The Market Forces of Supply and Demand
22. In competitive markets,
a. firms produce identical products.
b. no individual buyer can influence the market price.
c. no individual seller can influence the market price.
d. All of the above are correct.
ANS: D
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-1
TOP: Competitive markets
23. In competitive markets, which of the following is not correct?
a. Firms produce identical products.
b. No individual buyer can influence the market price.
c. Some sellers can set prices.
d. Buyers are price takers.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-1
TOP: Competitive markets
24. In competitive markets,
a. firms produce identical products.
b. buyers can influence the market price more easily than sellers.
c. markets are more likely to be in equilibrium.
d. sellers are price setters.
ANS: A
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Competitive markets
MSC: Definitional
25. The highest form of competition is called
a. absolute competition.
b. cutthroat competition.
c. perfect competition.
d. market competition.
ANS: C
PTS: 1
DIF:
NAT: Analytic
LOC: Perfect competition
MSC: Definitional
26. The highest form of competition is called
a. arbitrage.
b. monopolistic competition.
c. equilibrium.
d. perfect competition.
ANS: D
PTS: 1
DIF:
NAT: Analytic
LOC: Perfect competition
MSC: Definitional
1
REF: 4-1
TOP: Perfect competition
1
REF: 4-1
TOP: Perfect competition
27. Which of the following is not a characteristic of a perfectly competitive market?
a. Different sellers sell identical products.
b. There are many sellers.
c. Sellers must accept the price the market determines.
d. All of the above are characteristics of a perfectly competitive market.
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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Chapter 4/The Market Forces of Supply and Demand ❖ 7
28. Which of the following is not a characteristic of a perfectly competitive market?
a. Sellers set the price of the product.
b. There are many sellers.
c. Buyers must accept the price the market determines.
d. All of the above are characteristics of a perfectly competitive market.
ANS: A
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Interpretive
29. Buyers and sellers who have no influence on market price are referred to as
a. market pawns.
b. monopolists.
c. price takers.
d. price setters.
ANS: C
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Definitional
30. When all market participants are price takers who have no influence over prices, the markets have
a. only a few buyers and sellers.
b. numerous sellers but only a few buyers.
c. numerous buyers but only a few sellers.
d. numerous buyers and sellers.
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Interpretive
31. If buyers and sellers in a certain market are price takers, then individually
a. they have no influence on market price.
b. they have some influence on market price but that influence is limited.
c. buyers will be able to find prices lower than those determined in the market.
d. sellers will find it difficult to sell all they want to sell at the market price.
ANS: A
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Interpretive
32. In a perfectly competitive market, at the market price, buyers
a. cannot buy all they want, and sellers cannot sell all they want.
b. cannot buy all they want, but sellers can sell all they want.
c. can buy all they want, but sellers cannot sell all they want.
d. can buy all they want, and sellers can sell all they want.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Definitional
33. An example of a perfectly competitive market would be the
a. cable TV market.
b. soybean market.
c. breakfast cereal market.
d. shampoo market.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Perfect competition
MSC: Applicative
REF: 4-1
TOP: Perfect competition
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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8 ❖ Chapter 4/The Market Forces of Supply and Demand
34. An example of a perfectly competitive market would be the market for
a. tennis racquets.
b. pizza.
c. garbage collection.
d. wheat.
ANS: D
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Competitive markets
MSC: Applicative
35. An example of a perfectly competitive market would be the market for
a. electricity.
b. soybeans.
c. coffee shops.
d. restaurants.
ANS: B
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Competitive markets
MSC: Applicative
36. Which of the following is the least likely to be a competitive market?
a. ice cream
b. soybeans
c. cable television
d. new houses
ANS: C
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Applicative
37. Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,
a. the price of tennis balls increases.
b. the price of tennis balls decreases.
c. the price of tennis balls does not change.
d. there is no longer a market for tennis balls.
ANS: C
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Applicative
38. Assume the market for pork is perfectly competitive. When one pork buyer exits the market,
a. the price of pork increases.
b. the price of pork decreases.
c. the price of pork does not change.
d. there is no longer a market for pork.
ANS: C
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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Chapter 4/The Market Forces of Supply and Demand ❖ 9
39. Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of
market types we find in the world?
a. Perfectly competitive markets are the easiest to analyze because everyone participating in the
market takes the price as given by market conditions.
b. Some degree of competition is present in most markets.
c. There are many buyers and many sellers in all types of markets.
d. Many of the lessons that we learn by studying supply and demand under perfect competition apply
in more complicated markets as well.
ANS: C
PTS: 1
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Definitional
40. If a firm is a price taker, it operates in a
a. competitive market.
b. monopoly market.
c. oligopoly market.
d. monopolistically competitive market.
ANS: A
PTS: 1
DIF:
NAT: Analytic
LOC: Perfect competition
MSC: Definitional
1
REF: 4-1
TOP: Perfect competition
41. A monopoly is a market with one
a. seller, and that seller is a price taker.
b. seller, and that seller sets the price.
c. buyer, and that buyer is a price taker.
d. buyer, and that buyer sets the price.
ANS: B
PTS: 1
DIF: 1
NAT: Analytic
LOC: Monopoly
TOP: Monopoly
REF: 4-1
MSC: Definitional
42. Which of the following would most likely serve as an example of a monopoly?
a. a bakery in a large city
b. a bank in a large city
c. a local cable television company
d. a small group of corn farmers
ANS: C
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Monopoly
TOP: Monopoly
MSC: Applicative
43. Which of the following would most likely serve as an example of a monopoly?
a. a restaurant in a large city
b. a dry cleaners in a large city
c. a local gas station
d. a local electrical company
ANS: D
PTS: 1
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Monopoly
TOP: Monopoly
MSC: Applicative
DEMAND
1. The quantity demanded of a good is the amount that buyers are
a. willing to purchase.
b. willing and able to purchase.
c. willing, able, and need to purchase.
d. able to purchase.
ANS: B
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-2
TOP: Quantity demanded
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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10 ❖ Chapter 4/The Market Forces of Supply and Demand
2. An increase in quantity demanded
a. results in a movement downward and to the right along a demand curve.
b. results in a movement upward and to the left along a demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
3. A decrease in quantity demanded
a. results in a movement downward and to the right along a demand curve.
b. results in a movement upward and to the left along a demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
4. A movement upward and to the left along a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
5. A movement downward and to the right along a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
6. An increase in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
ANS: D
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
7. A decrease in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
ANS: C
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
2
REF: 4-2
TOP: Quantity demanded
2
REF: 4-2
TOP: Quantity demanded
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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Chapter 4/The Market Forces of Supply and Demand ❖ 11
8. When the price of a good or service changes,
a. the supply curve shifts in the opposite direction.
b. the demand curve shifts in the opposite direction.
c. the demand curve shifts in the same direction.
d. there is a movement along a given demand curve.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Quantity demanded
9. A decrease in the price of a good would
a. increase the supply of the good.
b. increase the quantity demanded of the good.
c. give producers an incentive to produce more to keep profits from falling.
d. shift the supply curve for the good to the left.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
Figure 4-1
price
P
A
B
P'
D
Q
Q'
qua ntity
10. Refer to Figure 4-1. The movement from point A to point B on the graph shows
a. a decrease in demand.
b. an increase in demand.
c. a decrease in quantity demanded.
d. an increase in quantity demanded.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
11. Refer to Figure 4-1. The movement from point A to point B on the graph is caused by
a. an increase in price.
b. a decrease in price.
c. a decrease in the price of a substitute good.
d. an increase in income.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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12 ❖ Chapter 4/The Market Forces of Supply and Demand
12. Refer to Figure 4-1. It is apparent from the figure that the
a. good is inferior.
b. demand for the good decreases as income increases.
c. demand for the good conforms to the law of demand.
d. All of the above are correct.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Interpretive
13.
“Other things equal, when the price of a good rises, the quantity demanded of the good falls, and
when the price falls, the quantity demanded rises.” This relationship between price and quantity demanded
a. applies to most goods in the economy.
b. is represented by a downward-sloping demand curve.
c. is referred to as the law of demand.
d. All of the above are correct.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Definitional
14.
“Other things equal, when the price of a good rises, the quantity demanded of the good falls, and
when the price falls, the quantity demanded rises.” This relationship between price and quantity demanded is
referred to as
a. equilibrium.
b. the law of demand.
c. the relationship between supply and demand.
d. the definition of an inferior good.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Definitional
15. The law of demand states that, other things equal, when the price of a good
a. falls, the demand for the good rises.
b. rises, the quantity demanded of the good rises.
c. rises, the demand for the good falls.
d. falls, the quantity demanded of the good rises.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Definitional
16. The law of demand states that, other things equal, an increase in
a. price causes quantity demanded to increase.
b. price causes quantity demanded to decrease.
c. quantity demanded causes price to increase.
d. quantity demanded causes price to decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Interpretive
17. Which of these statements best represents the law of demand?
a. When buyers’ tastes for a good increase, they purchase more of the good.
b. When income levels increase, buyers purchase more of most goods.
c. When the price of a good decreases, buyers purchase more of the good.
d. When buyers’ demands for a good increase, the price of the good increases.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 13
18. A downward-sloping demand curve illustrates
a. that demand decreases over time.
b. that prices fall over time.
c. the relationship between income and quantity demanded.
d. the law of demand.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Law of demand
19. Nemo rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is
$2.50 per rental. Nemo’s demand demonstrates the law of
a. price.
b. supply.
c. demand.
d. income.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Applicative
20. Which of the following demonstrates the law of demand?
a. After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his
raise.
b. Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal.
c. Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
d. Kendra buys fewer Snickers at $0.60 per Snickers after the price of Milky Ways falls to $0.50 per
Milky Way.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Applicative
21. The following table contains a demand schedule for a good.
Price
Quantity Demanded
$10
100
$20
Q1
If the law of demand applies to this good, then Q1 could be
a. 0.
b. 100.
c. 200.
d. 400.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Law of demand
22. If the price of apple pies rose to $100 per pie, consumers would purchase fewer pies than if the price were $5
per pie. If the price of ice cream fell to $0.30 per scoop, consumers would purchase more ice cream than if the
price were $5 per scoop. These relationships illustrate the
a. law of demand.
b. law of supply.
c. difference between normal and inferior goods.
d. difference between substitute and complement goods.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
14 ❖ Chapter 4/The Market Forces of Supply and Demand
23. A table that shows the relationship between the price of a good and the quantity demanded of that good is
called a
a. price-quantity schedule.
b. buyer schedule.
c. demand schedule.
d. demand curve.
ANS: C
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand schedule
MSC: Definitional
24. A demand schedule is a table that shows the relationship between
a. quantity demanded and quantity supplied.
b. income and quantity demanded.
c. price and quantity demanded.
d. price and income.
ANS: C
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand schedule
MSC: Definitional
25. Which of the following is not held constant in a demand schedule?
a. income
b. tastes
c. price
d. expectations
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand schedule
MSC: Interpretive
26. The demand curve for a good is a line that relates
a. price and quantity demanded.
b. income and quantity demanded.
c. quantity demanded and quantity supplied.
d. price and income.
ANS: A
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-2
TOP: Demand curve
27. The line that relates the price of a good and the quantity demanded of that good is called the demand
a. schedule, and it usually slopes upward.
b. schedule, and it usually slopes downward.
c. curve, and it usually slopes upward.
d. curve, and it usually slopes downward.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 15
28. When drawing a demand curve,
a. demand is measured along the vertical axis, and price is measured along the horizontal axis.
b. quantity demanded is measured along the vertical axis, and price is measured along the horizontal
axis.
c. price is measured along the vertical axis, and demand is measured along the horizontal axis.
d. price is measured along the vertical axis, and quantity demanded is measured along the horizontal
axis.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Definitional
29. When we move along a given demand curve,
a. only price is held constant.
b. income and price are held constant.
c. all nonprice determinants of demand are held constant.
d. all determinants of quantity demanded are held constant.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
30. Once the demand curve for a product or service is drawn, it
a. remains stable over time.
b. can shift either rightward or leftward.
c. is possible to move along the curve, but the curve will not shift.
d. tends to become steeper over time.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
31. If something happens to alter the quantity demanded at any given price, then
a. the demand curve becomes steeper.
b. the demand curve becomes flatter.
c. the demand curve shifts.
d. we move along the demand curve.
ANS: C
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Definitional
32. When quantity demanded decreases at every possible price, the demand curve has
a. shifted to the left.
b. shifted to the right.
c. not shifted; rather, we have moved along the demand curve to a new point on the same curve.
d. not shifted; rather, the demand curve has become flatter.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
33. When quantity demanded increases at every possible price, the demand curve has
a. shifted to the left.
b. shifted to the right.
c. not shifted; rather, we have moved along the demand curve to a new point on the same curve.
d. not shifted; rather, the demand curve has become steeper.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
16 ❖ Chapter 4/The Market Forces of Supply and Demand
34. The market demand curve
a. is found by vertically adding the individual demand curves.
b. slopes upward.
c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the
good.
d. represents the sum of the quantities demanded by all the buyers at each price of the good.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Interpretive
35. The market demand curve
a. is the sum of all individual demand curves.
b. is the demand curve for every product in an industry.
c. shows the average quantity demanded by individual demanders at each price.
d. is always flatter than an individual demand curve.
ANS: A
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Definitional
36. To obtain the market demand curve for a product, sum the individual demand curves
a. vertically.
b. diagonally.
c. horizontally.
d. and then average them.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Interpretive
37. A market demand curve shows
a. the relationship between price and the number of buyers in a market.
b. how quantity demanded changes when the number of sellers changes.
c. the sum of all prices that individual buyers are willing and able to pay for each possible quantity of
the good.
d. how much of a good all buyers are willing and able to buy at each possible price.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Interpretive
38. A market demand curve shows how the total quantity demanded of a good varies as
a. income varies.
b. price varies.
c. price of the nearest substitute good varies.
d. supply varies.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 17
Table 4-1
Price
Quantity Demanded
by Michelle
Quantity Demanded
by Laura
$5
$4
$3
$2
$1
$0
5
6
7
8
9
10
4
6
8
10
12
14
Quantity Demanded
by Hillary
11
13
15
17
19
21
39. Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Analytical
40. Refer to Table 4-1. If the market consists of Michelle and Laura only and the price falls by $1, the quantity
demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Analytical
41. Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity
demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Analytical
42. Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity
demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Analytical
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
18 ❖ Chapter 4/The Market Forces of Supply and Demand
43. Refer to Table 4-1. Which of the following illustrates the market demand curve?
Price
Price
a.
c.
5
5
4
4
3
3
2
2
1
1
Demand C
Demand A
2
b.
4
6
8
10
12
5
Quantity
d.
Price
5
10
15
20
25
30
35
40
45 Quantity
Price
5
4
4
3
3
2
2
1
1
Demand B
4
ANS: C
NAT: Analytic
MSC: Definitional
8
12
16
20
24
28
Demand D
Quantity
5
PTS: 1
DIF:
LOC: Supply and demand
1
10
15
20
25
30
Quantity
REF: 4-2
TOP: Market demand
Figure 4-2
20
Price
20
Consumer A
18
Price
Consumer B
18
16
16
14
14
12
12
10
10
8
8
6
6
4
4
2
2
D1
2
4
6
8
10
12
D2
14
16
Qua ntity
2
4
6
8
10
12
14
16
Qua ntity
44. Refer to Figure 4-2. If Consumer A and Consumer B are the only consumers in the market, then the market
quantity demanded when the price is $6 is
a. 4 units.
b. 6 units.
c. 8 units.
d. 12 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 19
45. Refer to Figure 4-2. If Consumer A and Consumer B are the only consumers in the market, then the market
quantity demanded when the price is $10 is
a. 0 units.
b. 4 units.
c. 10 units.
d. 12 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
Table 4-2
Price
$12
$10
$8
$6
$4
$2
William’s
Quantity
Demanded
2
4
6
8
10
12
Fergie’s
Quantity
Demanded
1
4
7
8
9
10
Taboo’s
Quantity
Demanded
3
4
5
4
3
2
apl.de.ap’s
Quantity
Demanded
4
5
6
7
8
9
46. Refer to Table 4-2. Whose demand does not obey the law of demand?
a. William’s
b. Fergie’s
c. Taboo’s
d. apl.de.ap’s
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Applicative
47. Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a
price of $8 is
a. 4 units.
b. 6 units.
c. 24 units.
d. 32 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
48. Refer to Table 4-2. If these are the only four buyers in the market, then when the price decreases from $6 to
$4, the market quantity demanded
a. increases by 0.75 units.
b. increases by 3 units.
c. increases by 8 units.
d. decreases by 27 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
20 ❖ Chapter 4/The Market Forces of Supply and Demand
Figure 4-3
Consumer 1
20
Consumer 2
price
30
18
27
16
24
14
21
12
18
10
15
8
12
6
9
4
6
2
price
3
D
2
4
6
8
10
D
12
14
16
qua ntity
5
10
15
20
25
30
35
40
qua ntity
49. Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at
a price of $15 is
a. 0 units.
b. 10 units.
c. 15 units.
d. 25 units.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
50. Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at
a price of $10 is
a. 0 units.
b. 5 units.
c. 8.33 units.
d. 25 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
51. Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at
a price of $6 is
a. 12 units.
b. 14 units.
c. 19 units.
d. 21 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 21
52. Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of
lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each
month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when
the price is $1.50 per glass. Which of the following points is on the market demand curve?
a. (quantity demanded = 2, price = $1.50)
b. (quantity demanded = 4, price = $2.50)
c. (quantity demanded = 10, price = $1.00)
d. (quantity demanded = 16, price = $2.50)
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
53. Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of
lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each
month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when
the price is $1.50 per glass. Which of the following points is on the market demand curve?
Point
Price
Quantity
A
$1.00
4
B
$1.00
10
C
$1.50
2
D
$1.50
6
a. B only
b. B and D only
c. A and C only
d. D only
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
Table 4-3
Price
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Bert’s
Quantity
Demanded
Ernie’s
Quantity
Demanded
Grover’s
Quantity
Demanded
Oscar’s
Quantity
Demanded
20
18
14
12
6
0
16
12
10
8
6
4
4
6
2
0
0
0
8
6
5
4
2
0
54. Refer to Table 4-3. Whose demand does not obey the law of demand?
a. Bert’s
b. Ernie’s
c. Grover’s
d. Oscar’s
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
22 ❖ Chapter 4/The Market Forces of Supply and Demand
55. Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a
price of $1 is
a. 4 units.
b. 7.75 units.
c. 14 units.
d. 31 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
56. Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a
price of $2 is
a. 0 units.
b. 3.5 units.
c. 12 units.
d. 14 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
57. Refer to Table 4-3. If these are the only four buyers in the market, then when the price increases from $1.00
to $1.50, the market quantity demanded
a. decreases by 1.75 units.
b. increases by 2 units.
c. decreases by 7 units.
d. decreases by 24 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Applicative
58. Refer to Table 4-3. For whom is the good a normal good?
a. Bert only
b. Grover only
c. Bert, Ernie, Grover, and Oscar
d. This cannot be determined from the table.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Normal goods
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 23
Figure 4-4
Price
Demand A
Demand B
Demand C
Qua ntity
59. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States?
a. a decrease in the price of DVDs
b. a decrease in the price of DVD players
c. a change in consumer preferences toward watching movies in movie theaters rather than at home
d. a decrease in the number of people in the United States
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
60. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs?
a. an increase in the price of DVDs
b. a decrease in the price of DVD players
c. a change in consumer preferences toward watching movies in movie theaters rather than at home
d. an expectation by buyers that their incomes will increase in the very near future
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
61. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?
a. an increase in the price of tennis balls
b. a decrease in the price of tennis racquets
c. an expectation by buyers that their incomes will increase in the very near future
d. a decrease in the number of people in the United States under age 70
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
24 ❖ Chapter 4/The Market Forces of Supply and Demand
62. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States?
a. a decrease in the price of golf balls
b. an increase in the price of green fees
c. an expectation by buyers that their incomes will increase in the very near future
d. a change in consumer tastes away from golf and toward tennis
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
63. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?
a. a freeze in Florida
b. a technological advance that allows oranges to ripen faster
c. a decrease in the price of apples
d. an announcement by the FDA that oranges prevent heart disease
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
Figure 4-5
10
Price
10
Panel 1
9
Price
Panel 2
9
8
8
7
7
6
6
5
5
4
4
3
C
3
B
2
A
A
2
1
1
Demand 2
1
2
3
4
5
6
Demand 1
7
8
Demand 1
Q uantity
1
2
3
4
5
6
7
8
Q uantity
64. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require “junk food” producers to include warning labels on all
junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are
successful, we could illustrate the plan as producing a movement from
a. Point A to Point B in Panel 1.
b. Point B to Point A in Panel 1.
c. Point A to Point C in Panel 2.
d. Point C to Point A in Panel 2.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 25
65. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require “junk food” producers to include warning labels on all
junk food. The other would impose a tax on all products considered to be junk food. We could illustrate the
tax as producing a movement from
a. Point A to Point B in Panel 1.
b. Point B to Point A in Panel 1.
c. Point A to Point C in Panel 2.
d. Point C to Point A in Panel 2.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
Figure 4-6
price
D'
D
qua ntity
66. Refer to Figure 4-6. The shift from D to D’ is called
a. an increase in demand.
b. a decrease in demand.
c. a decrease in quantity demanded.
d. an increase in quantity demanded.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
67. Refer to Figure 4-6. If the demand curve shifts from D to D’, then
a. firms would be willing to supply less of the good than before at each possible price.
b. people are willing to buy less of the good than before at each possible price.
c. people’s incomes must have decreased.
d. the price of the product has increased, causing consumers to buy less of the product.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
68. Refer to Figure 4-6. The movement from D to D’ could be caused by
a. an increase in price.
b. a decrease in the price of a complement.
c. a technological advance.
d. a decrease in the price of a substitute.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
26 ❖ Chapter 4/The Market Forces of Supply and Demand
69. Refer to Figure 4-6. The movement from D’ to D could be caused by
a. a decrease in price.
b. a decrease in income, assuming the good is inferior.
c. buyers expecting the price of the good to fall in the near future.
d. an increase in the price of a complement.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
70. Refer to Figure 4-6. The movement from D’ to D in the market for potato chips could be caused by a(n)
a. decrease in the price of potato chips.
b. decrease in income, assuming that potato chips are a normal good.
c. announcement by the FDA that potato chips cause cancer.
d. increase in the price of a pretzels.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
71. An increase in demand is represented by a
a. movement downward and to the right along a demand curve.
b. movement upward and to the left along a demand curve.
c. rightward shift of a demand curve.
d. leftward shift of a demand curve.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
72. A decrease in demand is represented by a
a. movement downward and to the right along a demand curve.
b. movement upward and to the left along a demand curve.
c. rightward shift of a demand curve.
d. leftward shift of a demand curve.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
73. A leftward shift of a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
74. A rightward shift of a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 27
75. If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at
each price of Vanilla Coke, then
a. we will observe a movement downward and to the right along the demand curve for Vanilla Coke.
b. we will observe a movement upward and to the left along the demand curve for Vanilla Coke.
c. the demand curve for Vanilla Coke will shift to the right.
d. the demand curve for Vanilla Coke will shift to the left.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
76. When the price of hot dogs changes, the demand curve for hot dogs
a. shifts because the price of hot dogs is measured on the vertical axis of the graph.
b. shifts because the quantity demanded of hot dogs is measured on the horizontal axis of the graph.
c. does not shift because the price of hot dogs is measured on the vertical axis of the graph.
d. does not shift because the price of hot dogs is measured on the horizontal axis of the graph.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
77. Which of the following changes would not shift the demand curve for a good or service?
a. a change in income
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in the price of a related good or service
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
78. Which of the following would not shift the demand curve for mp3 players?
a. a decrease in the price of mp3 players
b. a fad that makes mp3 players more popular among 12-25 year olds
c. an increase in the price of digital music downloads, a complement for mp3 players
d. a decrease in the price of satellite radio, a substitute for mp3 players
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
79. Which of the following events would cause a movement upward and to the left along the demand curve for
olives?
a. The number of people who purchase olives decreases.
b. Consumer income decreases, and olives are a normal good.
c. The price of pickles decreases, and pickles are a substitute for olives.
d. The price of olives rises.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
80. A movement along the demand curve might be caused by a change in
a. income.
b. the prices of substitutes or complements.
c. expectations about future prices.
d. the price of the good or service that is being demanded.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
28 ❖ Chapter 4/The Market Forces of Supply and Demand
81. Holding the nonprice determinants of demand constant, a change in price would
a. result in either a decrease in demand or an increase in demand.
b. result in a movement along a stationary demand curve.
c. result in a shift of supply.
d. have no effect on the quantity demanded.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
82. The sum of all the individual demand curves for a product is called
a. income demand.
b. equilibrium demand.
c. complementary demand.
d. market demand.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Definitional
83. Which of the following is not an expression for the sum of all the individual demand curves for a product?
a. total demand
b. market demand
c. equilibrium demand
d. aggregate demand
ANS: C
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Definitional
84. The demand curve for textbooks shifts
a. only when income changes.
b. when a determinant of the demand for textbooks other than the price of textbooks changes.
c. when the price of textbooks changes.
d. Both b) and c) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Determinants of demand
MSC: Applicative
85. Which of the following is not a determinant of the demand for a particular good?
a. the prices of related goods
b. income
c. tastes
d. the prices of the inputs used to produce the good
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Determinants of demand
MSC: Interpretive
86. Each of the following is a determinant of demand except
a. tastes.
b. production technology.
c. expectations.
d. the prices of related goods.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Determinants of demand
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 29
87. Which of the following is not a determinant of demand?
a. the price of a resource that is used to produce the good
b. the price of a complementary good
c. the price of the good next month
d. the price of a substitute good
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Determinants of demand
88. If the demand for a good falls when income falls, then the good is called a(n)
a. normal good.
b. regular good.
c. luxury good.
d. inferior good.
ANS: A
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Definitional
89. If a good is normal, then an increase in income will result in a(n)
a. increase in the demand for the good.
b. decrease in the demand for the good.
c. movement down and to the right along the demand curve for the good.
d. movement up and to the left along the demand curve for the good.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Interpretive
90. If Max experiences a decrease in his income, then we would expect Max’s demand for
a. each good he purchases to remain unchanged.
b. normal goods to decrease.
c. luxury goods to increase.
d. inferior goods to decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
91. You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider
iTunes music downloads to be a(n)
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
92. Pizza is a normal good if the demand
a. for pizza rises when income rises.
b. for pizza rises when the price of pizza falls.
c. curve for pizza slopes upward.
d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are
substitutes.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
30 ❖ Chapter 4/The Market Forces of Supply and Demand
93. Suppose that when income rises, the demand curve for doctor’s visits shifts to the right. In this case, we know
doctor’s visits are
a. inferior goods.
b. normal goods.
c. perfectly competitive goods.
d. durable goods.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
94. Which of the following would shift the demand curve for gasoline to the right?
a. a decrease in the price of gasoline
b. an increase in consumer income, assuming gasoline is a normal good
c. an increase in the price of cars, a complement for gasoline
d. a decrease in the expected future price of gasoline
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
95. If a decrease in income increases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Definitional
96. If a increase in income decreases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Definitional
97. If a good is inferior, then an increase in income will result in
a. an increase in the demand for the good.
b. a decrease in the demand for the good.
c. a movement down and to the right along the demand curve for the good.
d. a movement up and to the left along the demand curve for the good.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 31
98. Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you
will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)
a. substitute good.
b. normal good.
c. inferior good.
d. complementary good.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
99. Soup is an inferior good if the demand
a. for soup falls when the price of a substitute for soup rises.
b. for soup rises when the price of soup falls.
c. curve for soup slopes upward.
d. for soup falls when income rises.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Inferior goods
100. Suppose that Amanda receives a pay increase. We would expect
a. to observe Amanda moving down and to the right along her given demand curve.
b. Amanda's demand for inferior goods to decrease.
c. Amanda's demand for each of two goods that are complements to increase.
d. Amanda's demand for normal goods to decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
101. If macaroni and cheese is an inferior good, then an increase in
a. the price will cause the demand curve for macaroni and cheese to shift to the left.
b. the price will cause the demand curve for macaroni and cheese to shift to the right.
c. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the left.
d. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the right.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
102. Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
ANS: A
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
32 ❖ Chapter 4/The Market Forces of Supply and Demand
103. Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies
that X and Y are
a. complementary goods.
b. normal goods.
c. inferior goods.
d. substitute goods.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
104. Good X and good Y are substitutes. If the price of good Y increases, then the
a. demand for good X will decrease.
b. quantity demanded of good X will decrease.
c. demand for good X will increase.
d. quantity demanded of good X will increase.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
105. A likely example of substitute goods for most people would be
a. peanut butter and jelly.
b. tennis balls and tennis rackets.
c. televisions and subscriptions to cable television services.
d. pencils and pens.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Substitutes
106. If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a. increase in the demand for bagels.
b. decrease in the demand for bagels.
c. increase in the demand for muffins.
d. decrease in the demand for muffins.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Applicative
107. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for
a. sweatpants will increase.
b. sweatpants will decrease.
c. shorts will increase.
d. shorts will decrease.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 33
108. If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese?
a. a decrease in the price of cheddar cheese
b. an increase in the price of American cheese
c. a decrease in the price of American cheese
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
109. Two goods are complements when a decrease in the price of one good
a. decreases the quantity demanded of the other good.
b. decreases the demand for the other good.
c. increases the quantity demanded of the other good.
d. increases the demand for the other good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Definitional
110. If goods A and B are complements, then an increase in the price of good A will result in
a. more of good A being sold.
b. more of good B being sold.
c. less of good B being sold.
d. no difference in the quantity sold of either good.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Interpretive
111. A likely example of complementary goods for most people would be
a. butter and margarine.
b. lawnmowers and automobiles.
c. chips and salsa.
d. cola and lemonade.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
112. A higher price for batteries would result in a(n)
a. increase in the demand for flashlights.
b. decrease in the demand for flashlights.
c. increase in the demand for batteries.
d. decrease in the demand for batteries.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
2
REF: 4-2
TOP: Complements
113. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that
the price of bananas has increased. As a result, your demand for vanilla pudding would
a. decrease.
b. increase.
c. be unaffected.
d. There is insufficient information given to answer the question.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
34 ❖ Chapter 4/The Market Forces of Supply and Demand
114. Holding all other things constant, a higher price for ski lift tickets would
a. increase the number of skiers.
b. increase the price of skis.
c. decrease the number of skis sold.
d. decrease the demand for other winter recreational activities.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
115. When quantity demanded has increased at every price, it might be because
a. the number of buyers in the market has decreased.
b. income has increased, and the good is an inferior good.
c. the costs incurred by sellers producing the good have decreased.
d. the price of a complementary good has decreased.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Interpretive
116. Which of the following might cause the demand curve for an inferior good to shift to the left?
a. a decrease in income
b. an increase in the price of a substitute
c. an increase in the price of a complement
d. None of the above is correct.
ANS: C
PTS: 1
DIF: 3
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Analytical
117. If toast and butter are complements, then which of the following would increase the demand for toast?
a. a decrease in the price of toast
b. a decrease in the price of butter
c. an increase in the price of butter
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Interpretive
118. When it comes to people's tastes, economists generally believe that
a. tastes are based on forces that are well within the realm of economics.
b. tastes are based on historical and psychological forces that are beyond the realm of economics.
c. tastes can only be studied through well-constructed, real-life models.
d. because tastes do not directly affect demand, there is little need to explain people's tastes.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Definitional
119. Economists normally
a. do not try to explain people's tastes, but they do try to explain what happens when tastes change.
b. believe that they must be able to explain people's tastes in order to explain what happens when
tastes change.
c. do not believe that people's tastes determine demand, so they ignore the subject of tastes.
d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of
goods are substitutes or complements.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 35
120. Suppose the American Medical Association announces that men who shave their heads are less likely to die of
heart failure. We could expect the current demand for
a. hair gel to increase.
b. razors to increase.
c. combs to increase.
d. shampoo to increase.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
121. Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who
eat it. We would expect to see
a. no change in the demand for chocolate pudding.
b. a decrease in the demand for chocolate pudding.
c. an increase in the demand for chocolate pudding.
d. a decrease in the supply of chocolate pudding.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
122. A very hot summer in Atlanta will cause
a. the demand curve for lemonade to shift to the left.
b. the demand for air conditioners to decrease.
c. the demand for jackets to decrease.
d. a movement downward and to the right along the demand curve for tank tops.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
123. If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes
weight gain, then we likely would see
a. an increase in demand for brown rice and a decrease in demand for white rice.
b. a decrease in demand for brown rice and an increase in demand for white rice.
c. an increase in demand for both brown and white rice.
d. no change in demand for either type of rice because weight loss is not a determinant of demand.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
124. Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good.
b. The income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements run on television encourage people to walk or ride bicycles instead
of driving cars.
d. The price of gasoline rises.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
36 ❖ Chapter 4/The Market Forces of Supply and Demand
125. An increase in the number of college scholarships issued by private foundations would
a. increase the supply of education.
b. decrease the supply of education.
c. increase the demand for education.
d. decrease the demand for education.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
126. Today, people changed their expectations about the future. This change
a. can cause a movement along a demand curve.
b. can affect future demand but not today’s demand.
c. can affect today’s demand.
d. cannot affect either today’s demand or future demand.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Interpretive
127. If Miguel expects to earn a higher income next month, he may choose to
a. save more now and spend less of his current income on goods and services.
b. save less now and spend more of his current income on goods and services.
c. decrease his current demand for goods and services.
d. move along his current demand curves for goods and services.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
128. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped
out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your
demand for peanut butter
a. will increase but not until the end of the year.
b. increases today.
c. decreases as you look for a substitute good.
d. shifts left today.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
129. Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of
this information, today’s demand curve for Mustangs
a. shifts to the right.
b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the
given information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next month.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 37
130. What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?
a. The demand for artichokes will increase.
b. The demand for artichokes will decrease.
c. The demand for artichokes will be unaffected.
d. The supply of artichokes will increase.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
131. Today's demand 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 sellers of gasoline.
d. All of the above are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
132. If the number of buyers in a market decreases, then
a. demand will increase.
b. demand will decrease.
c. supply will increase.
d. supply will decrease.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Number of buyers
133. Which of the following does not affect an individual's demand curve?
a. expectations
b. income
c. prices of related goods
d. the number of buyers
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Number of buyers
MSC: Interpretive
134. Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast
food in Warrensburg
a. increases.
b. decreases.
c. remains constant, but we observe a movement downward and to the right along the demand curve.
d. remains constant, but we observe a movement upward and to the left along the demand curve.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Number of buyers
MSC: Applicative
135. For the general population, a 10 percent increase in the price of cigarettes leads to a
a. 1 percent reduction in the quantity demanded of cigarettes.
b. 4 percent reduction in the quantity demanded of cigarettes.
c. 10 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
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38 ❖ Chapter 4/The Market Forces of Supply and Demand
136. For teenagers, a 10 percent increase in the price of cigarettes leads to a
a. 1 percent reduction in the quantity demanded of cigarettes.
b. 4 percent reduction in the quantity demanded of cigarettes.
c. 10 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand
MSC: Definitional
137. The belief that tobacco is a “gateway drug” is consistent with
a. the idea that tobacco and marijuana are substitutes.
b. the idea that an increase in income causes a decrease in the demand for tobacco and an increase in
the demand for marijuana.
c. the idea that lower cigarette prices are associated with less use of marijuana.
d. most of the available evidence.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
138. Most studies indicate that tobacco and marijuana tend to be
a. substitutes.
b. complements.
c. unrelated because one good is legal while the other one is illegal.
d. inferior goods.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Definitional
139. Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices
a. encourage marijuana use, and the evidence supports this argument.
b. encourage marijuana use, but the evidence does not support this argument.
c. discourage marijuana use, and the evidence supports this argument.
d. discourage marijuana use, but the evidence does not support this argument.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes | Complements
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 39
Figure 4-7
Panel (a)
Panel (b)
price
price
P'
P
D
Q'
Q
D'
qua ntity
D
qua ntity
140. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a. The price of marijuana, a complement to cigarettes, increased.
b. Mandatory health warnings were placed on cigarette packages.
c. Several foreign countries banned U.S. cigarettes in their countries.
d. A tax was placed on cigarettes.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
141. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a. Tobacco and marijuana are complements, and the price of marijuana decreased.
b. Tobacco is a “gateway drug,” and the price of marijuana increased.
c. The price of cigarettes increased.
d. The arrows are consistent with all of these events.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
142. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (b), the arrows are consistent with
which of the following events?
a. an increase in the price of cigarettes
b. placing a tax on cigarettes
c. the prohibition of cigarette advertisements on television
d. decreasing the price of marijuana, given that tobacco and marijuana are complements
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
40 ❖ Chapter 4/The Market Forces of Supply and Demand
SUPPLY
1. The quantity supplied of a good is the amount that
a. buyers are willing and able to purchase.
b. sellers are able to produce.
c. buyers and sellers agree will be brought to market.
d. sellers are willing and able to sell.
ANS: D
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-3
TOP: Quantity supplied
2. If the price of a good is low,
a. firms would increase profit by increasing output.
b. the quantity supplied of the good could be zero.
c. the supply curve for the good will shift to the left.
d. firms can and should raise the price of the product.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
3. A decrease in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
d. decrease quantity supplied.
ANS: D
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
4. An increase in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
d. decrease quantity supplied.
ANS: C
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Quantity supplied
2
REF: 4-3
TOP: Quantity supplied
2
REF: 4-3
TOP: Quantity supplied
5. When the price of a good or service changes,
a. the demand curve shifts in the opposite direction.
b. the supply curve shifts in the opposite direction.
c. the supply curve shifts in the same direction.
d. there is a movement along a given supply curve.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Quantity supplied
6. A movement along the supply curve might be caused by a change in
a. production technology.
b. input prices.
c. expectations about future prices.
d. the price of the good or service that is being supplied.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
d. Point C to Point A in Panel 2.
ANS: A
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
2
REF: 4-2
TOP: Demand curve
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 25
65. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require “junk food” producers to include warning labels on all
junk food. The other would impose a tax on all products considered to be junk food. We could illustrate the
tax as producing a movement from
a. Point A to Point B in Panel 1.
b. Point B to Point A in Panel 1.
c. Point A to Point C in Panel 2.
d. Point C to Point A in Panel 2.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
Figure 4-6
price
D'
D
qua ntity
66. Refer to Figure 4-6. The shift from D to D’ is called
a. an increase in demand.
b. a decrease in demand.
c. a decrease in quantity demanded.
d. an increase in quantity demanded.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
67. Refer to Figure 4-6. If the demand curve shifts from D to D’, then
a. firms would be willing to supply less of the good than before at each possible price.
b. people are willing to buy less of the good than before at each possible price.
c. people’s incomes must have decreased.
d. the price of the product has increased, causing consumers to buy less of the product.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
68. Refer to Figure 4-6. The movement from D to D’ could be caused by
a. an increase in price.
b. a decrease in the price of a complement.
c. a technological advance.
d. a decrease in the price of a substitute.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
26 ❖ Chapter 4/The Market Forces of Supply and Demand
69. Refer to Figure 4-6. The movement from D’ to D could be caused by
a. a decrease in price.
b. a decrease in income, assuming the good is inferior.
c. buyers expecting the price of the good to fall in the near future.
d. an increase in the price of a complement.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
70. Refer to Figure 4-6. The movement from D’ to D in the market for potato chips could be caused by a(n)
a. decrease in the price of potato chips.
b. decrease in income, assuming that potato chips are a normal good.
c. announcement by the FDA that potato chips cause cancer.
d. increase in the price of a pretzels. 3
0
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
71. An increase in demand is represented by a
a. movement downward and to the right along a demand curve.
b. movement upward and to the left along a demand curve.
c. rightward shift of a demand curve.
d. leftward shift of a demand curve.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
72. A decrease in demand is represented by a
a. movement downward and to the right along a demand curve.
b. movement upward and to the left along a demand curve.
c. rightward shift of a demand curve.
d. leftward shift of a demand curve.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
73. A leftward shift of a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
74. A rightward shift of a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Demand curve
REF: 4-2
TOP: Demand curve
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 27
75. If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at
each price of Vanilla Coke, then
a. we will observe a movement downward and to the right along the demand curve for Vanilla Coke.
b. we will observe a movement upward and to the left along the demand curve for Vanilla Coke.
c. the demand curve for Vanilla Coke will shift to the right.
d. the demand curve for Vanilla Coke will shift to the left.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
76. When the price of hot dogs changes, the demand curve for hot dogs
a. shifts because the price of hot dogs is measured on the vertical axis of the graph.
b. shifts because the quantity demanded of hot dogs is measured on the horizontal axis of the graph.
c. does not shift because the price of hot dogs is measured on the vertical axis of the graph.
d. does not shift because the price of hot dogs is measured on the horizontal axis of the graph.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
77. Which of the following changes would not shift the demand curve for a good or service?
a. a change in income
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in the price of a related good or service
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
78. Which of the following would not shift the demand curve for mp3 players?
a. a decrease in the price of mp3 players
b. a fad that makes mp3 players more popular among 12-25 year olds
c. an increase in the price of digital music downloads, a complement for mp3 players
d. a decrease in the price of satellite radio, a substitute for mp3 players
ANS: A
PTS: 1
REF: 4-2
3DIF: 02
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
79. Which of the following events would cause a movement upward and to the left along the demand curve for
olives?
a. The number of people who purchase olives decreases.
b. Consumer income decreases, and olives are a normal good.
c. The price of pickles decreases, and pickles are a substitute for olives.
d. The price of olives rises.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Applicative
80. A movement along the demand curve might be caused by a change in
a. income.
b. the prices of substitutes or complements.
c. expectations about future prices.
d. the price of the good or service that is being demanded.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
28 ❖ Chapter 4/The Market Forces of Supply and Demand
81. Holding the nonprice determinants of demand constant, a change in price would
a. result in either a decrease in demand or an increase in demand.
b. result in a movement along a stationary demand curve.
c. result in a shift of supply.
d. have no effect on the quantity demanded.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve | Quantity demanded
MSC: Interpretive
82. The sum of all the individual demand curves for a product is called
a. income demand.
b. equilibrium demand.
c. complementary demand.
d. market demand.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Definitional
83. Which of the following is not an expression for the sum of all the individual demand curves for a product?
a. total demand
b. market demand
c. equilibrium demand
d. aggregate demand
ANS: C
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand
MSC: Definitional
84. The demand curve for textbooks shifts
a. only when income changes.
b. when a determinant of the demand for textbooks other than the price of textbooks changes.
c. when the price of textbooks changes.
d. Both b) and c) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Determinants of demand
MSC: Applicative
85. Which of the following is not a determinant of the demand for a particular good?
a. the prices of related goods
b. income
c. tastes
d. the prices of the inputs used to produce the good
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Determinants of demand
MSC: Interpretive
86. Each of the following is a determinant of demand except
a. tastes.
b. production technology.
c. expectations.
d. the prices of related goods.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
3
0
REF: 4-2
TOP: Determinants of demand
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4/The Market Forces of Supply and Demand ❖ 29
87. Which of the following is not a determinant of demand?
a. the price of a resource that is used to produce the good
b. the price of a complementary good
c. the price of the good next month
d. the price of a substitute good
ANS: A
PTS: 1
3DIF: 02
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Determinants of demand
88. If the demand for a good falls when income falls, then the good is called a(n)
a. normal good.
b. regular good.
c. luxury good.
d. inferior good.
ANS: A
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Definitional
89. If a good is normal, then an increase in income will result in a(n)
a. increase in the demand for the good.
b. decrease in the demand for the good.
c. movement down and to the right along the demand curve for the good.
d. movement up and to the left along the demand curve for the good.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Interpretive
90. If Max experiences a decrease in his income, then we would expect Max’s demand for
a. each good he purchases to remain unchanged.
b. normal goods to decrease.
c. luxury goods to increase.
d. inferior goods to decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
91. You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider
iTunes music downloads to be a(n)
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
92. Pizza is a normal good if the demand
a. for pizza rises when income rises.
b. for pizza rises when the price of pizza falls.
c. curve for pizza slopes upward.
d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are
substitutes.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
30 ❖ Chapter 4/The Market Forces of Supply and Demand
93. Suppose that when income rises, the demand curve for doctor’s visits shifts to the right. In this case, we know
doctor’s visits are
a. inferior goods.
b. normal goods.
c. perfectly competitive goods.
d. durable goods.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
94. Which of the following would shift the demand curve for gasoline to the right?
a. a decrease in the price of gasoline
b. an increase in consumer income, assuming gasoline is a normal good
c. an increase in the price of cars, a complement for gasoline
d. a decrease in the expected future price of gasoline
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Applicative
95. If a decrease in income increases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
3
0
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Definitional
96. If a increase in income decreases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Definitional
97. If a good is inferior, then an increase in income will result in
a. an increase in the demand for the good.
b. a decrease in the demand for the good.
c. a movement down and to the right along the demand curve for the good.
d. a movement up and to the left along the demand curve for the good.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 31
98. Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you
will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)
a. substitute good.
b. normal good.
c. inferior good.
d. complementary good.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
99. Soup is an inferior good if the demand
a. for soup falls when the price of a substitute for soup rises.
b. for soup rises when the price of soup falls.
c. curve for soup slopes upward.
d. for soup falls when income rises.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Inferior goods
100. Suppose that Amanda receives a pay increase. We would expect
a. to observe Amanda moving down and to the right along her given demand curve.
b. Amanda's demand for inferior goods to decrease.
c. Amanda's demand for each of two goods that are complements to increase.
d. Amanda's demand for normal goods to decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
101. If macaroni and cheese is an inferior good, then an increase in
a. the price will cause the demand curve for macaroni and cheese to shift to the left.
b. the price will cause the demand curve for macaroni and cheese to shift to the right.
c. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the left.
d. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the right.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
102. Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
ANS: A
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
3
0
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
32 ❖ Chapter 4/The Market Forces of Supply and
3 Demand
0
103. Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies
that X and Y are
a. complementary goods.
b. normal goods.
c. inferior goods.
d. substitute goods.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
104. Good X and good Y are substitutes. If the price of good Y increases, then the
a. demand for good X will decrease.
b. quantity demanded of good X will decrease.
c. demand for good X will increase.
d. quantity demanded of good X will increase.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
105. A likely example of substitute goods for most people would be
a. peanut butter and jelly.
b. tennis balls and tennis rackets.
c. televisions and subscriptions to cable television services.
d. pencils and pens.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-2
TOP: Substitutes
106. If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a. increase in the demand for bagels.
b. decrease in the demand for bagels.
c. increase in the demand for muffins.
d. decrease in the demand for muffins.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Applicative
107. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for
a. sweatpants will increase.
b. sweatpants will decrease.
c. shorts will increase.
d. shorts will decrease.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 33
108. If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese?
a. a decrease in the price of cheddar cheese
b. an increase in the price of American cheese
c. a decrease in the price of American cheese
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
109. Two goods are complements when a decrease in the price of one good
a. decreases the quantity demanded of the other good.
b. decreases the demand for the other good.
c. increases the quantity demanded of the other good.
d. increases the demand for the other good.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
3
0
MSC: Definitional
110. If goods A and B are complements, then an increase in the price of good A will result in
a. more of good A being sold.
b. more of good B being sold.
c. less of good B being sold.
d. no difference in the quantity sold of either good.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Complements
111. A likely example of complementary goods for most people would be
a. butter and margarine.
b. lawnmowers and automobiles.
c. chips and salsa.
d. cola and lemonade.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
112. A higher price for batteries would result in a(n)
a. increase in the demand for flashlights.
b. decrease in the demand for flashlights.
c. increase in the demand for batteries.
d. decrease in the demand for batteries.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
2
REF: 4-2
TOP: Complements
113. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that
the price of bananas has increased. As a result, your demand for vanilla pudding would
a. decrease.
b. increase.
c. be unaffected.
d. There is insufficient information given to answer the question.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
34 ❖ Chapter 4/The Market Forces of Supply and Demand
114. Holding all other things constant, a higher price for ski lift tickets would
a. increase the number of skiers.
b. increase the price of skis.
c. decrease the number of skis sold.
d. decrease the demand for other winter recreational activities.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
115. When quantity demanded has increased at every price, it might be because
a. the number of buyers in the market has decreased.
b. income has increased, and the good is an inferior good.
c. the costs incurred by sellers producing the good have decreased.
d. the price of a complementary good has decreased.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Interpretive
116. Which of the following might cause the demand curve for an inferior good to shift to the left?
a. a decrease in income
b. an increase in the price of a substitute
c. an increase in the price of a complement
d. None of the above is correct.
ANS: C
PTS: 1
DIF: 3
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Analytical
117. If toast and butter are complements, then which of the following would increase the demand for toast?
a. a decrease in the price of toast
b. a decrease in the price of butter
c. an increase in the price of butter
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Interpretive
118. When it comes to people's tastes, economists generally believe that
a. tastes are based on forces that are well
3 within0 the realm of economics.
b. tastes are based on historical and psychological forces that are beyond the realm of economics.
c. tastes can only be studied through well-constructed, real-life models.
d. because tastes do not directly affect demand, there is little need to explain people s tastes.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Definitional
119. Economists normally
a. do not try to explain people's tastes, but they do try to explain what happens when tastes change.
b. believe that they must be able to explain people's tastes in order to explain what happens when
tastes change.
c. do not believe that people's tastes determine demand, so they ignore the subject of tastes.
d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of
goods are substitutes or complements.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 35
120. Suppose the American Medical Association announces that men who shave their heads are less likely to die of
heart failure. We could expect the current demand for
a. hair gel to increase.
b. razors to increase.
c. combs to increase.
d. shampoo to increase.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
121. Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who
eat it. We would expect to see
a. no change in the demand for chocolate pudding.
b. a decrease in the demand for chocolate pudding.
c. an increase in the demand for chocolate pudding.
d. a decrease in the supply of chocolate pudding.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
122. A very hot summer in Atlanta will cause
a. the demand curve for lemonade to shift to the left.
b. the demand for air conditioners to decrease.
c. the demand for jackets to decrease.
d. a movement downward and to the right along the demand curve for tank tops.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
123. If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes
weight gain, then we likely would see
a. an increase in demand for brown rice and a decrease in demand for white rice.
b. a decrease in demand for brown rice and an increase in demand for white rice.
c. an increase in demand for both brown and white rice.
d. no change in demand for either type of rice because weight loss is not a determinant of demand.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
124. Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good.
b. The income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements run on television encourage people to walk or ride bicycles instead
of driving cars.
d. The price of gasoline rises.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
3
0
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
36 ❖ Chapter 4/The Market Forces of Supply and Demand
125. An increase in the number of college scholarships issued by private foundations would
a. increase the supply of education.
b. decrease the supply of education.
c. increase the demand for education.
d. decrease the demand for education.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Tastes
MSC: Applicative
0 future. This change
126. Today, people changed their expectations3about the
a. can cause a movement along a demand curve.
b. can affect future demand but not today’s demand.
c. can affect today’s demand.
d. cannot affect either today’s demand or future demand.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Expectations
127. If Miguel expects to earn a higher income next month, he may choose to
a. save more now and spend less of his current income on goods and services.
b. save less now and spend more of his current income on goods and services.
c. decrease his current demand for goods and services.
d. move along his current demand curves for goods and services.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
128. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped
out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your
demand for peanut butter
a. will increase but not until the end of the year.
b. increases today.
c. decreases as you look for a substitute good.
d. shifts left today.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
129. Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of
this information, today’s demand curve for Mustangs
a. shifts to the right.
b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the
given information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next month.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 37
130. What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?
a. The demand for artichokes will increase.
b. The demand for artichokes will decrease.
c. The demand for artichokes will be unaffected.
d. The supply of artichokes will increase.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
131. Today's demand 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 sellers of gasoline.
d. All of the above are correct.
ANS: B
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
132. If the number of buyers in a market decreases, then
a. demand will increase.
b. demand will decrease.
c. supply will increase.
d. supply will decrease.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-2
TOP: Number of buyers
133. Which of the following does not affect an individual's demand curve?
a. expectations
3
0
b. income
c. prices of related goods
d. the number of buyers
ANS: D
NAT: Analytic
MSC: Interpretive
PTS: 1
DIF:
LOC: Supply and demand
2
REF: 4-2
TOP: Number of buyers
134. Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast
food in Warrensburg
a. increases.
b. decreases.
c. remains constant, but we observe a movement downward and to the right along the demand curve.
d. remains constant, but we observe a movement upward and to the left along the demand curve.
ANS: A
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Number of buyers
MSC: Applicative
135. For the general population, a 10 percent increase in the price of cigarettes leads to a
a. 1 percent reduction in the quantity demanded of cigarettes.
b. 4 percent reduction in the quantity demanded of cigarettes.
c. 10 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
38 ❖ Chapter 4/The Market Forces of Supply and Demand
136. For teenagers, a 10 percent increase in the price of cigarettes leads to a
a. 1 percent reduction in the quantity demanded of cigarettes.
b. 4 percent reduction in the quantity demanded of cigarettes.
c. 10 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
ANS: D
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand
MSC: Definitional
137. The belief that tobacco is a “gateway drug” is consistent with
a. the idea that tobacco and marijuana are substitutes.
b. the idea that an increase in income causes a decrease in the demand for tobacco and an increase in
the demand for marijuana.
c. the idea that lower cigarette prices are associated with less use of marijuana.
d. most of the available evidence.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
138. Most studies indicate that tobacco and marijuana tend to be
a. substitutes.
b. complements.
c. unrelated because one good is legal while the other one is illegal.
d. inferior goods.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Definitional
139. Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices
a. encourage marijuana use, and the evidence supports this argument.
b. encourage marijuana use, but the evidence does not support this argument.
c. discourage marijuana use, and the evidence supports this argument.
d. discourage marijuana use, but the evidence does not support this argument.
ANS: B
PTS: 1
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes | Complements
MSC: Definitional
3
0
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4/The Market Forces of Supply and Demand ❖ 39
Figure 4-7
Panel (a)
price
3
0
Panel (b)
price
P'
P
D
Q'
Q
D'
qua ntity
D
qua ntity
140. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a. The price of marijuana, a complement to cigarettes, increased.
b. Mandatory health warnings were placed on cigarette packages.
c. Several foreign countries banned U.S. cigarettes in their countries.
d. A tax was placed on cigarettes.
ANS: D
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
141. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a. Tobacco and marijuana are complements, and the price of marijuana decreased.
b. Tobacco is a “gateway drug,” and the price of marijuana increased.
c. The price of cigarettes increased.
d. The arrows are consistent with all of these events.
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
142. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (b), the arrows are consistent with
which of the following events?
a. an increase in the price of cigarettes
b. placing a tax on cigarettes
c. the prohibition of cigarette advertisements on television
d. decreasing the price of marijuana, given that tobacco and marijuana are complements
ANS: C
PTS: 1
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
40 ❖ Chapter 4/The Market Forces of Supply and Demand
SUPPLY
1. The quantity supplied of a good is the amount that
a. buyers are willing and able to purchase.
b. sellers are able to produce.
c. buyers and sellers agree will be brought to market.
d. sellers are willing and able to sell.
ANS: D
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
2. If the price of a good is low,
a. firms would increase profit by increasing output.
b. the quantity supplied of the good could be zero.
c. the supply curve for the good will shift to the left.
d. firms can and should raise the price of the product.
ANS: B
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
3. A decrease in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
3
0
REF: 4-3
TOP: Quantity supplied
REF: 4-3
TOP: Quantity supplied
d. decrease quantity supplied.
ANS: D
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
4. An increase in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
d. decrease quantity supplied.
ANS: C
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
2
REF: 4-3
TOP: Quantity supplied
2
REF: 4-3
TOP: Quantity supplied
5. When the price of a good or service changes,
a. the demand curve shifts in the opposite direction.
b. the supply curve shifts in the opposite direction.
c. the supply curve shifts in the same direction.
d. there is a movement along a given supply curve.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Quantity supplied
6. A movement along the supply curve might be caused by a change in
a. production technology.
b. input prices.
c. expectations about future prices.
d. the price of the good or service that is being supplied.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 41
7. Holding the nonprice determinants of supply constant, a change in price would
a. result in either a decrease in supply or an increase in supply.
b. result in a movement along a stationary supply curve.
c. result in a shift of demand.
d. have no effect on the quantity supplied.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
8. An increase in the price of a good would
a. increase the supply of the good.
b. increase the amount purchased by buyers.
c. give producers an incentive to produce more.
d. decrease both the quantity demanded of the good and the quantity supplied of the good.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
9. An increase in the price of oranges would lead to
a. an increased supply of oranges.
b. a reduction in the prices of inputs used in orange production.
c. an increased demand for oranges.
d. a movement up and to the right along the supply curve for oranges.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Applicative
10. An increase in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
11. A decrease in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
3DIF: 02
ANS: A
PTS: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
42 ❖ Chapter 4/The Market Forces of Supply and Demand
Figure 4-8
10
Price
9
Supply
8
7
6
5
A
4
3
2
B
1
1
2
3
4
5
6
7
8
Q ua ntity
12. Refer to Figure 4-8. The movement from Point A to Point B represents a(n)
a. shift in the supply curve.
b. decrease in the quantity supplied.
c. increase in the quantity supplied.
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Definitional
13. Refer to Figure 4-8. The movement from Point A to Point B represents a(n)
a. increase in the price.
b. decrease in the quantity supplied.
c. shift in the supply curve.
d. Both a) and b) are correct.
ANS: B
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Definitional
14. “Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the
price falls, the quantity supplied falls as well.” This relationship between price and quantity supplied
a. is referred to as the law of supply.
b. applies only to a few goods in the economy.
c. is represented by a downward-sloping supply curve.
d. All of the above are correct.
ANS: A
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional
15. The law of supply states that, other things equal, when the price of a good
a. falls, the supply of the good rises.
b. rises, the quantity supplied of the good rises.
c. rises, the supply of the good falls.
d. falls, the quantity supplied of the good rises.
ANS: B
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 43
16. The law of supply states that, other things equal, an increase in
a. price causes quantity supplied to increase.
b. price causes quantity supplied to decrease.
c. quantity supplied causes price to increase.
d. quantity supplied causes price to decrease.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
17. Other things equal, when the price of a good falls, the
a. quantity supplied of the good increases.
b. supply decreases.
c. quantity supplied of the good decreases.
3
0
d. demand increases.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
REF: 4-3
TOP: Law of supply
REF: 4-3
TOP: Law of supply
MSC: Interpretive
18. Which of these statements best represents the law of supply?
a. When input prices increase, sellers produce less of the good.
b. When production technology improves, sellers produce less of the good.
c. When the price of a good decreases, sellers produce less of the good.
d. When sellers’ supplies of a good increase, the price of the good increases.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Interpretive
19. A supply curve slopes upward because
a. as more is produced, total cost of production falls.
b. an increase in input prices increases supply.
c. the quantity supplied of most goods and services increases over time.
d. an increase in price gives producers an incentive to supply a larger quantity.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Interpretive
20. Which of the following demonstrates the law of supply?
a. When leather became more expensive, belt producers decreased their supply of belts.
b. When car production technology improved, car producers increased their supply of cars.
c. When sweater producers expected sweater prices to rise in the near future, they decreased their
current supply of sweaters.
d. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
44 ❖ Chapter 4/The Market Forces of Supply and Demand
21. The following table contains a supply schedule for a good.
Price
Quantity Supplied
$10
100
$20
Q1
If the law of supply applies to this good, then Q1 could be
a. 0.
b. 50.
c. 100.
d. 150.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-3
TOP: Law of supply
22. A supply schedule is a table that shows the relationship between
a. price and quantity supplied.
b. input costs and quantity supplied.
c. quantity demanded and quantity supplied.
d. profit and quantity supplied.
ANS: A
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply schedule
MSC: Definitional
23. Which of the following is not held constant in a supply schedule?
a. production technology
b. the price of the good
c. the prices of inputs
d. expectations
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply schedule
MSC: Interpretive
24. The difference between a supply schedule and a supply curve is that a supply schedule
a. incorporates demand and a supply curve
3 does0 not.
b. incorporates profit and a supply curve does not.
c. can shift, but a supply curve cannot shift.
d. is a table, and a supply curve is drawn on a graph.
d. is a table, and a supply curve is drawn on a graph.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
TOP: Supply schedule | Supply curve
MSC: Interpretive
REF:
4-3
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 45
Figure 4-9
price
S
B
P'
P
A
Q
Q'
qua ntity
25. Refer to Figure 4-9. The movement from point A to point B on the graph is called
a. a decrease in supply.
b. an increase in supply.
c. an increase in the quantity supplied.
d. a decrease in the quantity supplied.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
26. Refer to Figure 4-9. The movement from point A to point B on the graph is caused by
a. a decrease in the price of the good.
b. an increase in the price of the good.
c. an advance in production technology.
d. a decrease in input prices.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive
27. Refer to Figure 4-9. The movement from point A to point B on the graph represents
a. an increased willingness and ability on the part of suppliers to supply the good at each possible
price.
b. an increase in the number of suppliers.
c. a decrease in the price of a relevant input.
d. an increase in the price of the good that is being supplied and the suppliers’ responses to that price
change.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
3
0
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
46 ❖ Chapter 4/The Market Forces of Supply and Demand
Figure 4-10
Price
Supply A
Supply B
Supply C
3
0
Qua ntity
28. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply
C in the market for tennis racquets?
a. an increase in the price of tennis balls
b. an expectation by firms that the price of tennis racquets will increase in the very near future
c. a decrease in the price of tennis racquet strings
d. a decrease in the number of firms selling tennis racquets
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Applicative
29. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply
C in the market for winter coats?
a. an increase in the price of winter coats
b. a decrease in the number of firms selling winter coats
c. a decrease in the price of zippers and snaps
d. a decrease in the price of winter hats and gloves
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Applicative
30. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply
A in the market for tennis racquets?
a. a decrease in the price of tennis balls
b. an expectation by firms that the price of tennis racquets will increase in the very near future
c. a decrease in the price of tennis racquet strings
d. an improvement in technology that allows firms to use less labor in the production of tennis
racquets
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 47
31. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply
A in the market for disposable ballpoint pens?
a. a decrease in the price of disposable ballpoint pens
b. an increase in the price of fountain pens
c. an increase in the price of ink
d. an improvement in technology that allows firms to use less labor in the production of disposable
ballpoint pens
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Applicative
32. The supply curve for a good is a line that relates
a. profit and quantity supplied.
b. quantity supplied and quantity demanded.
c. price and quantity supplied.
d. price and profit.
ANS: C
PTS: 1
DIF: 1
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
REF: 4-3
TOP: Supply curve
33. The line that relates the price of a good and the quantity supplied of that good is called the supply
a. schedule, and it usually slopes upward.
b. schedule, and it usually slopes downward.
c. curve, and it usually slopes upward.
d. curve, and it usually slopes downward.
3
0
ANS: C
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Definitional
34. When we move along a given supply curve,
a. only price is held constant.
b. technology and price are held constant.
c. all nonprice determinants of supply are held constant.
d. all determinants of quantity supplied are held constant.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Supply curve
35. Once the supply curve for a product or service is drawn, it
a. remains stable over time.
b. can shift either rightward or leftward.
c. is possible to move along the curve, but the curve will not shift.
d. tends to become steeper over time.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
36. If something happens to alter the quantity supplied at any given price, then
a. we move along the supply curve.
b. the supply curve shifts.
c. the supply curve becomes steeper.
d. the supply curve becomes flatter.
ANS: B
PTS: 1
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Definitional
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
48 ❖ Chapter 4/The Market Forces of Supply and Demand
37. An increase in supply is represented by a
a. movement downward and to the left along a supply curve.
b. movement upward and to the right along a supply curve.
c. rightward shift of a supply curve.
d. leftward shift of a supply curve.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
38. A decrease in supply is represented by a
a. movement downward and to the left along a supply curve.
b. movement upward and to the right along a supply curve.
c. rightward shift of a supply curve.
d. leftward shift of a supply curve.
ANS: D
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
39. A leftward shift of a supply curve is called a(n)
a. increase in supply.
b. decrease in supply.
c. decrease in quantity supplied.
d. increase in quantity supplied.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
2
40. A rightward shift of a supply curve is called a(n)
a. increase in supply.
b. decrease in supply.
c. decrease in quantity supplied.
d. increase in quantity supplied.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Supply curve
REF: 4-3
TOP: Supply curve
REF: 4-3
TOP: Supply curve
REF: 4-3
TOP: Supply curve
41. A movement upward and to the right along a supply curve is called a(n)
a. increase in supply.
b. decrease in supply.
c. decrease in quantity supplied.
d. increase in quantity supplied.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
3
0
42. A movement downward and to the left along a supply curve is called a(n)
a. increase in supply.
b. decrease in supply.
b. decrease in supply.
c. decrease in quantity supplied.
d. increase in quantity supplied.
ANS: C
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
2
REF: 4-3
TOP: Supply curve
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 49
43. When quantity supplied decreases at every possible price, we know that the supply curve has
a. shifted to the left.
b. shifted to the right.
c. not shifted; rather, we have moved along the supply curve to a new point on the same curve.
d. not shifted; rather, the supply curve has become flatter.
ANS: A
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Interpretive
44. When quantity supplied increases at every possible price, we know that the supply curve has
a. shifted to the left.
b. shifted to the right.
c. not shifted; rather, we have moved along the supply curve to a new point on the same curve.
d. not shifted; rather, the supply curve has become flatter.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Interpretive
45. The supply curve for milk
a. shifts when the price of milk changes because the price of milk is measured on the vertical axis of
the graph.
b. shifts when the price of milk changes because the quantity supplied of milk is measured on the
horizontal axis of the graph.
c. does not shift when the price of milk changes because the price of milk is measured on the vertical
axis of the graph.
d. does not shift when the price of milk changes because the price of milk is measured on the
horizontal axis of the graph.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Applicative
46. Which of the following changes would not shift the supply curve for a good or service?
a. a change in production technology
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in input prices
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Interpretive
47. Which of the following would not shift the supply curve for mp3 players?
a. an increase in the price of mp3 players
b. a decrease in the number of sellers of mp3 players
c. an increase in the price of plastic, an input into the production of mp3 players
d. an improvement in the technology used to produce mp3 players
ANS: A
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
50 ❖ Chapter 4/The Market Forces of Supply and Demand
48. Which of the following events would cause a movement upward and to the right along the supply curve for
mangos?
a. The number of sellers of mangos increases.
b. There is an advance in technology that reduces the cost of producing mangos.
c. The price of fertilizer decreases, and fertilizer is an input in the production of mangos.
d. The price of mangos rises.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve | Quantity supplied
MSC: Applicative
49. The sum of all the individual supply curves for a product is called
a. total supply.
b. market supply.
c. aggregate supply.
d. total output.
ANS: B
PTS: 1
DIF: 1
REF: 4-3
3
0
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Definitional
50. The market supply curve
a. is found by vertically adding the individual supply curves.
b. slopes downward.
c. represents the sum of the prices that all the sellers are willing to accept for a given quantity of the
good.
d. represents the sum of the quantities supplied by all the sellers at each price of the good.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Interpretive
51. In a market, to find the total amount supplied at a particular price, we must
a. sum the quantities that individual firms are willing and able to supply at that price.
b. calculate the average of the quantities that individual firms are willing and able to supply at that
price.
c. sum the costs that individual firms incur to supply the product at that price.
d. account for all determinants of demand.
ANS: A
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Interpretive
52. A market supply curve is determined by
a. vertically summing individual supply curves.
b. horizontally summing individual supply curves.
c. finding the average quantity supplied by sellers at each possible price.
d. finding the average price at which sellers are willing and able to sell a particular quantity of the
good.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 51
53. A market supply curve shows
a. the total quantity supplied at all possible prices.
b. the average quantity supplied by producers at all possible prices.
c. how quantity supplied changes when consumer income changes.
d. suppliers’ responses, in terms of the amounts they will supply, to the demands of buyers.
ANS: A
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Interpretive
54. A market supply curve shows how the total quantity supplied of a good varies as
a. production technology varies.
b. price varies.
c. input prices vary.
d. demand varies.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Interpretive
55. Suppose there are five suppliers of ice cream in the town of Summerville. If we add the respective quantities
that each firm would produce at each of the five ice cream parlors when the price of ice cream is $2 per scoop,
$2.50 per scoop, and $3 per scoop, and so forth, we have found the
a. market demand curve.
b. market supply curve.
c. equilibrium curve.
d. surplus or shortage depending on market conditions.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
Table 4-4
Price
$0
$2
$4
$6
$8
$10
Firm A’s
Quantity
Supplied
10
8
6
4
2
0
Firm B’s
Quantity
Supplied
0
3
6
9
12
15
Firm C’s
Quantity
Supplied
0
4
8
3
0
12
8
4
Firm D’s
Quantity
Supplied
0
5
10
15
20
25
56. Refer to Table 4-4. Which supply schedules obey the law of supply?
a. Firm A’s only
b. Firm B’s, Firm C’s, and Firm D’s only
c. Firm A’s and Firm C’s only
d. Firm B’s and Firm D’s only
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
52 ❖ Chapter 4/The Market Forces of Supply and Demand
57. Refer to Table 4-4. If these are the only four sellers in the market, then the market quantity supplied at a
price of $4 is
a. 4 units.
b. 7.5 units.
c. 10 units.
d. 30 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
58. Refer to Table 4-4. If these are the only four sellers in the market, then the market quantity supplied at a
price of $10 is
a. 3 units.
b. 11 units.
c. 25 units.
d. 44 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
59. Refer to Table 4-4. If these are the only four sellers in the market, then when the price increases from $6 to
$8, the market quantity supplied
a. increases by 0.5 units.
b. increases by 2 units.
c. decreases by 4 units.
d. increases by 42 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
60. Refer to Table 4-4. If these are the only four sellers in the market, then when the price decreases from $4 to
$2, the market quantity supplied
a. increases by 10 units.
b. decreases by 10 units.
c. decreases by 20 units.
d. decreases by 30 units.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
3
0
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4/The Market Forces of Supply and Demand ❖ 53
Table 4-5
Price
$0
$2
$4
$6
$8
$10
Firm A’s
Quantity
Supplied
0
3
6
9
12
15
Firm B’s
Quantity
Supplied
0
4
8
12
16
20
Firm C’s
Quantity
Supplied
0
2
4
6
3 8 0
10
Firm D’s
Quantity
Supplied
0
1
2
3
4
5
61. Refer to Table 4-5. If these are the only four sellers in the market, then the market quantity supplied at a
price of $4 is
a. 4 units.
b. 5 units.
c. 20 units.
d. 80 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
62. Refer to Table 4-5. If these are the only four sellers in the market, then the market quantity supplied at a
price of $8 is
a. 10 units.
b. 20 units.
c. 32 units.
d. 40 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
63. Refer to Table 4-5. If these are the only four sellers in the market, then when the price decreases from $10 to
$8, the market quantity supplied decreases by
a. 2.5 units.
b. 4 units.
c. 10 units.
d. 50 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
64. Refer to Table 4-5. If these are the only four sellers in the market, then when the price increases from $4 to
$6, the market quantity supplied
a. decreases by 10 units.
b. decreases by 20 units.
c. increases by 10 units.
d. increases by 20 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
54 ❖ Chapter 4/The Market Forces of Supply and Demand
Figure 4-11
Firm A
20
Firm B
price
20
18
18
16
16
14
price
14
S
12
12
10
10
8
8
6
6
4
4
2
2
2
4
6
8
10
12
14
16
18
20
qua ntity
S
2
4
6
8
10
12
14
16
qua ntity
65. Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a
price of $4 is
a. 6 units.
b. 7 units.
c. 8 units.
d. 14 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
3
0
66. Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a
price of $6 is
a. 2 units.
b. 10 units.
c. 12 units.
d. 22 units.
ANS: D
NAT: Analytic
MSC: Applicative
PTS: 1
DIF:
LOC: Supply and demand
2
REF: 4-3
TOP: Market supply
67. Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a
price of $8 is
a. 14 units.
b. 15 units.
c. 16 units.
d. 29 units.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
0
Chapter 4/The Market Forces of Supply and Demand ❖ 55
Figure 4-12
20
Price
20
Producer A
18
16
16
14
14
12
12
10
10
8
8
6
6
4
4
2
2
4
6
8
Producer B
18
S1
2
Price
10
12
14
16
Qua ntity
S2
2
4
6
8
10
12
14
16
Qua ntity
68. Refer to Figure 4-12. If Producer A and Producer B are the only producers in the market, then the market
quantity supplied when the price is $4 is
a. 4 units.
b. 8 units.
c. 12 units.
d. 16 units.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply
MSC: Applicative
69. The supply curve for portable charcoal grills shifts
a. only when production technology changes.
b. when a determinant of the supply of portable charcoal grills other than the price of portable
charcoal grills changes.
c. when any determinant of the supply of portable charcoal grills changes.
d. only when the number of sellers of portable charcoal grills changes.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Determinants of supply
MSC: Applicative
70. Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect
the supply of
a. crystal to be unaffected.
b. crystal to decrease.
c. crystal to increase.
d. lead to increase.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Applicative
71. Suppose you make jewelry. If the price of
3 gold falls,
0 then we would expect you to
a. be willing and able to produce less jewelry than before at each possible price.
b. be willing and able to produce more jewelry than before at each possible price.
c. face a greater demand for your jewelry.
d. face a weaker demand for your jewelry.
ANS: B
PTS: 1
DIF:
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
2
REF: 4-3
TOP: Input prices
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
56 ❖ Chapter 4/The Market Forces of Supply and Demand
3 earn
0 the mandatory minimum wage. If the federal government
72. Workers at a bicycle assembly plant currently
increases the minimum wage by $1.00 per hour, then it is likely that the
a. demand for bicycle assembly workers will increase.
b. supply of bicycles will shift to the right.
c. supply of bicycles will shift to the left.
d. firm must increase output to maintain profit levels.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Applicative
REF: 4-3
TOP: Input prices
73. Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to
a. shift rightward.
b. shift leftward.
c. become flatter.
d. remain unchanged.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Applicative
74. Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the
a. demand for flour to increase.
b. demand for flour to decrease.
c. supply of flour to increase.
d. supply of flour to decrease.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Applicative
75. Matthew bakes apple pies that he sells at the local farmer’s market. If the price of apples increases, the
a. supply curve for Matthew’s pies will increase.
b. supply curve for Matthew’s pies will decrease.
c. demand curve for Matthew’s pies will increase.
d. demand curve for Matthew’s pies will decrease.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Applicative
76. Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As
a result of these two events, the demand for tires
a. decreases, and the supply of tires increases.
b. is unaffected, and the supply of tires decreases.
c. is unaffected, and the supply of tires increases.
d. None of the above is necessarily correct.
ANS: D
PTS: 1
DIF: 3
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices | Technology
MSC: Analytical
77. A improvement in production technology will shift the
a. supply curve to the right.
b. supply curve to the left.
c. demand curve to the right.
d. demand curve to the left.
ANS: A
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Technology
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter 4/The Market Forces of Supply and Demand ❖ 57
78. An improvement in production technology will
a. increase a firm's costs and increase its supply.
b. increase a firm’s costs and decrease its supply.
c. decrease a firm’s costs and increase its supply.
d. decrease a firm’s costs and decrease its supply.
ANS: C
PTS: 1
DIF: 2
NAT: Analytic
LOC: Supply and demand
MSC: Interpretive
REF: 4-3
TOP: Technology
79. If car manufacturers begin using new labor-saving technology on their assembly lines, we would not expect
a. a smaller quantity of labor to be used.
b. the supply of cars to increase.
c. the firms’ costs to fall.
d. individual car manufacturers to move up and to the right along their individual supply curves.
ANS: D
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Technology
MSC: Applicative
80. Which of the following might cause the supply curve for an inferior good to shift to the right?
a. an increase in input prices
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b. a decrease in consumer income
c. an improvement in production technology that makes production of the good more profitable
d. a decrease in the number of sellers in the market
ANS: C
NAT: Analytic
MSC: Analytical
PTS: 1
DIF:
LOC: Supply and demand
3
REF: 4-3
TOP: Technology
81. 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.
ANS: A
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Technology
MSC: Applicative
82. 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.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Interpretive
83. 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.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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58 ❖ Chapter 4/The Market Forces of Supply and Demand
84. 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.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
85. 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.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
86. A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect
a. the dress manufacturer to supply more dresses now than it was supplying previously.
b. the dress manufacturer to supply fewer dresses now than it was supplying previously.
c. the demand for this manufacturer's dresses to fall.
d. no change in the dress manufacturer's current supply; instead, future supply will be affected.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
87. 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.
ANS: C
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
88. 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, is3mass-producing
an excellent copy and plans to flood the market
0
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.
ANS: B
PTS: 1
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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