Question 1

When used in a professional or technical sense,the law of supply and demand refers to

Accepted Answer

The law of supply and demand is a fundamental concept in economics that refers to the market forces that determine prices and quantities of goods and services in a free market. It states that when the demand for a product or service increases, the price will also increase, assuming supply remains constant. Conversely, when the demand decreases, prices will usually fall. This principle also applies to the supply of goods and services: when supply increases, prices tend to fall, and when supply decreases, prices tend to rise. So, in a professional or technical sense, the law of supply and demand refers to the interaction between buyers and sellers in a market that determines prices and quantities.

Question 2

The demand curve for a good connects points describing how much consumers

Accepted Answer

The demand curve represents the relationship between the price of a good and the quantity that consumers are willing and able to buy at that price during a particular period. Therefore, the best choice is C, as it accurately describes what the demand curve represents. The other choices (A, B, and D) are incorrect as they either suggest that the demand curve describes past purchases (A and B) or future purchases across different time periods (D), which is not the case.

Question 3

During the American Revolution,Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices.The Continental Congress later passed a law which

Accepted Answer

The answer of During the American Revolution,Washington's army nearly starved...

Question 4

The most basic investigative tool of economics is the

Accepted Answer

The mechanism of supply and demand is the most basic investigative tool of economics because it explains how prices are determined in a market economy through the interaction of supply (how much of a good or service is available) and demand (how much of a good or service people want). This fundamental concept is central to understanding economic behavior and market operations.

Question 5

The mechanism of supply and demand is

Accepted Answer

The mechanism of supply and demand is a fundamental tool in both microeconomics and macroeconomics, as it helps us understand how prices are determined in individual markets and how they affect the economy as a whole. While it is not the only tool or law in economics, it is a crucial concept that underlies much of economic theory and practice.

Question 6

Sugar price supports ensure an abundance of sugar,and hence reasonable prices for consumers.

Accepted Answer

Sugar price supports lead to overproduction and surplus, which can result in artificially high prices and government stockpiling. This can actually harm consumers by driving up prices and reducing market efficiency.

Question 7

An individual's demand schedule

Accepted Answer

An individual's demand schedule provides information about what quantity a consumer is willing and able to buy at each price. It is a table that shows the relationship between the price of a good or service and the quantity demanded over a specified period of time, holding all other factors constant. It helps to determine the demand curve for a product, which is a graphical representation of the relationship between price and quantity demanded.

Question 8

Price ceilings will likely result in the growth of black markets.

Accepted Answer

When prices are legally set below the market equilibrium price, a price ceiling is established. This creates a shortage – more consumers wish to buy at the low price than suppliers wish to sell. This can lead to a black market, where goods are sold above the legal price ceiling, creating an illegal trade in the product.

Question 9

Assume the demand schedule for cookies is downward sloping.If the price of cookies falls from $1.50 to $1.25 per dozen,

Accepted Answer

According to the law of demand, as the price of a good decreases, the quantity demanded of that good will increase, ceteris paribus. Therefore, if the price of cookies falls from $1.50 to $1.25 per dozen, a larger quantity of cookies (i.e., more than before) will be demanded.

Question 10

Price controls are usually enacted in response to

Accepted Answer

Price controls are usually enacted in response to popular opinion, such as when consumers express frustration with high prices for certain goods or services. While governmental studies and scholarly research may inform policymakers' decisions about price controls, public opinion is often the driving force behind their implementation. Laws enacted in other countries may also influence policymakers' decisions, but this is less common than popular opinion.

Question 11

One motive for "fighting the invisible hand" is

Accepted Answer

The answer of One motive for "fighting the invisible hand"...

Question 12

When a demand schedule is drawn as a graph,

Accepted Answer

All options are correct. Price is typically measured on the vertical axis, quantity on the horizontal axis, the curve has a negative slope due to the law of demand, and the other variables (such as income or consumer tastes) are held constant to only analyze the relationship between price and quantity demanded.

Question 13

The demand curve for a typical good has

Accepted Answer

The negative slope of the demand curve represents the law of demand, which states that as the price of a good increases, the quantity demanded of that good decreases. This occurs because consumers will switch to other goods as the price of the good increases, seeking substitutes that are more affordable. Therefore, option A is the best choice because it correctly explains the reason for the negative slope of the demand curve.

Question 14

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

Price controls often lead to inefficient allocation of resources, as they can create shortages or surpluses, and may not accurately reflect market demand or supply.

Question 15

Shortages normally accompany an effective price floor.

Accepted Answer

The answer of Shortages normally accompany an effective price floor....

Question 16

During the American Revolution,the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was

Accepted Answer

Price controls often lead to shortages as suppliers are forced to provide goods below market value, making it less profitable to continue production or bring in goods from other areas. This was the case with the Pennsylvania legislature's price controls on essential commodities during the American Revolution. As a result, there was a severe shortage of those items.

Question 17

A demand schedule is a table showing how the ____ of some product during a specified period of time changes as ____ changes,holding all other determinants of quantity demanded constant.

Accepted Answer

A demand schedule shows how the quantity demanded of a product changes as the price of that product changes, holding all other determinants of quantity demanded constant. Therefore, the correct choice is D.

Question 18

One effect of market intervention is resource misallocation.

Accepted Answer

Market intervention can lead to government attempts to steer resources towards certain sectors or industries, which can interfere with the normal functioning of markets and result in resources being directed towards less efficient uses. This can lead to a misallocation of resources and ultimately, lower economic growth and welfare.

Question 19

The slope of a demand curve is almost always

Accepted Answer

The slope of a demand curve is negative because as the price of a good decreases, the quantity demanded increases. This is due to the law of demand, which states that as the price of a good decreases, other things being equal, consumers will buy more of it.

Question 20

During the Revolutionary War,the Pennsylvania legislature attempted to help the Continental Army by enacting

Accepted Answer

The answer of During the Revolutionary War,the Pennsylvania legislature attempted...

Quiz 4: Supply and Demand: An Initial Look