Question 1

Assume the demand schedule for cookies is downward sloping.If the price of cookies falls from $1.50 to $1.25 per dozen,
A)the demand for cookies will fall.
B)the demand for cookies will rise.
C)a larger quantity of cookies will be demanded.
D)a smaller quantity of cookies will be demanded.

Accepted Answer

A downward sloping demand schedule indicates that as the price decreases, the quantity demanded increases. Therefore, when the price of cookies falls, a larger quantity will be demanded.

Question 2

Shortages normally accompany an effective price floor.

Accepted Answer

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

Question 3

The most basic investigative tool of economics is the
A)concept of scarcity.
B)mechanism of supply and demand.
C)coordination and trade syndrome.
D)inflation-unemployment trade-off.
E)regulation of business.

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 4

During the Revolutionary War, the Pennsylvania legislature attempted to help the Continental Army by enacting
A)wage floors for soldiers in the army.
B)bonuses for soldiers who re-enlisted.
C)laws to buy food for the soldiers stationed in Pennsylvania.
D)price controls on essential commodities.
E)All of the above are correct.

Accepted Answer

The Pennsylvania legislature enacted price controls on essential commodities to help the Continental Army by making necessary goods more affordable.

Question 5

One motive for "battling the invisible hand" is
A)unhappiness about the prices that occur in free markets.
B)envy toward those who apparently benefit from certain prices.
C)a desire to have government "correct" some problems.
D)an attempt to produce justice between buyers and sellers.
E)All of the above are correct.

Accepted Answer

All the options listed are motives for opposing or regulating free market outcomes, as they reflect concerns about fairness, equity, and the role of government in addressing perceived market failures or injustices.

Question 6

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
A)exhorted the public to obey the law and help supply food to the army.
B)passed tax increases to punish those who refused to sell the food.
C)revised the American Law of Supply and Demand.
D)overrode local ordinances and essentially repealed the price controls.
E)called for the repeal of other price control measures.

Accepted Answer

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

Question 7

Any ​event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Accepted Answer

This is because a shift in demand or supply curve changes the quantity demanded and quantity supplied at every price level, leading to a new equilibrium point where the price and quantity are different than before.

Question 8

Price controls are usually enacted in response to
A)popular opinion.
B)governmental studies.
C)scholarly research on the effects of high prices.
D)laws enacted in other countries.
E)All of the above are correct.

Accepted Answer

Price controls are usually enacted in response to popular opinion, as consumers may feel that certain goods or services are too expensive and demand action from their government. While governmental studies and scholarly research may inform the decision-making process, they are not always the primary drivers of price controls. Laws enacted in other countries may also serve as examples or precedents, but popular opinion is often the most influential factor. Therefore, option A is the best choice.

Question 9

When used in a professional or technical sense, the law of supply and demand refers to
A)some vague influences on economic affairs.
B)the fact that prices go up when commodities are scarce.
C)the market forces that show how prices and quantities are determined.
D)the controls that regulate the amount of scarce goods that each consumer can purchase.

Accepted Answer

The law of supply and demand refers to the market forces that determine prices and quantities of goods and services exchanged in a market. It explains how the quantity of goods supplied by producers and the quantity of goods demanded by consumers determines the market price at which the goods will be sold. It is a fundamental principle of economics used in professional and technical contexts. Option A is incorrect because the law of supply and demand is not vague and has well-defined meanings. Option B is partially correct, but it only describes a consequence of the law of supply and demand and does not explain it fully. Option D is incorrect because the law does not regulate the amount of scarce goods that consumers can purchase, but instead reflects the natural market forces at work.

Question 10

Price controls usually enhance efficiency in the allocation of resources.

Accepted Answer

Price controls, such as price ceilings or price floors, can disrupt the market by creating shortages or surpluses of goods and services. They can also lead to inefficiencies such as inefficient production, decreased quality, and reduced innovation. Therefore, price controls do not usually enhance efficiency in the allocation of resources.

Question 11

The mechanism of supply and demand is
A)a fundamental tool in both microeconomics and macroeconomics.
B)the only real "law" of economics.
C)a fundamental tool only in microeconomics.
D)a fundamental tool only in macroeconomics.

Accepted Answer

The mechanism of supply and demand is a fundamental tool in both microeconomics and macroeconomics. It is used to explain how market prices are determined and how they change over time. It is also used to analyze the impacts of various economic policies and events on the economy. Therefore, option A is the correct answer.

Question 12

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.
A)demand; the price of its complement 
B)demand; the quantity supplied 
C)quantity demanded; the price of its substitute 
D)quantity demanded; the price of that product

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 answer is D - quantity demanded; the price of that product.

Question 13

Any change that shifts the supply curve outward to the right, and does not affect ​the demand durve will lower the equilibrium price and raise the equilibrium.

Accepted Answer

When the supply curve shifts outward to the right, it means there is an increase in the quantity supplied at every price level. This leads to a surplus of goods in the market, which puts downward pressure on the price. As a result, the equilibrium price will decrease, while the equilibrium quantity will increase. The demand curve remains unchanged in this scenario.

Question 14

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

Accepted Answer

When prices are artificially lowered below the market equilibrium by price ceilings, a shortage of goods or services may occur as quantity demanded exceeds quantity supplied. This shortage creates an opportunity for sellers in the market to charge higher prices for the same goods, causing a black market to emerge. Therefore, price ceilings are likely to result in the growth of black markets.

Question 15

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was
A)a large increase in the availability of those items, ending shortages.
B)a severe shortage of those essential commodities.
C)an increase in the price of those items, thus alleviating shortages.
D)new efforts to increase production of those commodities.
E)a minor inconvenience as persons adjusted to the new law.

Accepted Answer

Price controls often result in shortages because they prevent market forces from adjusting prices in response to changes in supply and demand. This was the case during the American Revolution, when price controls on essential commodities led to severe shortages.

Question 16

The demand curve for a good connects points describing how much consumers
A)actually bought at different prices during a particular period.
B)actually bought at different prices in different periods.
C)would have been willing and able to buy at different prices during a particular period.
D)would have been willing and able to buy at different prices in different periods.

Accepted Answer

The demand curve shows the quantity of a good or service that consumers would be willing and able to buy at each price level during a particular period. It does not necessarily reflect how much they actually bought, or what they would be willing to buy in different time periods.

Question 17

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

Accepted Answer

Sugar price supports, which are government subsidies for sugar producers, can lead to oversupply and surpluses of sugar. This can actually drive down prices for sugar in the short term, but in the long term it can lead to higher costs for taxpayers and economic inefficiencies.

Question 18

While demand shifts have an effect on equilibrium price and quantity, supply shifts have no such effect.

Accepted Answer

Changes in supply shifts the supply curve, which in turn affects the equilibrium price and quantity.

Question 19

One effect of market intervention is resource misallocation.

Accepted Answer

Market intervention can lead to resources being allocated in ways that are not efficient or effective, as decisions may be made based on political or other factors rather than purely on market forces. This can result in inefficiencies and waste within the economy.

Question 20

The demand curve for a typical good has
A)a negative slope because some consumers switch to other goods as the price of the good rises.
B)a negative slope because the supply of the good rises as demand rises.
C)a negative slope because the good has less "snob appeal" as its price falls.
D)an inverse slope because as the price goes up, the good has more profitability.
E)a positive slope because price is a clear indicator of need.

Accepted Answer

The demand curve for a typical good has a negative slope because some consumers switch to other goods as the price of the good rises. This is known as the law of demand which states that as the price of a good increases, the quantity demanded decreases. As the price decreases, the quantity demanded increases. This is because as the price of a good increases, consumers may switch to cheaper substitutes or reduce their overall demand.

Quiz 4: Supply and Demand: an Initial Look

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

Shortages normally accompany an effective price floor.

The most basic investigative tool of economics is the

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

One motive for "battling the invisible hand" is

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

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Price controls are usually enacted in response to

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

Price controls usually enhance efficiency in the allocation of resources.

The mechanism of supply and demand is

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.

Any change that shifts the supply curve outward to the right, and does not affect the demand durve will lower the equilibrium price and raise the equilibrium.

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

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

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

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

While demand shifts have an effect on equilibrium price and quantity, supply shifts have no such effect.

One effect of market intervention is resource misallocation.

The demand curve for a typical good has

Quiz 4: Supply and Demand: an Initial Look

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

Shortages normally accompany an effective price floor.

The most basic investigative tool of economics is the

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

One motive for "battling the invisible hand" is

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

Any ​event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

Price controls are usually enacted in response to

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

Price controls usually enhance efficiency in the allocation of resources.

The mechanism of supply and demand is

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.

Any change that shifts the supply curve outward to the right, and does not affect ​the demand durve will lower the equilibrium price and raise the equilibrium.

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

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

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

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

While demand shifts have an effect on equilibrium price and quantity, supply shifts have no such effect.

One effect of market intervention is resource misallocation.

The demand curve for a typical good has

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

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.

Any change that shifts the supply curve outward to the right, and does not affect the demand durve will lower the equilibrium price and raise the equilibrium.