Question 1

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?
A) Price will increase, and quantity will increase.
B) Price will decrease, and quantity will increase.
C) Price will increase, and quantity will decrease.
D) Price will decrease, and quantity will decrease.
E) Price will increase, and quantity will stay the same.

Accepted Answer

An increase in consumers' incomes will lead to an increase in demand for restaurant meals. Since there is an increase in demand, it will cause the equilibrium price to increase. Also, the increase in demand will lead to an increase in quantity supplied, resulting in an increase in the equilibrium quantity. Therefore, the correct answer is A.

Question 2

Exhibit 4-8  Demand and supply curves  In Exhibit 4-8, a movement from A to B is best explained by:
A) an increase in income and in the number of suppliers.
B) an increase in the price of other goods.
C) an increase in the population.
D) a decrease in income and an improvement in the technology used to produce the good.
E) equilibrium quantity increases and the equilibrium price change is indeterminate.

Accepted Answer

The answer of Exhibit 4-8  Demand and supply curves  In...

Question 3

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:
A) market price will decrease, and market quantity exchanged will increase.
B) market price will increase, and market quantity exchanged will decrease.
C) market price will increase, and the quantity exchanged could increase, decrease, or remain the same.
D) market price could increase, decrease, or remain the same, and quantity exchanged will increase.
E) market price will increase, decrease, or remain the same, and quantity exchanged will decrease.

Accepted Answer

When market supply decreases and market demand increases, the equilibrium price will increase, and the quantity exchanged could increase, decrease, or remain the same. The direction of the quantity change will depend on the extent of the shifts in both supply and demand. Therefore, C is the best choice.

Question 4

Exhibit 4-7  Demand and supply schedules for movie tickets  In Exhibit 4-7, the equilibrium price of a movie ticket is:
A) $10.
B) $8.
C) $6.
D) $4.
E) $2.

Accepted Answer

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

Question 5

Exhibit 4-8  Demand and supply curves  In Exhibit 4-8, a movement from A to D is best described as a(n):
A) increase in the quantity demanded and an increase in supply.
B) increase in supply and demand.
C) increase in both the quantity demanded and supplied.
D) increase in the quantity supplied and in the demand.
E) decrease in the quantity demanded and a decrease in supply.

Accepted Answer

The answer of Exhibit 4-8  Demand and supply curves  In...

Question 6

An increase in the wages paid to fishermen will have what effect on the fish market equilibrium?
A) Price will decrease, and quantity will decrease.
B) Price will increase, and quantity will increase.
C) Price will decrease, and quantity will increase.
D) Price will increase, and quantity will decrease.
E) Price and quantity will stay the same.

Accepted Answer

An increase in wages will increase the cost of production for fishermen, leading to a decrease in the supply of fish. As a result, the equilibrium price will increase and the equilibrium quantity will decrease.

Question 7

An increase in both supply and demand causes which of the following?
A) Equilibrium price falls.
B) Equilibrium price rises.
C) Equilibrium price change is indeterminate.
D) Equilibrium quantity decreases.
E) Equilibrium quantity change is indeterminate.

Accepted Answer

The answer of An increase in both supply and demand...

Question 8

Exhibit 4-8  Demand and supply curves  In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n):
A) increase in supply and demand.
B) decrease in supply and demand.
C) increase in supply that dominates a decrease in demand.
D) increase in demand that dominates a decrease supply.
E) decrease in demand that dominates an increase in supply.

Accepted Answer

The answer of Exhibit 4-8  Demand and supply curves  In...

Question 9

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:
A) market price will decrease, and market quantity exchanged could increase, decrease, or remain unchanged.
B) market price will increase, and market quantity exchanged will decrease.
C) market price will increase, and the quantity exchanged could increase, decrease, or remain the same.
D) market price could increase, decrease, or remain the same, and quantity exchanged will increase.
E) market price will increase, decrease, or remain the same, and quantity exchanged will decrease.

Accepted Answer

An increase in supply and a decrease in demand would result in a surplus of goods, causing the market price to decrease. However, the effect on the quantity exchanged is uncertain and could increase, decrease, or remain the same depending on the magnitude of the changes in supply and demand.

Question 10

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?
A) Price increases and quantity increases
B) Price decreases and quantity increases.
C) Price increases and quantity increases.
D) Price decreases and quantity decreases
E) No change in price and quantity

Accepted Answer

The announcement by the FDA will have a negative impact on the demand for soda X, which will shift the demand curve to the left. As a result, the equilibrium price and quantity will both decrease. This is reflected in answer choice D. Option A and C are incorrect because there would not be an increase in both price and quantity when the demand for the product has decreased dramatically. Option B is also incorrect because a decrease in price and an increase in quantity cannot occur simultaneously if the demand curve has shifted left. Option E is incorrect because there will be a change in both price and quantity due to the shift in the demand curve.

Question 11

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:
A) these two effects cancel each other out and there is no change in the margarine market equilibrium.
B) the demand curve shifts left and the supply curve shifts right.
C) there is a margarine price increase.
D) there is an excess demand for margarine.
E) the equilibrium quantity of margarine must increase.

Accepted Answer

When consumers switch away from eating margarine, the demand for margarine decreases, causing the demand curve to shift left. At the same time, an increase in the number of margarine suppliers will increase the supply of margarine, causing the supply curve to shift right. These two effects will result in a new market equilibrium with a lower price and quantity of margarine. Therefore, the answer is B.

Question 12

A price ceiling that sets the price of a good below market equilibrium will cause:
A) An increase in quantity demanded of the good.
B) A decrease in quantity supplied of the good.
C) A shortage of the good.
D) All of the above.

Accepted Answer

A price ceiling below market equilibrium increases quantity demanded, decreases quantity supplied, and results in a shortage.

Question 13

An increase in demand and a decrease in supply cause which of the following?
A) Equilibrium price change is indeterminate.
B) Equilibrium quantity decreases.
C) Equilibrium price falls.
D) Equilibrium price rises.
E) Equilibrium quantity increases.

Accepted Answer

The answer of An increase in demand and a decrease...

Question 14

Ceteris paribus , if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?
A) Price will increase, and quantity will increase.
B) Price and quantity will stay the same.
C) Price will decrease, and quantity will increase.
D) Price will increase, and quantity will decrease.
E) Price will decrease, and quantity will decrease.

Accepted Answer

If more people are eating broccoli, the demand for cabbage (a substitute good for broccoli) will decrease, leading to a decrease in both price and quantity demanded of cabbage. This will result in a decrease in market equilibrium for cabbage. Therefore, the correct answer is E, which reflects a decrease in price and quantity of cabbage.

Question 15

Ceteris paribus , an increase in the supply of a good causes which of the following?
A) Lowers the equilibrium price, and reduces the quantity bought and sold.
B) Raises the equilibrium price, and raises the quantity bought and sold.
C) Raises the equilibrium price, and increases the quantity bought and sold.
D) Lowers the equilibrium price, and increases the quantity bought and sold.
E) Equilibrium price and equilibrium quantity change are indeterminate.

Accepted Answer

An increase in the supply of a good leads to a rightward shift of the supply curve, resulting in a surplus of the good at the initial price. Producers then lower their prices to clear the surplus, which results in a lower equilibrium price. As the price falls, the quantity demanded increases, and the quantity supplied decreases until a new equilibrium is established at a lower price and a higher quantity. Therefore, D, "Lowers the equilibrium price, and increases the quantity bought and sold" is the correct answer.

Question 16

Exhibit 4-6 Demand and supply curves In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market. A) Market supply has decreased, and market demand has increased. B) Market supply has increased, and market demand has decreased. C) Market supply has decreased, and market demand has decreased. D) The quantity supplied has decreased, and the quantity demanded has increased. E) Market supply has increased, and market demand has increased.

Accepted Answer

The answer of Exhibit 4-6  Demand and supply curves  In...

Question 17

Exhibit 4-7  Demand and supply schedules for movie tickets  In Exhibit 4-7, a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:
A) $10.
B) $8.
C) $6.
D) $4.
E) $2.

Accepted Answer

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

Question 18

Assume no price ceiling exists and a market is in equilibrium. Then a price ceiling is established which is below the market equilibrium. What would result?
A) Shortage.
B) Equilibrium.
C) Surplus.
D) Equity.

Accepted Answer

Establishing a price ceiling below the market equilibrium means that the maximum price that suppliers can charge is lower than what consumers are willing to pay. This would result in a shortage because the quantity demanded would exceed the quantity supplied. Consumers would be willing to buy more at the lower price, but suppliers would reduce the amount they are willing to produce and sell due to the lower profitability. As a result, there would be excess demand or a shortage in the market.

Question 19

Exhibit 4-6  Demand and supply curves  If the market demand and supply curves shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n):
A) increase in market price and a decrease in the quantity exchanged.
B) decrease in market price and a decrease in the quantity exchanged.
C) increase in market price and an increase in the quantity exchanged.
D) decrease in market price and an increase in the quantity exchanged.
E) decrease in market price and no change in the quantity exchanged.

Accepted Answer

The shift in demand and supply curves both lead to a decrease in equilibrium price, but the effect on quantity exchanged is ambiguous. However, in this case, the shift in the supply curve is larger than the shift in the demand curve, leading to a decrease in quantity exchanged. Therefore, the new equilibrium will show a decrease in market price and an increase in the quantity exchanged.

Question 20

Exhibit 4-8  Demand and supply curves  In Exhibit 4-8, a movement from A to C is best described as a(n)
A) increase in the quantity supplied and an increase in the demand.
B) decrease in the quantity supplied and a decrease in demand.
C) decrease in the quantity supplied and an increase in demand.
D) decrease in the quantity demanded and a decrease in supply.
E) decrease in both quantity demanded and quantity supplied.

Accepted Answer

The answer of Exhibit 4-8  Demand and supply curves  In...

Quiz 4: Markets in Action

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to B is best explained by:

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Exhibit 4-7 Demand and supply schedules for movie tickets In Exhibit 4-7, the equilibrium price of a movie ticket is:

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to D is best described as a(n) :

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

An increase in both supply and demand causes which of the following?

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n) :

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:

A price ceiling that sets the price of a good below market equilibrium will cause:

An increase in demand and a decrease in supply cause which of the following?

Ceteris paribus , if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?

Ceteris paribus , an increase in the supply of a good causes which of the following?

Exhibit 4-6 Demand and supply curves In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market.

Exhibit 4-7 Demand and supply schedules for movie tickets In Exhibit 4-7, a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Assume no price ceiling exists and a market is in equilibrium. Then a price ceiling is established which is below the market equilibrium. What would result?

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

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to C is best described as a(n)

Quiz 4: Markets in Action

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to B is best explained by:

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show:

Exhibit 4-7 Demand and supply schedules for movie tickets In Exhibit 4-7, the equilibrium price of a movie ticket is:

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to D is best described as a(n) :

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

An increase in both supply and demand causes which of the following?

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n) :

If the market supply increases and, simultaneously, market demand decreases, the new equilibrium will show:

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?

If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:

A price ceiling that sets the price of a good below market equilibrium will cause:

An increase in demand and a decrease in supply cause which of the following?

Ceteris paribus , if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?

Ceteris paribus , an increase in the supply of a good causes which of the following?

Exhibit 4-6 Demand and supply curves In Exhibit 4-6, the demand curve has shifted from D1 to D2 and, simultaneously, the supply curve has shifted from S1 to S2. Describe these actions in this market.

Exhibit 4-7 Demand and supply schedules for movie tickets In Exhibit 4-7, a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Assume no price ceiling exists and a market is in equilibrium. Then a price ceiling is established which is below the market equilibrium. What would result?

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

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to C is best described as a(n)

Exhibit 4-6 Demand and supply curves In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market.