Chapter 04a test bank.docx

Chapter 04a test bank.docx

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Chapter04atestbank

Chapter4

TheMarketForcesofSupplyandDemand

TestA

.Amarketisa

a.placewhereonlybuyerscometogether.

b.placewhereonlysellersmeet.

c.groupofpeoplewithcommondesires.

d.groupofbuyersandsellersofaparticulargoodorservice.

ANSWER:

d.groupofbuyersandsellersofaparticulargoodorservice.

.Amonopolyisamarket

a.withoneseller.

b.withfewsellers.

c.withonebuyer.

d.wherethegovernmentsetstheprice.

ANSWER:

a.withoneseller.

.Whenwearestudyingthebehaviorofbuyers,wearestudying

a.supply.

b.demand.

c.anentiremarket.

d.governmentregulation.

ANSWER:

b.demand.

.Ademandcurveisthe

a.curvethatrelatesincomewithquantitydemanded.

b.upward-slopinglinerelatingpricewithquantitysupplied.

c.downward-slopinglinerelatingthepriceofthegoodwiththequantitydemanded.

d.Noneoftheaboveanswersiscorrect.

ANSWER:

c.downward-slopinglinerelatingthepriceofthegoodwiththequantitydemanded.

.Ifagoodis“normal,”thenanincreaseinincomewillresultin

a.alowermarketprice.

b.adecreaseinthedemandforthegood.

c.anincreaseinthedemandforthegood.

d.nochangeinthedemandforthegood.

ANSWER:

c.anincreaseinthedemandforthegood.

.IfthepriceofasubstitutetogoodXincreases,thenthe

a.demandforgoodXwilldecrease.

b.demandforgoodXwillincrease.

c.marketpriceofgoodXwilldecrease.

d.demandforgoodXwillnotchange.

ANSWER:

b.demandforgoodXwillincrease.

.Whatwillhappeninthericemarketifbuyersareexpectinghigherpricesinthenearfuture?

a.Thesupplyofricewillincrease.

b.Thedemandforricewilldecrease.

c.Thedemandforricewillincrease.

d.Thedemandforricewillbeunaffected.

ANSWER:

c.Thedemandforricewillincrease.

.ThemovementfrompointAtopointBonthegraphwouldbecausedby

a.anincreaseinincome.

b.anincreaseinprice.

c.adecreaseinprice.

d.adecreaseinthepriceofasubstitutegood.

ANSWER:

c.adecreaseinprice.

.CeterisparibusisaLatinphrasethatliterallymeans

a.“afterthisthereforebecauseofthis.”

b.“otherthingsbeingequal.”

c.“torespondslowlytoachangeinprice.”

d.“There’snosuchthingasafreelunch.”

ANSWER:

b.“otherthingsbeingequal.”

.WhichofthefollowingwouldNOTshiftthedemandcurveforagoodorservice?

a.achangeinincome

b.achangeinthepriceofarelatedgood

c.achangeinthepriceofthegoodorservice

d.achangeinexpectationsaboutthepriceofthegoodorservice

ANSWER:

c.achangeinthepriceofthegoodorservice

.Ifthenumberofbuyersinthemarketdecreases,the

a.demandinthemarketwilldecrease.

b.supplyinthemarketwillincrease.

c.demandinthemarketwillincrease.

d.supplyinthemarketwilldecrease.

ANSWER:

a.demandinthemarketwilldecrease.

.Whenthepriceofagoodorservicechanges,

a.supplyshiftsintheoppositedirection.

b.demandshiftsintheoppositedirection.

c.demandshiftsinthesamedirection.

d.thereisamovementalongastabledemandcurve.

ANSWER:

d.thereisamovementalongastabledemandcurve.

.Asupplycurveslopesupwardbecause

a.adecreaseininputpricesdecreasessupply.

b.anincreaseininputpricesincreasessupply.

c.asmoreisproduced,per-unitcostsofproductionfall.

d.anincreaseinpricegivesproducersincentivetosupplyalargerquantity.

ANSWER:

d.anincreaseinpricegivesproducersincentivetosupplyalargerquantity.

.Onthegraph,themovementfromStoS1iscalled

a.adecreaseinquantitysupplied.

b.anincreaseinquantitysupplied.

c.adecreaseinsupply.

d.anincreaseinsupply.

ANSWER:

d.anincreaseinsupply.

.Atechnologicaladvancementwillshiftthe

a.supplycurvetotheleft.

b.demandcurvetotheleft.

c.supplycurvetotheright.

d.demandcurvetotheright.

ANSWER:

c.supplycurvetotheright.

.Supposethereisanincreaseininputprices.Wewouldexpectsupply

a.toincrease.

b.todecrease.

c.toremainunchanged.

d.toeitherincreaseordecrease.

ANSWER:

b.todecrease.

.Theuniquepointatwhichthesupplyanddemandcurvesintersectiscalled

a.cohesion.

b.marketunity.

c.equilibrium.

d.anagreement.

ANSWER:

c.equilibrium.

.Accordingtothegraph,attheequilibriumprice,

a.20unitswouldbesuppliedanddemanded.

b.40unitswouldbesuppliedanddemanded.

c.60unitswouldbesuppliedanddemanded.

d.60unitswouldbesupplied,butonly20wouldbedemanded.

.Accordingtothegraph,atapriceof$7,

a.asurpluswouldexistandthepricewouldtendtorise.

b.asurpluswouldexistandthepricewouldtendtofall.

c.themarketwouldbeinequilibrium.

d.ashortagewouldexistandthepricewouldtendtofall.

ANSWER:

b.asurpluswouldexistandthepricewouldtendtofall.

.Ifthereisashortageoffarmlaborers,wewouldexpect

a.thewagesoffarmlaborerstoincrease.

b.thewagesoffarmlaborerstodecrease.

c.thepricesoffarmcommoditiestodecrease.

d.adecreaseinthedemandforsubstitutesoffarmlabor.

ANSWER:

a.thewagesoffarmlaborerstoincrease.

.Attheequilibriumprice

a.sellerswouldeventuallyrequireahigherprice.

b.therewillbenopressureonpricetoriseorfall.

c.therecanstillbeupwardordownwardpressureonprice.

d.buyerswouldnotbewillingtopurchasetheoutputsellersdesiretosell.

ANSWER:

b.therewillbenopressureonpricetoriseorfall.

.Whenthepriceishigherthantheequilibriumprice,

a.ashortagewillexist.

b.quantitydemandedequalsquantitysupplied.

c.buyersdesiretopurchasemorethanisproduced.

d.sellersdesiretoproduceandsellmorethanbuyerswishtopurchase.

ANSWER:

d.sellersdesiretoproduceandsellmorethanbuyerswishtopurchase.

.SupposethatdemanddecreasesANDsupplydecreases.Whatwouldyouexpecttooccurinthemarketforthegood?

a.Bothequilibriumpriceandequilibriumquantitywouldincrease.

b.Equilibriumpricewoulddecrease,buttheimpactonequilibriumquantitywouldbeambiguous.

c.Equilibriumquantitywoulddecrease,buttheimpactonequilibriumpricewouldbeambiguous.

d.Equilibriumpricewouldincrease,buttheimpactonequilibriumquantitywouldbeambiguous.

ANSWER:

c.Equilibriumquantitywoulddecrease,buttheimpactonequilibriumpricewouldbeambiguous.

.Supposethattheincomesofbuyersinaparticularmarketforanormalgooddeclinesandthereisalsoareductionininputprices.Whatwouldweexpecttooccurinthismarket?

a.Boththeequilibriumpriceandquantitywouldincrease.

b.Equilibriumpricewouldincrease,buttheimpactontheamountsoldinthemarketwouldbeambiguous.

c.Equilibriumpricewoulddecrease,buttheimpactontheamountsoldinthemarketwouldbeambiguous.

d.Equilibriumquantitywouldincrease,buttheimpactonequilibriumpricewouldbeambiguous.

ANSWER:

c.Equilibriumpricewoulddecrease,buttheimpactontheamountsoldinthemarketwouldbeambiguous.

.Inafreemarketsystem,whatisthemechanismforrationingscarceresources?

a.thegovernment

b.prices

c.buyers

d.sellers

ANSWER:

b.prices