Question 1

-Refer to the Table 4-1. If the price were $30, what would happen?

Accepted Answer

A)   A shortage of 90 units would exist and the price would tend to fall.
B)   A surplus of 45 units would exist and the price would tend to rise.
C)   A surplus of 45 units would exist and the price would tend to fall.
D)   A shortage of 90 units would exist and the price would tend to rise.E) B) and D)
F) A) and B)

Question 2

Figure 4-5 
-Refer to the Figure 4-5. Which of the four graphs represents the market for strawberries after new technology is introduced that helps speed up the harvesting time?

Accepted Answer

A)   graph A
B)   graph B
C)   graph C
D)   graph DE) None of the above
F) C) and D)

Question 3

Which of the following would NOT be a determinant of demand?

Accepted Answer

A)   the price of related goods
B)   income
C)   expectations
D)   the prices of the inputs used to produce the goodE) A) and C)
F) B) and D)

Question 4

What would an early frost in the orchards of the Annapolis Valley cause?

Accepted Answer

A)   an increase in the demand for apples, increasing price
B)   an increase in the supply of apples, decreasing price
C)   a decrease in the demand for apples, decreasing price
D)   a decrease in the supply of apples, increasing priceE) All of the above
F) B) and C)

Question 5

Price, which is determined by all buyers and sellers as they interact in the marketplace, allocates the economy's scarce resources.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-1 
-Refer to the Figure 4-1. What could cause the movement from S1 to S?

Accepted Answer

A)   a decrease in the price of the good
B)   an improvement in technology
C)   an increase in income
D)   an increase in input pricesE) B) and D)
F) A) and B)

Question 7

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

-Refer to the Table 4-1. If the price were $120, what would happen?

Accepted Answer

A)   A surplus of 50 units would exist and the price would tend to fall.
B)   A surplus of 10 units would exist and the price would tend to fall.
C)   A surplus of 25 units would exist and the price would tend to fall.
D)   A shortage of 25 units would exist and the price would tend to rise.E) A) and D)
F) None of the above

Question 9

What is another term for equilibrium price?

Accepted Answer

A)   balancing price
B)   market-clearing price
C)   cooperative price
D)   reservation priceE) A) and D)
F) All of the above

Question 10

The law of demand states that the quantity demanded of a product is positively related to price.

Accepted Answer

A) True 
 B)False

Question 11

Figure 4-7 
-Refer to the Figure 4-7. What does the movement from point A to point B on the graph show?

Accepted Answer

A)   a decrease in demand
B)   an increase in demand
C)   a decrease in quantity demanded
D)   an increase in quantity demandedE) B) and C)
F) A) and D)

Question 12

The market demand is the average of all of the individual demands for a particular good or service.

Accepted Answer

A) True 
 B)False

Question 13

If two goods are substitutes, what happens if there is a decrease in the price of one good?

Accepted Answer

A)   It increases the demand for the other good.
B)   It reduces the demand for the other good.
C)   It reduces the quantity demanded of the other good.
D)   It increases the quantity demanded of the other good.E) C) and D)
F) B) and D)

Question 14

What is the term for the behaviour of people as they interact with one another in markets?

Accepted Answer

A)   economics
B)   interaction
C)   demand and supply
D)   social psychologyE) C) and D)
F) A) and D)

Question 15

Which of the following will definitely cause equilibrium quantity to fall?

Accepted Answer

A)   demand increases and supply decreases
B)   demand and supply both decrease
C)   demand decreases and supply increases
D)   demand and supply both increaseE) A) and B)
F) A) and D)

Question 16

Figure 4-10 
-Refer to the Figure 4-10. What is the movement from point B to point A on the graph called?

Accepted Answer

A)   a decrease in supply
B)   an increase in supply
C)   an increase in the quantity supplied
D)   a decrease in the quantity suppliedE) B) and D)
F) B) and C)

Question 17

Suppose cupcakes are currently selling for $8 per dozen. The equilibrium price of cupcakes is $10 per dozen. What would we expect?

Accepted Answer

A)   a shortage to exist and the market price of cupcakes to increase
B)   a shortage to exist and the market price of cupcakes to decrease
C)   a surplus to exist and the market price of cupcakes to increase
D)   a surplus to exist and the market price of cupcakes to decreaseE) All of the above
F) C) and D)

Question 18

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also a reduction in input prices. What would we expect to occur in this market?

Accepted Answer

A)   The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
B)   The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
C)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.E) A) and B)
F) A) and C)

Question 19

What would happen to the equilibrium price and quantity of apples if the wages of apple pickers rose and the price of peaches rose?

Accepted Answer

A)   price will fall and the effect on quantity is ambiguous
B)   price will rise and the effect on quantity is ambiguous
C)   quantity will fall and the effect on price is ambiguous
D)   quantity will rise and the effect on price is ambiguousE) B) and C)
F) C) and D)

Question 20

Peterborough is a small university city in Ontario. What happens to the market demand curve for fast food in Peterborough at the end of August each year?

Accepted Answer

A)   It shifts right.
B)   It shifts left.
C)   It remains constant but moves down the curve.
D)   It remains constant but moves up the curve.E) A) and B)
F) B) and D)

Exam 4: The Market Forces of Supply and Demand

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Correct AnswerverifiedShow Answer

-Refer to the Table 4-1. If the price were $30, what would happen?

Correct AnswerverifiedShow Answer

What would an early frost in the orchards of the Annapolis Valley cause?

Correct AnswerverifiedShow Answer

What is another term for equilibrium price?

Correct AnswerverifiedShow Answer

Which of the following will definitely cause equilibrium quantity to fall?

Correct AnswerverifiedShow Answer

Peterborough is a small university city in Ontario. What happens to the market demand curve for fast food in Peterborough at the end of August each year?

Correct AnswerverifiedShow Answer

If two goods are substitutes, what happens if there is a decrease in the price of one good?

Correct AnswerverifiedShow Answer

Suppose cupcakes are currently selling for $8 per dozen. The equilibrium price of cupcakes is $10 per dozen. What would we expect?

Correct AnswerverifiedShow Answer

Price, which is determined by all buyers and sellers as they interact in the marketplace, allocates the economy's scarce resources.

Correct AnswerverifiedShow Answer

Figure 4-7 -Refer to the Figure 4-7. What does the movement from point A to point B on the graph show?

Correct AnswerverifiedShow Answer

What is the term for the behaviour of people as they interact with one another in markets?

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of apples if the wages of apple pickers rose and the price of peaches rose?

Correct AnswerverifiedShow Answer

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also a reduction in input prices. What would we expect to occur in this market?

Correct AnswerverifiedShow Answer

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for strawberries after new technology is introduced that helps speed up the harvesting time?

Correct AnswerverifiedShow Answer

Which of the following would NOT be a determinant of demand?

Correct AnswerverifiedShow Answer

Figure 4-10 -Refer to the Figure 4-10. What is the movement from point B to point A on the graph called?

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Figure 4-1 -Refer to the Figure 4-1. What could cause the movement from S1 to S?

Correct AnswerverifiedShow Answer

The market demand is the average of all of the individual demands for a particular good or service.

Correct AnswerverifiedShow Answer

The law of demand states that the quantity demanded of a product is positively related to price.

Correct AnswerverifiedShow Answer

-Refer to the Table 4-1. If the price were $120, what would happen?

Correct AnswerverifiedShow Answer

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