Microeconomics Ch. 4

A competitive market is one in which a. there is only one seller, but there are many buyers. b. there are many sellers and each seller has the ability to set the price of his product. c. there are many sellers and they compete with one another in such a way that some sellers are always being forced out of the market. d. there are so many buyers and so many sellers that each has a negligible impact on the price of the product.

Economists in general a. do not try to explain people's tastes, but they do try to explain what happens when tastes change. b. believe that they must be able to explain people's tastes in order to explain what happens when tastes change. c. do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

A market demand curve represents a. the fact that the level of income is inversely related to quantity demanded. b. how quantity demanded changes when the number of buyers changes. c. the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. d. how much of a good all buyer are willing and able to buy at each possible price.

When quantity demanded has increased at every price, it might be because a. the number of buyers in the market has decreased. b. income has increased and the good is an inferior good. c. the costs incurred by sellers in producing the good have decreased. d. the price of a complementary good has decreased.

The difference between a supply schedule and a supply curve is that a. a supply schedule incorporates demand and a supply curve does not. b. a supply schedule incorporates prices of related goods and a supply curve does not. c. a supply schedule can shift, but a supply curve cannot shift. d. a supply schedule is a table and a supply curve is drawn on a graph.

The supply of a good is negatively related to the a. price of inputs used to make the good. b. demand for the good by consumers. c. price of the good itself. d. amount of profit a firm can expect to receive from selling the good.

A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect a. the dress manufacturer to supply more dresses now than it was supplying previously. b. the dress manufacturer to supply fewer dressed now than it was supplying previously. c. the demand for this manufacturer's dresses to fall. d. no change in the dress manufacturer's current supply; instead, future supply will be affected.

Which of the following events will definitely cause equilibrium quantity to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? 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 increase, but the impact on equilibrium price would be ambiguous. d. Both equilibrium price and equilibrium quantity would increase.

When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged.

The demand for a good or service is determined by a. those who buy the good or service. b. the government. c. the producers who create the good or service. d. those who supply the raw materials used in the production of the good or service.

The highest form of competition is called a. absolute competition. b. cutthroat competition. c. perfect competition. d. market competition.

A demand schedule is a table showering the relationship between a. quantity demanded and quantity supplied. b. income and quantity demanded. c. price and quantity demanded. d. price and expected price.

The line that relates the price of a good to the quantity demanded of that good is called the a. demand schedule, and it slopes upward only if the good for which the line is drawn fails to conform to the law of demand. b. demand schedule, and it slopes upward only if the demand for the good in question, relative to the demand for other goods, is increasing over time. c. demand curve, and it slopes upward only if there is a positive relationship between income and quantity demanded. d. demand curve, and it slopes downward as long as the good in question conforms to the law of demand.

The demand curve for a good is a. a line that relates the price to quantity demanded. b. a line that relates income to quantity demanded. c. a line that will shift only if the price of a related good changes. d. the same thing as a production possibilities frontier, except the axes are labeled differently.

Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in the price of a related good or service

Which of the following would not affect an individual's demand curve? a. expectations b. income c. prices of related goods d. the number of buyers

The market demand is a. the sum of all individual demands. b. the demand for every product in an industry. c. the average quantity demanded by individual demanders at each price. d. positively related to the price of the product in question.

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for a. hair gel to increase. b. razors to increase. c. combs to increase. d. None of the above is correct.

Suppose scientists provide evidence to the effect that chocolate pudding increases cholesterol. We would expect to see a. no change in the demand for chocolate pudding. b. a decrease in the demand for chocolate pudding. c. an increase in the demand for chocolate pudding. d. a decrease in the supply of chocolate pudding.

If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at each price of Vanilla Coke, a. we will observe a movement downward along the demand curve for Vanilla Coke. b. we will observe a movement upward along the demand curve for Vanilla Coke. c. the demand curve for Vanilla Coke will shift to the right. d. the demand curve for Vanilla Coke will shift to the left.

A very hot summer in Atlanta will cause a. the demand for lemonade to shift to the left. b. the demand for air conditioners to decrease. c. the demand for jackets to decrease. d. a movement downward and to the right along the demand curve for jackets.

The downward slope of the typical demand curve reflects which of the following concepts? a. Price is positively related to quantity supplied. b. There is a negative relationship between price and quantity demanded. c. There is a direct relationship between price and quantity demanded. d. When the price falls, buyers are willing to buy more but they are able to buy less.

According to the law of supply, a. the quantity supplied of a good is negatively related to the price of the good. b. when the price of a good falls, the quantity supplied of the good rises. c. the supply curve for a good is upward-sloping. d. All of the above are correct.

A decrease in the supply of televisions is represented by a. a leftward shift of the supply curve for televisions. b. a rightward shift of the supply curve for televisions. c. a flattening of the supply curve for televisions. d. a movement down and to the left along the supply curve for televisions.

If the price of a good is low, a. firms would increase profit by increasing output. b. the quantity supplied of the good could be zero. c. the supply curve for the good will shift to the left. d. firms can and should raise the price of the product.

The supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. price and profit.

The market supply curve shows a. the total quantity supplied at all possible prices. b. the average quantity supplied by producers at all possible prices. c. a ration between price and quantity supplied for market. d. suppliers' responses, in terms of the amounts they will supply, to the demands of buyers.

The positive relationship between price and quantity supplied is called a. profit. b. a change in supply. c. a shift of the supply curve. d. the law of supply.

"Other things equal, when the price of a good rises, the quantity supplied of the good rises also." This is a statement of the law of a. increasing costs. b. diminishing returns. c. supply. d. supply and demand.

An advance in production technology will a. increase a firm's costs. b. allow firms to raise the price of their product. c. shift the supply curve to the right, but the demand curve will be unaffected. d. shift the supply curve to the right and shift the demand curve to the right.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 an hour it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels.

Wheat is the main input in the production of flour. If the price of wheat decreases, all else equal, we would expect the a. demand for flour to increase. b. demand for flour to decrease. c. supply of flour to increase. d. supply of flour to decrease.

An increase in the price of oranges would lead to a. an increased supply of oranges. b. a reduction in the prices of inputs used in orange production. c. an increased demand for oranges. d. a movement up and to the right along the supply curve for oranges.

The price at which quantity supplied equals quantity demanded is called the a. coordinating price. b. monopoly price. c. equilibrium price. d. All of the above are correct.

A decrease in input costs to firms in a market will result in a. a decrease in equilibrium price and an increase in equilibrium quantity. b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and no change in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity.

If a surplus exists in a market we know that the actual price is a. above equilibrium price and quantity supplied is greater than quantity demanded. b. above equilibrium price and quantity demanded is greater than quantity supplied. c. below equilibrium price and quantity demanded is greater than quantity supplied. d. below equilibrium price and quantity supplied is greater than quantity demanded.

If excess demand exists in a market we know that the actual price is a. below equilibrium price and quantity demanded is greater than quantity supplied. b. above equilibrium price and quantity demanded is greater than quantity supplied. c. above equilibrium price and quantity supplied is greater than quantity demanded. d. below equilibrium price and quantity supplied is greater than quantity demanded.

You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would be to a. decide which direction to shift the curve. b. decide whether the fires affected demand or supply. c. graph the shift to see the affect on equilibrium. d. None of the above are correct.

Holding all other things constant, a higher price for ski lift tickets would a. increase the number of skiers. b. increase the price of skis. c. decrease the number of skis sold. d. decrease the demand for other winter recreational activities.

If the demand for a product decreases, we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity to both increase. d. equilibrium price and equilibrium quantity to both decrease.

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls and more firms decide to manufacture traditional film? 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. The effect on both price and quantity is ambiguous.

If there is a shortage of farm laborers, we would expect a. the wages of farm laborers to increase. b. the wages of farm laborers to decrease. c. the prices of farm commodities to decrease. d. a decrease in the demand for substitutes for farm labor.

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation? a. Consumers have experienced an increase in income and beef-production technology has improved. b. The price of chicken has risen and the price of steak sauce has fallen. c. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and his or her longevity. d. The demand curve for beef must be positively sloped.

Which of the following events would definitely result in a higher price in the market for Snickers? a. Demand for Snickers increases and supply of Snickers decreases. b. Demand for snickers and supply of Snickers both decrease. c. Demand for Snickers decreases and supply of Snickers increases. d. Demand for Snickers and supply of Snickers both increase.