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When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

A) True
B) False

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Figure 4-4 Figure 4-4 -Refer to the Figure 4-4. In this market, what would the equilibrium price and quantity be? A) $15 and 700 B) $20 and 600 C) $25 and 500 D) $25 and 800 -Refer to the Figure 4-4. In this market, what would the equilibrium price and quantity be?


A) $15 and 700
B) $20 and 600
C) $25 and 500
D) $25 and 800

E) All of the above
F) A) and B)

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Holding all else constant, what will result from a higher price for ski-lift tickets?


A) increased number of skiers
B) decreased supply of ski resorts
C) decreased demand for other winter recreational activities
D) decreased ski sales

E) A) and C)
F) B) and C)

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Assume the following demand and supply equations: Qd=900-20P, and Qs=150+10P. a) Graph the two curves. b) Calculate the slopes of the two curves. c) Calculate the equilibrium price and quantity. d) If the price was $30, how much would the quantity demanded be? (Show it on the graph) e) If the price was $30, how much would the quantity supplied be? (Show it on the graph)

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a) An easy way to draw the curves is to ...

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Market demand is given as Qd = 190 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?


A) price will be $30 and quantity will be 35
B) price will be $60 and quantity will be 70
C) price will be $70 and quantity will be 60
D) price will be $95 and quantity will be 10

E) A) and D)
F) A) and C)

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Figure 4-7 Figure 4-7 -Refer to the Figure 4-7. What would cause the movement from point A to point B on the graph? A) an increase in price B) a decrease in price C) a decrease in the price of a complement good D) an increase in income -Refer to the Figure 4-7. What would cause the movement from point A to point B on the graph?


A) an increase in price
B) a decrease in price
C) a decrease in the price of a complement good
D) an increase in income

E) C) and D)
F) A) and B)

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What does fewer sellers in the market cause?


A) the supply curve to shift to the left
B) the supply curve to shift to the right
C) a movement up a stationary supply curve
D) a movement down a stationary supply curve

E) A) and C)
F) C) and D)

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Market demand is given as Qd = 200 - 2P. Market supply is given as Qs = 2P + 40. What would result if the market price were $10?


A) a shortage of 60
B) a surplus of 60
C) a surplus of 120
D) a shortage of 120

E) None of the above
F) All of the above

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Given a fixed demand curve, which of the following is affected when the price changes?


A) income
B) tastes
C) expectations
D) quantity demanded

E) None of the above
F) C) and D)

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What is an example of an inferior good?


A) a family restaurant meal
B) instant noodles
C) fresh baked rolls
D) a steak dinner

E) B) and D)
F) B) and C)

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What impact does a person's expectations about the future have?


A) cannot affect demand because expectations change
B) can affect future demand
C) can affect current demand
D) can shift a supply curve

E) B) and C)
F) None of the above

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In what type of market do we refer to buyers and sellers as "price takers"?


A) a perfectly competitive market
B) a monopolistically competitive market
C) an oligopolistic market
D) a monopolistic market

E) A) and B)
F) None of the above

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-Refer to the Table 4-3. What happens if the price decreases from $1.50 to $1.00? A) The market demand increases by 35 units. B) The quantity demanded in the market decreases by 2 units. C) Individual demands will increase. D) The quantity demanded in the market increases by 7 units. -Refer to the Table 4-3. What happens if the price decreases from $1.50 to $1.00?


A) The market demand increases by 35 units.
B) The quantity demanded in the market decreases by 2 units.
C) Individual demands will increase.
D) The quantity demanded in the market increases by 7 units.

E) A) and B)
F) A) and C)

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What happens if there is a shortage of a good at the current price?


A) Sellers are producing more than buyers wish to buy.
B) The market must be in equilibrium.
C) The price is below the equilibrium price.
D) Quantity demanded equals quantity supplied.

E) All of the above
F) A) and B)

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Suppose there is an earthquake that destroys several seaside resorts. Which of the following would NOT occur as a direct result of this event?


A) Sellers would not be willing to produce and sell as much as before at each relevant price.
B) The supply would decrease.
C) Buyers would not be willing to buy as much as before at each relevant price.
D) The equilibrium price would rise.

E) All of the above
F) A) and B)

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Market demand is given as Qd = 200 - 4P. Market supply is given as Qs = 6P. What would result if the market price were $30?


A) a shortage of 100
B) a surplus of 100
C) a surplus of 50
D) a shortage of 50

E) None of the above
F) A) and C)

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You have decided to purchase a new Range Rover SUV. A friend tells you that Land Rover will be offering a $3000 rebate on Range Rovers starting next month. As a result of this information, what will happen to your demand curve for Range Rovers?


A) could shift either right or left
B) shifts right today
C) curve will be unaffected
D) shifts left today

E) C) and D)
F) A) and B)

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Pens are normal goods. What will happen to the equilibrium price of pens if the prices of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?


A) price will rise
B) price will fall
C) price will stay exactly the same
D) price change will be ambiguous

E) B) and C)
F) All of the above

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Market demand is given as Qd = 200 - 2P. Market supply is given as Qs = 2P + 40. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?


A) price will be $4 and quantity will be 160
B) price will be $40 and quantity will be 120
C) price will be $40 and quantity will be 200
D) price will be $60 and quantity will be 180

E) B) and C)
F) B) and D)

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-Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium quantity and an indeterminate change in equilibrium price? A) space A B) space B C) space C D) space D -Refer to the Table 4-2. What is the space that would represent a decrease in equilibrium quantity and an indeterminate change in equilibrium price?


A) space A
B) space B
C) space C
D) space D

E) A) and C)
F) None of the above

Correct Answer

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