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Copyright © 2011 Pearson Education, Inc.
Foundations of Microeconomics, 5e (Bade/Parkin)
Chapter 4 Demand and Supply
4.1 Demand
1) A market is defined as
A) a physical place where people buy only goods.
B) a physical place where people buy both goods and services.
C) a store where people buy physical goods.
D) any arrangement that brings buyers and sellers together.
E) a place where one good is bartered for another.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: WM
AACSB: Reflective thinking
2) EBay
A) will be considered a market when the Internet firms are profitable.
B) is a market because buyers and sellers are brought together to buy and sell.
C) would be a market if there was only one physical location.
D) cannot function as a market.
E) is not a market because buyers can buy from only one seller at any point in time.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: WM
AACSB: Reflective thinking
3) Which of the following statements is true about a competitive market? A competitive market
A) must have a physical location.
B) includes markets for goods and services but not for inputs.
C) has so many buyers and sellers that no one can influence the price.
D) has one seller competing to sell his or her product.
E) has a handful of sellers but always has many buyers.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: CT
AACSB: Reflective thinking
2
Copyright © 2011 Pearson Education, Inc.
4) The "law of demand" refers to the fact that, other things remaining the same, when the price of
a good rises,
A) the demand curve shifts rightward.
B) the demand curve shifts leftward.
C) there is a movement down along the demand curve to a larger quantity demanded.
D) there is a movement up along the demand curve to a smaller quantity demanded.
E) the demand curve shifts rightward and there is a movement up along the demand curve to a
smaller quantity demanded.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: RB
AACSB: Reflective thinking
5) The law of demand refers to how
A) demand changes when people's incomes change.
B) demand changes when the prices of substitutes and complements change.
C) the quantity demanded changes when the price of the good changes.
D) the price of the good changes when people's demand for the good changes.
E) the quantity demanded changes when the demand for the good changes.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
6) Which of the following describes the law of demand? When other things remain the same, as
A) the price of gas falls, the quantity demanded of gas increases.
B) the quantity demanded of bread increases, the price of bread falls.
C) the price of peanut butter increases, the quantity demanded of jelly decreases.
D) your income increases, you'll buy more hamburgers.
E) more people decide to eat pizza, the demand for pizza increases.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: CD
AACSB: Reflective thinking
3
Copyright © 2011 Pearson Education, Inc.
7) Gasoline prices increase by 50 percent and other things remain the same. As a result, there is
A) an increase in the demand for gasoline.
B) a decrease in the demand for gasoline.
C) no change in the quantity of gasoline demanded.
D) a decrease in the quantity of gasoline demanded.
E) More information is needed to determine if the demand for gasoline increases or decreases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: JC
AACSB: Reflective thinking
8) In stores, it is common to find seasonal products marked down when the season ends. What
explains this behavior?
A) The law of demand is being used to increase the quantity demanded.
B) The store is trying to increase its customers' demand for the product.
C) The store manager must be trying to drive away customers by selling low quality products.
D) The store is trying to increase its consumer's incomes by increasing their purchasing power.
E) The store is trying to sell the goods and realizes that they are substitutes for other goods
whose prices have risen.
Skill: Level 4: Applying models
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
9) The law of demand implies that, other things remaining the same,
A) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded increases.
B) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases.
C) as income increases, the quantity of cheeseburgers demanded increases.
D) as the demand for cheeseburgers increases, the price of a cheeseburger falls.
E) as more people demand cheeseburgers, the quantity demanded increases.
Skill: Level 4: Applying models
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
4
Copyright © 2011 Pearson Education, Inc.
10) The quantity demanded of a good or service is
A) the list of all quantities at different prices, as illustrated by a demand schedule and demand
curve.
B) the list of all quantities at different prices, as illustrated by a supply schedule and a supply
curve because the supply shows how much people will be able to buy.
C) the one quantity that is demanded at several different prices.
D) one quantity at one price.
E) the same as the demand for the good or service.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: JC
AACSB: Reflective thinking
11) What is the "quantity demanded"?
A) the amount of a good people desire
B) the amount of a good people are able and willing to buy during a specific time period and at a
given price
C) the amount of a good people are able and willing to buy at all possible prices
D) the maximum amount of a good that can be consumed during a specific time period
E) the minimum amount of a good that people are willing to buy during a specific time period
and at a given price
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
12) The "quantity demanded" of any good or service is ________ during a specified time period
and at a specified price.
A) the amount people are willing to buy
B) the amount people are able to buy
C) the amount people are willing and able to offer
D) the amount people are willing and able to buy
E) the amount people are willing to buy because it is the amount sellers are willing to sell
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
5
Copyright © 2011 Pearson Education, Inc.
13) An increase in the quantity demanded is shown as a
A) movement along the demand curve.
B) movement toward the demand curve.
C) rightward shift of the demand curve.
D) leftward shift of the demand curve.
E) both a movement along the demand curve and a shift of the demand curve.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
14) Which of the following is true regarding demand?
i. Demand is the relationship between quantity demanded and the price of a good when all
other influences on buying plans remain the same.
ii. Demand refers to one quantity at one time.
iii. "Demand" and " quantity demanded" are the same thing.
A) i only.
B) ii only.
C) both i and ii
D) iii only.
E) both ii and iii.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: CD
AACSB: Reflective thinking
15) The price of cotton clothing falls. As a result,
A) the quantity demanded of cotton clothing increases.
B) the demand for cotton clothing increases.
C) the quantity demanded of cotton clothing decreases.
D) the demand for cotton clothing decreases.
E) both the demand for cotton clothing increases and the quantity demand of cotton clothing
increases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
6
Copyright © 2011 Pearson Education, Inc.
16) The American Dairy Association starts a highly successful advertising campaign that makes
most people want to drink more milk. As a result,
A) the demand for milk increases.
B) the quantity demanded of milk increases.
C) the price of milk falls to encourage people to drink more milk.
D) the demand for milk is not affected.
E) the demand for milk decreases because the price of milk rises.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
17) A demand schedule shows
A) the quantities that people plan to buy in all possible circumstances.
B) the quantities that people plan to buy at each different price when all other influences on
buying plans remain the same.
C) the quantities that people would plan to buy if they could afford them at each different price
when all other influences on buying plans remain the same.
D) the quantities that people plan to buy at each different income when all other influences on
buying plans remain the same.
E) the quantities that people plan to buy at each different price as long as producers are willing to
supply that quantity.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
18) A demand schedule
A) shows the quantity demanded at one price.
B) is a graph showing a relationship between the quantity demanded and the price of a good.
C) is a list of the quantities demanded at each different price when all other influences on buying
plans remain the same.
D) shows that demand is on schedule.
E) shows how the demand changes when the supply changes.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
7
Copyright © 2011 Pearson Education, Inc.
19) The downward slope of a demand curve
A) represents the law of demand.
B) shows that as the price of a good rises, consumers increase the quantity they demand.
C) indicates how the quantity demanded changes when incomes rise and the good is a normal
good.
D) indicates how demand changes when incomes rise and the good is a normal good.
E) indicates how demand changes when the price changes and the good is a normal good.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
20) A demand curve
A) has an upward slope.
B) has a downward slope.
C) is a graph of the relationship between quantity demanded of a good and its price.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
21) Demand curves slope ________ because as the price increases and other things remain the
same, the quantity demanded ________.
A) downward; decreases
B) downward; increases
C) upward; decreases
D) upward; increases
E) downward; does not change
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
8
Copyright © 2011 Pearson Education, Inc.
22) The market demand curve
A) cannot show how quantity demanded changes in response to a change in price.
B) cannot show a change in demand for a good.
C) is the horizontal sum of individual demand curves.
D) is the vertical sum of individual demand curves.
E) is upward sloping.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: CD
AACSB: Analytical reasoning
23) The market demand curve for mangos is
A) the same as the demand curve of one buyer in a market with many buyers.
B) upward sloping because rich people can afford more mangos than poor people can buy.
C) the horizontal sum of the individual demand curves of all the buyers.
D) the vertical sum of the individual demand curves of all the buyers.
E) the horizontal average of the individual demand curves of all the buyers.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: JC
AACSB: Analytical reasoning
24) There are five hundred buyers in the market for cheese. If we know each individual's demand
curves, to find the market demand, we must
A) add the prices that each buyer will pay at every quantity.
B) add the quantities that each buyer will purchase at every price.
C) multiply the price times quantity for each buyer and then add the resulting products together.
D) average the price each buyer is willing to pay for each given quantity.
E) give up because there is no way to find the market demand.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: TS
AACSB: Analytical reasoning
9
Copyright © 2011 Pearson Education, Inc.
25) Market demand curves are obtained by
A) determining the price each consumer is willing to pay for the good and summing those prices
across all consumers.
B) observing the prices and quantities sold in a market over time and plotting those price-
quantity combinations in a graph.
C) summing the quantities every consumer is willing to buy at each different price.
D) observing the behavior of an individual consumer in a market.
E) averaging the quantities every consumer is willing to buy at each different price.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Analytical reasoning
26) The market demand curve for mousetraps is
A) found by summing the quantities of mousetraps demanded at each income level by each
buyer.
B) found by summing the prices of mousetraps at each quantity of mousetraps demanded by each
buyer.
C) the horizontal sum of the individual demand curves for mousetraps of all the buyers.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
27) To find the market demand curve for in-line skates, we must
A) add the quantities demanded at every price and every income by every buyer of in-line skates.
B) add the quantities demanded at prices that all buyers can afford to pay.
C) sum horizontally the individual demand curves of all the buyers.
D) take account of the skate buying plans of all actual and potential buyers in all possible
situations.
E) None of the above answers is correct because we need also to take account of the supply of
in-line skates.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
10
Copyright © 2011 Pearson Education, Inc.
28) The phrase "a change in demand" most directly implies a
A) movement along a demand curve.
B) movement along the price curve.
C) change in the quantity demanded of a good.
D) shift of the demand curve.
E) movement along the quantity curve.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
29) When demand increases,
A) consumers are willing to buy more at any price.
B) consumers buy more of the good only if its price falls.
C) the price is lower at any level of quantity demanded.
D) consumers buy more of the good only if its price rises.
E) the demand curve shifts leftward.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
30) A change in the demand for apples could result from any of the following EXCEPT
A) a change in the number of buyers.
B) increased preferences for fresh fruit consumption for health reasons.
C) a change in the price of an apple.
D) a change in the price of a banana.
E) a change in income.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
11
Copyright © 2011 Pearson Education, Inc.
31) Changes in which of the following factors do NOT shift the demand curve?
A) the price of the good
B) buyers' incomes
C) the price of a substitute good
D) the number of buyers
E) the price expected in the future
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
32) If the demand for used cars decreases after the price of a new car falls, used cars and new
cars are
A) inferior goods.
B) substitute goods.
C) complementary goods.
D) normal goods.
E) The questions errs because it is the quantity of used cars, NOT the demand for used cars, that
will change when the price of a new car falls.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
33) Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell
computer decreases, the
A) demand for Dell computers increases.
B) demand for Apple computers increases.
C) demand for Apple computers decreases.
D) supply of Dell computers increases.
E) demand for Dell computers decreases.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
12
Copyright © 2011 Pearson Education, Inc.
34) Which of the following increases the demand for a good or service?
A) a fall in the price of the good or service
B) a smaller number of consumers wanting to buy the good or service
C) a rise in the price of the good or service
D) a rise in the price of a substitute good or service
E) a rise in the price of a complement
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
35) Consider the market for cellular phones. Which of the following shifts the demand curve
rightward?
A) an increase in the price of cellular phones
B) a decrease in the price of cellular phones
C) an increase in the price of regular phone service, a substitute for cellular phones
D) a decrease in the number of cellular phone buyers
E) an increase in the supply of cellular phones.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
36) Two brands of water, Natural Water and Mountain Water, are close substitutes. If the price
of Mountain Water decreases, the fall in price
A) shifts the demand curve for Natural Water rightward.
B) shifts the demand curve for Natural Water leftward.
C) increases the price of Natural Water.
D) increases the demand for Mountain Water.
E) More information is needed to determine if the demand curve for Natural Water shifts
rightward or leftward.
Skill: Level 4: Applying models
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
13
Copyright © 2011 Pearson Education, Inc.
37) Car insurance and cars are complements. If the price of car insurance increases, the
A) demand for cars decreases.
B) demand for cars increases.
C) quantity of cars demanded decreases.
D) quantity of cars demanded increases.
E) More information is needed to determine if the demand increases or decreases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: JC
AACSB: Reflective thinking
38) Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the
price of salsa affect the demand for taco chips?
A) It decreases the demand for taco chips.
B) It increases the demand for taco chips.
C) It has no effect on the demand for taco chips.
D) It will decrease the demand for taco chips only if taco chips are a normal good.
E) It could increase, decrease, or have no effect on the demand for taco chips, but more
information is needed to determine the impact.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
39) To access Internet services, consumers must use a computer. If computer prices fall, what is
the effect on the demand for Internet services?
A) The demand for Internet services increases.
B) The demand for Internet services decreases.
C) The demand for Internet services remains unchanged.
D) The demand for Internet services could either not change or decrease but definitely will not
increase.
E) The demand for Internet services could increase, decrease, or stay the same depending on
other factors.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
14
Copyright © 2011 Pearson Education, Inc.
40) What happens to the demand for a good if a complement's price increases?
A) The demand decreases and the demand curve shifts rightward.
B) The demand increases and the demand curve shifts rightward.
C) There is no impact on demand for the good and the demand curve does not shift.
D) The demand decreases and the demand curve shifts leftward.
E) The demand increases and the demand curve shifts leftward.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
41) Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then
A) the demand for hot dogs will increase.
B) the demand for hot dog buns will decrease.
C) the quantity demanded of hotdogs will decrease.
D) the demand for hot dog buns will increase.
E) the quantity demanded of hot dog buns will increase.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
42) A popular dinner among college students today is sushi, green tea, and wasabi dip so these
foods are complements. If the price of green tea increases and the price of wasabi dip increases,
what would be the effect on demand for sushi at lunch?
A) The demand for sushi would decrease.
B) The demand for sushi would be unaffected, but the price would increase.
C) The demand for sushi could increase or decrease.
D) The demand for sushi would increase.
E) The demand for sushi would be unaffected, but the price would decrease.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SH
AACSB: Reflective thinking
15
Copyright © 2011 Pearson Education, Inc.
43) Soda and hot dogs are complements for one another. If a shortage of carbonated water leads
to an increase in the price of soda, then the
A) demand for hot dogs increases.
B) demand for hot dogs decreases.
C) quantity of hot dogs demanded increases.
D) quantity of hot dogs demanded decreases.
E) More information is needed to determine if the demand increases or decreases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: JC
AACSB: Reflective thinking
44) A student at New York University used to take the Redhound bus when she visited her
grandmother in Boston. After graduating, although the bus fare and the plane fare were the same
as they were when she was a student, with a well paid job on Wall Street she now takes the plane
to Boston to visit her grandmother. For this student, travel by Redhound bus is
A) a normal good.
B) an inferior good.
C) a substitute good.
D) a complement good.
E) a good with negative preferences.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SA
AACSB: Reflective thinking
45) If the demand for digital cameras increases when consumers' incomes rise, then digital
cameras are
A) a normal good.
B) an inferior good.
C) a substitute for camcorders.
D) a complement to camcorders.
E) made using advanced technology.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
16
Copyright © 2011 Pearson Education, Inc.
46) If the demand for a good increases when people's incomes increase,
A) the good is an inferior good.
B) the law of demand is violated.
C) the good's demand curve must be slope upward.
D) the good is a normal good.
E) the good is a substitute good for an inferior good.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
47) In a recession, consumers have less income to spend. As a result, if dining out is a normal
good, then which of the following would happen to the demand curve for dining out?
A) The demand curve would shift leftward.
B) The demand curve would not shift but the price of dining out would rise.
C) The effect on the demand curve is unknown.
D) The demand curve would shift rightward.
E) The demand curve would not shift but the price of dining out would fall.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SH
AACSB: Reflective thinking
48) If macaroni and cheese is an inferior good, then a decrease in income results in
A) an increase in the demand for macaroni and cheese.
B) a decrease in the demand for macaroni and cheese.
C) an increase in the supply of macaroni and cheese.
D) a decrease in the supply of macaroni and cheese.
E) Both answers A and D are correct.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
17
Copyright © 2011 Pearson Education, Inc.
49) If income increases and the demand for bus rides decreases,
A) bus rides are a normal good.
B) consumers are behaving irrationally.
C) bus rides are an inferior good.
D) bus rides are a substitute good.
E) bus rides must be a complement good with some other good.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
50) Which of the following is true?
A) For an inferior good, when income increases, the demand curve shifts leftward.
B) If the price of a substitute rises, the demand curve shifts leftward.
C) If people expect the price of a good will rise in the future, the demand curve shifts leftward.
D) An increase in population shifts the demand curve leftward.
E) An increase in the cost of producing a good shifts the demand curve leftward.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
51) Ramen noodles are a staple food item for many college students. Ramen noodles are very
inexpensive, easy to prepare, and can be combined easily with other foods. After students
graduate, find employment, and earn a higher income, they decrease their Ramen noodle
purchases significantly. In this case, Ramen noodles are
A) a normal good.
B) an inferior good.
C) a complement for higher income people.
D) a substitute good.
E) None of the above answers is correct.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
18
Copyright © 2011 Pearson Education, Inc.
52) Water bottlers announce that next month the price of bottled water will rise by 25 percent.
Which of the following occurs immediately?
A) The quantity of bottled water demanded increases.
B) The quantity of bottled water demanded decreases.
C) The demand for bottled water decreases.
D) The demand for bottled water increases.
E) None of the above answers is correct because it is the supply that immediately changes, not
the demand.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: JC
AACSB: Reflective thinking
53) A huge 50 percent off sale on golf clubs is advertised for next week. What happens this
week in the market for golf clubs?
A) The supply of golf clubs increases.
B) The supply of golf clubs decreases.
C) The demand for golf clubs increases.
D) The demand for golf clubs decreases.
E) The demand for and the supply of golf clubs decreases.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Reflective thinking
54) You are just about to finish college and are about to start a high paying job. Because of this
new job, what is the most likely outcome in the market for cars?
A) Your demand for cars will decrease.
B) The market supply of cars will increase.
C) Your demand for cars will increase.
D) The market supply of cars will decrease.
E) The demand and the supply for cars will decrease.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Reflective thinking
19
Copyright © 2011 Pearson Education, Inc.
55) Which of the following increases the demand for a good?
A) a rise in the price of a complement
B) the expectation that future income will be higher
C) an increase in income, assuming the good is an inferior good
D) a decrease in the number of buyers
E) a fall in the price of a substitute
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
56) Suppose that tattoos gained immense popularity with retired people as well as college
students. This gain in popularity best reflects which of the following influences on buying plans?
A) the price of a substitute good
B) income
C) expectations
D) preferences
E) the price of a complement good
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
57) Consider the market for cellular phones. Which of the following shifts the demand curve
leftward?
A) studies showing using cellular phones can cause brain cancer
B) a decrease in the price of cellular phones
C) a decrease in the quantity demanded of cellular phones
D) an increase in the services provided by cellular phones, such as text messaging
E) an increase in the price of cellular phones
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: CD
AACSB: Reflective thinking
20
Copyright © 2011 Pearson Education, Inc.
58) Scooters and bicycles are substitutes. Suppose that the price of a bicycle falls. Which of the
figures above best illustrates how this fall in price affects the demand curve for scooters?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the above answers is correct because the change in the price of a bicycle will affect
the supply curve not the demand curve.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
21
Copyright © 2011 Pearson Education, Inc.
59) Scooters are a normal good and buyers' incomes decrease. Which of the figures above best
illustrates how this change affects the demand curve for scooters?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the above answers is correct because the decrease in income will affect the supply
curve not the demand curve.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
60) Over the next few years more and more people prefer to ride on scooters. Which of the
figures above best illustrates how this change affects the demand curve for scooters?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the above answers is correct because the change in tastes will affect the supply curve
not the demand curve.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
61) A scooter uses much less gasoline than does a car. Suppose the price of gasoline rises
substantially. Which of the figures above best illustrates how this change affects the demand
curve for scooters?
A) Figure A only
B) Figure B only
C) Figure C only
D) Figure D only
E) Both Figure A and Figure D
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: JC
AACSB: Analytical reasoning
22
Copyright © 2011 Pearson Education, Inc.
62) In the above figure, the movement from point a to point b reflects
A) a decrease in the price of pizza.
B) an increase in the demand for pizza.
C) an increase in the number of people who eat pizza.
D) an increase in the price of the tomato sauce used to produce pizza.
E) a decrease in the number of firms producing pizza.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: CD
AACSB: Analytical reasoning
63) In the above figure, the shift in the demand curve from D to D1 can be the result of
A) an increase in the price of pizza.
B) an increase in the price of a sub sandwich, a substitute for pizza.
C) an increase in the price of soda, a complement to pizza.
D) a change in quantity demanded.
E) a decrease in income if pizza is a normal good.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: CD
AACSB: Analytical reasoning
23
Copyright © 2011 Pearson Education, Inc.
64) In the above figure, the shift in the demand curve from D to D2 can be the result of
A) an increase in income if pizza is a normal good.
B) an increase in the price of a sub sandwich, a substitute for pizza.
C) an increase in the price of soda, a complement to pizza.
D) a change in quantity demanded.
E) a decrease in the supply of pizza that raises the price of pizza.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
65) The figure above shows the market for iPods. Which of the following creates a movement
from point A to point B?
A) A requirement that all students at universities have an iPod.
B) A decrease in the price of iPods.
C) A decrease in the price of Zunes, a substitute for iPods.
D) An increase in the price of iPods.
E) An increase in people's incomes.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
24
Copyright © 2011 Pearson Education, Inc.
66) The figure above shows the market for iPods. Which of the following shifts the demand
curve from D0 to D1?
A) A decrease in the price of Zunes, a substitute for iPods.
B) An increase in the price of iPods.
C) A requirement that all students at universities have an iPod.
D) A decrease in the price of iPods.
E) An increase in people's incomes.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
67) The figure above shows the market for iPods. Which of the following shifts the demand
curve from D0 to D2?
A) A decrease in the price of Zunes, a substitute for iPods.
B) An increase in the price of iPods.
C) A requirement that all students at universities have an iPod.
D) A decrease in the price of iPods.
E) A decrease in people's incomes if iPods are a normal good.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
25
Copyright © 2011 Pearson Education, Inc.
68) Pizza is a normal good. In the above figure, the shift in the demand curve from D to D2 can
be the result of
A) a decrease in the price of soda, a complement to pizza.
B) an increase in the price of hamburgers, a substitute for pizza.
C) a decrease in income.
D) a study that shows that pizza is a very healthy food.
E) an increase in the cost of producing pizza.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: CD
AACSB: Analytical reasoning
69) In the above figure, the shift in the demand curve from D to D1 can be the result of
A) a decrease in income if pizza is a normal good.
B) a decrease in the price of a sub sandwich, a substitute for pizza.
C) an increase in the price of soda, a complement to pizza.
D) an increase in the number of teenagers, all of whom demand more pizza than do other age
groups.
E) new technology that increases the profit from producing pizza.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
26
Copyright © 2011 Pearson Education, Inc.
70) In the above figure, ________ will shift in the demand curve from D to D1.
A) an increase in income if pizza is an inferior good
B) a decrease in the price of a sub sandwich, a substitute for pizza
C) buyers' expectation that pizza will be less expensive next week
D) a scientific article published that demonstrates eating pizza is good for one's health
E) a fall in the cost of producing pizza
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
71) Which of the following brings only an increase in the quantity demanded of a good?
A) a decrease in income, assuming the good is an inferior good
B) a rise in the price of a substitute good
C) a fall in the price of the good itself
D) an expectation that the good's price will rise in the future
E) a decrease in income, assuming the good is a normal good
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: SB
AACSB: Reflective thinking
72) People consume more soup as temperatures falls. So, as cold weather approaches,
A) the quantity of soup demanded increases.
B) the demand for soup increases.
C) people move closer to their demand curve for soup.
D) people move farther beyond their demand curves.
E) both the demand and the quantity demanded of soup increase.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MR
AACSB: Reflective thinking
27
Copyright © 2011 Pearson Education, Inc.
73) The impact of an increase in the price of a particular good is illustrated as a
A) leftward shift in its demand curve.
B) rightward shift in its demand curve.
C) movement upward and to the left along its demand curve.
D) movement downward and to the right along its demand curve.
E) rightward shift in its demand curve and a movement upward and to the left along its demand
curve.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: TS
AACSB: Analytical reasoning
74) Which of the following events will increase the quantity demanded of bottled water?
A) a fall in the price of soda
B) a rise in the price of a fitness club membership
C) an increase in the number of buyers of bottled water
D) a fall in the price of bottled water
E) a rise in the price of bottled water
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Analytical reasoning
28
Copyright © 2011 Pearson Education, Inc.
75) The table above gives the demand schedule for lattes at the Bottomless Cup. If the price of a
latte is $3, then the quantity of lattes demanded is ________ an hour.
A) 90
B) 30
C) 80
D) 60
E) 230
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Analytical reasoning
76) Other things remaining the same, the quantity of a good or service demanded will increase if
the price of the good or service
A) rises.
B) falls.
C) does not change.
D) rises or does not change.
E) rises or falls.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
29
Copyright © 2011 Pearson Education, Inc.
77) The "law of demand" indicates that if the University of Maine increases tuition, all other
things remaining the same
A) the demand for classes will decrease at the University of Maine.
B) the demand for classes will increase at the University of Maine.
C) the quantity of classes demanded will increase at the University of Maine.
D) the quantity of classes demanded will decrease at the University of Maine.
E) both the demand for and the quantity of classes demanded will decrease at the University of
Maine.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
78) The graph illustrates the demand for peanuts. Peanuts are a normal good because the
A) demand curve for peanuts slopes downward.
B) demand for peanuts increases when income increases.
C) demand for peanuts increases when the price of one of its substitutes rises.
D) peanuts have both substitutes and complements.
E) demand curve shows that if the price of peanuts rises, there is a movement along the demand
curve to a lower quantity demanded.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Analytical reasoning
30
Copyright © 2011 Pearson Education, Inc.
79) A normal good is defined as a good
A) with a downward sloping demand curve.
B) for which demand increases when the price of a substitute rises.
C) for which demand increases when income increases.
D) for which demand increases when the number of demanders increases.
E) for which demand increases when the price of a complement falls.
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Reflective thinking
80) Soda and peanuts are complements. Other influences on buying plans remaining the same, a
rise in the price of soda
A) increases the demand for peanuts.
B) decreases the demand for peanuts.
C) decreases the demand for soda.
D) increases the demand for soda.
E) has no effect on the demand for peanuts, though it does change the quantity demanded of
peanuts.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Reflective thinking
31
Copyright © 2011 Pearson Education, Inc.
81) People come to expect that the price of a gallon of gasoline will rise next week. As a result,
A) today's supply of gasoline increases.
B) today's demand for gasoline increases.
C) the price of a gallon of gasoline falls today.
D) next week's supply of gasoline decreases.
E) today's demand for gasoline and today's supply of gasoline do not change.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Reflective thinking
82) One reason the demand for laptop computers might increase is a
A) fall in the price of a laptop computers.
B) fall in price of desktop computers.
C) a change in preferences as laptops have become more portable, with faster processors and
larger hard drives.
D) poor quality performance record for laptop computers.
E) a decrease in income if laptops are a normal good.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
83) Teenagers drink more soda than other age groups. If the number of teenagers increases,
everything else remaining the same,
A) market demand for soda increases.
B) market demand for soda decreases.
C) market demand for soda does not change.
D) there is a movement along the market demand curve for soda.
E) None of the above answers is correct because the effect on the demand depends whether the
supply curve shifts rightward, leftward, or not at all.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
32
Copyright © 2011 Pearson Education, Inc.
84) The number of buyers of sport utility vehicles, SUV, decreases sharply. So the
A) demand curve for SUVs shifts leftward.
B) demand curve for SUVs shifts rightward.
C) demand curve for SUVs does not shift nor is there a movement along then demand curve.
D) demand curve for SUVs does not shift but there is a movement downward along it.
E) the supply curve for SUVs shifts rightward.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
85) When moving along a demand curve, which of the following changes?
A) the consumers' incomes
B) the prices of other goods
C) the number of buyers
D) the price of the good
E) the consumers' preferences
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
33
Copyright © 2011 Pearson Education, Inc.
86) The graph illustrates the demand curve for soda. After a rise in the price of a soda from $1.00
a can to $2.00 a can, the quantity of soda demanded
A) decreases from 2 cans to 0 cans a day.
B) increases from 0 cans to 2 cans a day.
C) remains unchanged.
D) decreases from 1 can to 0 cans a day.
E) cannot be determined from the figure because the demand curve will shift to a new curve.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: MyEconLab Web Site
AACSB: Analytical reasoning
87) Pizza and tacos are substitutes, and the price of a pizza increases. Which of the following
correctly indicates what happens?
A) The demand for pizzas decreases and the demand for tacos increases.
B) The demand for both goods decreases.
C) The quantity of tacos demanded increases and the quantity of pizza demanded decreases.
D) The quantity of pizza demanded decreases and the demand for tacos increases.
E) The demand for each decreases because both are normal goods.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Reflective thinking
34
Copyright © 2011 Pearson Education, Inc.
88) If the price of a DVD falls,
i. the demand curve for DVDs will shift rightward.
ii. the demand curve for DVDs will not shift.
iii. there will be a movement along the demand curve for DVDs.
A) i only
B) ii only
C) iii only
D) ii and iii
E) i and iii
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: STUDY GUIDE
AACSB: Analytical reasoning
4.2 Supply
1) To be part of the supply for a good, a producer must be
A) only able to supply the good.
B) only willing to supply the good.
C) both able and willing to supply the good.
D) both able and willing to supply the good, and have already identified a buyer.
E) both able and willing to supply the good, and have already sold the good.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
2) The law of supply states that, other things remaining the same,
A) demand increases when supply increases.
B) if the price of a good increases, firms buy less of it.
C) if the price of a good increases, the quantity supplied increases.
D) as people's income increase, the supply of goods increases.
E) if the price of a good increases, the supply increases.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: SA
AACSB: Reflective thinking
35
Copyright © 2011 Pearson Education, Inc.
3) The law of supply states that other things remaining the same, a decrease in the price of a
kayak leads to
A) a decrease in the supply of kayaks.
B) a decrease in the quantity of kayaks supplied.
C) an increase in the supply of kayaks.
D) an increase in the quantity of kayaks supplied.
E) an increase in the supply of kayaks and a decrease in the quantity of kayaks supplied.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
4) Which of the following helps explain why the law of supply exists?
A) Larger outputs result in lower costs of production.
B) The law of increasing opportunity cost.
C) The costs of production remain constant throughout all levels of output.
D) Sellers realize that if the price increases, they make larger profits and do not need to change
their production.
E) The law of demand.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
5) The law of supply reflects the fact that
A) people buy more of a good when its price falls.
B) suppliers have an incentive to use their resources in the way that brings the biggest return.
C) higher prices are more attractive to consumers because they signal a higher quality product.
D) businesses can sell more goods at lower prices.
E) the demand curve is downward sloping.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
36
Copyright © 2011 Pearson Education, Inc.
6) The quantity supplied of a good or service is the
A) list of all quantities at different prices, as illustrated by a supply schedule and a supply curve.
B) list of all quantities at different prices, as illustrated by a demand schedule and a demand
curve.
C) one quantity produced at a variety of prices.
D) quantity produced at one price.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
7) The supply schedule
A) shows the relationship between the quantity supplied and the price of a good when all other
influences on selling plans remain the same.
B) is a curve showing the relationship between the amount the sellers are willing and able to sell
and the price of that good when all relevant factors change.
C) shows one quantity at one price.
D) is the schedule that suppliers have to keep or else they will be late.
E) shows the relationship between the quantity supplied and the price of a good when all other
influences on selling plans change.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: SA
AACSB: Reflective thinking
8) A supply curve
A) slopes downward.
B) slopes upward.
C) is a graph of the relationship between quantity supplied of a good and its price.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: SA
AACSB: Reflective thinking
37
Copyright © 2011 Pearson Education, Inc.
9) Which of the following increases the quantity supplied of compact discs but does NOT
increase the supply of compact discs?
A) a decrease in the price of a compact disc
B) an increase in the price of a compact disc
C) a decrease in the number of suppliers of compact discs
D) an increase in the price of the resources used to produce compact discs
E) new technology that lowers the cost of producing compact discs
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
10) Which of the following increases the supply of a product?
A) lower prices for the resources used to produce the product
B) some producers going bankrupt and leaving the industry
C) a higher price for the product
D) an increase in the expected future price of the product
E) a decrease in productivity.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
11) Which of the following does NOT increase the supply of personal computers, that is, does
NOT shift the supply curve of personal computers?
A) an advance in the technology used to produce personal computers
B) an increase in the number of firms producing personal computer
C) a fall in the cost of the components used to assemble personal computers
D) a rise the price of a personal computer
E) a change in the expected future price of a personal computer.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
38
Copyright © 2011 Pearson Education, Inc.
12) Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a
potato-like vegetable.)
A) an increase in the price of a rutabaga
B) an exceptionally cold summer that killed much of the rutabaga crop
C) a fall in the price of fertilizer used to grow rutabagas
D) Both answers A and C shift the supply curve of rutabagas rightward.
E) Both answers A and B shift the supply curve of rutabagas rightward.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
13) Mulch is shredded wood and is a by-product in the production of lumber. Because these two
goods are produced together, they are
A) complements in production.
B) substitutes in production.
C) inputs into the same production process.
D) not related.
E) normal goods in production.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
14) A decrease in the price of a complement in production leads to
A) a decrease in the supply of the good in question.
B) an increase in the supply of the good in question.
C) no change in the supply of the good in question.
D) a decrease in the quantity supplied of the good in question.
E) an increase in the supply of the good in question and a decrease in the quantity supplied of the
good in question.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
39
Copyright © 2011 Pearson Education, Inc.
15) Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what
happens to the supply of cheese?
A) The supply of cheese increases.
B) The supply of cheese decreases.
C) The supply of cheese stays the same and there is no change in the quantity supplied of cheese.
D) The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese.
E) The supply of cheese could increase, decrease, or stay the same depending on what happens to
the supply of butter.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
16) Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or
more diesel fuel. If the price of diesel fuel falls, there is
A) an increase in the supply of home heating oil.
B) a decrease in the supply of home heating oil.
C) an increase in the quantity of home heating oil supplied.
D) a decrease in the quantity of home heating oil supplied.
E) an increase in the demand for home heating oil.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
17) Which of the following increases the supply of gasoline?
A) a situation where the quantity of gasoline demanded exceeds the quantity supplied
B) an increase in the price of gasoline
C) a decrease in the price of a resource used to produce gasoline, such as crude oil
D) a decrease in the demand for gas-guzzling, sport utility vehicles
E) an increase in income if gas-guzzling, sport utility vehicles are a normal good
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
40
Copyright © 2011 Pearson Education, Inc.
18) The United Auto Workers bargained for higher wages and more benefits for autoworkers. As
a result of the higher wages and increased benefits,
i. the quantity of new automobiles supplied decreases.
ii. the supply of new automobiles decreases.
iii. the supply of new automobiles increases.
A) only i
B) only ii
C) only iii
D) both i and ii
E) Neither i, ii, nor iii is correct.
Skill: Level 4: Applying models
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
19) If the automobile worker's union successfully negotiates a wage increase for its members,
how does the wage hike affect the supply of automobiles?
A) The supply increases.
B) The supply decreases.
C) The quantity supplied increases.
D) The quantity supplied decreases.
E) Both answers B and D are correct.
Skill: Level 4: Applying models
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
20) Plywood is used in the construction of houses. If the price of plywood rises, what happens to
the supply of houses?
A) The supply increases so that the supply curve shifts rightward.
B) The supply decreases so that the supply curve shifts leftward.
C) The quantity supplied increases but there is no shift in the supply curve.
D) The quantity supplied decreases but there is no shift in the supply curve.
E) The quantity supplied decreases and the supply curve shifts leftward.
Skill: Level 4: Applying models
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
41
Copyright © 2011 Pearson Education, Inc.
21) It is expected that the price of a bushel of wheat will increase in one month. This belief will
result in
A) an increase in the current supply of wheat.
B) a decrease in the current supply of wheat.
C) a decrease in the future supply of wheat.
D) no change in the current or future supply of wheat.
E) an increase in the current quantity supplied of wheat.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
22) If the number of companies producing memory chips increases, then the
A) supply of memory chips does not change.
B) supply of memory chips increases.
C) supply of memory chips decreases.
D) quantity of memory chips supplied increases.
E) demand for memory chips increases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
23) An increase in the number of fast-food restaurants
A) raises the price of fast-food meals.
B) increases the demand for fast-food meals.
C) increases the supply of fast-food meals.
D) increases the demand for substitutes for fast-food meals.
E) increases both the demand and supply of fast-food meals.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
42
Copyright © 2011 Pearson Education, Inc.
24) An increase in the number of pineapple growers results in
A) an increase in the quantity of pineapples supplied and no shift in the supply curve of
pineapples.
B) an increase in the supply of pineapples and a rightward shift in the supply curve of
pineapples.
C) an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples.
D) no change in the supply of pineapples and a movement along the supply curve of pineapples.
E) None of the above answers is correct.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
25) If the number of sellers decreases, then the supply curve ________ and the supply ________.
A) shifts rightward; increases
B) shifts rightward; decreases
C) shifts leftward; increases
D) shifts leftward; decreases
E) does not shift; does not change but there is a decrease in the quantity supplied
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
26) Which of the following results in an increase in the supply of a good or service?
A) a fall in the price of the good or service
B) a smaller number of sellers producing the good or service
C) an increase in foreign imports of the good or service
D) higher taxes imposed upon producers of the good or service
E) a rise in the price of the good or service
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
43
Copyright © 2011 Pearson Education, Inc.
27) Researchers have found a hybrid of corn that is cheaper to grow. This technological
breakthrough
A) increases the demand for corn.
B) increases the supply of corn.
C) decreases the supply of corn.
D) Both answers A and C are correct.
E) Both answers A and B are correct.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SA
AACSB: Reflective thinking
28) Suppose over the next several years the productivity of firms producing electric cars
improves dramatically. The advance in productivity leads to
A) a decrease in the supply of electric cars so that the supply curve shifts leftward.
B) a decrease in the supply of electric cars so that the supply curve shifts rightward.
C) an increase in the supply of electric cars so that the supply curve shifts leftward.
D) an increase in the supply electric cars so that the supply curve shifts rightward.
E) no change in the supply of electric cars, only a change in the quantity supplied of electric cars.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
29) Which of the following increases the supply of a good and shifts its supply curve rightward?
A) a smaller number of producers
B) a higher wage paid to workers in the industry
C) a technological advance in how the good is produced
D) an increase in the cost of the resources used to produce the good
E) an increase in the price of the good
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
44
Copyright © 2011 Pearson Education, Inc.
30) Which of the following increases the supply of a good?
A) a decrease in the price of a complement in production
B) producers expect higher prices for the good in the future
C) productivity improves
D) prices of inputs used to produce the good rise
E) The number of producers decreases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
31) Advances in productivity increase supply because they
A) increase the price expected in the future.
B) decrease the number of goods available.
C) decrease the cost of production.
D) raise the prices of resources used to produce the good.
E) increase the number of firms producing the good.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
32) The number of corn producers increases, so the supply of corn ________ and the supply
curve of corn ________.
A) increases; shifts rightward
B) increases; shifts leftward
C) decrease; shifts rightward
D) decreases; shifts leftward
E) increases; does not shift
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: JC
AACSB: Analytical reasoning
45
Copyright © 2011 Pearson Education, Inc.
33) Which of the following shifts the supply curve for oranges?
A) disastrous weather that destroys about half of this year's orange crop
B) a newly discovered increase in the nutritional value of oranges
C) an increase in the price of bananas, a substitute in consumption for oranges
D) an increase in income for all orange consumers if oranges are a normal good
E) an increase in the number of orange consumers
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
34) Because of the high cost of fuel, railroads such as Union Pacific Corp and CSX Corp have
increased the price they charge to haul freight. This change means that the
A) demand curve for hauling freight has shifted leftward.
B) supply curve for hauling freight has shifted leftward.
C) demand curve for hauling freight has shifted rightward.
D) supply curve for hauling freight has shifted rightward.
E) neither the supply curve nor the demand curve for hauling freight has shifted; the only change
is that the price is higher.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: SA
AACSB: Analytical reasoning
35) Which of the following shifts the supply curve of popcorn leftward?
A) a decrease in the price of popcorn
B) an increase in the price of popcorn
C) a technological development in the production of popcorn
D) a decrease in the number of popcorn suppliers
E) a decrease in the cost of producing popcorn
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
46
Copyright © 2011 Pearson Education, Inc.
36) In the above figure, the movement from point a to point b reflects
A) an increase in the price of pizza.
B) an increase in the supply of pizza.
C) an increase in the number of producers of pizza.
D) a decrease in the cost of the tomato sauce used to produce pizza.
E) a decrease in income if pizza is a normal good.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: CD
AACSB: Analytical reasoning
37) In the above figure, the shift in the supply curve from S to S1 reflects
A) an increase in the quantity of pizza supplied.
B) a decrease in the quantity of pizza supplied.
C) an increase in the supply of pizza.
D) a decrease in the supply of pizza.
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
47
Copyright © 2011 Pearson Education, Inc.
38) In the above figure, the shift in the supply curve from S to S2 reflects
A) an increase in the quantity of pizza supplied.
B) a decrease in the quantity of pizza supplied.
C) an increase in the supply of pizza.
D) a decrease in the supply of pizza.
E) a decrease in the supply of pizza and a simultaneous decrease in the quantity of pizza
supplied.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
39) In the above figure, the shift in the supply curve from S to S2 might reflect
A) a decrease in the cost of the tomato sauce used to produce pizza.
B) a decrease in the number of pizza producers.
C) an increase in the price of a pizza.
D) an increase in income if pizza is a normal good.
E) an increase in the price of a good that is a substitute for consumers.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
40) In the above figure, an increase in cost of the cheese used to produce pizza
A) shifts the supply curve from S to S1.
B) shifts the supply curve from S to S2.
C) results in a movement from point a to point b.
D) results in a movement from point b to point a.
E) has no effect.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
48
Copyright © 2011 Pearson Education, Inc.
41) In the above figure, an increase in productivity
A) shifts the supply curve from S to S1.
B) shifts the supply curve from S to S2.
C) results in a movement from point a to point b.
D) results in a movement from point b to point a.
E) has no effect.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
42) The above figure shows the market for laptops. Which of the following causes a movement
from A to B?
A) A decrease in the number of laptop manufactures and sellers.
B) An increase in the productivity of the workers manufacturing laptops.
C) An increase in the cost of hard drives.
D) An increase in the price of laptops.
E) A decrease in the price of laptops.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
49
Copyright © 2011 Pearson Education, Inc.
43) The above figure shows the market for laptops. Which of the following causes a movement
from B to A?
A) An increase in the cost of hard drives.
B) An increase in the productivity of the workers manufacturing laptops.
C) A decrease in the price of laptops.
D) An increase in the price of laptops.
E) An increase in the number of laptop manufactures and sellers.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
44) The above figure shows the market for laptops. Which of the following shifts the supply
curve from S0 to S2?
A) An increase in the cost of hard drives.
B) An increase in the productivity of the workers manufacturing laptops.
C) A decrease in the price of laptops.
D) An increase in the price of laptops.
E) A decrease in the number of laptop manufactures and sellers.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
45) The above figure shows the market for laptops. Which of the following shifts the supply
curve from S0 to S1?
A) An increase in the cost of hard drives.
B) A decrease in the price of laptops.
C) An increase in the number of laptop manufactures and sellers.
D) An increase in the price of laptops.
E) An increase in the productivity of the workers manufacturing laptops.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
50
Copyright © 2011 Pearson Education, Inc.
46) The above figure illustrates the market for corn. If point "a" represents the original
equilibrium and point "b" the new equilibrium, which of the following could have caused the
change?
A) an increase in consumers' preferences for corn
B) an increase in consumers' income if corn is a normal good
C) an increase in labor costs of producing corn
D) an improvement in the technology of producing corn
E) an increase in consumers' income if corn is an inferior good
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: SA
AACSB: Analytical reasoning
47) The above figure illustrates the market for corn. If point "a" represents the original
equilibrium and point "b" the new equilibrium, which of the following could have caused the
change?
A) an increase in the number of corn growers
B) an increase the price of wheat, a substitute in production for corn
C) an increase in the cost of the fertilizer used to grow the corn
D) a belief among corn farmers that the price of a bushel of corn will be higher next month
E) an increase in income if corn is a normal good
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
51
Copyright © 2011 Pearson Education, Inc.
48) The above figure illustrates the market for corn. If point "a" represents the original
equilibrium and point "b" the new equilibrium, which of the following could have caused the
change?
A) a decrease in the number of corn growers
B) a decrease the price of wheat, a substitute in production for corn
C) an increase in the cost of the seed used to grow the corn
D) an decrease in buyers' incomes if corn is an inferior good
E) an increased belief among buyers that corn is healthy.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
49) In the figure above, if point "a" represents the original equilibrium and point "b" the new
equilibrium, then
A) there has been an increase in supply.
B) there has been an increase in demand.
C) there has been a change in the quantity supplied and no change in supply.
D) Both answers B and C are correct.
E) Both answers A and B are correct.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: SA
AACSB: Analytical reasoning
50) Autoworkers negotiate a wage increase. How does this change affect the supply curve of
cars?
A) It shifts the supply curve leftward.
B) It shifts the supply curve rightward.
C) It does not shift the supply curve or create a movement along it.
D) The supply curve will shift but there is not enough information to tell if the change shifts the
supply curve rightward, leftward, or not at all.
E) It creates a movement downward along the supply curve.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Analytical reasoning
52
Copyright © 2011 Pearson Education, Inc.
51) Which of the following leads to an increase in the quantity supplied but not an increase in
supply?
A) a decrease in the costs of production
B) an increase in the product's price
C) an advance in the technology used to produce the good
D) an increase in the price of another product that the suppliers can produce
E) an increase in the number of firms producing the good or service
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
52) The price of salsa rises. How does the increase in the price of salsa affect the supply of salsa?
A) The supply of salsa increases.
B) The supply of salsa decreases.
C) There is no change to either the supply of salsa or the quantity of salsa supplied.
D) There is no change to the supply of salsa but the quantity of salsa supplied increases.
E) There is no change to the supply of salsa but the quantity of salsa supplied decreases.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
53) If a higher price for wheat decreases the quantity of corn being produced, which of the
following describes what has occurred?
A) The supply of wheat increased and the supply of corn decreased.
B) The quantity of wheat supplied increased and quantity of corn supplied decreased.
C) The supply of wheat increased and the quantity of corn supplied decreased
D) The quantity of wheat supplied increased and the supply of corn decreased.
E) The supply of wheat decreased and the supply of corn decreased.
Skill: Level 4: Applying models
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
53
Copyright © 2011 Pearson Education, Inc.
54) "Other things remaining the same, if the price of a good rises, the quantity supplied of that
good increases." This sentence describes a
A) shift of a supply curve.
B) shift of the price curve.
C) movement along a supply curve.
D) movement along the price curve.
E) movement along the quantity curve.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
55) The quantity supplied of a good, service, or resource is ________ during a specified period
and at a specified price.
A) the amount that people are able to sell
B) the amount that people are willing to sell
C) the amount that people are able and willing to sell
D) the amount that people are willing and able to buy
E) the amount sold
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
56) The quantity supplied of a good is
A) the same thing as the quantity demanded at each price.
B) the amount that the people are willing and able to sell during a given time period at a
specified price.
C) equal to the difference between the quantity available and the quantity desired by all
consumers and producers.
D) the amount the firm will sell when it can sell all it wants.
E) is always larger than the quantity demanded at each price.
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Reflective thinking
54
Copyright © 2011 Pearson Education, Inc.
57) The graph illustrates the supply of sweaters. Which of the following events will increase the
quantity supplied of sweaters?
A) a rise in the price of a sweater
B) a rise in the wage rate paid to the workers who make sweaters
C) a rise in the expected future price of a sweater
D) an increase in the number of sellers of sweaters
E) a decrease in the number of sweater buyers
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
58) Which of the following indicates that the law of supply applies to makers of soda?
A) An increase in the price of a soda leads to an increase in the demand for soda.
B) An increase in the price of a soda leads to an increase in the supply of soda.
C) An increase in the price of a soda leads to an increase in the quantity of soda supplied.
D) A decrease in the price of a soda leads to an increase in the quantity of soda demanded.
E) A decrease in the price of a soda leads to an increase in the supply of soda.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
55
Copyright © 2011 Pearson Education, Inc.
59) One reason supply curves have an upward slope is because
A) increased supply will require increased technology.
B) people will pay a higher price when less is supplied.
C) a higher price brings a greater profit, so firms want to sell more of that good.
D) to have more of the good supplied requires more firms to open.
E) None of the above answers is correct because supply curves have a downward slope.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
60) The market supply curve is the ________ of the ________.
A) horizontal sum; individual supply curves
B) vertical sum; individual supply curves
C) horizontal sum; individual supply curves minus the market demand
D) vertical sum; individual supply curves minus the market demand
E) vertical average; of the individual supply curves
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
61) If the costs to produce pizza increase, which will occur?
A) The supply of pizza will decrease.
B) The quantity of pizzas supplied will increase as sellers try to cover their costs.
C) Pizza will cease to be produced and sold.
D) The demand curve for pizza will shift leftward when the price of a pizza increases.
E) The demand curve for pizza will shift rightward when the price of a pizza increases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
56
Copyright © 2011 Pearson Education, Inc.
62) A rise in the price of a substitute in production for a good leads to
A) an increase in the supply of that good.
B) a decrease in the supply of that good.
C) no change in the supply of that good; instead there is a change in the quantity supplied.
D) a decrease in the quantity of that good supplied.
E) no change in either the supply or the quantity supplied of the good.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
63) Suppose the price of leather used to produce shoes increases. The higher price of leather
________ the supply of shoes and the supply curve of shoes ________.
A) increases; shifts rightward
B) increases; shifts leftward
C) decreases; shifts rightward
D) decreases; shifts leftward
E) does not change; does not shift
Skill: Level 4: Applying models
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
64) An increase in the number of producers of bird seed ________ the supply of bird seed and
shifts the supply curve of bird seed ________.
A) increases; rightward
B) increases; leftward
C) decreases; rightward
D) decreases; leftward
E) does not change; rightward
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
57
Copyright © 2011 Pearson Education, Inc.
65) The graph illustrates the supply of sweaters. Which of the following events will increase the
supply of sweaters?
A) a rise in the price of a sweater
B) a rise in the wage rate paid to the workers who make sweaters
C) a rise in the expected future price of a sweater
D) an increase in the number of sellers of sweaters
E) an increase in income if sweaters are a normal good
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
66) The graph illustrates the supply of sweaters. As the technology used to produce sweaters
improves, the
A) supply of sweaters decreases and the demand for sweaters does not change.
B) supply of sweaters increases and the demand for sweaters does not change.
C) quantity of sweaters supplied increases.
D) quantity of sweaters supplied decreases.
E) supply of sweaters increases and the demand for sweaters increases.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
58
Copyright © 2011 Pearson Education, Inc.
67) An increase in the productivity of producing jeans results in
A) the quantity of jeans supplied increasing.
B) the supply of jeans increasing.
C) buyers demanding more jeans because they are now more efficiently produced.
D) buyers demanding fewer jeans because their price will fall, which signals lower quality.
E) some change but the impact on the supply of jeans is impossible to predict.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: STUDY GUIDE
AACSB: Reflective thinking
68) A change in the price of a good ________ its supply curve and ________ a movement along
its supply curve.
A) shifts; causes
B) shifts; does not cause
C) does not shift; causes
D) does not shift; does not cause
E) None of the above because the change in the price might cause either a shift in the supply
curve or a movement along the supply curve depending on the size of the change.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Reflective thinking
59
Copyright © 2011 Pearson Education, Inc.
69) The graph illustrates the supply of sweaters. A fall in the price of sweaters brings
A) a movement along the supply curve.
B) a decrease in the quantity supplied of sweaters.
C) a shift of the supply curve.
D) Both answers A and B are correct.
E) Both answers B and C are correct.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
60
Copyright © 2011 Pearson Education, Inc.
70) The graph illustrates the supply of soda. If the price of soda rises from $0.50 a can to $1.50 a
can, the quantity of soda supplied
A) increases from 0 cans to 4,000 cans a day.
B) decreases from 4,000 cans to 0 cans a day.
C) remains unchanged because the supply increases not the quantity supplied.
D) increases from 0 to 6,000 cans a day.
E) remains unchanged because the supply decreases not the quantity supplied.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
4.3 Market Equilibrium
1) Market equilibrium occurs when
A) all markets become equal.
B) the quantity demanded equals the quantity supplied.
C) opposing forces pull demand and supply apart.
D) demand and supply move in opposite direction.
E) demand and supply change so that are equal at all possible prices.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: SA
AACSB: Reflective thinking
61
Copyright © 2011 Pearson Education, Inc.
2) Market equilibrium occurs when
A) the quantity demanded equals the quantity supplied.
B) the market is changing rapidly.
C) other things remain the same.
D) buyers get the lowest possible price.
E) everyone who wants the good gets the quantity he or she wants.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: SB
AACSB: Reflective thinking
3) Market equilibrium
i. can never occur because there are always people who want a good but cannot afford it.
ii. occurs at the intersection of the supply and demand curves.
iii. is the point where the price equals the quantity.
A) ii only
B) iii only
C) ii and iii
D) i only
E) i and ii
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: SB
AACSB: Reflective thinking
4) A surplus of cardboard boxes means that
A) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.
B) at the current price of a cardboard box, the quantity demanded is less than the quantity
supplied.
C) the current price of a cardboard box is less than the equilibrium price.
D) at the current price of a cardboard box, the quantity demanded equals the quantity supplied
and the price will fall to restore the equilibrium..
E) More information is needed to determine if the price of cardboard boxes is higher than, lower
than, or equal to the equilibrium price.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: MR
AACSB: Reflective thinking
62
Copyright © 2011 Pearson Education, Inc.
5) When there is a surplus of snowboards, the
A) demand for snowboards is greater than the supply of snowboards.
B) supply of snowboards is greater than the demand for snowboards.
C) quantity of snowboards demanded is greater than the quantity of snowboards supplied.
D) quantity of snowboards supplied is greater than the quantity of snowboards demanded.
E) the price rises to restore the equilibrium.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: JC
AACSB: Reflective thinking
6) If there is a surplus of tacos, then the
A) quantity of tacos demanded equals the quantity of tacos supplied.
B) quantity of tacos demanded is greater than the quantity of tacos supplied.
C) quantity of tacos demanded is less than the quantity of tacos supplied.
D) market is at equilibrium.
E) supply curve of tacos will shift leftward to eliminate the surplus.
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: SB
AACSB: Reflective thinking
7) When a surplus of rice occurs,
A) the price of rice rises.
B) the price of rice falls.
C) there is a balance between the forces of supply and demand.
D) the quantity demanded is greater than quantity supplied at the current price.
E) the demand curve shifts rightward and the supply curve shifts leftward to eliminate the
surplus.
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: TS
AACSB: Reflective thinking
63
Copyright © 2011 Pearson Education, Inc.
8) Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the
equilibrium price a
A) shortage exists and the price falls to restore equilibrium.
B) shortage exists and the price rises to restore equilibrium.
C) surplus exists and the price falls to restore equilibrium.
D) surplus exists and the price rises to restore equilibrium.
E) surplus exists but nothing happens until either the demand or the supply changes.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Reflective thinking
9) Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9
per pound. In this case, there is a
A) shortage, so the price falls and quantity demanded increases.
B) surplus, so the price falls and quantity demanded increases.
C) shortage, so the price rises and quantity demanded decreases.
D) surplus, so the price rises and quantity demanded increases.
E) surplus, so the price falls and quantity supplied increases.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: CD
AACSB: Reflective thinking
10) As a falling price eliminates a surplus in the jersey market,
A) the demand curve for jerseys shifts leftward and the supply curve of jerseys shifts rightward.
B) consumers increase the quantity of jerseys they demand.
C) producers increase the quantity of jerseys they supply.
D) producers decrease the quantity of jerseys they supply and buyers decrease the quantity of
jerseys they demand.
E) the demand curve for jerseys shifts rightward and the supply curve of jerseys shifts leftward.
Skill: Level 5: Critical thinking
Section: Checkpoint 4.3
Author: SB
AACSB: Reflective thinking
64
Copyright © 2011 Pearson Education, Inc.
11) If the price is below the equilibrium price,
A) there is a surplus.
B) there is a shortage.
C) the supply curve will shift rightward.
D) the supply curve will shift leftward.
E) the demand curve will shift leftward.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Reflective thinking
12) When there is a shortage of parking spaces at your college, the
A) demand for parking spaces is greater than the supply.
B) supply of parking spaces is greater than the demand.
C) quantity of parking spaces supplied is greater than the quantity of parking spaces demanded.
D) quantity of parking spaces demanded is greater than the quantity of parking spaces supplied.
E) Both answers A and D are correct.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: JC
AACSB: Reflective thinking
13) If the price of carrots is below the equilibrium price, the
A) quantity demanded of carrots exceeds the quantity supplied and a surplus exists.
B) quantity supplied of carrots exceeds the quantity demanded and a surplus exists.
C) quantity demanded of carrots exceeds the quantity supplied and a shortage exists.
D) quantity supplied of carrots exceeds the quantity demanded and a shortage exists.
E) quantity supplied of carrots equals the quantity demanded.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Reflective thinking
65
Copyright © 2011 Pearson Education, Inc.
14) Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9
per pound. What takes place?
A) There is a shortage, so the price falls and quantity demanded increases.
B) There is a surplus, so the price falls and quantity demanded increases.
C) There is a shortage, so the price rises and quantity demanded decreases.
D) There is a shortage, so the price rises and quantity demanded increases.
E) There is a shortage, so the price falls and quantity demanded decreases.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: CD
AACSB: Reflective thinking
15) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.65, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
66
Copyright © 2011 Pearson Education, Inc.
16) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.73, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
17) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.62, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
67
Copyright © 2011 Pearson Education, Inc.
18) Using the data in the table above, the equilibrium quantity and equilibrium price for a
cellular telephone is
A) 50,000 and $100.
B) 80,000 and $80.
C) 60,000 and $50.
D) 40,000 and $20.
E) 100,000 and $20.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
19) Using the data in the table above, at the price of $80 a phone,
A) a shortage of 25,000 cellular telephones occurs.
B) a surplus of 80,000 cellular telephones occurs.
C) a surplus of 25,000 cellular telephones occurs.
D) a shortage of 55,000 cellular telephones occurs.
E) the market is in equilibrium.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
68
Copyright © 2011 Pearson Education, Inc.
20) Using the data in the table above, the equilibrium quantity and equilibrium price for a stapler
is
A) 10,000 and $8.
B) 90,000 and $8.
C) 100,000 and $5.
D) 70,000 and $6.
E) 60,000 and $5.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
21) Using the data in the table above, if the price of a stapler is $8, then there is a ________ of
staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.
A) surplus; is greater than
B) surplus; is less than
C) shortage; is greater than
D) shortage; is less than
E) neither a surplus nor a shortage; equals
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
69
Copyright © 2011 Pearson Education, Inc.
22) Using the data in the table above, if the price of a stapler is $5, then there is a ________ of
staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.
A) surplus; is greater than
B) surplus; is less than
C) shortage; is greater than
D) shortage; is less than
E) neither a surplus nor a shortage; equals
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
23) In the figure above, a price of $35 per dozen roses results in
A) a shortage.
B) equilibrium.
C) a surplus.
D) upward pressure on the price of roses.
E) an eventual rightward shift of the demand curve and/or leftward shift of the supply curve.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
70
Copyright © 2011 Pearson Education, Inc.
24) In the figure above, a price of $15 per dozen roses results in
A) equilibrium.
B) a shortage.
C) a surplus.
D) downward pressure on the price of roses.
E) an eventual leftward shift of the demand curve and/or rightward shift of the supply curve.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
25) The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then
A) there is a shortage and the price of t-shirts will rise.
B) there is a surplus and the price of t-shirts will rise.
C) the market is in equilibrium.
D) there is a shortage and the price of t-shirts will fall.
E) there is a surplus and the price of t-shirts will fall.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: KG
AACSB: Analytical reasoning
71
Copyright © 2011 Pearson Education, Inc.
26) The above figure shows the market for game day t-shirts. If the price of t-shirts is $10, then
A) there is a surplus and the price of t-shirts will rise.
B) there is a shortage and the price of t-shirts will rise.
C) there is a shortage and the price of t-shirts will fall.
D) there is a surplus and the price of t-shirts will fall.
E) the market is in equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: KG
AACSB: Analytical reasoning
27) The above figure shows the market for game day t-shirts. If the price of t-shirts is $12, then
A) there is a shortage and the price of t-shirts will fall.
B) there is a shortage and the price of t-shirts will rise.
C) there is a surplus and the price of t-shirts will rise.
D) there is a surplus and the price of t-shirts will fall.
E) the market is in equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: KG
AACSB: Analytical reasoning
28) The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then
A) the market is in equilibrium.
B) there is a surplus and the price of t-shirts will rise.
C) the quantity demanded is greater than quantity supplied.
D) there is a shortage and the price of t-shirts will fall.
E) there is a surplus and the price of t-shirts will fall.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: KG
AACSB: Analytical reasoning
72
Copyright © 2011 Pearson Education, Inc.
29) Assume a competitive market is in equilibrium. There is an increase in demand, but no
change in supply. As a result the equilibrium price ________, and the equilibrium quantity is
________.
A) rises; increases
B) rises; does not change
C) falls; does not change
D) falls; decreases
E) falls; increases
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
30) If a market begins in equilibrium and then the demand curve shifts leftward, a
A) shortage is created, which is eliminated by a fall in price.
B) shortage is created, which is eliminated by a rise in price.
C) surplus is created, which is eliminated by a fall in price.
D) surplus is created, which is eliminated by a rise in price.
E) surplus is created, which is eliminated by the supply curve shifting leftward.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
31) When the demand curve shifts rightward and the market moves to a new equilibrium, then
the
A) supply increases.
B) supply decreases.
C) quantity supplied increases.
D) quantity supplied decreases.
E) price falls to restore the equilibrium.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
73
Copyright © 2011 Pearson Education, Inc.
32) If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity
will ________ and the equilibrium quantity of electricity will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease
E) not change; increase
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
33) Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles
(SUVs) has decreased. So, the high price of gasoline leads to a
A) leftward shift of the demand curve for SUVs and the supply curve of SUVs.
B) leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs.
C) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of
SUVs.
D) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
E) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
34) If the price of tangerines increases, the price of oranges also rises because
A) consumers consider the two goods complements and so sellers decreased the supply of
oranges.
B) consumers consider the two goods substitutes and demand for oranges increases.
C) if the supply of tangerines decreased, then the supply of oranges also must decrease.
D) buyers must have expected a higher price for oranges and thus increased their demand for
oranges.
E) buyers' incomes must have decreased and oranges are an inferior good.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
74
Copyright © 2011 Pearson Education, Inc.
35) Suppose that the equilibrium price and quantity of new houses both increase. Which of the
following could be a cause of this change?
A) Both the supply and the demand for new houses increased and the supply increased by more
than the demand.
B) The demand for new houses increased and the supply did not change.
C) Both the supply and demand for new houses decreased.
D) The supply of new houses decreased and the demand for new houses did not change.
E) The supply of new houses increased and the demand for new houses did not change.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
36) Suppose that the equilibrium price and quantity of new houses both increase. Which of the
following could be a cause of this change?
A) The wage paid carpenters who build new houses might have risen.
B) A technological advance in framing a new house might have occurred.
C) The rent for nearby apartments might have fallen.
D) More home buyers might have moved into the area.
E) The cost of wood framing used to build houses might have fallen.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
37) Suppose that over the next few years the demand for dancing to country and western music
decreases. Hence, at country and western dance clubs the equilibrium price of admission
________ and the equilibrium quantity of dancing ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
75
Copyright © 2011 Pearson Education, Inc.
38) For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the
effect on the equilibrium price and quantity of taco chips?
A) The equilibrium price of taco chips falls and the equilibrium quantity decreases.
B) The equilibrium price of taco chips rises and the equilibrium quantity decreases.
C) There is no change in the equilibrium price of taco chips and the equilibrium quantity
increases.
D) The equilibrium price of taco chips could rise, fall, or stay the same and the equilibrium
quantity increases.
E) The equilibrium price of taco chips rises and the equilibrium quantity increases.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
39) Computer chips are a normal good. Suppose the economy slips into a recession so that
income falls. As a result, the demand for computer chips ________ so that the price of a
computer chip ________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) decreases; does not change
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
40) Bagels and cream cheese are complementary goods. Suppose that the price for flour, which
is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the
equilibrium quantity of cream cheese ________.
A) rises; decreases
B) rises; increases
C) falls; decreases
D) does not change; does not change
E) falls; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
76
Copyright © 2011 Pearson Education, Inc.
41) Suppose that people decide riding scooters is no longer fun. The equilibrium price of a
scooter ________ and the equilibrium quantity of scooters ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
42) Assume a market is in equilibrium. There is an increase in supply, but no change in demand
As a result the equilibrium price is ________, and the equilibrium quantity is ________.
A) rises; increases
B) rises; decreases
C) rises; does not change
D) falls; decreases
E) falls; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
43) If good weather conditions results in a larger than normal crop of peaches, then the
A) equilibrium price of peaches rises and the equilibrium quantity of peaches increases.
B) equilibrium price of peaches falls and the equilibrium quantity of peaches increases.
C) demand curve for peaches shifts leftward.
D) increase in the supply of peaches induces a greater demand for peaches, so that the
equilibrium price rises and the equilibrium quantity increases.
E) equilibrium price of peaches falls and the equilibrium quantity of peaches decreases.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
77
Copyright © 2011 Pearson Education, Inc.
44) The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web
pages are created in a month. Many new Web design firms now enter the market. As a result,
A) the supply of Web pages increases and the price falls.
B) the supply curve of Web pages shifts leftward and the price falls.
C) the demand for Web pages increases and the price rises.
D) the supply of web pages increase and the price falls, which then increases the demand for
Web pages and the demand curve shifts rightward.
E) the demand for Web pages increases and the price falls.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
45) Which of the following lower the equilibrium price of a canoe?
A) an increase in the supply of canoes
B) an increase in the demand for canoes
C) an increase in the quantity of canoes supplied
D) a decrease in the supply of canoes
E) Both answers A and B are correct.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Reflective thinking
46) When personal computers were first produced, the price was very high. As time passed, the
price of personal computers fell because
A) the demand for personal computers decreased.
B) the initial price was too high and nobody bought personal computers.
C) there were technological advances in the production of personal computers.
D) people's incomes increased and personal computers are an inferior good.
E) None of the above answers is correct.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
78
Copyright © 2011 Pearson Education, Inc.
47) If a freeze destroys oranges before they are harvested, the equilibrium price of an orange
________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
48) Suppose that the price of bread rises. This rise could be the result of
A) a decrease in the supply of bread.
B) an increase in the supply of bread.
C) a decrease in the demand for bread.
D) Both answers A and C are correct.
E) Both answers B and C are correct.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
49) If an early frost destroys most of the apple crop, the equilibrium price of an apple ________
and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
79
Copyright © 2011 Pearson Education, Inc.
50) In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a
result, the equilibrium quantity of gasoline ________ and the equilibrium price of gasoline
________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) does not change; rises
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
51) Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price
of a bagel ________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; does not change
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
52) Fresh orange juice and frozen orange juice are substitutes in production. The price of fresh
orange juice rises. As a result, the equilibrium price of frozen orange juice ________ and the
equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
80
Copyright © 2011 Pearson Education, Inc.
53) A construction boom occurs and many of the new buildings need plywood for their framing.
Which of the figures above best illustrates this change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Figure A or Figure C
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
81
Copyright © 2011 Pearson Education, Inc.
54) Contractors can use plywood or brick to construct walls. Suppose the price of bricks
increases. Which of the figures above best illustrates the effect of this change on the market for
plywood?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Figure A or Figure C depending on how contractors react to the higher price of bricks.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
55) The number of logging firms increases. Which of the figures above best illustrates this
change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Figure A and Figure D
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
56) New technology for producing plywood is developed. Which of the figures above best
illustrates this change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Figure A and Figure D
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
82
Copyright © 2011 Pearson Education, Inc.
57) In an effort to protect endangered species from the effects of logging in America's national
forests, the federal government passes a law prohibiting logging in most of the state of
Washington. Which of the figures above best illustrates the effect of this new law?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the above because a prohibition cannot be illustrated using demand and supply
figures.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
83
Copyright © 2011 Pearson Education, Inc.
58) Which figure above shows the effect if research is published claiming that eating pizza is
healthy?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Both Figure A and Figure D
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
84
Copyright © 2011 Pearson Education, Inc.
59) Pizza is a normal good. Which figure above shows the effect of a decrease in consumers'
incomes?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Both Figure B and Figure C
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
60) Which figure above shows the effect of a technological advance in the production of pizza?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Both Figure A and Figure D
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
61) Which figure above shows the effect of a decrease in the number of pizza sellers?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Both Figure B and Figure C
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
85
Copyright © 2011 Pearson Education, Inc.
62) Which figure above shows the effect of an increase in the cost of the tomato sauce used to
produce pizza?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Both Figure B and Figure C
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
63) The above figure shows the market for pizza. The market is in equilibrium when people's
incomes decrease. If pizza is a normal good, then which point represents the most likely new
price and quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
86
Copyright © 2011 Pearson Education, Inc.
64) The above figure shows the market for pizza. The market is in equilibrium when the cheese
used to produce pizza falls in price. What point represents the most likely new price and
quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
65) The above figure shows the market for pizza. The market is in equilibrium when the wages
paid pizza workers increases. What point represents the most likely new price and quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
66) The above figure shows the market for pizza. The market is in equilibrium when new pizza
firms enter the market. What point represents the most likely new price and quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
87
Copyright © 2011 Pearson Education, Inc.
67) The above figure shows the market for pizza. The market is in equilibrium when some of the
pizza firms go out of business. What point represents the most likely new price and quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
68) The above figure shows the market for pizza. The market is in equilibrium when people learn
that eating pizza helps prevent heart disease. What point represents the most likely new price and
quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
69) The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos
are substitutes for consumers. The price of tacos falls. What point represents the most likely new
price and quantity?
A) A
B) B
C) C
D) D
E) E
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
88
Copyright © 2011 Pearson Education, Inc.
70) If both the supply and demand curves shift simultaneously, we can always predict what will
happen to
A) both the price and the quantity.
B) either the price or the quantity, but not both.
C) only the price.
D) only the quantity.
E) neither the price nor the quantity.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
71) A competitive market is in equilibrium. Then there is an increase in demand and an increase
in supply. The equilibrium price ________, and the equilibrium quantity ________.
A) rises; increases
B) perhaps changes but we can't say if it rises, falls, or stays the same; does not change
C) falls; increases
D) perhaps changes but we can't say if it rises, falls, or stays the same; increases
E) falls; perhaps changes but we can't say if it increases, decreases, or stays the same
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
72) If the demand and supply both increase equally, then the equilibrium price ________ and the
equilibrium quantity ________.
A) increases; increase
B) increases; does not change
C) does not change; increases
D) increases; decreases
E) decreases; does not change
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
89
Copyright © 2011 Pearson Education, Inc.
73) Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi
coupled with an increase in the number of strawberry growers ________ the equilibrium price of
a pound of strawberries and ________ the equilibrium quantity of strawberries.
A) raises; increases
B) probably changes, but more information is needed to determine if it rises or falls; increases
C) raises; probably changes, but more information is needed to determine if it increases or
decreases
D) lowers; probably changes, but more information is needed to determine if it increases or
decreases
E) lowers; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
74) A competitive market is in equilibrium. Then there is a decrease in demand and a decrease in
supply. The equilibrium price ________, and the equilibrium quantity ________.
A) rises; decreases
B) perhaps changes but we can't say if it rises, falls, or stays the same; decreases
C) falls; increases
D) perhaps changes but we can't say if it rises, falls, or stays the same; increases
E) rises; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
75) If both supply and demand decrease by the same amount, the equilibrium price
A) does not change.
B) rises.
C) falls.
D) cannot be predicted.
E) None of the answers is correct because the price depends on what happens to the equilibrium
quantity.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
90
Copyright © 2011 Pearson Education, Inc.
76) Both the demand for and supply of cars changes in France. You observe that the quantity of
cars does not change but the price rises. Thus, which of the following occurred?
A) Demand and supply increased by an equal amount.
B) Demand and supply decreased by an equal amount.
C) Demand increased and supply decreased by an equal amount.
D) Demand decreased and supply increased by an equal amount.
E) Demand increased by a larger magnitude than supply decreased.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
77) Suppose that the demand curve for desktop computers shifts rightward and at the same time
the supply curve shifts leftward. Which of the following could have caused these shifts?
A) Desktop computers are a normal good and incomes increased, while more firms entered the
market.
B) The price of a laptop computer, a substitute for desktop computers, fell and the cost of
producing desktop computers decreased.
C) Consumers purchased more computers because of the Christmas season and the labor costs of
producing desktop computers decreased.
D) Desktop computers are a normal good and incomes increased, while the labor costs of
producing personal computers increased.
E) Desktop computers are a normal good and incomes decreased, while the labor costs of
producing personal computers increased.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
78) If the demand curve for desktop computers shifts rightward and at the same time the supply
curve shifts leftward, then
A) the equilibrium price definitely rises.
B) the equilibrium price definitely falls.
C) the equilibrium price definitely remains the same.
D) More information is needed to determine the effect on the equilibrium price.
E) the equilibrium quantity definitely increases.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
91
Copyright © 2011 Pearson Education, Inc.
79) If the demand curve for desktop computers shifts rightward and at the same time the supply
curve shifts leftward, then
A) the equilibrium quantity definitely increases.
B) the equilibrium quantity definitely decreases.
C) the equilibrium quantity definitely remains the same.
D) More information is needed to determine the effect on the equilibrium quantity.
E) the equilibrium price definitely falls.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
80) The demand for oranges increases while the supply decreases. The equilibrium price of
oranges ________, and the equilibrium quantity ________.
A) rises; decreases
B) falls; perhaps changes but we can't say if it increases, decreases, or stays the same
C) falls; increases
D) does not change; perhaps changes but we can't say if it increases, decreases, or stays the same
E) rises; perhaps changes but we can't say if it increases, decreases, or stays the same
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
81) The demand for cat food decreases while the supply increases. The equilibrium price of cat
food ________, and the equilibrium quantity ________.
A) does not change; increases
B) rises; decreases
C) falls; perhaps changes but we can't say if it increases, decreases, or stays the same
D) rises; perhaps changes but we can't say if it increases, decreases, or stays the same
E) falls; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
92
Copyright © 2011 Pearson Education, Inc.
82) Suppose the government imposes a small carbon tax on automakers. But the price of gasoline
has doubled due to a Middle East crisis which has reduced oil production. In the market for
autos, these changes mean that supply and demand have both changed with the effect on the
demand larger than the effect on the supply. The result is that the price of autos will ________
and the number of autos sold will ________.
A) rise; perhaps change but we can't say if it increases, decreases, or stays the same
B) rise; increase
C) rise; decrease
D) fall; perhaps change but we can't say if it increases, decreases, or stays the same
E) fall; decrease
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SH
AACSB: Analytical reasoning
83) If both producers and consumers believe that a product's price will rise in the future, then at
the present, demand ________ and supply ________.
A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; increases
E) does not change; does not change
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
84) If both producers and consumers believe that a product's price will rise in the future, then at
the present, the equilibrium price
A) does not change.
B) rises.
C) falls.
D) might rise, fall, or not change, but the change can never be predicted.
E) might rise, fall, or not change depending on whether the effect from the producers is greater
than or less than the effect from the consumers.
Skill: Level 4: Applying models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
93
Copyright © 2011 Pearson Education, Inc.
85) The equilibrium price of a good occurs if the
A) quantity of the good demanded equals the quantity of the good supplied.
B) quantity of the good demanded is greater than the quantity of the good supplied.
C) quantity of the good demanded is less than the quantity of the good supplied.
D) demand for the good is equal to the supply of the good.
E) price of the good seems reasonable to most buyers.
Skill: Level 1: Definition
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Reflective thinking
86) If there is a surplus of a good, the quantity demanded is ________ the quantity supplied and
the price will ________.
A) less than; rise
B) less than; fall
C) greater than; rise
D) greater than; fall
E) equal to; fall
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Reflective thinking
94
Copyright © 2011 Pearson Education, Inc.
87) The graph illustrates the market for bottled water. When the price exceeds the equilibrium
price, the quantity demanded is ________ the quantity supplied and the price of the good will
________.
A) less then; fall
B) greater than; rise
C) greater than; fall
D) less than; rise
E) equal to; fall
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
88) Which of the following is correct?
i. A surplus puts downward pressure on the price of a good.
ii. A shortage puts upward pressure on the price of a good.
iii. There is no surplus or shortage at equilibrium.
A) i and ii
B) i and iii
C) ii and iii
D) i, ii, and iii
E) only iii
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Reflective thinking
95
Copyright © 2011 Pearson Education, Inc.
89) Which of the following is the best explanation for why the price of gasoline increases during
the summer months?
A) Oil producers have higher costs of production in the summer.
B) Sellers have to earn profits during the summer to cover losses in the winter.
C) There is increased driving by families going on vacation.
D) There is less competition among oil refineries in the summer.
E) The number of gas stations open 24 hours a day rises in the summer months and so the price
must rise to cover the higher costs.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Reflective thinking
90) The number of people looking to buy ceiling fan buyers increases, so there is an increase in
the
A) quantity of ceiling fans demanded and a surplus of ceiling fans.
B) demand for ceiling fans and a rise in the price of a ceiling fan.
C) demand for ceiling fans and a surplus of ceiling fans.
D) supply of ceiling fans and no change in the price of a ceiling fan.
E) demand for ceiling fans and in the supply of ceiling fans.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Analytical reasoning
91) When the demand for a good decreases, its equilibrium price ________ and equilibrium
quantity ________.
A) falls; decreases
B) falls; increases
C) rises; decreases
D) rises; increases
E) falls; does not change
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
96
Copyright © 2011 Pearson Education, Inc.
92) A technological improvement lowers the cost of producing corn. As a result, the price of a
pound of corn ________ and the quantity of corn ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) falls; does not change
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
93) The technology associated with manufacturing computers has advanced enormously. This
change has led to the price of a computer ________ and the quantity ________.
A) rising; increasing
B) rising; decreasing
C) falling; increasing
D) falling; decreasing
E) falling; not changing
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Analytical reasoning
97
Copyright © 2011 Pearson Education, Inc.
94) The graph illustrates the market for bottled water. If the producers of bottled water switch to
using improved technology, then the
A) supply of bottled water decreases.
B) quantity demanded of bottled water increases.
C) quantity demanded of bottled water does not change.
D) price of bottled water rises.
E) supply curve shifts leftward.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
95) Suppose that the price of lettuce used to produce tacos increases. This change means that the
equilibrium price of a taco ________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Analytical reasoning
98
Copyright © 2011 Pearson Education, Inc.
96) Suppose a medical study reveals new benefits to consuming beef and at the same time a
bumper corn crop reduces the cost of feeding steers. The equilibrium quantity of beef will
A) decrease.
B) perhaps increase, decrease, or stay the same, but more information is needed to determine
which it does.
C) stay the same.
D) increase.
E) definitely either stay the same or decrease.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
97) Candy makers accurately anticipate the increase in demand for candy for Halloween so that
the supply of candy and demand for candy increase the same amount. As a result, the price of
candy ________ and the quantity of candy ________.
A) rises; does not change
B) falls; increases
C) does not change; increases
D) does not change; does not change
E) rises; increases
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Analytical reasoning
99
Copyright © 2011 Pearson Education, Inc.
98) The graph illustrates the market for British pounds, the currency of the United Kingdom. As
the number of buyers of pounds increases and the number of sellers of pounds increases, the
equilibrium price of a pound
A) will rise.
B) will fall
C) will remain the same.
D) might rise, fall, or remain the same depending on whether the effect on buyers is larger than,
less than, or the same as the effect on sellers.
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
100
Copyright © 2011 Pearson Education, Inc.
99) The graph illustrates the market for computers. If the number of buyers of computers
increases and technology advances, you predict that the
A) equilibrium quantity of computers will increase.
B) equilibrium quantity of computers will decrease.
C) equilibrium price of a computer will rise.
D) equilibrium price of a computer will fall.
E) equilibrium quantity of computers might increase, decrease, or not change.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
100) Which of the following definitely results in a product's equilibrium price rising?
A) an increase in both demand and supply
B) a decrease in both demand and supply
C) an increase in demand combined with a decrease in supply
D) a decrease in demand combined with an increase in supply
E) an increase in the supply combined with no change in the demand
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
101
Copyright © 2011 Pearson Education, Inc.
101) During 2008 the supply of gasoline decreased while at the same time the demand for
gasoline increased. If the magnitude of the increase in demand was greater than the magnitude of
the decrease in supply, then the equilibrium price of gasoline ________ and the equilibrium
quantity ________.
A) increased; increased
B) increased; decreased
C) increased; did not change
D) decreased; did not change
E) did not change; increased
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: STUDY GUIDE
AACSB: Analytical reasoning
102) The graph illustrates the market for British pounds, the currency of the United Kingdom. As
the number of buyers of pounds decreases and the number of sellers of pounds increases, the
equilibrium price of a pound
A) will rise.
B) will fall
C) will remain the same.
D) might rise, fall, or remain the same but more information is needed.
E) will rise if the magnitude of the effect on the buyers is larger than the magnitude of the effect
on the sellers.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MyEconLab Web Site
AACSB: Analytical reasoning
102
Copyright © 2011 Pearson Education, Inc.
4.4 Integrative Questions
1) Consider the market for bread. If the price of wheat rises, then the
A) demand curve for bread shifts leftward.
B) supply curve of bread shifts leftward.
C) price of bread falls.
D) equilibrium quantity of bread increases.
E) demand curve for bread shifts rightward.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
2) Consider the market for turkeys. In the United States, because of Thanksgiving in the month
of November,
A) there is a downward movement along the demand curve for turkeys.
B) there is an upward movement along the supply curve for turkeys.
C) the supply curve of turkeys shifts leftward.
D) the demand curve for turkeys shifts leftward.
E) neither the demand curve nor the supply curve shift; instead there is a movement along both
curves.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
3) Consider the market for feather pillows. If there is an increase in the price of feather dusters, a
substitute in production for feather pillows, then
A) the price of feather pillows decreases.
B) the demand curve for feather pillows shifts leftward.
C) the supply curve for feather pillows shifts leftward.
D) there is a downward movement along the demand curve for feather pillows.
E) the demand curve for feather pillows shifts rightward.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
103
Copyright © 2011 Pearson Education, Inc.
4) Consider the market for peanut butter. If there is an increase in the price of peanuts,
A) there is an upward movement along the supply curve for peanut butter.
B) the supply curve for peanuts shifts rightward.
C) there is a decrease in the supply of peanuts.
D) there is a decrease in the supply of peanut butter.
E) there is a decrease in the demand for peanut butter.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
5) Peanut butter and jelly are complements for many consumers. Consider the market for peanut
butter. If there is an increase in the price of jelly,
A) there is a movement along the supply curve of peanut butter.
B) the price of peanut butter rises.
C) the quantity of peanut butter increases.
D) there is a shift in the supply curve for jelly.
E) the demand curve for peanut butter does not shift; instead there is a movement along it.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
6) Consider the market for wheat. If there is an improvement in harvesting technology,
A) the supply curve for wheat shifts rightward.
B) the demand curve for wheat shifts rightward.
C) there is a movement up along the demand curve.
D) the equilibrium price rises.
E) the demand curve for wheat shifts leftward.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
104
Copyright © 2011 Pearson Education, Inc.
7) Consider the market for camera film. If more people start using digital cameras, which do not
require film,
A) the supply curve of film shifts rightward.
B) the demand curve for film shifts leftward.
C) there is a movement up along the demand curve for film.
D) there is a movement down along the demand curve for film.
E) neither the demand curve nor the supply curve for film shifts; instead there is a movement
along both.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
105
Copyright © 2011 Pearson Education, Inc.
8) The above figures show the market for HD televisions. If people's incomes increase and HD
televisions are a normal good, which figure shows the effect of this change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
106
Copyright © 2011 Pearson Education, Inc.
9) The above figures show the market for HD televisions. Blu-ray players can be used to play
HD movies. If the price of blu-ray players falls, then which figure shows the effect of this change
in the market for HD televisions?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
10) The above figures show the market for HD televisions. If research is published showing that
watching HD television shows causes eye damage, then which figure shows the effect of this
change?
A) Figure A
B) Figure B
C) Figure C
D) Figure C
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
11) The above figures show the market for HD televisions. If cable television providers lower
the price of providing HD cable service, which figure shows the effect of this change ?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: KG
AACSB: Analytical reasoning
107
Copyright © 2011 Pearson Education, Inc.
12) The above figures show the market for HD televisions. If the price of the LCD screens used
to produce these televisions falls, which figure shows the effect of this change in price?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
13) The above figures show the market for HD televisions. If there are severe earthquakes that
destroy a significant number of of HD television manufacturing plants, which figure shows the
effect of the earthquake?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
14) The above figures show the market for HD televisions. If more firms start to produce HD
televisions , which figure shows the effect of this change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
108
Copyright © 2011 Pearson Education, Inc.
15) The above figures show the market for HD televisions. If the technology used to produce
these televisions advances so that productivity increases, which figure shows the effect of this
change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) None of the figures represent this change.
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: KG
AACSB: Analytical reasoning
16) Consider the market for leather shoes. If producers believe the price of leather shoes will
increase next month, today
A) the supply curve for leather shoes shifts rightward.
B) the supply curve for leather shoes shifts leftward.
C) there is a movement along the supply curve for leather shoes.
D) the equilibrium price of leather shoes falls.
E) the equilibrium quantity of leather shoes increases.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Reflective thinking
17) Consider the market for peanut butter. If there is an increase in the price of bread (a
complement for peanut butter) along with a drought in peanut growing areas, the
A) equilibrium quantity of bread increases.
B) equilibrium quantity of peanut butter definitely decreases.
C) equilibrium quantity of peanut butter might increase or might decrease.
D) equilibrium price of peanut butter definitely rises.
E) equilibrium price of peanut butter definitely falls.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Analytical reasoning
109
Copyright © 2011 Pearson Education, Inc.
18) Consider the market for peanut butter. If there is a decrease in the price of deli turkey slices
(a substitute in consumption for peanut butter) along with a decrease in the price of peanut brittle
(a substitute in production for peanut butter), the
A) equilibrium price of peanut butter definitely falls.
B) equilibrium quantity of peanut definitely decreases.
C) equilibrium price of peanut butter might rise or fall.
D) equilibrium quantity of peanut butter definitely increases.
E) equilibrium price of peanut butter definitely rises.
Skill: Level 3: Using models
Section: Integrative
Author: CD
AACSB: Analytical reasoning
19) Millions of people from Mexico have migrated to the United States. This has reduced the
supply of labor in Mexico and increased the supply of labor in the United States. Assume that
the demand for labor in Mexico and the United States is unchanged. Then wages in the United
States ________ and wages in Mexico ________.
A) fall; rise
B) rise; rise
C) rise; do not change
D) fall; fall
E) do not change; fall
Skill: Level 4: Applying models
Section: Integrative
Author: SH
AACSB: Analytical reasoning
4.5 Essay: Demand
1) What is the law of demand?
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
110
Copyright © 2011 Pearson Education, Inc.
2) What leads to a decrease in the quantity demanded of a good or service?
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: TS
AACSB: Reflective thinking
3) Explain the difference between a change in demand and a change in quantity demanded. What
leads to each of these changes?
Skill: Level 1: Definition
Section: Checkpoint 4.1
Author: SB
AACSB: Communication
4) List the factors change demand and shift the demand curve. Tell what happens to demand and
the demand curve when there is an increase in the factor.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: CD
AACSB: Communication
111
Copyright © 2011 Pearson Education, Inc.
5) Computers are a complement to computer software. Suppose the price of a computer falls.
How does this fall in price affect the demand for computer software and the demand curve for
computer software?
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: JC
AACSB: Communication
6) What is the difference between a normal good and an inferior good. Give an example of each.
Skill: Level 2: Using definitions
Section: Checkpoint 4.1
Author: CD
AACSB: Communication
7) Suppose Katie, Mark, and Bobby are the only consumers in the market for ice cream. Using
the demand schedules in the table above, what is the market demand curve for ice cream?
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: SB
AACSB: Analytical reasoning
112
Copyright © 2011 Pearson Education, Inc.
8) Soft drinks and milk are substitutes for consumers. Draw a graph showing the effect of an
increase in the price of milk on the demand for soft drinks.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
113
Copyright © 2011 Pearson Education, Inc.
9) Soft drinks are a normal good. Draw a graph showing the effect of an increase in income on
the demand for soft drinks.
Skill: Level 3: Using models
Section: Checkpoint 4.1
Author: MR
AACSB: Analytical reasoning
4.6 Essay: Supply
1) What leads to a decrease in the quantity supplied of a good or service?
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: TS
AACSB: Reflective thinking
114
Copyright © 2011 Pearson Education, Inc.
2) What is the difference between quantity supplied and supply?
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: CD
AACSB: Reflective thinking
3) List the factors that change supply and shift the supply curve. Tell what happens to supply and
the supply curve when there is an increase in the factor.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: CD
AACSB: Communication
4) What are substitutes in production?
Skill: Level 1: Definition
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
5) Suppose that the number of companies selling computer software decreases. How does this
change affect the supply of computer software and the supply curve of computer software?
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
115
Copyright © 2011 Pearson Education, Inc.
6) Suppose that the productivity used to produce computers advances. How does this change
affect the supply of computers and the supply curve of computers?
Skill: Level 3: Using models
Section: Checkpoint 4.2
Author: MR
AACSB: Reflective thinking
7) The table above represents a possible supply schedule for a paper company. The law of supply
is valid for every price from ________ to ________.
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: JC
AACSB: Reflective thinking
8) The table above indicates how many thousands of containers of ice cream three different
companies are willing to produce at different prices. Does this information reflect the law of
supply? Why or why not?
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SB
AACSB: Reflective thinking
116
Copyright © 2011 Pearson Education, Inc.
9) The table above shows supply schedules for the two nail salons in town, Nancy's Nails and
Fancy Nails. What is the market supply of manicures?
Skill: Level 2: Using definitions
Section: Checkpoint 4.2
Author: SA
AACSB: Analytical reasoning
4.7 Essay: Market Equilibrium
1) When does a shortage occur?
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: MR
AACSB: Reflective thinking
2) When does a surplus occur?
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: MR
AACSB: Reflective thinking
117
Copyright © 2011 Pearson Education, Inc.
3) At prices above the equilibrium price, what occurs?
Skill: Level 2: Using definitions
Section: Checkpoint 4.3
Author: TS
AACSB: Communication
4) When the demand for blue jeans increases, what happens next?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Communication
5) Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good. Why do
grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot
of Ramen noodles?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Communication
118
Copyright © 2011 Pearson Education, Inc.
6) Why does an increase in supply lead to lower prices?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Communication
7) Personal computers are becoming less expensive as new technology reduces the cost of
production. In a supply and demand model, explain the effects of the technological innovations
and their effect on the quantity of computers.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Communication
8) What is the effect on the price and quantity of a product if both the demand and supply
simultaneously increase?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
9) What is the effect on the price and quantity of a product if the demand decreases and the
supply simultaneously increases?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
119
Copyright © 2011 Pearson Education, Inc.
10) For consumers, computers are a complement to computer software. Suppose the price of a
computer falls. Simultaneously, suppose that the number of companies selling computer software
decreases. How do these changes affect the price and quantity of computer software?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
11) In early 2009 the price of computer memory chips rose. In a demand and supply model,
shifts in what curve or curves could have brought about the higher price?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
12) The above table gives the demand and supply schedules for cat food. If the price is $3.00 per
pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If
there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? If
$3.00 is the equilibrium price, what is the equilibrium quantity?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
120
Copyright © 2011 Pearson Education, Inc.
13) The above table gives the demand and supply schedules for cat food. If the price is $1.00 per
pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If
there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? If
$3.00 is the equilibrium price, what is the equilibrium quantity?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
14) The above table gives the demand and supply schedules for cat food. What is the equilibrium
price and quantity?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
15) The above table gives the demand and supply schedules for cat food. If the supply increases
by 20 tons at every price, what is the new equilibrium price and quantity?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: TS
AACSB: Analytical reasoning
121
Copyright © 2011 Pearson Education, Inc.
16) The diagram above illustrates the market for apartments in Victoria, British Columbia.
a. If the current rent is $300 per month, is there a shortage or surplus in the apartment market
and how much is the shortage or surplus?
b. What is the equilibrium rent and quantity of apartments?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: JC
AACSB: Analytical reasoning
122
Copyright © 2011 Pearson Education, Inc.
17) In the figure above, if the price is $8 a unit, is there a shortage or surplus and what is the
amount of any shortage or surplus?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
18) In the figure above, what is the equilibrium price and quantity?
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SB
AACSB: Analytical reasoning
123
Copyright © 2011 Pearson Education, Inc.
19) Last year a very severe ice storm hit the north counties of New York state, and the states of
Vermont and Maine. Electric poles were down and no one had power for days. It was reported
that the price of kerosene heaters skyrocketed and the number purchased increased during this
time. Using a supply and demand diagram, show the impact of the ice storm on the market for
kerosene heaters.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: SA
AACSB: Analytical reasoning
124
Copyright © 2011 Pearson Education, Inc.
20) Consumers can use either natural gas or heating oil to warm their houses. Suppose the price
of natural gas increases. Use a demand and supply diagram to show the impact of the higher
price of natural gas on the market for home heating oil.
Skill: Level 3: Using models
Section: Checkpoint 4.3
Author: MR
AACSB: Analytical reasoning
