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3-196
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
396. An effective price ceiling will lower the equilibrium price and cause a surplus.
397. In response to the general public's complaints about "price gouging" by sellers, the
government could impose a price floor.
Multiple Choice Questions
398. A headline reads "Perfect Weather Brings Record-High Coffee Harvest." This situation
would lead to a(n)
A. increase in the price and in the quantity purchased of coffee.
3-197
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficulty:
02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
399. What will happen to the equilibrium quantity and price of salmon in a competitive market
when there is an equal decrease in demand and supply?
A. Equilibrium quantity and price will both increase.
400. A television station reports that the price of orange juice has declined but the quantity
traded has increased. This situation could be caused by a(n)
A. increased preference for orange juice among buyers.
401. If there's a huge increase in the number of Americans traveling to Europe (say, for the
Olympics), then the effect on the foreign exchange market is that the
B. supply of euros would increase.
402. In the dollar-yen foreign exchange market, if Japanese companies sharply increase their
importation of U.S. products, then the
A. supply of yen will decrease and the yen will appreciate.
403. In the dollar-euro foreign exchange market, if many financial investors become worried
about the stability of the euro and thus invest in U.S. financial assets instead of in European
assets, then the
A. supply of euros will decrease and the euro will appreciate.
3-199
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
404. Assume that the graphs show a competitive market for the product stated in the question.
Select the graph above that best shows the change in the market for gasoline, when the price of
oil, which is used to produce gasoline, increases because of reduced production by major oil-
producing nations.
A. Graph A
B. Graph B
3-200
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. Graph C
D. Graph D
AACSB: Knowledge Application
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
405. Assume that the graphs show a competitive market for the product stated in the question.
Select the graph that best shows the change in the market for Florida oranges, when a major frost
3-201
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
damages the orange crop in California.
A. Graph A
B. Graph B
C. Graph C
D. Graph D
406. Assume that the graphs show a competitive market for the product stated in the question.
Select the graph above that best shows the change in the market for wheat, when the cost of
fertilizer decreases.
407. What would best explain why the equilibrium price of pink salmon decreased and the
equilibrium quantity increased?
A. The increase in demand was greater than the decrease in supply.
3-203
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficulty:
02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
408. If the price of oil increases significantly, buyers and sellers of gasoline will both expect the
price of gasoline to also increase. If sellers of gasoline act on their expectations more than the
buyers do, then
A. the equilibrium price of gasoline will increase, while the equilibrium quantity will decrease.
409. When tickets are "scalped," then in this market transaction
A. the buyer benefits, but the seller does not.
410. The scalping of tickets for an event is a sign that the stated price on the ticket is
A. equal to the quantity demanded.
B. equal to the market clearing price.
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. below the market clearing price.
D. above the market clearing price.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di f f icul t y:
01 Easy
Learning Objective: 03-06 Identify what government-set prices are and how they can cause
product surpluses and shortages.
Test Bank: II
Topic:
Application: Government-Set Prices
411. The graph below shows the market for tickets to a "Final Four" sports event. Assume that
there is only one kind of ticket to the event.
Given this market, if the event organizers pre-set the price at $20, then this action would result
in a
D. surplus of 50,000 units.
3-205
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Di f f icul t y:
01 Easy
Learning Objective: 03-06 Identify what government-set prices are and how they can cause
product surpluses and shortages.
Test Bank: II
Topic:
Application: Government-Set Prices
412. The graph below shows the market for tickets to a "Final Four" sports event. Assume that
there is only one kind of ticket to the event.
A scalpers' market will exist if the event organizers set the official ticket price at
413. The graph below shows the market for tickets to a "Final Four" sports event. Assume that
there is only one kind of ticket to the event.
The supply curve in this event-ticket market is vertical because
D. the government has regulated the selling of the tickets.
414. The supply curve in a market is vertical instead of upsloping whenever
A. all buyers are willing to pay only one price for the item.
3-207
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Di f f icul t y:
01 Easy
Learning Objective: 03-06 Identify what government-set prices are and how they can cause
product surpluses and shortages.
Test Bank: II
Topic:
Application: Government-Set Prices
415. In markets where the supply curve is vertical, changes in
A. demand will not cause the equilibrium price to change.
True / False Questions
416. In the market for sushi, an increase in supply and a greater decrease in demand will cause
both the equilibrium price and quantity to decrease.
417. In the market for sushi, an increase in the price of fish along with an increase in the
popularity of sushi among consumers will cause the equilibrium quantity to increase, but the
effect on the equilibrium price is indeterminate.
3-208
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
418. In the market for gasoline, if the change in demand due to the start of the summer driving
season is greater than the change in supply due to disruptions in the refinery operations in the
Gulf, then the equilibrium quantity will increase.
419. In the market for crude oil, if the change in demand due to the falling price of natural gas (a
substitute for oil) is greater than the change in supply due to disruptions in oil-well operations
in the Middle East, then the equilibrium price of oil will decrease.
420. In the foreign exchange market, if Canadian companies import more products from the U.S.,
then the demand for Canadian dollars will increase.
3-209
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium
prices and quantities.
Test Bank: II
Topic:
Changes in Supply, Demand, and Equilibrium
421. In the foreign exchange market, if Americans significantly increase their investments in
securities in British financial markets, one effect is that the dollar will tend to depreciate
against the pound.
422. If the organizers of a major sports event set the ticket price above the equilibrium level,
then scalping will develop in a secondary market for tickets.
423. The presence of ticket scalpers in popular events like concerts will hurt consumers who
buy from the scalpers.
3-210
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di f f icul t y:
01 Easy
Learning Objective: 03-06 Identify what government-set prices are and how they can cause
product surpluses and shortages.
Test Bank: II
Topic:
Application: Government-Set Prices
424. In cases where sellers have a fixed number of units of a product to sell, the supply curve
will be horizontal.
425. In cases where the supply curve is vertical, any change in demand will cause only a change
in price but no change in quantity.
