978-1259723223 Test Bank TBChap003 Part 11

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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.

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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.

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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

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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

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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.

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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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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.

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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.

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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.

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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.

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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.

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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.