d.
The cost of producing blue jeans will rise, and the supply curve for blue jeans will shift to
the right.
152. Which of the following will lead to a decrease in supply of a good?
a.
an increase in the price of the good
b.
an increase in consumer incomes
c.
an increase in the price of an important resource used to produce the good
d.
a technological advance that lowers the cost of producing the good
153. Which of the following would most likely cause the supply of wheat to increase?
a.
a decrease in the price of corn, a substitute for wheat
b.
a technological advance that lowers the cost of producing wheat
c.
an increase in the cost of producing wheat
d.
a change in consumer preferences, causing them to prefer plain white bread to
whole-wheat bread
154. Which of the following would increase the supply of laptop computers?
a.
higher wage rates for the workers that produce laptop computers
b.
a technological improvement that lowers the cost of producing laptop computers
c.
an increase in the price of computer chips used to produce laptop computers
d.
all of the above
155. If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be
a.
a decrease in the supply of sugarcane.
b.
an increase in the supply of sugarcane.
c.
a decrease in the demand for sugarcane.
d.
an increase in the demand for sugarcane.
156. What impact would a severe drought that destroys the wheat crop in several areas of the United States
have on the market for wheat?
a.
The supply of wheat would fall.
b.
The supply of wheat would rise.
c.
The demand for wheat would fall.
d.
The demand for wheat would rise.
157. Which of the following would reduce the supply of baseball hats?
a.
An increase in the demand for baseball hats.
b.
A new tax imposed on the producers of baseball hats.
c.
A reduction in the price of cloth used to make baseball hats.
d.
All of the above.
158. Which of the following will reduce the supply of motorcycles?
a.
an increase in the population age 16 to 35, the primary consumers of motorcycles
b.
an increase in taxes imposed on motorcycle producers
c.
a technological improvement reducing the production costs of motorcycles
d.
a government study that reveals motorcycle riders, on average, live 10 years longer than
those who don’t ride motorcycles
159. Which of the following occurs when a shortage occurs in the market for a good?
a.
Quantity demanded exceeds quantity supplied and the market mechanism pushes the price
up, which in turn encourages more production and less consumption.
b.
Quantity supplied exceeds quantity demanded and the price falls, which encourages more
production and less consumption.
c.
Quantity demanded exceeds quantity supplied and the market mechanism pushes the price
down, which encourages more production and less consumption.
d.
Quantity supplied exceeds quantity demanded and the price rises, which encourages more
production and less consumption.
160. In a competitive market economy, a resource in short supply will be allocated
a.
so that each firm gets enough to keep producing some portion of its output.
b.
according to how much each firm purchased before the shortage.
c.
to those firms that can make the most profitable use of it.
d.
by government regulation.
161. The term market always refers to
a.
an arrangement in which buyers and sellers meet at a specific time and place.
b.
an arrangement in which an auctioneer plays at least a limited role in setting prices.
c.
a group of buyers and sellers of a particular good or service.
d.
a single buyer and seller of a particular good or service.
162. If a surplus exists in a market we know that the actual price is
a.
above equilibrium price and quantity supplied is greater than quantity demanded.
b.
above equilibrium price and quantity demanded is greater than quantity supplied.
c.
below equilibrium price and quantity demanded is greater than quantity supplied.
d.
below equilibrium price and quantity supplied is greater than quantity demanded.
163. The forces of supply and demand assure that
a.
demand curves and supply curves tend to shift to the right as time goes by.
b.
the price of a good will eventually rise in response to an excess demand for that good.
c.
when the supply curve for a good shifts, the demand curve for that good shifts in response.
d.
the equilibrium price of a good will be rising more often than it will be falling.
164. Suppliers recognize there is a shortage in the market for their product when they notice that
a.
the quantity supplied exceeds the quantity demanded.
b.
the quantity demanded is falling.
c.
inventories are falling.
d.
production exceeds new orders for the product.
e.
government economists announce a shortage exists.
165. A shortage occurs whenever
a.
quantity demanded exceeds quantity supplied at the equilibrium price.
b.
price is less than equilibrium price.
c.
quantity demanded is less than quantity supplied.
d.
goods are scarce.
e.
some of the people who need the product are not willing and able to buy it at the
equilibrium price.
166. Which of the following is true of the interaction of supply and demand?
a.
As the price increases, the quantity demanded and the quantity supplied will increase.
b.
As the price increases, the quantity demanded and the quantity supplied will decrease.
c.
As the price increases, the quantity demanded increases and the quantity supplied will
decrease.
d.
As the price increases, the quantity demanded will decrease and the quantity supplied will
increase.
e.
As the price increases, neither the quantity demanded nor quantity supplied will change.
167. When the quantity demanded and quantity supplied in a market are equal, the market is said to be in
a.
fixation.
b.
excess supply.
c.
equilibrium.
d.
excess demand.
168. If equilibrium is present in a market,
a.
there is generally either a shortage or a surplus.
b.
quantity demanded equals quantity supplied.
c.
quantity demanded exceeds quantity supplied.
d.
quantity supplied exceeds quantity demanded.
169. Use the table below to choose the correct answer. The table is a schedule of the supply and demand for
coffee (both given in thousands of pounds per month).
Price per Pound
Quantity Demanded
Quantity Supplied
$6.00
25
9
$8.00
20
12
$10.00
15
15
$12.00
10
18
The equilibrium market price of coffee would be
a.
$6 per pound.
b.
$8 per pound.
c.
$10 per pound.
d.
$12 per pound.
170. Use the table below to choose the correct answer. The table is a schedule of the supply and demand for
ground hamburger meat (both given in thousands of pounds per month).
Price per Pound
Quantity Demanded
Quantity Supplied
$0.50
16
1
$1.00
13
3
$1.50
10
5
$2.00
7
7
$2.50
4
9
$3.00
1
11
The equilibrium market price of ground hamburger meat would be
a.
$1 per pound.
b.
$2 per pound.
c.
$2.50 per pound.
d.
$3 per pound.
171. When there is excess demand for a product in a market,
a.
price will tend to fall.
b.
price must be below the equilibrium price.
c.
price must be above the equilibrium price.
d.
producers will reduce output and sales will fall.
172. When there is excess supply of a product in a market,
a.
price will tend to rise.
b.
price must be above the equilibrium price.
c.
producers will expand output and sales will rise.
d.
price must be below the equilibrium price.
173. The price of a good will tend to fall when
a.
there is excess demand for the good.
b.
there is excess supply of the good.
c.
demand for the good increases.
d.
the supply of the good decreases.
174. The price of a good will tend to rise when
a.
there is excess demand for the good.
b.
there is excess supply of the good.
c.
demand for the good decreases.
d.
the supply of the good increases.
175. When economists say an activity is consistent with economic efficiency, they mean
a.
a majority of citizens favor the activity.
b.
the benefits that result from the activity exceed the costs.
c.
the number of people who gain from the activity exceeds the number on whom costs are
imposed.
d.
the costs that result from the activity exceed the benefits.
176. When property rights are well defined and markets are competitive, the
a.
market equilibrium violates the conditions for economic efficiency.
b.
market equilibrium is consistent with economic efficiency.
c.
conditions necessary for economic efficiency no longer apply.
d.
quantity supplied will rarely equal the quantity demanded.
177. When property rights are well defined and markets are competitive,
a.
the total gains from trade (the combined area of producer and consumer surplus) are
maximized at the market equilibrium.
b.
the market equilibrium is consistent with economic efficiency in that all units creating
more benefit than cost have been produced.
c.
the market will automatically move toward the price and quantity where the quantity
supplied and the quantity demanded are in balance.
d.
all of the above are true.
178. Which of the following are true?
a.
Economists use the criterion of economic efficiency to judge the merit of alternative
outcomes.
b.
Undertaking an economic action will be efficient if it produces more benefits than costs
for the individuals of the economy.
c.
Undertaking an economic action will be inefficient if it produces more costs than benefits
to the individuals.
d.
All of the above are true.
179. When economists say that market equilibrium is consistent with economic efficiency, they mean
a.
the total gains from trade (the combined area of producer and consumer surplus) are
smaller than potentially could be the case at a different price and quantity.
b.
all units creating more benefit than cost have been produced.
c.
some units have been produced that cost more than the benefits they create.
d.
consumers and producers have made decisions without properly taking into account the
market price.
180. Last year, 1,000 cases of bottled water were sold at $5; this year, 1,200 cases were sold at $7. These
data could be explained by the
a.
supply and demand curves shifting to the right.
b.
supply and demand curves shifting to the left.
c.
supply curve shifting to the left, with no change in demand.
d.
demand curve shifting to the right, with no change in supply.
181. A hotel in New Hampshire charges $150 per room in the winter ski season and $90 during the summer
months. The number of rooms and operating costs are constant year round. These prices indicate
a.
a rightward shift in the demand in the summer.
b.
a rightward shift in demand in the winter.
c.
a leftward shift in the supply curve in the summer.
d.
a leftward shift in demand in the winter.
182. Two studies published in the New England Journal of Medicine link the risk of breast cancer to
alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more
likely to develop breast cancer. According to economic analysis, how would this information affect the
market for alcohol?
a.
Demand will increase, placing upward pressure on price.
b.
Supply will decrease, placing downward pressure on price.
c.
Demand will decrease, placing downward pressure on price.
d.
Supply will increase, placing upward pressure on price.
183. Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause
cancer,
a.
the price of aspartame will increase.
b.
the price of sugar will decrease.
c.
the price of saccharin will increase.
d.
the demand curves for aspartame and sugar will shift leftward.
e.
aspartame and sugar will be complements.
184. Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes.
What should happen to the equilibrium price and quantity for shoelaces as a result?
a.
Both price and quantity will increase.
b.
Both price and quantity will decrease.
c.
Price will increase and quantity decrease.
d.
Price will decrease and quantity increase.
e.
Nothing.
185. If the demand for coffee makers increases,
a.
the quantity demanded will decrease.
b.
equilibrium price will increase and equilibrium quantity will decrease.
c.
equilibrium price will decrease and equilibrium quantity will increase.
d.
quantity supplied will increase.
e.
quantity supplied will decrease.
186. A decrease in supply will cause
a.
an increase in demand.
b.
a decrease in demand.
c.
an increase in quantity demanded.
d.
a decrease in quantity demanded.
e.
a decrease in equilibrium price.
187. An increase in supply will cause
a.
an increase in demand.
b.
a decrease in demand.
c.
an increase in quantity demanded.
d.
a decrease in quantity demanded.
e.
an increase in equilibrium price.
188. A decrease in demand will cause
a.
an increase in supply.
b.
a decrease in supply.
c.
an increase in quantity supplied.
d.
a decrease in quantity supplied.
e.
an increase in equilibrium price.
189. An increase in demand will cause
a.
an increase in supply.
b.
a decrease in supply.
c.
an increase in quantity supplied.
d.
a decrease in quantity supplied.
e.
a decrease in equilibrium price.
190. A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by
many dairies, what will be the effect on the milk market?
a.
An increase in supply, higher equilibrium price, and lower equilibrium quantity.
b.
A decrease in supply, lower equilibrium price, and lower equilibrium quantity.
c.
An increase in supply, lower equilibrium price, and higher equilibrium quantity.
d.
An increase in supply, higher equilibrium price, and higher equilibrium quantity.
e.
A decrease in supply, lower equilibrium price, and higher equilibrium quantity.
191. If you were a government official and wanted to raise the price of wheat, which of the following
actions would you take?
a.
Take wheat from government storage and sell it.
b.
Encourage farmers to use more fertilizer.
c.
Lower the price of rye.
d.
Subsidize purchases of farm equipment.
e.
Encourage farmers to grow less wheat.
192. If you were a government official that wanted to raise the equilibrium price of milk, which of the
following actions would you take?
a.
Take milk from government storage and sell it.
b.
Encourage farmers to produce more milk.
c.
Subsidize purchases of dairy equipment.
d.
Encourage farmers to produce less milk.
193. Consider the market for grapes. An increase in the wage paid to grape pickers will cause the
a.
demand curve for grapes to shift to the right, resulting in a higher equilibrium price for
grapes and a reduction in the quantity consumed.
b.
demand curve for grapes to shift to the left, resulting in a lower equilibrium price for
grapes and an increase in the quantity consumed.
c.
supply curve for grapes to shift to the left, resulting in a lower equilibrium price for grapes
and a decrease in the quantity consumed.
d.
supply curve for grapes to shift to the left, resulting in a higher equilibrium price for
grapes and a decrease in the quantity consumed.
194. A technological breakthrough lowers the cost of manufacturing microwave ovens. As a result, the
market changes to a new equilibrium because of
a.
an upward movement along the demand curve for microwave ovens.
b.
a rightward shift in the demand curve for microwave ovens.
c.
a rightward shift in the supply curve for microwave ovens.
d.
a shortage of microwave ovens.
195. An increase in the price of metal raises the cost of manufacturing dishwashers. As a result, the market
changes to a new equilibrium because of
a.
a surplus of dishwashers.
b.
an increase in the demand for dishwashers.
c.
a leftward shift in the demand curve for dishwashers.
d.
a leftward shift in the supply curve for dishwashers.
196. Which of the following is the best description of the effects of an increase in the supply of bread?
a.
Consumers will pay more for bread.
b.
Bread prices will fall, and bread sales will rise.
c.
A permanent surplus of bread will remain on the market.
d.
Bakers will have higher marginal costs.