158.
Refer to Figure 4-25. All else equal, the return of college students to campus in the fall would
cause a move from
a.
x to y.
b.
y to x.
c.
SA to SB.
d.
SB to SA.
159.
Refer to Figure 4-25. All else equal, an increase in the price of the pulp used in the paper
production process
would cause a move from
a.
x to y.
b.
y to x.
c.
SA to SB.
d.
SB to SA.
160.
Refer to Figure 4-25. All else equal, sellers expecting the price of paper to decrease next
month when many
college students leave campuses for the summer would cause a current move
from
a.
x to y.
b.
y to x.
c.
SA to SB.
d.
SB to SA.
161.
Refer to Figure 4–25. All else equal, a major paper manufacturer filing for bankruptcy and
shutting down as a
result of an IRS tax evasion investigation would cause a move from
a.
x to y.
b.
y to x.
c.
SA to SB.
d.
SB to SA.
The Market Forces of Supply and Demand 1017
Figure 4–26
162.
Refer to Figure 4–26. Which of the following movements would illustrate the effect in the
market for golf balls of
an increase in green fees?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
163.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for paper napkins as a result of a “Go Green” advertising campaign encouraging people
to use cloth napkins?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
164.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for orange juice
of an announcement by the American Dental Association that orange
juice erodes tooth enamel?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
165.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for swimming
lessons of an increase in the incomes of parents with school-aged children?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
166.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for Ramen
noodles of a decrease in the incomes of young adults, assuming that Ramen
noodles are an inferior good?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
167.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for ballroom dancing lessons resulting from the introduction of a popular new television
show called “Dancing with the Stars”?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
168.
Refer to Figure 4–26. Which of the following movements would illustrate the effect in the
market for bullet-proof
vests of an increase in the price of Kevlar?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
169.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for convertible
automobiles of an increase in the price of steel?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
170.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for wedding
cakes resulting from a decrease in the number of pastry chefs?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
171.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for chocolate
chip cookies of an improved high-speed mixer that allows bakers to
produce cookies in less time?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
172.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for fences of a
decrease in the price of wood?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
The Market Forces of Supply and Demand 1023
173.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the
market for doctor’s
visits of an increase in the number of medical students graduating from
medical school and successfully completing
their residency programs?
a.
Point A to Point B
b.
Point C to Point B
c.
Point C to Point D
d.
Point A to Point D
1024 The Market Forces of Supply and Demand
Figure 4–27
Panel (a) Panel (b)
Panel (c) Panel (d)
174.
Refer to Figure 4-27. Panel (a) shows which of the following?
a.
an increase in demand and an increase in quantity supplied
b.
an increase in demand and an increase in supply
c.
an increase in quantity demanded and an increase in quantity supplied
d.
an increase in quantity demanded and an increase in supply
175.
Refer to Figure 4-27. Panel (b) shows which of the following?
a.
a decrease in demand and a decrease in quantity supplied
b.
a decrease in demand and a decrease in supply
c.
a decrease in quantity demanded and a decrease in quantity supplied
d.
a decrease in quantity demanded and a decrease in supply
176.
Refer to Figure 4-27. Panel (c) shows which of the following?
a.
an increase in demand and an increase in quantity supplied
b.
an increase in demand and an increase in supply
c.
an increase in quantity demanded and an increase in quantity supplied
d.
an increase in quantity demanded and an increase in supply
177.
Refer to Figure 4-27. Panel (d) shows which of the following?
a.
a decrease in demand and a decrease in quantity supplied
b.
a decrease in demand and a decrease in supply
c.
a decrease in quantity demanded and a decrease in quantity supplied
d.
a decrease in quantity demanded and a decrease in supply
178.
Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity demanded?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
179.
Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity demanded?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
180.
Refer to Figure 4-27. Which of the four panels illustrates a decrease in quantity supplied?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
181.
Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity supplied?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
182.
Refer to Figure 4-27. Which of the four panels represents the market for pizza delivery in a
college town as we
go from summer to the beginning of the fall semester?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
183.
Refer to Figure 4-27. Which of the four panels represents the market for winter coats as we
progress from
winter to spring?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
184.
Refer to Figure 4-27. Which of the four panels represents the market for cars as a result of
the adoption of new
technology on assembly lines?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
185.
Refer to Figure 4-27. Which of the four panels represents the market for peanut butter after a
major hurricane
hits the peanut-growing south?
a.
Panel (a)
b.
Panel (b)
c.
Panel (c)
d.
Panel (d)
Multiple Choice – Section 05: Conclusion: How Prices Allocate Resources
1.
In any economic system, scarce resources have to be allocated among competing uses. Market
economies harness
the forces of
a.
government to allocate scarce resources.
b.
supply and demand to allocate scarce resources.
c.
credit cards to allocate scarce resources.
d.
nature to allocate scarce resources.
2.
The signals that guide the allocation of resources in a market economy are
a.
surpluses and shortages.
b.
quantities.
c.
government policies.
d.
prices.
3.
Who gets scarce resources in a market economy?
a.
the government
b.
whoever the government decides gets them
c.
whoever wants them
d.
whoever is willing and able to pay the price
4.
There is no shortage of scarce resources in a market economy because
a.
the government makes shortages illegal.
b.
resources are abundant in market economies.
c.
prices adjust to eliminate shortages.
d.
quantity supplied is always greater than quantity demanded in market economies.
5.
In a market economy, who or what determines who produces each good and how much is
produced?
a.
the government
b.
lawyers
c.
lotteries
d.
prices
The Market Forces of Supply and Demand 1033
6.
Which of these statements does not apply to market economies?
a.
Prices prevent decentralized decision making from degenerating into chaos.
b.
Prices coordinate the actions of millions of people with varying abilities and desires.
c.
Prices ensure that anyone who wants a product can get it.
d.
Prices ensure that what needs to get done does in fact get done.
7.
Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust
to remove the
shortage?
a.
The government would provide tax incentives to encourage people to become farmers.
b.
The government would subsidize the production of food.
c.
The prices of food and the wages of farmers would adjust.
d.
There are no mechanisms to remove the shortage.
8.
Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the
baton that the
invisible hand uses to conduct the economic orchestra?
a.
the government
b.
prices
c.
subsidies
d.
the Federal Reserve
True/False and Short Answer
1.
Prices allocate a market economy’s scarce resources.
a.
True
b.
False