322 Miller Economics Today, 16th Edition
41) An increase in the equilibrium quantity of good X can be caused by
A) an increase the price of inputs utilized in producing good X.
B) an increase in the price of good X.
C) a technological improvement in the process of producing good X.
D) a reduction in the number of producers of good X.
42) An increase in the price of labor used to produce good Y will lead to
A) an increase in the market clearing price of good Y.
B) an increase in the supply of good Y.
C) a decrease in the demand for good Y.
D) an increase in the demand for good Y.
43) The market clearing price of corn has just increased. Which of the following could have caused
this change?
A) a reduction in demand B) a reduction in supply
C) an increase in quantity demanded D) an increase in quantity supplied
44) Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have
caused this change?
A) a decrease in demand B) an increase in supply
C) an increase in quantity demanded D) an increase in quantity supplied
45) The market clearing price of computer modems has just decreased. Which of the following
could have caused this change?
A) a decrease in supply at the same time that demand increases
B) an increase in supply at the same time that demand decreases
C) a decrease in supply with demand unchanged
D) an increase in demand with supply unchanged
46) Firms that produce 80 percent of all computer chips have shut down their facilities for
maintenance. In the computer chip market this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
47) A technological advancement has just occurred in the computer chip industry. In the computer
chip market this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
48) The economy is undergoing a recession that has reduced consumers incomes. In the computer
chip market, this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
49) Chocolate has just been found to increase your expected life span by 5 years if you eat it every
day. In the market for chocolate, this information will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
50) Goods X and Y are complementary goods. An increase in the price of good X has occurred. In
the market for good Y this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
51) Goods X and Y are complementary goods. A decrease in price of good X has occurred. In the
market for good Y, this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
52) An increase in supply causes
A) quantity supplied to decrease. B) supply and price to increase.
C) price to decrease. D) price to increase.
53) A severe drought has devastated cocoa plants, causing an increase in the price of chocolate. In
the market for chocolate chip cookies,
A) a surplus will arise.
B) supply has decreased and price has increased.
C) quantity has decreased and price has decreased.
D) quantity demanded has increased.
54) More farmers have recently entered the corn industry. In addition there has been a technological
advancement in the fertilizer industry providing corn farmers with a cheaper and a more
effective fertilizer. In the market for corn, the effects these changes will have on the equilibrium
price and quantity are:
A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.
55) In the automobile industry, workers have just negotiated a new contract giving workers a large
raise. There has also been an increase in the number of licensed drivers who are in the market
for a new car. In the market for new automobiles, the effects that these changes will have on the
equilibrium price and quantity are:
A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.
56) There has recently been an increase in the price of dairy products used in the production of ice
cream. High temperatures have also induced people to consume more ice cream. In the market
for ice cream, the effects these changes will have on equilibrium price and quantity are:
A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.
57) Following adjustments to a new equilibrium in a market, the equilibrium quantity remains
unchanged, but the market clearing price is now lower. Which of the following could definitely
have caused this outcome?
A) Demand and supply both increased.
B) Demand and supply both decreased.
C) Demand increased, and supply decreased.
D) Demand decreased, and supply increased.
58) An increase in demand and a decrease in supply will lead to an
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous increase in quantity, but the effect on price is indeterminate.
D) an unambiguous increase in price, but the effect on quantity is indeterminate.
59) An increase in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous increase in quantity, but the effect on price is indeterminate.
D) an unambiguous increase in price, but the effect on quantity is indeterminate.
60) A decrease in demand and a decrease in supply will lead to
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price quantity.
C) an unambiguous decrease in price, but the effect on quantity is indeterminate.
D) an unambiguous decrease in quantity, but the effect on price is indeterminate.
61) A decrease in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous decrease in price, but the effect on quantity is indeterminate.
D) an unambiguous decrease in quantity, but the effect on price is indeterminate.
62) Following adjustments to a new equilibrium in a market, the market clearing price remains
unchanged, but the equilibrium quantity is now lower. Which of the following could definitely
have caused this outcome?
A) Demand and supply both increased.
B) Demand and supply both decreased.
C) Demand increased, and supply decreased.
D) Demand decreased, and supply increased.
63) The income of consumers increases. and the wage rate in the DVD industry increases. As a
result,
A) the price of DVDs stays the same and the quantity sold can either increase or decrease,
depending on whether the change in demand is greater than the change in supply.
B) the price of DVDs increases and the quantity sold can either increase, decrease or stay the
same depending on whether the change in demand was greater than the change in supply.
C) the equilibrium quantity sold increases and price can either increase or decrease,
depending on whether the change in demand is greater than the change in supply.
D) the equilibrium quantity sold can either increase or decrease and the price can either
increase or decrease, depending on whether the change in demand was greater than the
change in supply.
64) The supply of eggs comes from chickens. The price of eggs will decrease if
A) the supply of chickens decreases. B) the supply of eggs decreases.
C) the price of chickens increases. D) the demand for eggs decreases.
65) The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium.
B) larger the shifts in supply will be after a change in demand.
C) greater the reliance by sellers to change the nominal price.
D) more quickly a shock to the economy can be absorbed.
66) Suppose a hurricane causes a great deal of destruction in Florida. After the hurricane, it takes
much longer than usual for the reconstruction to take place. A possible explanation for this is
A) greed by suppliers of construction materials increased.
B) government prevented price gouging during the reconstruction period.
C) prices of construction materials fell in the Midwest.
D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.
67) For which situation would we expect the adjustment speed to be the fastest?
A) The demand for surgeons increases.
B) A large increase in birth rates leads to an increase in elementary school teachers.
C) The demand for movie videos increases.
D) The demand for office space in downtown Chicago increases.
68) What will happen when there is a rightward shift in the demand curve?
A) The product price will instantaneously adjust downward.
B) Product prices do not change in this situation.
C) Producers will decrease the product price.
D) A new, higher price is not instantaneously achieved, but the price will rise over time.
69) During the Winter Olympics in Vancouver, some residents rented rooms to visitors. This
behavior
A) helped reduce the shortage of hotel rooms caused by the high demand during the
Olympics.
B) reduced the demand for tickets to the Olympics since many local residents left town while
they rented out space in their homes.
C) hurt the hotel market in Vancouver in the long run because new hotels that should have
been built were not built for the Olympics.
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the
city of Vancouver.
70) List prices on new cars do not change very often, so
A) the real price of cars is very inflexible.
B) the prices of new cars can only be flexible if there are changes in the cost of materials.
C) price flexibility is not an important feature in the auto market.
D) price flexibility shows up primarily through the negotiations between buyers and sellers.
71) After an increase in the demand for construction workers, the market will attain its new
long run equilibrium faster if
A) wages are flexible.
B) wages are inflexible, forcing new people to enter the market.
C) unions restrict the number of new construction workers.
D) people ignore the shortage in the short run.
72) To enhance their prestige, some country clubs like to point to the fact that they have a waiting
list for new members. Even at clubs with high initiation fees, it is common that prospective
members have to wait three or more years before there is room for them on the membership
rolls. How do these country clubs set the price of membership to ensure that they have a waiting
list?
A) Set the membership price above the market clearing price.
B) Set the membership price below the market clearing price.
C) Set the price so that the quantity supplied of memberships exceeds the quantity
demanded.
D) Set the price at a level that will generate a surplus of memberships.
73) Suppose new research shows that soy milk and other products derived from soybeans provide
more health benefits than previously thought. At the same time, drought conditions result in
extensive damage to the soybean crop. What will be the combined impact of these two factors
on the equilibrium price and quantity of soybeans?
A) Price will decrease, but the effect on quantity is indeterminate.
B) Price will increase, but the effect on quantity is indeterminate.
C) Quantity will decrease, but the effect on price is indeterminate.
D) Quantity will increase, but the effect on price is indeterminate.
74) Suppose that an early frost damages the Florida orange crop. As a result, the price of California
oranges increases. Ceteris paribus, which one of the following statements best explains this
situation?
A) The supply of Florida oranges decreased, causing the supply of California oranges to
increase, which resulted in a higher price.
B) The supply of Florida oranges decreased, causing the supply of California oranges to
decrease, which resulted in a higher price.
C) The supply of Florida oranges decreased, causing their price to increase, and thus causing
the demand for California oranges to increase.
D) The demand for Florida oranges fell because of the freeze, and this led to a higher demand
for California oranges.
75) A newspaper headline asserts: Rising Demand Pushes Up Housing Prices. This headline
A) incorrectly implies that the demand for housing can change, whereas in fact only the
quantity of housing demanded can change.
B) incorrectly implies that the price of housing will rise when demand increases.
C) incorrectly implies that more housing will be demanded at higher prices.
D) correctly implies that an increase in demand will increase the market clearing price.
76) Suppose you observe that the price of a good increases and that the quantity of this good sold
also increases. If only the demand curve or the supply curve shifts this suggests that
A) supply increased over time while demand remained the same.
B) supply decreased over time while demand remained the same.
C) demand increased over time while supply remained the same.
D) demand decreased over time while supply remained the same.
77) People consume more fresh fruit in the summer than during the rest of the year, yet the prices of
fresh fruit are lower in the summer than in other seasons. What accounts for this?
A) Fresh fruit is not subject to the law of supply.
B) The supply of fresh fruit increases in the summer.
C) Fresh fruit is an inferior good.
D) Fresh fruit is not subject to the law of demand.
78) Suppose you observe that the price of movie admissions decline and that the number of people
attending movies declines as well. If only the demand curve or the supply curve shifts, this
suggests that
A) movies are a normal good and incomes have increased.
B) high salaries for Hollywood actors have increased the cost of movie making.
C) movie theaters have experienced an increase in their operating costs due to increases in the
minimum wage.
D) admission prices for other types of entertainment, such as live shows and sporting events,
have also declined.
79) Roses are more expensive on Valentine s Day than at other times of the year, yet sales of roses
are highest on that day. How does economic theory account for this?
A) An increase in demand pushes up the market clearing price of roses.
B) People buying the roses are irrational.
C) Roses are not subject to the law of demand.
D) Florists know that there are no substitutes for roses, so they take advantage of consumers
on Valentine s Day.
80) In which of the following situations will both market clearing price and the equilibrium quantity
increase?
A) an increase in demand with no change in supply
B) an increase in supply with no change in demand
C) a decrease in supply with no change in demand
D) a decrease in demand with no change in supply
81) In which of the following situations will both market clearing price and the equilibrium quantity
decrease?
A) an increase in demand and no change in supply
B) an increase in supply with no change in demand
C) a decrease in supply with no change in demand
D) a decrease in demand with no change in supply
82) In which of the following situations will market clearing price increase and the equilibrium
quantity decrease?
A) an increase in demand with no change in supply
B) an increase in supply with no change in demand
C) a decrease in supply with no change in demand
D) a decrease in demand with no change in supply
83) In which of the following situations will market clearing price decrease and the equilibrium
quantity increase?
A) an increase in demand with no change in supply
B) an increase in supply with no change in demand
C) a decrease in supply with no change in demand
D) a decrease in demand with no change in supply
84) If demand and supply both increase,
A) the equilibrium quantity definitely will increase and market clearing price definitely will
decrease.
B) the equilibrium quantity definitely will increase and market clearing price definitely will
increase.
C) the equilibrium quantity definitely will increase but the change in market clearing price
cannot be determined without more information.
D) market clearing price definitely will increase but the change in the equilibrium quantity
cannot be determined without further information.
85) If demand and supply both decrease,
A) the equilibrium quantity definitely will decrease, and the market clearing price definitely
will decrease.
B) the equilibrium quantity definitely will decrease, and the market clearing price definitely
will increase.
C) the market clearing price definitely will decrease, but the change in the equilibrium
quantity cannot be determined without more information.
D) the equilibrium quantity definitely will decrease, but the change in market clearing price
cannot be determined without more information.
86) If demand increases and supply decreases,
A) the market clearing price definitely will increase, and the equilibrium quantity definitely
will increase.
B) the market clearing price definitely will increase, and the equilibrium quantity definitely
will decrease.
C) the market clearing price definitely will increase, but the change in the equilibrium
quantity cannot be determined without more information.
D) the equilibrium quantity definitely will decrease, but the change in the market clearing
price cannot be determined without more information.
87) If demand decreases and supply increases,
A) the market clearing price will decrease, and the equilibrium quantity will increase.
B) the market clearing price will decrease, and equilibrium quantity will decrease.
C) the equilibrium quantity will decrease, but the change in the market clearing price cannot
be determined without more information.
D) the equilibrium price will decrease, but the change in the equilibrium quantity cannot be
determined without more information.
88) Suppose that the supply curve remains unchanged. If the demand curve shifts to the right,
A) the market clearing price definitely will decrease.
B) the market clearing price definitely will increase.
C) there will be no change in the market clearing price.
D) the market will collapse.
89) If supply increases and demand decreases,
A) the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B) the market clearing price definitely rises, and the effect on the equilibrium quantity is
indeterminate.
C) the market clearing price definitely falls, and the effect on the equilibrium quantity is
indeterminate.
D) the effect on the market clearing price is indeterminate, and the equilibrium quantity
definitely falls.
90) If both supply and demand simultaneously decrease,
A) the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B) the market clearing price definitely rises, and the effect on the equilibrium quantity is
indeterminate.
C) the market clearing price definitely falls, and the effect on the equilibrium quantity is
indeterminate.
D) the effect on the market clearing price is indeterminate, and the equilibrium quantity
definitely falls.
91) If supply and demand both simultaneously increase,
A) the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B) the market clearing price definitely rises, and the effect on the equilibrium quantity is
indeterminate.
C) the market clearing price definitely falls ,and the effect on the equilibrium quantity is
indeterminate.
D) the effect on the market clearing price is indeterminate, and the equilibrium quantity
definitely rises.
92) We cannot predict the effect on the market clearing price, but know that the equilibrium
quantity will increase when
A) supply increases and demand decreases.
B) supply and demand for a product simultaneously decrease.
C) supply and demand for a product simultaneously increase.
D) supply decreases and demand increases.
93) We cannot predict the effect on the market clearing price, but know that the equilibrium
quantity will decrease when
A) supply increases and demand decreases
B) supply decreases and demand increases.
C) supply and demand for a product simultaneously decrease.
D) supply and demand for a product simultaneously increase.
94) We cannot predict the effect on the equilibrium quantity, but know that the market clearing
price will decrease when
A) supply increases and demand decreases.
B) supply decreases and demand increases.
C) supply decreases and at the same time demand increases.
D) supply increases and at the same time demand decreases.
95) We cannot predict the effect on the equilibrium quantity, but know that the market clearing
price will increase when
A) supply decreases and at the same time demand increases.
B) supply increases and demand increases simultaneously.
C) supply and demand decreases simultaneously.
D) supply and demand increases simultaneously.
96) If supply decreases and demand increases,
A) the market clearing price definitely rises, and the equilibrium quantity falls.
B) the market clearing price definitely rises, and the equilibrium quantity is indeterminate.
C) the market clearing price definitely falls, and the effect on the equilibrium quantity is
indeterminate.
D) the effect on the market clearing price is indeterminate, and the equilibrium quantity
definitely falls.
97) If both the demand curve and the supply curve shift to the right, we can unambiguously
conclude that the
A) market clearing price will increase. B) market clearing price will decrease.
C) equilibrium quantity will increase. D) equilibrium quantity will decrease.
98) Which one of the following could account for an increase in the market clearing price of iPads?
A) a decrease in demand for iPads
B) an increase in supply of iPads
C) an increase in supply along with a decrease in demand
D) an increase in demand along with a decrease in supply
99) In September 2005, destruction to U.S. gasoline refineries was caused by back to
b
ack storms
along the U.S. Gulf Coast Hurricane Katrina and Hurricane Rita. In one week, the average
price of a gallon of gasoline in the United States increased by about 40 cents. Which of the
following best explains why these events pushed up the price of gasoline?
A) The demand curve for gasoline shifted to the left along the supply curve for gasoline.
B) The supply curve for gasoline shifted to the left along the demand curve for gasoline.
C) The demand curve for gasoline shifted to the right along the supply curve for gasoline.
D) The supply curve for gasoline shifted to the right along the demand curve for gasoline.
100) In 2010, a British Petroleum oil rig exploded in the Gulf of Mexico. The explosion resulted in a
major oil spill and a decrease in the supply of oil. At the same time, the average price of gasoline
decreased. Which of the following best explains the decrease in the price of gasoline?
A) The quantity demanded of gasoline increased.
B) The demand for gasoline decreased, and the effect of the decrease in demand on the
gasoline price was greater than the price effect of the decrease in supply.
C) The demand for gasoline increased, and the effect of the increase in demand on the
gasoline price was less than the price effect of the decrease in supply.
D) The demand for gasoline remained unchanged.
101) The market for gasoline in May is in equilibrium, at a market clearing price of $4.50 per gallon.
After Memorial Day, the demand curve for gasoline increases, which causes
A) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon
which causes the market clearing price of gasoline to rise.
B) the demand curve for gasoline to shift to the right, creating a shortage at $4.50 per gallon
which causes the market clearing price of gasoline to fall.
C) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon
which causes the market clearing price of gasoline to rise.
D) the demand curve for gasoline to shift to the left, creating a shortage at $4.50 per gallon
which causes the market clearing price of gasoline to fall.
102) Suppose the price of crude oil used to produce gasoline rises significantly. At the same time,
consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to
the ________ and supply shifts to the ________.
A) left, left B) left, right C) right, left D) right, right
103) Suppose the price of crude oil used to produce gasoline rises significantly. At the same time,
consumers purchase hybrid cars in great numbers. In the market for gasoline, the market
clearing price ________ and the equilibrium quantity ________.
A) definitely falls, is indeterminate B) is indeterminate, definitely falls
C) definitely falls, definitely rises D) definitely rises, is indeterminate
104) Economists assume that when there is a change in supply and/or demand, the market clearing
price returns to the equilibrium
A) quickly. B) slowly.
C) after a protracted negotiation process. D) after an adjustment period.
105) When the supply and/or demand curve shift, the new market clearing price is
A) reached instantaneously.
B) reached only after the government intervenes in the market.
C) reached after some period of adjustment.
D) never reached.
106) Suppose the price of lumber decreases. In the market for new homes, we would expect which of
the following to occur?
A) the market clearing price will fall and the equilibrium quantity will rise.
B) the market clearing price will rise and the equilibrium quantity will fall.
C)
b
oth the market clearing price and the equilibrium quantity will fall.
D)
b
oth the market clearing price and the equilibrium quantity will rise.
107) If the demand for a product remains the same and the supply falls,
A) the market clearing price will fall and the equilibrium quantity will rise.
B) the market clearing price will rise and the equilibrium quantity will fall.
C)
b
oth the market clearing price and the equilibrium quantity will fall.
D)
b
oth the market clearing price and the equilibrium quantity will rise.
108) If one day it was discovered that lime juice caused cancer, which of the following would likely
result?
A) The supply curve for lime juice would shift to the right.
B) The supply curve for lime juice would shift to the left.
C) The demand curve for lime juice would shift to the right.
D) The demand curve for lime juice would shift to the left.
109) If the demand for a product rises and the supply stays the same
A) the market clearing price will fall and the equilibrium quantity will rise.
B) the market clearing price will rise and the equilibrium quantity will fall.
C)
b
oth the market clearing price and the equilibrium quantity will fall.
D)
b
oth the market clearing price and the equilibrium quantity will rise.
110) If the demand for a product falls and the supply stays the same,
A) the market clearing price will fall and the equilibrium quantity will rise.
B) the market clearing price will rise and the equilibrium quantity will fall.
C)
b
oth the market clearing price and the equilibrium quantity will fall.
D)
b
oth the market clearing price and the equilibrium quantity will rise.
111) If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that
the market clearing price ________ and the equilibrium quantity ________.
A) will fall, cannot be predicted B) will rise, cannot be predicted
C) cannot be predicted, will fall D) cannot be predicted, will rise
112) If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the
market clearing price ________ and the equilibrium quantity ________.
A) will fall, cannot be predicted B) will rise, cannot be predicted
C) cannot be predicted, will fall D) cannot be predicted, will rise
113) When supply and demand for a product increase simultaneously, we
A) can predict that both the market clearing price and the equilibrium quantity will increase.
B) can predict that both the market clearing price and the equilibrium quantity will decrease.
C) cannot predict the market clearing price, but know that the equilibrium quantity will
increase.
D) cannot predict the change in either the equilibrium quantity or the market clearing price.
114) When supply and demand for a product decrease simultaneously, we
A) can predict that both equilibrium price and quantity will increase.
B) can predict that both equilibrium price and quantity will decrease.
C) cannot predict equilibrium price, but know that equilibrium quantity will decrease.
D) cannot predict the change in either the equilibrium quantity or equilibrium price.