Chapter 4/The Market Forces of Supply and Demand ❖ 21
52. Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of
lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each
month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when
the price is $1.50 per glass. Which of the following points is on the market demand curve?
a.
(quantity demanded = 2, price = $1.50)
b.
(quantity demanded = 4, price = $2.50)
c.
(quantity demanded = 10, price = $1.00)
d.
(quantity demanded = 16, price = $2.50)
53. Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of
lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each
month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when
the price is $1.50 per glass. Which of the following points is on the market demand curve?
Point
Price
Quantity
A
$1.00
4
B
$1.00
10
C
$1.50
2
D
$1.50
6
a.
B only
b.
B and D only
c.
A and C only
d.
D only
Table 4-3
Price
Bert’s
Quantity
Demanded
Ernie’s
Quantity
Demanded
Grover’s
Quantity
Demanded
Oscar’s
Quantity
Demanded
$0.00
20
16
4
8
$0.50
18
12
6
6
$1.00
14
10
2
5
$1.50
12
8
0
4
$2.00
6
6
0
2
$2.50
0
4
0
0
54. Refer to Table 4-3. Whose demand does not obey the law of demand?
a.
Bert’s
b.
Ernie’s
c.
Grover’s
d.
Oscar’s
22 ❖ Chapter 4/The Market Forces of Supply and Demand
55. Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a
price of $1 is
a.
4 units.
b.
7.75 units.
c.
14 units.
d.
31 units.
56. Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a
price of $2 is
a.
0 units.
b.
3.5 units.
c.
12 units.
d.
14 units.
57. Refer to Table 4-3. If these are the only four buyers in the market, then when the price increases from $1.00
to $1.50, the market quantity demanded
a.
decreases by 1.75 units.
b.
increases by 2 units.
c.
decreases by 7 units.
d.
decreases by 24 units.
58. Refer to Table 4-3. For whom is the good a normal good?
a.
Bert only
b.
Grover only
c.
Bert, Ernie, Grover, and Oscar
d.
This cannot be determined from the table.
Chapter 4/The Market Forces of Supply and Demand ❖ 23
Figure 4-4
Quantity
Price
59. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to De-
mand C in the market for DVDs in the United States?
a.
a decrease in the price of DVDs
b.
a decrease in the price of DVD players
c.
a change in consumer preferences toward watching movies in movie theaters rather than at home
d.
a decrease in the number of people in the United States
60. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to De-
mand A in the market for DVDs?
a.
an increase in the price of DVDs
b.
a decrease in the price of DVD players
c.
a change in consumer preferences toward watching movies in movie theaters rather than at home
d.
an expectation by buyers that their incomes will increase in the very near future
61. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to De-
mand A in the market for tennis balls in the United States?
a.
an increase in the price of tennis balls
b.
a decrease in the price of tennis racquets
c.
an expectation by buyers that their incomes will increase in the very near future
d.
a decrease in the number of people in the United States under age 70
24 ❖ Chapter 4/The Market Forces of Supply and Demand
62. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand A to De-
mand B in the market for golf balls in the United States?
a.
a decrease in the price of golf balls
b.
an increase in the price of green fees
c.
an expectation by buyers that their incomes will increase in the very near future
d.
a change in consumer tastes away from golf and toward tennis
63. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand A to De-
mand B in the market for oranges in the United States?
a.
a freeze in Florida
b.
a technological advance that allows oranges to ripen faster
c.
a decrease in the price of apples
d.
an announcement by the FDA that oranges prevent heart disease
Figure 4-5
Demand 1Demand 2
AB
Panel 1
1 2 3 4 5 6 7 8 Quantity
1
2
3
4
5
6
7
8
9
10 Price
Demand 1
A
C
Panel 2
1 2 3 4 5 6 7 8 Quantity
1
2
3
4
5
6
7
8
9
10 Price
64. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require “junk food” producers to include warning labels on all
junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are
successful, we could illustrate the plan as producing a movement from
a.
Point A to Point B in Panel 1.
b.
Point B to Point A in Panel 1.
c.
Point A to Point C in Panel 2.
d.
Point C to Point A in Panel 2.
Chapter 4/The Market Forces of Supply and Demand ❖ 25
65. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require “junk food” producers to include warning labels on all
junk food. The other would impose a tax on all products considered to be junk food. We could illustrate the
tax as producing a movement from
a.
Point A to Point B in Panel 1.
b.
Point B to Point A in Panel 1.
c.
Point A to Point C in Panel 2.
d.
Point C to Point A in Panel 2.
Figure 4-6
D’ D
quantity
price
66. Refer to Figure 4-6. The shift from D to D’ is called
a.
an increase in demand.
b.
a decrease in demand.
c.
a decrease in quantity demanded.
d.
an increase in quantity demanded.
67. Refer to Figure 4-6. If the demand curve shifts from D to D’, then
a.
firms would be willing to supply less of the good than before at each possible price.
b.
people are willing to buy less of the good than before at each possible price.
c.
people’s incomes must have decreased.
d.
the price of the product has increased, causing consumers to buy less of the product.
68. Refer to Figure 4-6. The movement from D to D’ could be caused by
a.
an increase in price.
b.
a decrease in the price of a complement.
c.
a technological advance.
d.
a decrease in the price of a substitute.
26 ❖ Chapter 4/The Market Forces of Supply and Demand
69. Refer to Figure 4-6. The movement from D’ to D could be caused by
a.
a decrease in price.
b.
a decrease in income, assuming the good is inferior.
c.
buyers expecting the price of the good to fall in the near future.
d.
an increase in the price of a complement.
70. Refer to Figure 4-6. The movement from D’ to D in the market for potato chips could be caused by a(n)
a.
decrease in the price of potato chips.
b.
decrease in income, assuming that potato chips are a normal good.
c.
announcement by the FDA that potato chips cause cancer.
d.
increase in the price of a pretzels.
71. An increase in demand is represented by a
a.
movement downward and to the right along a demand curve.
b.
movement upward and to the left along a demand curve.
c.
rightward shift of a demand curve.
d.
leftward shift of a demand curve.
72. A decrease in demand is represented by a
a.
movement downward and to the right along a demand curve.
b.
movement upward and to the left along a demand curve.
c.
rightward shift of a demand curve.
d.
leftward shift of a demand curve.
73. A leftward shift of a demand curve is called a(n)
a.
increase in demand.
b.
decrease in demand.
c.
decrease in quantity demanded.
d.
increase in quantity demanded.
74. A rightward shift of a demand curve is called a(n)
a.
increase in demand.
b.
decrease in demand.
c.
decrease in quantity demanded.
d.
increase in quantity demanded.
Chapter 4/The Market Forces of Supply and Demand ❖ 27
75. If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at
each price of Vanilla Coke, then
a.
we will observe a movement downward and to the right along the demand curve for Vanilla Coke.
b.
we will observe a movement upward and to the left along the demand curve for Vanilla Coke.
c.
the demand curve for Vanilla Coke will shift to the right.
d.
the demand curve for Vanilla Coke will shift to the left.
76. When the price of hot dogs changes, the demand curve for hot dogs
a.
shifts because the price of hot dogs is measured on the vertical axis of the graph.
b.
shifts because the quantity demanded of hot dogs is measured on the horizontal axis of the graph.
c.
does not shift because the price of hot dogs is measured on the vertical axis of the graph.
d.
does not shift because the price of hot dogs is measured on the horizontal axis of the graph.
77. Which of the following changes would not shift the demand curve for a good or service?
a.
a change in income
b.
a change in the price of the good or service
c.
a change in expectations about the future price of the good or service
d.
a change in the price of a related good or service
78. Which of the following would not shift the demand curve for mp3 players?
a.
a decrease in the price of mp3 players
b.
a fad that makes mp3 players more popular among 12-25 year olds
c.
an increase in the price of digital music downloads, a complement for mp3 players
d.
a decrease in the price of satellite radio, a substitute for mp3 players
79. Which of the following events would cause a movement upward and to the left along the demand curve for
olives?
a.
The number of people who purchase olives decreases.
b.
Consumer income decreases, and olives are a normal good.
c.
The price of pickles decreases, and pickles are a substitute for olives.
d.
The price of olives rises.
80. A movement along the demand curve might be caused by a change in
a.
income.
b.
the prices of substitutes or complements.
c.
expectations about future prices.
d.
the price of the good or service that is being demanded.
28 ❖ Chapter 4/The Market Forces of Supply and Demand
81. Holding the nonprice determinants of demand constant, a change in price would
a.
result in either a decrease in demand or an increase in demand.
b.
result in a movement along a stationary demand curve.
c.
result in a shift of supply.
d.
have no effect on the quantity demanded.
82. The sum of all the individual demand curves for a product is called
a.
income demand.
b.
equilibrium demand.
c.
complementary demand.
d.
market demand.
83. Which of the following is not an expression for the sum of all the individual demand curves for a product?
a.
total demand
b.
market demand
c.
equilibrium demand
d.
aggregate demand
84. The demand curve for textbooks shifts
a.
only when income changes.
b.
when a determinant of the demand for textbooks other than the price of textbooks changes.
c.
when the price of textbooks changes.
d.
Both b) and c) are correct.
85. Which of the following is not a determinant of the demand for a particular good?
a.
the prices of related goods
b.
income
c.
tastes
d.
the prices of the inputs used to produce the good
86. Each of the following is a determinant of demand except
a.
tastes.
b.
production technology.
c.
expectations.
d.
the prices of related goods.
Chapter 4/The Market Forces of Supply and Demand ❖ 29
87. Which of the following is not a determinant of demand?
a.
the price of a resource that is used to produce the good
b.
the price of a complementary good
c.
the price of the good next month
d.
the price of a substitute good
88. If the demand for a good falls when income falls, then the good is called a(n)
a.
normal good.
b.
regular good.
c.
luxury good.
d.
inferior good.
89. If a good is normal, then an increase in income will result in a(n)
a.
increase in the demand for the good.
b.
decrease in the demand for the good.
c.
movement down and to the right along the demand curve for the good.
d.
movement up and to the left along the demand curve for the good.
90. If Max experiences a decrease in his income, then we would expect Max’s demand for
a.
each good he purchases to remain unchanged.
b.
normal goods to decrease.
c.
luxury goods to increase.
d.
inferior goods to decrease.
91. You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider
iTunes music downloads to be a(n)
a.
luxury good.
b.
inferior good.
c.
normal good.
d.
complementary good.
92. Pizza is a normal good if the demand
a.
for pizza rises when income rises.
b.
for pizza rises when the price of pizza falls.
c.
curve for pizza slopes upward.
d.
curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are
substitutes.
30 ❖ Chapter 4/The Market Forces of Supply and Demand
93. Suppose that when income rises, the demand curve for doctor’s visits shifts to the right. In this case, we know
doctor’s visits are
a.
inferior goods.
b.
normal goods.
c.
perfectly competitive goods.
d.
durable goods.
94. Which of the following would shift the demand curve for gasoline to the right?
a.
a decrease in the price of gasoline
b.
an increase in consumer income, assuming gasoline is a normal good
c.
an increase in the price of cars, a complement for gasoline
d.
a decrease in the expected future price of gasoline
95. If a decrease in income increases the demand for a good, then the good is a(n)
a.
substitute good.
b.
complementary good.
c.
normal good.
d.
inferior good.
96. If a increase in income decreases the demand for a good, then the good is a(n)
a.
substitute good.
b.
complementary good.
c.
normal good.
d.
inferior good.
97. If a good is inferior, then an increase in income will result in
a.
an increase in the demand for the good.
b.
a decrease in the demand for the good.
c.
a movement down and to the right along the demand curve for the good.
d.
a movement up and to the left along the demand curve for the good.
Chapter 4/The Market Forces of Supply and Demand ❖ 31
98. Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you
will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen piz-
zas are a(n)
a.
substitute good.
b.
normal good.
c.
inferior good.
d.
complementary good.
99. Soup is an inferior good if the demand
a.
for soup falls when the price of a substitute for soup rises.
b.
for soup rises when the price of soup falls.
c.
curve for soup slopes upward.
d.
for soup falls when income rises.
100. Suppose that Amanda receives a pay increase. We would expect
a.
to observe Amanda moving down and to the right along her given demand curve.
b.
Amanda’s demand for inferior goods to decrease.
c.
Amanda’s demand for each of two goods that are complements to increase.
d.
Amanda’s demand for normal goods to decrease.
101. If macaroni and cheese is an inferior good, then an increase in
a.
the price will cause the demand curve for macaroni and cheese to shift to the left.
b.
the price will cause the demand curve for macaroni and cheese to shift to the right.
c.
a consumer’s income will cause the demand curve for macaroni and cheese to shift to the left.
d.
a consumer’s income will cause the demand curve for macaroni and cheese to shift to the right.
102. Two goods are substitutes when a decrease in the price of one good
a.
decreases the demand for the other good.
b.
decreases the quantity demanded of the other good.
c.
increases the demand for the other good.
d.
increases the quantity demanded of the other good.
32 ❖ Chapter 4/The Market Forces of Supply and Demand
103. Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies
that X and Y are
a.
complementary goods.
b.
normal goods.
c.
inferior goods.
d.
substitute goods.
104. Good X and good Y are substitutes. If the price of good Y increases, then the
a.
demand for good X will decrease.
b.
quantity demanded of good X will decrease.
c.
demand for good X will increase.
d.
quantity demanded of good X will increase.
105. A likely example of substitute goods for most people would be
a.
peanut butter and jelly.
b.
tennis balls and tennis rackets.
c.
televisions and subscriptions to cable television services.
d.
pencils and pens.
106. If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a.
increase in the demand for bagels.
b.
decrease in the demand for bagels.
c.
increase in the demand for muffins.
d.
decrease in the demand for muffins.
107. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your de-
mand for
a.
sweatpants will increase.
b.
sweatpants will decrease.
c.
shorts will increase.
d.
shorts will decrease.
Chapter 4/The Market Forces of Supply and Demand ❖ 33
108. If American cheese and cheddar cheese are substitutes, then which of the following would increase the de-
mand for cheddar cheese?
a.
a decrease in the price of cheddar cheese
b.
an increase in the price of American cheese
c.
a decrease in the price of American cheese
d.
Both a) and b) are correct.
109. Two goods are complements when a decrease in the price of one good
a.
decreases the quantity demanded of the other good.
b.
decreases the demand for the other good.
c.
increases the quantity demanded of the other good.
d.
increases the demand for the other good.
110. If goods A and B are complements, then an increase in the price of good A will result in
a.
more of good A being sold.
b.
more of good B being sold.
c.
less of good B being sold.
d.
no difference in the quantity sold of either good.
111. A likely example of complementary goods for most people would be
a.
butter and margarine.
b.
lawnmowers and automobiles.
c.
chips and salsa.
d.
cola and lemonade.
112. A higher price for batteries would result in a(n)
a.
increase in the demand for flashlights.
b.
decrease in the demand for flashlights.
c.
increase in the demand for batteries.
d.
decrease in the demand for batteries.
113. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that
the price of bananas has increased. As a result, your demand for vanilla pudding would
a.
decrease.
b.
increase.
c.
be unaffected.
d.
There is insufficient information given to answer the question.
34 ❖ Chapter 4/The Market Forces of Supply and Demand
114. Holding all other things constant, a higher price for ski lift tickets would
a.
increase the number of skiers.
b.
increase the price of skis.
c.
decrease the number of skis sold.
d.
decrease the demand for other winter recreational activities.
115. When quantity demanded has increased at every price, it might be because
a.
the number of buyers in the market has decreased.
b.
income has increased, and the good is an inferior good.
c.
the costs incurred by sellers producing the good have decreased.
d.
the price of a complementary good has decreased.
116. Which of the following might cause the demand curve for an inferior good to shift to the left?
a.
a decrease in income
b.
an increase in the price of a substitute
c.
an increase in the price of a complement
d.
None of the above is correct.
117. If toast and butter are complements, then which of the following would increase the demand for toast?
a.
a decrease in the price of toast
b.
a decrease in the price of butter
c.
an increase in the price of butter
d.
Both a) and b) are correct.
118. When it comes to people’s tastes, economists generally believe that
a.
tastes are based on forces that are well within the realm of economics.
b.
tastes are based on historical and psychological forces that are beyond the realm of economics.
c.
tastes can only be studied through well-constructed, real-life models.
d.
because tastes do not directly affect demand, there is little need to explain people’s tastes.
119. Economists normally
a.
do not try to explain people’s tastes, but they do try to explain what happens when tastes change.
b.
believe that they must be able to explain people’s tastes in order to explain what happens when
tastes change.
c.
do not believe that people’s tastes determine demand, so they ignore the subject of tastes.
d.
incorporate tastes into economic models only to the extent that tastes determine whether pairs of
goods are substitutes or complements.
Chapter 4/The Market Forces of Supply and Demand ❖ 35
120. Suppose the American Medical Association announces that men who shave their heads are less likely to die of
heart failure. We could expect the current demand for
a.
hair gel to increase.
b.
razors to increase.
c.
combs to increase.
d.
shampoo to increase.
121. Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who
eat it. We would expect to see
a.
no change in the demand for chocolate pudding.
b.
a decrease in the demand for chocolate pudding.
c.
an increase in the demand for chocolate pudding.
d.
a decrease in the supply of chocolate pudding.
122. A very hot summer in Atlanta will cause
a.
the demand curve for lemonade to shift to the left.
b.
the demand for air conditioners to decrease.
c.
the demand for jackets to decrease.
d.
a movement downward and to the right along the demand curve for tank tops.
123. If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes
weight gain, then we likely would see
a.
an increase in demand for brown rice and a decrease in demand for white rice.
b.
a decrease in demand for brown rice and an increase in demand for white rice.
c.
an increase in demand for both brown and white rice.
d.
no change in demand for either type of rice because weight loss is not a determinant of demand.
124. Which of the following events could shift the demand curve for gasoline to the left?
a.
The income of gasoline buyers rises, and gasoline is a normal good.
b.
The income of gasoline buyers falls, and gasoline is an inferior good.
c.
Public service announcements run on television encourage people to walk or ride bicycles instead
of driving cars.
d.
The price of gasoline rises.
36 ❖ Chapter 4/The Market Forces of Supply and Demand
125. An increase in the number of college scholarships issued by private foundations would
a.
increase the supply of education.
b.
decrease the supply of education.
c.
increase the demand for education.
d.
decrease the demand for education.
126. Today, people changed their expectations about the future. This change
a.
can cause a movement along a demand curve.
b.
can affect future demand but not today’s demand.
c.
can affect today’s demand.
d.
cannot affect either today’s demand or future demand.
127. If Miguel expects to earn a higher income next month, he may choose to
a.
save more now and spend less of his current income on goods and services.
b.
save less now and spend more of his current income on goods and services.
c.
decrease his current demand for goods and services.
d.
move along his current demand curves for goods and services.
128. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped
out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your
demand for peanut butter
a.
will increase but not until the end of the year.
b.
increases today.
c.
decreases as you look for a substitute good.
d.
shifts left today.
129. Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of
this information, today’s demand curve for Mustangs
a.
shifts to the right.
b.
shifts to the left.
c.
shifts either to the right or to the left, but we cannot determine the direction of the shift from the
given information.
d.
will not shift; rather, the demand curve for Mustangs will shift to the right next month.
Chapter 4/The Market Forces of Supply and Demand ❖ 37
130. What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?
a.
The demand for artichokes will increase.
b.
The demand for artichokes will decrease.
c.
The demand for artichokes will be unaffected.
d.
The supply of artichokes will increase.
131. Today’s demand curve for gasoline could shift in response to a change in
a.
today’s price of gasoline.
b.
the expected future price of gasoline.
c.
the number of sellers of gasoline.
d.
All of the above are correct.
132. If the number of buyers in a market decreases, then
a.
demand will increase.
b.
demand will decrease.
c.
supply will increase.
d.
supply will decrease.
133. Which of the following does not affect an individual’s demand curve?
a.
expectations
b.
income
c.
prices of related goods
d.
the number of buyers
134. Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast
food in Warrensburg
a.
increases.
b.
decreases.
c.
remains constant, but we observe a movement downward and to the right along the demand curve.
d.
remains constant, but we observe a movement upward and to the left along the demand curve.
135. For the general population, a 10 percent increase in the price of cigarettes leads to a
a.
1 percent reduction in the quantity demanded of cigarettes.
b.
4 percent reduction in the quantity demanded of cigarettes.
c.
10 percent reduction in the quantity demanded of cigarettes.
d.
12 percent reduction in the quantity demanded of cigarettes.
38 ❖ Chapter 4/The Market Forces of Supply and Demand
136. For teenagers, a 10 percent increase in the price of cigarettes leads to a
a.
1 percent reduction in the quantity demanded of cigarettes.
b.
4 percent reduction in the quantity demanded of cigarettes.
c.
10 percent reduction in the quantity demanded of cigarettes.
d.
12 percent reduction in the quantity demanded of cigarettes.
137. The belief that tobacco is a “gateway drug” is consistent with
a.
the idea that tobacco and marijuana are substitutes.
b.
the idea that an increase in income causes a decrease in the demand for tobacco and an increase in
the demand for marijuana.
c.
the idea that lower cigarette prices are associated with less use of marijuana.
d.
most of the available evidence.
138. Most studies indicate that tobacco and marijuana tend to be
a.
substitutes.
b.
complements.
c.
unrelated because one good is legal while the other one is illegal.
d.
inferior goods.
139. Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette pric-
es
a.
encourage marijuana use, and the evidence supports this argument.
b.
encourage marijuana use, but the evidence does not support this argument.
c.
discourage marijuana use, and the evidence supports this argument.
d.
discourage marijuana use, but the evidence does not support this argument.
Chapter 4/The Market Forces of Supply and Demand ❖ 39
Figure 4-7
Panel (a)
Panel (b)
D
P’
P
Q’ Q
quantity
price
D’ D
quantity
price
140. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a.
The price of marijuana, a complement to cigarettes, increased.
b.
Mandatory health warnings were placed on cigarette packages.
c.
Several foreign countries banned U.S. cigarettes in their countries.
d.
A tax was placed on cigarettes.
141. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a.
Tobacco and marijuana are complements, and the price of marijuana decreased.
b.
Tobacco is a “gateway drug,” and the price of marijuana increased.
c.
The price of cigarettes increased.
d.
The arrows are consistent with all of these events.
142. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (b), the arrows are consistent with
which of the following events?
a.
an increase in the price of cigarettes
b.
placing a tax on cigarettes
c.
the prohibition of cigarette advertisements on television
d.
decreasing the price of marijuana, given that tobacco and marijuana are complements
40 ❖ Chapter 4/The Market Forces of Supply and Demand
SUPPLY
1. The quantity supplied of a good is the amount that
a.
buyers are willing and able to purchase.
b.
sellers are able to produce.
c.
buyers and sellers agree will be brought to market.
d.
sellers are willing and able to sell.
2. If the price of a good is low,
a.
firms would increase profit by increasing output.
b.
the quantity supplied of the good could be zero.
c.
the supply curve for the good will shift to the left.
d.
firms can and should raise the price of the product.
3. A decrease in the price of a good will
a.
increase supply.
b.
decrease supply.
c.
increase quantity supplied.
d.
decrease quantity supplied.
4. An increase in the price of a good will
a.
increase supply.
b.
decrease supply.
c.
increase quantity supplied.
d.
decrease quantity supplied.
5. When the price of a good or service changes,
a.
the demand curve shifts in the opposite direction.
b.
the supply curve shifts in the opposite direction.
c.
the supply curve shifts in the same direction.
d.
there is a movement along a given supply curve.
6. A movement along the supply curve might be caused by a change in
a.
production technology.
b.
input prices.
c.
expectations about future prices.
d.
the price of the good or service that is being supplied.