QUESTION 1

A black market develops only when quantity demanded exceeds quantity supplied.

True

False

QUESTION 2

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

True

False

QUESTION 3

A common misconception about supply is that

	a.	quantity cannot be determined in advance.
	b.	All of these responses are correct.
	c.	it is a fixed amount.
	d.	supply depends on many other variables
	e.	price is a major determinant of quantity.

QUESTION 4

A decrease in demand will have what effect on equilibrium price and quantity?

	a.	Both price and quantity will increase.
	b.	Price will decrease; quantity will increase.
	c.	Price will increase; quantity will decrease.
	d.	Both price and quantity will decrease.

QUESTION 5

A key assumption made when a supply schedule is constructed is that

	a.	firms only want to sell a certain amount of a product.
	b.	demand has a positive slope.
	c.	the only factors that matter in determining supply are price and quantity.
	d.	only price and quantity vary, all other determinants of supply are held constant.
	e.	supply is too important to be left to the marketplace.

QUESTION 6

A report on the dangers of cholesterol would likely shift the demand curve for beef downward and to the left.

True

False

QUESTION 7

A supply schedule shows

	a.	possible combinations of output under different conditions.
	b.	how much consumers would like to buy at different prices.
	c.	the "market potential" for a product.
	d.	All of these responses are correct.
	e.	how much producers are willing and able to sell at different prices.

QUESTION 8

An increase in demand will have what effect on equilibrium price and quantity?

	a.	Both price and quantity will increase.
	b.	Price will decrease; quantity will increase.
	c.	Both price and quantity will decrease.
	d.	Price will increase; quantity will decrease.

QUESTION 9

Are markets always in equilibrium?

	a.	No, but if there is no interference, they tend to move toward equilibrium.
	b.	Uncertain, economic theory has no answer to this question.
	c.	Yes, because few things tend to alter supply and demand.
	d.	No, they never "settle down" into a stable price and quantity.
	e.	Yes, they are always at the equilibrium point, or very close to it.

QUESTION 10

Figure 4-16 P