ngân hàng đề thi câu hỏi trắc nghiệm kinh tế vi mô chương 4 (principle of economics mankiw 2018)

202  Chapter 4 /The Market Forces of Supply and Demand

Chapter 4
The Market Forces of Supply and Demand
TRUE/FALSE
1.
Prices allocate a market economy’s scarce resources.
ANS: T
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional
2.

In a market economy, supply and demand determine both the quantity of each good produced and the price at
which it is sold.
ANS: T
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional
3.
A market is a group of buyers and sellers of a particular good or service.
ANS: T
DIF: 1
REF: 4-1
NAT: Analytic

LOC: Markets, market failure, and externalities
TOP: Markets
MSC: Definitional
4.

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a
product.
ANS: F
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Supply and demand
TOP: Demand | Supply
MSC: Definitional
5.
A yard sale is an example of a market.
ANS: T
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Markets
MSC: Applicative
6.
A newspaper’s classified ads are an example of a market.
ANS: T
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities

TOP: Markets
MSC: Applicative
7.
Most markets in the economy are highly competitive.
ANS: T
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Markets
MSC: Definitional
8.

In a competitive market, the quantity of each good produced and the price at which it is sold are not
determined by any single buyer or seller.
ANS: T
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional
9.

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the
market price.
ANS: F
DIF: 1
REF: 4-1
NAT: Analytic

LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional
10. In a perfectly competitive market, the goods offered for sale are all exactly the same.
ANS: T
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP: Perfect competition
MSC: Definitional


203  Chapter 4 /The Market Forces of Supply and Demand
11. In a perfectly competitive market, buyers and sellers are price setters.
ANS: F
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
TOP:
MSC: Definitional
12. All goods and services are sold in perfectly competitive markets.
ANS: F
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Perfect competition
MSC: Definitional

TOP:

Perfect competition

Perfect competition

13. If a good or service has only one seller, then the seller is called a monopoly.
ANS: T
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Monopoly
TOP: Monopoly
MSC: Definitional
14. Monopolists are price takers.
ANS: F
DIF: 2
NAT: Analytic
LOC: Monopoly

REF:
TOP:

4-1
Monopoly

MSC: Interpretive

15. Local cable TV companies frequently are monopolists.
ANS: T

DIF: 1
REF: 4-1
NAT: Analytic
LOC: Monopoly
TOP: Monopoly

MSC: Definitional

16.

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular
price.
ANS: T
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Quantity demanded
MSC: Definitional
17. The law of demand is true for most goods in the economy.
ANS: T
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
MSC: Definitional

TOP:

Law of demand

18.

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the
good rises, and when the price falls, the quantity demanded falls.
ANS: F
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Law of demand
MSC: Definitional
19. The demand curve is the upward-sloping line relating price and quantity demanded.
ANS: F
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Definitional
20. Individual demand curves are summed horizontally to obtain the market demand curve.
ANS: T
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand curve
MSC: Definitional
21.

The market demand curve shows how the total quantity demanded of a good varies as the income of buyers
varies, while all the other factors that affect how much consumers want to buy are held constant.
ANS: F
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Market demand curve
MSC: Definitional
22. If something happens to alter the quantity demanded at any given price, then the demand curve shifts.
ANS: T
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Definitional


Chapter 4 /The Market Forces of Supply and Demand  204
23. A movement upward and to the left along a given demand curve is called a decrease in demand..
ANS: F
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
24. An increase in demand shifts the demand curve to the left.
ANS: F

DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
MSC: Definitional

TOP:

Demand curve

25. If the demand for a good falls when income falls, then the good is called an inferior good.
ANS: F
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Normal goods
MSC: Definitional
26. When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.
ANS: F
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Applicative
27. A decrease in income will shift the demand curve for an inferior good to the right.
ANS: T
DIF: 2
REF: 4-2

NAT: Analytic
LOC: Supply and demand
TOP: Inferior goods
MSC: Interpretive
28. An increase in the price of a substitute good will shift the demand curve for a good to the right.
ANS: T
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Substitutes
MSC: Interpretive
29. Baseballs and baseball bats are substitute goods.
ANS: F
DIF: 2
REF:
NAT: Analytic
LOC: Supply and demand
MSC: Applicative

4-2
TOP:

Complements

30. A decrease in the price of a complement will shift the demand curve for a good to the left.
ANS: F
DIF: 2
REF: 4-2
NAT: Analytic

LOC: Supply and demand
TOP: Complements
MSC: Interpretive
31.

When an increase in the price of one good lowers the demand for another good, the two goods are called
complements.
ANS: T
DIF: 1
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Definitional
32.

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the
demand for marshmallows.
ANS: T
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
33.

If a person expects the price of socks to increase next month, then that person’s current demand for socks will
increase.
ANS: T

DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative


205  Chapter 4 /The Market Forces of Supply and Demand
34.

A decrease in the price of a product and an increase in the number of buyers in the market affect the demand
curve in the same general way.
ANS: F
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
35. Whenever a determinant of demand other than price changes, the demand curve shifts.
ANS: T
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Interpretive
36. An increase in the price of pizza will shift the demand curve for pizza to the left.
ANS: F

DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
37.

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of
cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.
ANS: F
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Demand curve
MSC: Applicative
38. Most studies have found that tobacco and marijuana are complements rather than substitutes.
ANS: T
DIF: 2
REF: 4-2
NAT: Analytic
LOC: Supply and demand
TOP: Complements
MSC: Applicative
39.

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular
price.
ANS: T

DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Definitional
40. When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.
ANS: T
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional
41. When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.
ANS: F
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional
42. Price cannot fall so low that some sellers choose to supply a quantity of zero.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Quantity supplied
MSC: Interpretive

43.

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the
good falls.
ANS: F
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional
44.

The law of supply states that, other things equal, when the price of a good falls, the quantity supplied falls as
well.
ANS: T
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Law of supply
MSC: Definitional


Chapter 4 /The Market Forces of Supply and Demand  206
45. If a higher price means a greater quantity supplied, then the supply curve slopes upward.
ANS: T
DIF: 1
REF: 4-3
NAT: Analytic

LOC: Supply and demand
TOP: Supply curve
MSC: Definitional
46. Individual supply curves are summed vertically to obtain the market supply curve.
ANS: F
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply curve
MSC: Definitional
47.

The market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding
constant all the other factors that influence producers’ decisions about how much to sell.
ANS: F
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Market supply curve
MSC: Definitional
48.

If something happens to alter the quantity supplied at any given price, then we move along the fixed supply
curve to a new quantity supplied.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic

LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
49.

A movement along a supply curve is called a change in supply while a shift of the supply curve is called a
change in quantity supplied.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply | Quantity supplied
MSC: Interpretive
50. A decrease in supply shifts the supply curve to the left.
ANS: T
DIF: 1
REF: 4-3
NAT: Analytic
LOC: Supply and demand
MSC: Definitional

TOP:

Supply curve

51. A reduction in an input price will cause a change in quantity supplied, but not a change in supply.
ANS: F
DIF: 2
REF: 4-3

NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Interpretive
52. An increase in the price of ink will shift the supply curve for pens to the left.
ANS: T
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Input prices
MSC: Applicative
53.

If there is an improvement in the technology used to produce a good, then the supply curve for that good will
shift to the left.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Technology
MSC: Interpretive
54. Advances in production technology typically reduce firms’ costs.
ANS: T
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP:

MSC: Interpretive
55.

Technology

If a company making frozen orange juice expects the price of its product to be higher next month, it will
supply more to the market this month.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Applicative


207  Chapter 4 /The Market Forces of Supply and Demand
56. When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Expectations
MSC: Interpretive
57.

An increase in the price of a product and an increase in the number of sellers in the market affect the supply
curve in the same general way.
ANS: F

DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
58. Whenever a determinant of supply other than price changes, the supply curve shifts.
ANS: T
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Interpretive
59. A decrease in the price of pizza will shift the supply curve for pizza to the left.
ANS: F
DIF: 2
REF: 4-3
NAT: Analytic
LOC: Supply and demand
TOP: Supply curve
MSC: Applicative
60. Supply and demand together determine the price and quantity of a good sold in a market.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium
MSC: Definitional

61. A market’s equilibrium is the point at which the supply and demand curves intersect.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium
MSC: Definitional
62. At the equilibrium price, quantity demanded is equal to quantity supplied.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
63. The equilibrium price is the same as the market-clearing price.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium

MSC: Definitional

64.

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to
sell.

ANS: F
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
65. The actions of buyers and sellers naturally move markets toward equilibrium.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
66.

When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity
supplied.
ANS: F
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
67. When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.
ANS: T
DIF: 1
REF: 4-4

NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
68. A surplus is the same as an excess demand.
ANS: F
DIF: 1
REF:
NAT: Analytic
LOC: Supply and demand
MSC: Definitional

4-4
TOP:

Surplus


Chapter 4 /The Market Forces of Supply and Demand  208
69. Sellers respond to a surplus by cutting their prices.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Supply and demand
MSC: Definitional
70. Price will rise to eliminate a surplus.
ANS: F
DIF: 2
NAT: Analytic

LOC: Equilibrium

REF:
TOP:

4-4
Surplus

TOP:

Surplus

MSC: Interpretive

71.

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus and
market price will likely rise in the future to eliminate the surplus.
ANS: F
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Surplus
MSC: Interpretive
72.

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity
supplied.
ANS: T

DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
73. When the market price is below the equilibrium price, suppliers are unable to sell all they want to sell.
ANS: F
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional
74. A shortage is the same as an excess demand.
ANS: T
DIF: 1
REF:
NAT: Analytic
LOC: Supply and demand
MSC: Definitional

4-4

75. Sellers respond to a shortage by cutting their prices.
ANS: F
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Supply and demand

MSC: Definitional
76. Price will rise to eliminate a shortage.
ANS: T
DIF: 2
NAT: Analytic
LOC: Equilibrium

REF:
TOP:

4-4
Shortage

TOP:

Shortage

TOP:

Shortage

MSC: Interpretive

77.

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage and
market price will likely rise in the future to eliminate the shortage.
ANS: T
DIF: 2
REF: 4-4

NAT: Analytic
LOC: Equilibrium
TOP: Shortage
MSC: Interpretive
78. Surpluses drive price up while shortages drive price down.
ANS: F
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Shortage | Surplus
MSC: Interpretive
79.

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above
equilibrium price.
ANS: T
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Shortage | Surplus
MSC: Interpretive
80. In a market, the price of any good adjusts until quantity demanded equals quantity supplied.
ANS: T
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium

MSC: Interpretive
81. When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity change.
ANS: T
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Equilibrium
TOP: Equilibrium
MSC: Definitional


209  Chapter 4 /The Market Forces of Supply and Demand
82.

Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the
demand curve.
ANS: F
DIF: 1
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Demand | Quantity demanded
MSC: Definitional
83.

Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers
wish to sell.
ANS: T
DIF: 1
REF: 4-4

NAT: Analytic
LOC: Supply and demand
TOP: Supply | Quantity supplied
MSC: Definitional
84. It is not possible for demand and supply to shift at the same time.
ANS: F
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP:
MSC: Interpretive

Supply | Demand

85. A decrease in demand will cause a decrease in price, which will cause a decrease in supply.
ANS: F
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium
MSC: Interpretive
86. An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.
ANS: T
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium

MSC: Interpretive
87. An increase in supply will cause a decrease in price, which will cause an increase in demand.
ANS: F
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium
MSC: Interpretive
88. A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded.
ANS: T
DIF: 2
REF: 4-4
NAT: Analytic
LOC: Supply and demand
TOP: Equilibrium
MSC: Interpretive
89. In a market economy, prices are the signals that guide the allocation of scarce resources.
ANS: T
DIF: 1
REF: 4-5
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional
SHORT ANSWER

1.
a. What is the difference between a "change in demand" and a "change in quantity demanded?" Graph
your answer.

b. For each of the following changes, determine whether there will be a change in quantity demanded
or a change in demand.
i. a change in the price of a related good
ii. a change in tastes
iii. a change in the number of buyers
iv. a change in price
v. a change in consumer expectations
vi. a change in income

ANS:
a.
b.

A change in demand refers to a shift of the demand curve. A change in quantity demanded refers to
a movement along a fixed demand curve.
A change in price causes a change in quantity demanded. All of the other changes listed shift the
demand curve.


Chapter 4 /The Market Forces of Supply and Demand  210
A change in quantity demanded
price

A change in demand
price

D

D
quantity

DIF: 2
REF:
LOC: Supply and demand
MSC: Interpretive

4-2

D'
quantity

NAT:
TOP:

Analytic
Demand | Quantity demanded

2.
a.
b.

What is the difference between a "change in supply" and a "change in quantity supplied?" Graph
your answer.
For each of the following changes, determine whether there will be a change in quantity supplied
or a change in supply.
i. a change in input costs
ii a change in producer expectations
iii. a change in price
iv. a change in technology
v. a change in the number of sellers

ANS:
a.
b.

A change in supply refers to a shift of the supply curve. A change in quantity supplied refers to a
movement along a fixed supply curve.
A change in price causes a change in quantity supplied. All of the other changes listed shift the
supply curve.
A change in quantity supplied
price

A change in supply
price

S

S

quantity

DIF: 2
REF:
LOC: Supply and demand
MSC: Interpretive

4-3

S'

quantity

NAT:
TOP:

Analytic
Supply | Quantity supplied


211  Chapter 4 /The Market Forces of Supply and Demand
3.
a.

Price

Quantity Demanded
Per Month
6,000
8,000
10,000
12,000
14,000

$5
$4
$3
$2
$1
b.
c.

d.

Given the table below, graph the demand and supply curves for flashlights. Make certain to label
the equilibrium price and equilibrium quantity.
Quantity Supplied
Per Month
10,000
8,000
6,000
4,000
2,000

What is the equilibrium price and the equilibrium quantity?
Suppose the price is currently $5. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.
Suppose the price is currently $2. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.

ANS:
a.

price

S

Surplus of 4000

5
4.5

Pe

4
3.5
3
2.5
2

Shortage of 8000

1.5

D

1
0.5
1000

2000

3000

4000

5000

6000

7000

8000

9000

10000 11000 12000

quantity

Qe

b.
c.
d.

The equilibrium price (Pe) is $4 and the equilibrium quantity (Qe) is 8,000.
A surplus of 4,000 flashlights would be the problem in the market, and we would expect the price
to fall.
A shortage of 8,000 flashlights would be the problem in the market, and we would expect the price
to rise.

DIF: 2
REF:
LOC: Supply and demand
MSC: Applicative
4.

4-4

NAT:
TOP:

Analytic
Equilibrium | Shortage | Surplus

Fill in the table below, showing whether equilibrium price and equilibrium quantity go up, go down, stay the
same, or change ambiguously.
No Change in Supply

No Change in
Demand
An Increase in
Demand
A Decrease in
Demand

An Increase in Supply

A Decrease in Supply


Chapter 4 /The Market Forces of Supply and Demand  212
ANS:
No Change in
Demand
An Increase in
Demand
A Decrease in
Demand

No Change in Supply

P same
Q same
P up
Q up
P down
Q down

DIF: 2
REF:
LOC: Supply and demand
MSC: Interpretive

5.

4-4

An Increase in Supply
P down
Q up
P ambiguous
Q up
P down
Q ambiguous
NAT:
TOP:

A Decrease in Supply
P up
Q down
P up

Q ambiguous
P ambiguous
Q down

Analytic
Demand | Supply

Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the
following would have on demand or supply. Also show how equilibrium price and equilibrium
quantity would change.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.

Winter starts and the weather turns sharply colder.
The price of tea, a substitute for hot chocolate, falls.
The price of cocoa beans decreases.
The price of whipped cream falls.
A better method of harvesting cocoa beans is introduced.
The Surgeon General of the U.S. announces that hot chocolate cures acne.
Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.
Consumer income falls because of a recession, and hot chocolate is considered a normal good.
Producers expect the price of hot chocolate to increase next month.

Currently, the price of hot chocolate is $0.50 per cup above equilibrium.


213  Chapter 4 /The Market Forces of Supply and Demand
ANS:
(a)

(b)

price

price

S

S

Pe'

Pe

Pe

Pe'

D

Qe

Qe'

D'

D'

Qe'

quantity

(c)

Qe

D
quantity

(d)

price

price

S

S'

S

Pe'
Pe

Pe

Pe'
D

Qe

Qe'

D

Qe

quantity

(e)

Qe'

D'
quantity

(f)

price

price

S

S'

S

Pe'
Pe

Pe

Pe'
D

Qe

Qe'

(g)

D
quantity

Qe

Qe'

(h)

D'
quantity

Chapter 4 /The Market Forces of Supply and Demand  214
price

price

S'

S

S

Pe
Pe'

Pe'

Pe
D

Qe'

Qe

D'

Qe'

quantity

(i)

D

Qe

quantity

(j)

price

price

S'

S

S

Pe'

Pe+
$0.50

Pe

Pe

Surplus

D

Qe'

Qe

D

Qd

quantity

Qe

Qs

quantity

In (j), a price above equilibrium will affect both quantity demanded and quantity supplied and will cause a surplus in
the market. It will not cause either demand or supply to shift.
DIF: 2
REF:
LOC: Supply and demand
MSC: Applicative

4-4

NAT:

TOP:

Analytic
Demand | Supply

Sec00 - The Market Forces of Supply and Demand
MULTIPLE CHOICE

1.

The two words most often used by economists are
a.
b.
c.
d.

prices and quantities.
resources and allocation.
supply and demand.
efficiency and equity.

ANS: C
NAT: Analytic
TOP: Economists

2.

DIF: 1
REF: 4-0
LOC: The study of economics and definitions of economics

MSC: Definitional

The forces that make market economies work are
a.
b.
c.
d.

work and leisure.
politics and religion.
supply and demand.
taxes and government spending.


215  Chapter 4 /The Market Forces of Supply and Demand
ANS: C
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional

3.

In a market economy, supply and demand determine
a.
b.
c.
d.

both the quantity of each good produced and the price at which it is sold.
the quantity of each good produced, but not the price at which it is sold.
the price at which each good is sold, but not the quantity of each good produced.
neither the quantity of each good produced nor the price at which it is sold.

ANS: A
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional

4.

In a market economy, supply and demand are important because they
a.
b.
c.
d.

play a critical role in the allocation of the economy’s scarce resources.
determine how much of each good gets produced.
can be used to predict the impact on the economy of various events and policies.
All of the above are correct.

ANS: D
DIF: 1
REF: 4-0

NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional

5.

In a market economy,
a.
b.
c.
d.

supply determines demand and demand, in turn, determines prices.
demand determines supply and supply, in turn, determines prices.
the allocation of scarce resources determines prices and prices, in turn, determine supply and
demand.
supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources.

ANS: D
DIF: 1
REF: 4-0
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Market economies
MSC: Definitional

Sec01 - The Market Forces of Supply and Demand - Markets and Competition
MULTIPLE CHOICE

1.

A group of buyers and sellers of a particular good or service is called a(n)
a.
b.
c.
d.

coalition.
economy.
market.
competition.

ANS: C
NAT: Analytic
TOP: Markets

2.

Which of the following statements is correct?
a.
b.
c.
d.

Buyers determine supply and sellers determine demand.
Buyers determine demand and sellers determine supply.
Buyers determine both demand and supply.
Sellers determine both demand and supply.

ANS: B
NAT: Analytic
MSC: Definitional

3.

DIF: 1
REF: 4-1
LOC: Markets, market failure, and externalities
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-1

The demand for a good or service is determined by
a.
b.
c.
d.

those who buy the good or service.
the government.
those who sell the good or service.
both those who buy and those who sell the good or service.

TOP:

Demand | Supply


Chapter 4 /The Market Forces of Supply and Demand  216
ANS: A
NAT: Analytic
MSC: Definitional

4.

TOP:

Supply

4-1

DIF: 1
REF: 4-1
LOC: Markets, market failure, and externalities
MSC: Definitional

Which of the following is an example of a market?
a.
b.
c.
d.

a gas station
a garage sale
a barber shop

All of the above are examples of markets.

ANS: D
NAT: Analytic
TOP: Markets

DIF: 2
REF: 4-1
LOC: Markets, market failure, and externalities
MSC: Applicative

The market for ice cream is
a.
b.
c.
d.

a monopolistic market.
a highly competitive market.
a highly organized market.
both (b) and (c) are correct.

ANS: B
NAT: Analytic
TOP: Markets

DIF: 1
REF: 4-1
LOC: Markets, market failure, and externalities
MSC: Definitional

Most markets in the economy are
a.
b.
c.
d.

markets in which sellers, rather than buyers, control the price of the product.
markets in which buyers, rather than sellers, control the price of the product.
perfectly competitive.
highly competitive.

ANS: D
NAT: Analytic
TOP: Markets

9.

DIF: 1
REF:
LOC: Supply and demand

there must be a group of buyers and sellers.
there must be a specific time and place at which the good or service is traded.
there must be a high degree of organization present.
All of the above are correct.

ANS: A
NAT: Analytic
TOP: Markets

8.

Demand

For a market for a good or service to exist,
a.
b.
c.
d.

7.

TOP:

those who buy the good or service.
the government.
those who sell the good or service.
both those who buy and those who sell the good or service.

ANS: C
NAT: Analytic
MSC: Definitional

6.

4-1

The supply of a good or service is determined by
a.

b.
c.
d.

5.

DIF: 1
REF:
LOC: Supply and demand

DIF: 1
REF: 4-1
LOC: Markets, market failure, and externalities
MSC: Definitional

In a competitive market, the price of a product
a.
b.
c.
d.

is determined by buyers and the quantity of the product produced is determined by sellers.
is determined by sellers and the quantity of the product produced is determined by buyers.
and the quantity of the product produced are both determined by sellers.
None of the above is correct.

ANS: D
DIF: 2
REF: 4-1
NAT: Analytic

LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Interpretive


217  Chapter 4 /The Market Forces of Supply and Demand
10. In a competitive market, the quantity of a product produced and the price of the product are
determined by
a.
b.
c.
d.

buyers.
sellers.
both buyers and sellers.
None of the above is correct.

ANS: C
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Interpretive

11. In a competitive market, the quantity of a product produced and the price of the product are
determined by
a.
b.

c.
d.

a single buyer.
a single seller.
one buyer and one seller working together.
all buyers and all sellers.

ANS: D
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Interpretive

12. A competitive market is a market in which
a.
b.
c.
d.

an auctioneer helps set prices and arrange sales.
there are only a few sellers.
the forces of supply and demand do not apply.
no individual buyer or seller has any significant impact on the market price.

ANS: D
DIF: 1
REF: 4-1

NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional

13. A competitive market is one in which
a.
b.
c.
d.

there is only one seller, but there are many buyers.
there are many sellers and each seller has the ability to set the price of his product.
there are many sellers and they compete with one another in such a way that some sellers are
always being forced out of the market.
there are so many buyers and so many sellers that each has a negligible impact on the price of the
product.

ANS: D
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional

14. Assume Tibana buys computers in a competitive market. It follows that
a.
b.
c.

d.

Tibana has a limited number of sellers to turn to when she buys a computer.
Tibana will find herself negotiating with sellers whenever she buys a computer.
if Tibana buys a large number of computers, the price of computers will rise noticeably.
None of the above is correct.

ANS: D
DIF: 2
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Applicative

15. In a competitive market, each seller has limited control over the price of his product because
a.
b.
c.
d.

other sellers are offering similar products.
buyers exert more control over the price than do sellers.
these markets are highly regulated by the government.
sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

ANS: A
DIF: 1
REF: 4-1
NAT: Analytic

LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional


Chapter 4 /The Market Forces of Supply and Demand  218

16. For a competitive market, which of the following statements is correct?
a.
b.
c.
d.

A seller can always increase her profit by raising the price of her product.
If a seller charges more than the going price, buyers will go elsewhere to make their purchases.
A seller often charges less than the going price to increase sales and profit.
A single buyer can influence the price of the product, but only when purchasing from several sellers
in a short period of time.

ANS: B
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional

17. If a seller in a competitive market chooses to charge more than the going price, then
a.
b.

c.
d.

the sellers’ profits definitely would increase.
the owners of the raw materials used in production would raise the prices for the raw materials.
other sellers would also raise their prices.
buyers will make purchases from other sellers.

ANS: D
DIF: 1
REF: 4-1
NAT: Analytic
LOC: Markets, market failure, and externalities
TOP: Competitive markets
MSC: Definitional

18. The highest form of competition is called
a.
b.
c.
d.

absolute competition.
cutthroat competition.
perfect competition.
market competition.

ANS: C
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

19. Which of the following is not a characteristic of a perfectly competitive market?
a.
b.
c.
d.

Different sellers sell identical products.
There are many sellers.
Sellers must accept the price the market determines.
All of the above are characteristics of a perfectly competitive market.

ANS: D
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Perfect competition

4-1

TOP:

Perfect competition

20. Which of the following is not a characteristic of a perfectly competitive market?
a.
b.
c.
d.

Sellers set the price of the product.
There are many sellers.
Buyers must accept the price the market determines.
All of the above are characteristics of a perfectly competitive market.

ANS: A
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

21. The term price takers refers to buyers and sellers in
a.

b.
c.
d.

perfectly competitive markets.
monopolistic markets.
markets that are regulated by the government.
markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.

ANS: A
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition


219  Chapter 4 /The Market Forces of Supply and Demand
22. Buyers and sellers who have no influence on market price are referred to as
a.
b.
c.
d.

market pawns.
monopolists.
price takers.
price makers.

ANS: C
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

23. All market participants are price takers that have no influence over prices in markets that feature
a.
b.
c.
d.

only a few buyers and a few sellers.
numerous sellers but only a few buyers.
numerous buyers but only a few sellers.
numerous buyers and numerous sellers.

ANS: D

NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

24. If buyers and sellers in a certain market are price takers, then individually
a.
b.
c.
d.

they have no influence on market price.
they have some influence on market price, but that influence is limited.
buyers will be able to find prices lower than those determined in the market.
sellers will find it difficult to sell all they want to sell at the market price.

ANS: A
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

25. In a perfectly competitive market, at the market price,
a.
b.
c.
d.

buyers cannot buy all they want and sellers cannot sell all they want.
buyers cannot buy all they want, but sellers can sell all they want.
buyers can buy all they want, but sellers cannot sell all they want.
buyers can buy all they want and sellers can sell all they want.

ANS: D
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

TOP:

Perfect competition

26. An example of a perfectly competitive market would be the
a.
b.
c.
d.

cable TV market.
soybean market.
breakfast cereal market.
shampoo market.

ANS: B
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Perfect competition

4-1

27. Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the
market,
a.
b.
c.

d.

the price of tennis balls increases.
the price of tennis balls decreases.
the price of tennis balls does not change.
there is no longer a market for tennis balls.

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition


Chapter 4 /The Market Forces of Supply and Demand  220

28. Assume the market for pork is perfectly competitive. When one pork buyer exits the market,
a.
b.
c.
d.

the price of pork increases.

the price of pork decreases.
the price of pork does not change.
there is no longer a market for pork.

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Perfect competition

4-1
TOP:

Perfect competition

29. A monopoly is a market
a.
b.
c.
d.

with one seller, and that seller is a price taker.
with one seller, and that seller sets the price.
with one buyer, and that buyer is a price taker.
with one buyer, and that buyer sets the price.

ANS: B
NAT: Analytic

DIF: 1
LOC: Monopoly

REF:
TOP:

4-1
Monopoly

MSC: Definitional

30. Which of the following would most likely serve as an example of a monopoly?
a.
b.
c.
d.

a bakery in a large city
a bank in a large city
a local cable television company
a small group of corn farmers

ANS: C
NAT: Analytic

DIF: 2
LOC: Monopoly

REF:

TOP:

4-1
Monopoly

MSC: Applicative

31. Which of the following is not a reason perfect competition is a useful simplification, despite the
diversity of market types we find in the world?
a.
b.
c.
d.

Perfectly competitive markets are the easiest to analyze because everyone participating in the
market takes the price as given by market conditions.
Some degree of competition is present in most markets.
There are many buyers and many sellers in all types of markets.
Many of the lessons that we learn by studying supply and demand under perfect competition apply
in more complicated markets as well.

ANS: C
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Perfect competition

4-1

TOP:

Perfect competition

Sec02 - The Market Forces of Supply and Demand - Demand
MULTIPLE CHOICE

1.

The quantity demanded of a good is the amount that buyers
a.
b.
c.
d.

are willing to purchase.
are willing and able to purchase.
are willing and able and need to purchase.
are able to purchase.

ANS: B
NAT: Analytic
MSC: Definitional

2.

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Quantity demanded

“Other things equal, when the price of a good rises, the quantity demanded of the good falls, and
when the price falls, the quantity demanded rises.” This relationship between price and quantity
demanded
a.
b.
c.
d.

applies to most goods in the economy.
is represented by a downward-sloping demand curve.
is referred to as the law of demand.
All of the above are correct.


221  Chapter 4 /The Market Forces of Supply and Demand
ANS: D
NAT: Analytic
MSC: Definitional

3.

4-2
TOP:

Law of demand

DIF: 2
REF:
LOC: Supply and demand

TOP:

Law of demand

4-2

Which of these statements best represents the law of demand?
a.
b.
c.
d.

When buyers’ tastes for a good increase, they purchase more of the good.
When income levels increase, buyers purchase more of most goods.
When the price of a good decreases, buyers purchase more of the good.
When buyers’ demands for a good increase, the price of the good increases.

ANS: C
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

TOP:

Law of demand

A downward-sloping demand curve illustrates
a.
b.
c.
d.

that demand decreases over time.
that prices fall over time.
the relationship between income and quantity demanded.
the law of demand.

ANS: D
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2

Benny rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when
the price is $2.50 per rental. Benny’s demand demonstrates the law of
a.
b.
c.
d.

price.
supply.
demand.
income.

ANS: C
NAT: Analytic
MSC: Applicative

8.

DIF: 1
REF:
LOC: Supply and demand

an increase in price causes quantity demanded to increase.
an increase in price causes quantity demanded to decrease.
an increase in quantity demanded causes price to increase.
an increase in quantity demanded causes price to decrease.

ANS: B
NAT: Analytic
MSC: Interpretive

7.

Law of demand

The law of demand states that, other things equal,
a.
b.
c.
d.

6.

TOP:

when the price of a good falls, the demand for the good rises.
when the price of a good rises, the quantity demanded of the good rises.
when the price of a good rises, the demand for the good falls.
when the price of a good falls, the quantity demanded of the good rises.

ANS: D
NAT: Analytic
MSC: Definitional

5.

4-2

The law of demand states that, other things equal,
a.

b.
c.
d.

4.

DIF: 1
REF:
LOC: Supply and demand

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

Which of the following demonstrates the law of demand?
a.
b.
c.
d.

After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his
raise.
Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal.
Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
Kendra buys fewer Snickers at $0.60 per Snickers since the price of Milky Ways fell to $0.50 per

Milky Way.


Chapter 4 /The Market Forces of Supply and Demand  222
ANS: C
NAT: Analytic
MSC: Applicative
9.

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

The following table contains a demand schedule for a good.
Price
$10
$20

Quantity Demanded
100
?

If the law of demand applies to this good, then “?” could be
a.
b.

c.
d.

0.
100.
200.
400.

ANS: A
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

10. A table that shows the relationship between the price of a good and the quantity demanded of that
good is called a
a.
b.
c.
d.

price-quantity schedule.
buyer schedule.

demand schedule.
demand curve.

ANS: C
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Demand schedule

11. A demand schedule is a table that shows the relationship between
a.
b.
c.
d.

quantity demanded and quantity supplied.
income and quantity demanded.
price and quantity demanded.
price and income.

ANS: C
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Demand schedule

12. Which of the following is not held constant in a demand schedule?
a.
b.
c.
d.

income
tastes
price
expectations

ANS: C
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2

TOP:

Demand schedule

TOP:

Demand curve

13. The demand curve for a good is
a.
b.
c.
d.

a line that relates price and quantity demanded.
a line that relates income and quantity demanded.
a line that relates quantity demanded and quantity supplied.
a line that relates price and income.

ANS: A
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2

223  Chapter 4 /The Market Forces of Supply and Demand
14. The line that relates the price of a good and the quantity demanded of that good is called the
a.
b.
c.
d.

demand schedule, and it usually slopes upward.
demand schedule, and it usually slopes downward.
demand curve, and it usually slopes upward.
demand curve, and it usually slopes downward.

ANS: D
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Demand curve

15. When drawing a demand curve,
a.
b.
c.
d.

demand is on the vertical axis and price is on the horizontal axis.
quantity demanded is on the vertical axis and price is on the horizontal axis.
price is on the vertical axis and demand is on the horizontal axis.
price is on the vertical axis and quantity demanded is on the horizontal axis.

ANS: D
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Demand curve

16. The sum of all the individual demand curves for a product is called
a.
b.
c.
d.

total demand.
consumer demand.
aggregate demand.
market demand.

ANS: D
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

17. The market demand curve
a.
b.
c.
d.

is found by vertically adding the individual demand curves.
slopes upward.
represents the sum of the prices that all the buyers are willing to pay for a given quantity of the
good.
represents the sum of the quantities demanded by all the buyers at each price of the good.

ANS: D
NAT: Analytic
MSC: Interpretive

DIF: 2

REF:
LOC: Supply and demand

4-2
TOP:

Market demand

18. The market demand curve
a.
b.
c.
d.

is the sum of all individual demand curves.
is the demand curve for every product in an industry.
shows the average quantity demanded by individual demanders at each price.
is always flatter than an individual demand curve.

ANS: A
NAT: Analytic
MSC: Definitional

DIF: 1
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

19. To obtain the market demand curve for a product, sum the individual demand curves
a.
b.
c.
d.

vertically.
diagonally.
horizontally.
and then average them.

ANS: C
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand


Chapter 4 /The Market Forces of Supply and Demand  224

20. A market demand curve shows

a.
b.
c.
d.

the relationship between price and the number of buyers in a market.
how quantity demanded changes when the number of buyers changes.
the sum of all prices that individual buyers are willing and able to pay for each possible quantity of
the good.
how much of a good all buyers are willing and able to buy at each possible price.

ANS: D
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

21. A market demand curve shows how the total quantity demanded of a good varies as
a.
b.
c.
d.

income varies.
price varies.
the number of buyers varies.
supply varies.

ANS: B
NAT: Analytic
MSC: Interpretive

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

22. 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.
b.
c.
d.

(quantity demanded = 2, price = $1.50)
(quantity demanded = 4, price = $2.50)

(quantity demanded = 10, price = $1.00)
(quantity demanded = 16, price = $2.50)

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

Table 4-1
Price
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50

Aaron’s
Quantity
Demanded
20
18

14
12
6
0

Angela’s
Quantity
Demanded
16
12
10
8
6
4

Austin’s
Quantity
Demanded
4
6
2
0
0
0

Alyssa’s
Quantity
Demanded
8
6

5
4
2
0

23. Refer to Table 4-1. Whose demand does not obey the law of demand?
a.
b.
c.
d.

Aaron’s
Angela’s
Austin’s
Alyssa’s

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

225  Chapter 4 /The Market Forces of Supply and Demand
24. Refer to Table 4-1. If these are the only four buyers in the market, then the market quantity
demanded at a price of $1 is
a.
b.
c.
d.

4 units.
7.75 units.
14 units.
31 units.

ANS: D
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

25. Refer to Table 4-1. If these are the only four buyers in the market, then the market quantity
demanded at a price of $2 is
a.
b.

c.
d.

0 units.
3.5 units.
6 units.
14 units.

ANS: D
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

26. Refer to Table 4-1. 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.
b.
c.
d.

decreases by 1.75 units.
increases by 2 units.

decreases by 7 units.
decreases by 24 units.

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

TOP:

Normal goods

27. Refer to Table 4-1. For whom is the good a normal good?
a.
b.
c.
d.

Aaron
Austin
all of the four demanders
This cannot be determined from the table.

ANS: D
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2

Table 4-2
Price
$12
$10
$8
$6
$4
$2

Audrey’s
Quantity
Demanded
2
4
6
8
10
12

Bob’s
Quantity
Demanded
1
4
7
8
9
10

Chuck’s
Quantity
Demanded
3
4
5
4
3
2

Dottie’s
Quantity
Demanded
4
5
6
7
8
9

28. Refer to Table 4-2. Whose demand does not obey the law of demand?
a.
b.
c.
d.

Audrey’s
Bob’s
Chuck’s
Dottie’s


Chapter 4 /The Market Forces of Supply and Demand  226
ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Law of demand

29. Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity
demanded at a price of $8 is
a.
b.

c.
d.

4 units.
6 units.
24 units.
32 units.

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

30. Refer to Table 4-2. If these are the only four buyers in the market, then when the price decreases
from $6 to $4, the market quantity demanded
a.
b.
c.
d.

increases by 0.75 units.
increases by 3 units.

increases by 8 units.
decreases by 27 units.

ANS: B
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2
TOP:

Market demand

Figure 4-1
Consumer 1

Consumer 2

price

20

30

18

27

16

24

14

21

12

18

10

15

8

12

6

9

4

6

2

price

3
D
2

4

6

8

10 12

D
14

16

quantity

5

10 15

20 25

30 35

40

quantity

31. Refer to Figure 4-1. If these are the only two consumers in the market, then the market quantity
demanded at a price of $6 is
a.
b.
c.
d.

12 units.
14 units.
19 units.
21 units.

ANS: C
NAT: Analytic
MSC: Applicative

DIF: 2
REF:
LOC: Supply and demand

4-2

32. When we move along a given demand curve,
a.
b.
c.

d.

only price is held constant.
income and price are held constant.
all nonprice determinants of demand are held constant.
all determinants of quantity demanded are held constant.

TOP:

Market demand