Chapter 4/The Market Forces of Supply and Demand ? 127
71. A downward-sloping demand curve illustrates the
a. relationship between consumers’ income and their willingness to purchase the good in question, provided the
good is inferior.
b. negative relationship between quantity demanded and quantity supplied.
c. idea that the more of one good that a consumer buys, the less income she has to spend on other goods. d. law of demand. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve MSC: Interpretive 72. The demand curve for a good is
a. a line that relates the price to quantity demanded. b. a line that relates income to quantity demanded.
c. a line that will shift only if the price of a related good changes.
d. the same thing as a production possibilities frontier, except the axes are labeled differently. ANS: A PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Interpretive
Figure 4-1 73. Refer to Figure 4-1. The movement from point A to point B on the graph would be caused by
a. an increase in price. b. a decrease in price.
c. a decrease in the price of a substitute good. d. an increase in income. ANS: B PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Interpretive 74. Refer to Figure 4-1. The movement from point A to point B on the graph shows
a. a decrease in demand. b. an increase in demand.
c. a decrease in quantity demanded. d. an increase in quantity demanded. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Interpretive 75. Refer to Figure 4-1. It is apparent from the figure that
a. the good is inferior.
b. the demand for the good decreases as income increases. c. the demand for the good conforms to the law of demand. d. All of the above are correct. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve | Law of demand MSC: Interpretive
128 ? Chapter 4/The Market Forces of Supply and Demand
76. When we move along a given demand curve,
a. only price is held constant.
b. income and the price of the good are held constant. c. all nonprice determinants of demand are held constant. d. all determinants of quantity demanded are held constant. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve MSC: Interpretive
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 ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve | Shifts of curves MSC: Interpretive 78. Which of the following would not affect an individual's demand curve?
a. expectations b. income
c. prices of related goods d. the number of buyers ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Individual demand MSC: Interpretive
79. When the number of buyers in a market increases,
a. the market demand curve shifts to the right.
b. the demand curves of the individual demanders in the market are unaffected. c. the market demand for the good in question increases. d. Al of the above are correct. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Individual demand | Market demand MSC: Interpretive 80. If the number of buyers in the market decreases, the
a. market demand will increase. b. market demand will decrease. c. market supply will increase. d. market supply will decrease. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand MSC: Interpretive
81. When the law of demand applies to a good, then
a. the quantity demanded of the good is negatively related to the price of the good. b. the demand curve for the good slopes downward.
c. when the price of the good falls, the quantity demanded of the good rises. d. All of the above are correct. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Demand curve MSC: Interpretive
82. The market demand curve
a. is found by adding vertically the individual demand curves. b. slopes upward.
c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. d. represents the sum of the quantities demanded by all the buyers at each price of the good. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand curve MSC: Interpretive
Chapter 4/The Market Forces of Supply and Demand ? 129
83. 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 = 4, price = $2.50) b. (quantity demanded = 16, price = $2.50) c. (quantity demanded = 3, price = $1.50) d. (quantity demanded = 10, price = $1.00) ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand MSC: Interpretive 84. An increase in demand is represented by
a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Definitional
85. Pizza is a normal good if
a. the demand for pizza rises when income rises.
b. the demand for pizza rises when the price of pizza falls. c. the demand curve for pizza slopes downward.
d. the demand curve for pizza shifts to the right when the price of burritos falls, assuming pizza and burritos are
substitutes.
ANS: A PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve | Normal goodss MSC: Definitional 86. Today's demand curve for gasoline could shift in response to
a. a change in today's price of gasoline.
b. a change in the expected future price of gasoline. c. a change in the number of sellers of gasoline. d. All of the above are correct. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Shifts of curves MSC: Interpretive
87. Which of the following events could shift the demand curve for gasoline to the left?
a. Income of gasoline buyers rises, and gasoline is a normal good. b. Income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements are run on television, encouraging people to walk or ride bicycles instead of
driving cars.
d. The price of gasoline rises. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Shifts of curves MSC: Interpretive 88. The sum of all individual demand curves for a product is called
a. total demand.
b. consumption demand. c. aggregate demand. d. market demand. ANS: D PTS: 1 DIF: 1 REF: 4-2 TOP: Market demand MSC: Definitional
89. The market demand is
a. the sum of all individual demands.
b. the demand for every product in an industry.
c. the average quantity demanded by individual demanders at each price. d. positively related to the price of the product in question. ANS: A PTS: 1 DIF: 1 REF: 4-2 TOP: Market demand MSC: Interpretive
130 ? Chapter 4/The Market Forces of Supply and Demand
90. To find the market demand for a product, individual demand curves are summed
a. vertically. b. diagonally. c. horizontally.
d. and then averaged. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand | Individual demand MSC: Interpretive 91. A market demand curve
a. is derived by a vertical summation of individual demand curves. b. is derived by a horizontal summation of individual demand curves. c. will shift in response to a change in the price of the good. d. is always steeper than an individual demand curve. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand MSC: Interpretive
92. A market demand curve represents
a. the fact that the level of income is inversely related to quantity demanded. b. how quantity demanded changes when the number of buyers changes.
c. the sum of all prices that individual buyers are willing and able to pay for each possible quantity of the good. d. how much of a good all buyers are willing and able to buy at each possible price. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Market demand MSC: Interpretive
The table shows individual demand schedules for a market.
Table 4-1 Price of the Good $0.00 0.50 1.00 1.50 2.00 2.50 93. Refer to Table 4-1. When the price of the good is $1.00, the quantity demanded in this market would be
a. 42 units. b. 31 units. c. 24 units. d. 14 units. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand schedule MSC: Applicative 94. Refer to Table 4-1. If the price increases from $1.00 to $1.50,
a. the market demand decreases by 20 units.
b. individual demand curves, when drawn, will shift to the left. c. the quantity demanded in the market decreases by 2 units. d. the quantity demanded in the market decreases by 7 units. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand schedule MSC: Applicative
95. Refer to Table 4-1. Whose demand does not conform to the law of demand?
a. Aaron’s b. Angela’s c. Austin’s d. Alyssa’s ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand schedule | Law of demand MSC: Applicative
Aaron 20 18 14 12 6 0 Angela 16 12 10 8 6 4 Austin 4 6 2 0 0 0 Alyssa 8 6 5 4 2 0 Chapter 4/The Market Forces of Supply and Demand ? 131
96. Refer to Table 4-1. For whom is the good a normal good?
a. for Aaron b. for Austin
c. for all of the four demanders
d. This cannot be determined from the table. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand schedule | Normal goods MSC: Applicative
97. 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. None of the above is correct. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
98. Suppose scientists provide evidence to the effect that chocolate pudding increases cholesterol. 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. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
99. If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at each price
of Vanilla Coke,
a. we will observe a movement downward along the demand curve for Vanilla Coke. b. we will observe a movement upward 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. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve MSC: Interpretive 100. Once the demand curve for a product or service is drawn, it
a. can shift either rightward or leftward.
b. remains stable over time at all possible prices.
c. is possible to move up or down the curve, but the curve will not shift. d. tends to become steeper over time. ANS: A PTS: 1 DIF: 1 REF: 4-2 TOP: Demand curve MSC: Interpretive 101. When the price of a good or service changes,
a. the supply curve shifts in the opposite direction. b. the demand curve shifts in the opposite direction. c. the demand curve shifts in the same direction. d. there is a movement along a given demand curve. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand curve MSC: Interpretive
102. Suppose that Carolyn receives a pay increase. We would expect
a. to observe Carolyn moving down and to the right along her given demand curve. b. Carolyn's demand for inferior goods to decrease.
c. Carolyn's demand for each of two goods that are complements to increase. d. Carolyn's demand for normal goods to decrease. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Inferior goods MSC: Interpretive