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103. Nancy likes pasta today more than she did yesterday. This fact leads us to conclude that
a. Nancy must now consider pasta a luxury.
b. Nancy must have experienced an increase in her income.
c. Nancy is now willing to pay more than before for pasta at each relevant price of pasta. d. the supply of pasta must have increased and stimulated Nancy’s enhanced taste for pasta. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Tastes MSC: Applicative 104. A very hot summer in Atlanta will cause
a. the demand 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 jackets. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Applicative
105. If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight gain we
likely would see
a. an increase in demand for brown sugar and a decrease in demand for white sugar. b. an increase in demand for brown sugar, but no change in the demand for white sugar. c. a decrease in the demand for white sugar, but no change in the demand for brown sugar. d. no change in either demand because weight loss is not a nonprice determinant of demand. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Applicative
106. 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 right along the supply curve. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
107. The downward slope of the typical demand curve reflects which of the following concepts?
a. Price is positively related to quantity supplied.
b. There is a negative relationship between price and quantity demanded. c. There is a direct relationship between price and quantity demanded.
d. When the price falls, buyers are willing to buy more but they are able to buy less. ANS: B PTS: 1 DIF: 1 REF: 4-2 TOP: Demand | Negative relationshipss MSC: Interpretive 108. Which of these statements best represents the law of demand?
a. When buyers’ tastes for a good increase, they purchase more of the good.
b. When income levels increase, buyers respond by purchasing more of most goods. c. When the price of a good falls, buyers respond by purchasing more of the good. d. When buyers’ demands for a good increase, the price of the good will increase. ANS: C PTS: 1 DIF: 1 REF: 4-2 TOP: Law of demand MSC: Definitional 109. 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. ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Applicative
Chapter 4/The Market Forces of Supply and Demand ? 133
Figure 4-2 110. Refer to Figure 4-2. The shift from D to D1 is called
a. an increase in demand. b. a decrease in demand.
c. a decrease in quantity demanded. d. an increase in quantity demanded. ANS: B PTS: 1 DIF: 1 REF: 4-2 TOP: Demand MSC: Definitional
111. Refer to Figure 4-2. The movement from D to D1 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. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Substitutes MSC: Applicative
112. Refer to Figure 4-2. If the demand curve shifts from D to D1, 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 evidently have decreased.
d. the price of the product has increased, causing consumers to buy less of the product. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
113. When quantity demanded decreases at every possible price, we know that the demand curve has
a. shifted to the left. b. shifted to the right.
c. not shifted; rather, we have moved down the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become flatter. ANS: A PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Interpretive
114. 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 in producing the good have decreased. d. the price of a complementary good has decreased. ANS: D PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Complements MSC: Interpretive
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115. The demand curve for textbooks shifts
a. when a determinant of the demand for textbooks other than income changes.
b. when a determinant of the demand for textbooks other than the price of textbooks changes. c. when any determinant of the demand for textbooks changes. d. only when the number of textbook-buyers changes. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Shifts of curves MSC: Interpretive
116. The demand curve for hot dogs
a. shifts when the price of hot dogs changes, because the price of hot dogs is measured on the vertical axis of the
graph.
b. shifts when the price of hot dogs changes, because the quantity demanded of hot dogs is measured on the
horizontal axis of the graph.
c. does not shift when the price of hot dogs changes, because the price of hot dogs is measured on the vertical axis of
the graph.
d. does not shift when the price of hot dogs changes, because the quantity demanded of hot dogs is measured on the
horizontal axis of the graph.
ANS: C PTS: 1 DIF: 2 REF: 4-2 TOP: Demand | Shifts of curves MSC: Interpretive
117. Most studies indicate that tobacco and marijuana tend to be
a. substitutes. b. complements.
c. not related since one is legal and one is illegal. d. inferior goods. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Complements MSC: Interpretive
118. 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. ANS: D PTS: 1 DIF: 3 REF: 4-2 TOP: Complements MSC: Applicative
Chapter 4/The Market Forces of Supply and Demand ? 135
Figure 4-3 119. Refer to Figure 4-3. The graph shows the demand for cigarettes. 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. ANS: D PTS: 1 DIF: 3 REF: 4-2 TOP: Demand curve MSC: Applicative 120. Refer to Figure 4-3. The graph shows the demand for cigarettes. 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. ANS: C PTS: 1 DIF: 3 REF: 4-2 TOP: Demand curve MSC: Applicative 121. For teens, a 10 percent increase in the price of cigarettes leads to a
a. 6 percent drop in teenage smoking. b. 12 percent drop in teenage smoking. c. 18 percent drop in teenage smoking. d. 24 percent drop in teenage smoking. ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Definitional
122. For which of the following groups of people does a 10 percent increase in the price of cigarettes lead to a decrease in
the quantity demanded of cigarettes that exceeds 10 percent? a. women b. teenagers c. Southerners
d. the population as a whole ANS: B PTS: 1 DIF: 2 REF: 4-2 TOP: Demand MSC: Definitional
123. The side of the market that deals with the willingness and ability to produce and sell is
a. demand. b. competition. c. supply. d. monopoly. ANS: C PTS: 1 DIF: 1 REF: 4-3 TOP: Supply MSC: Definitional
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124. The relationship between price and quantity supplied is
a. negative. b. positive.
c. the same as the relationship between price and quantity demanded.
d. not well understood by economists because laboratory-type experiments have not been conducted. ANS: B PTS: 1 DIF: 1 REF: 4-3 TOP: Price | Quantity supplied MSC: Interpretive 125. According to the law of supply,
a. the quantity supplied of a good is negatively related to the price of the good. b. when the price of a good falls, the quantity supplied of the good rises. c. the supply curve for a good is upward-sloping. d. All of the above are correct. ANS: C PTS: 1 DIF: 1 REF: 4-3 TOP: Supply curve MSC: Definitional
126. Which of the following events would cause a movement upward and to the right along the supply curve for tomatoes?
a. The number of sellers of tomatoes increases.
b. There is an advance in technology that reduces the cost of producing tomatoes.
c. The price of fertilizer decreases, and fertilizer is an input in the production of tomatoes. d. The price of tomatoes rises. ANS: D PTS: 1 DIF: 1 REF: 4-3 TOP: Supply curve MSC: Interpretive 127. A decrease in the supply of televisions is represented by
a. a leftward shift of the supply curve for televisions. b. a rightward shift of the supply curve for televisions. c. a flattening of the supply curve for televisions.
d. a movement down and to the left along the supply curve for televisions. ANS: A PTS: 1 DIF: 1 REF: 4-3 TOP: Shifts of curves MSC: Definitional
128. Which of the following events could cause an increase in the supply of ceiling fans?
a. The number of sellers of ceiling fans increases.
b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as
substitutes.
c. There is an increase in the price of the motor that powers ceiling fans. d. All of the above are correct. ANS: A PTS: 1 DIF: 2 REF: 4-3 TOP: Shifts of curves MSC: Interpretive 129. Other things equal, when the price of a good rises, the
a. quantity demanded of the good increases. b. supply increases.
c. quantity supplied of the good increases. d. demand curve shifts to the left. ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Price | Quantity supplied MSC: Interpretive 130. 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. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Price | Quantity supplied MSC: Interpretive