Chapter 4/The Market Forces of Supply and Demand ? 137
131. The supply schedule is a table that shows the relationship between
a. price and quantity supplied.
b. input costs and quantity supplied.
c. quantity demanded and quantity supplied. d. price and profit. ANS: A PTS: 1 DIF: 1 REF: 4-3 TOP: Supply schedule MSC: Definitional
132. The difference between a supply schedule and a supply curve is that
a. a supply schedule incorporates demand and a supply curve does not.
b. a supply schedule incorporates prices of related goods and a supply curve does not. c. a supply schedule can shift, but a supply curve cannot shift.
d. a supply schedule is a table and a supply curve is drawn on a graph. ANS: D PTS: 1 DIF: 1 REF: 4-3 TOP: Supply schedule | Supply curve MSC: Definitional
133. A market supply curve is determined by
a. vertically summing individual supply curves. b. horizontally summing individual supply curves.
c. finding the average quantity supplied by sellers at each possible price.
d. finding the average price at which sellers are willing and able to sell a particular quantity of the good. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Market supply | Individual supply MSC: Interpretive 134. The market supply curve shows
a. the total quantity supplied at all possible prices.
b. the average quantity supplied by producers at all possible prices. c. a ratio between price and quantity supplied for the market.
d. suppliers’ responses, in terms of the amounts they will supply, to the demands of buyers. ANS: A PTS: 1 DIF: 1 REF: 4-3 TOP: Market supply MSC: Interpretive 135. For a seller, which of the following quantities are not positively related?
a. the price of the good and the seller's profit b. the price of the good and quantity supplied c. the seller's profit and production costs d. the seller's profit and quantity supplied ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Positive relationships MSC: Applicative 136. The positive relationship between price and quantity supplied is called
a. profit.
b. a change in supply.
c. a shift of the supply curve. d. the law of supply. ANS: D PTS: 1 DIF: 1 REF: 4-3 TOP: Law of supply MSC: Definitional 137. The supply of a good is negatively related to the
a. price of inputs used to make the good. b. demand for the good by consumers. c. price of the good itself.
d. amount of profit a firm can expect to receive from selling the good. ANS: A PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Inputs MSC: Interpretive
138 ? Chapter 4/The Market Forces of Supply and Demand
138. “Other things equal, when the price of a good rises, the quantity supplied of the good rises also.” This is a statement
of the law of
a. increasing costs. b. diminishing returns. c. supply.
d. supply and demand. ANS: C PTS: 1 DIF: 1 REF: 4-3 TOP: Law of supply MSC: Definitional 139. If the number of sellers in a market increases, the
a. demand in that market will increase. b. supply in that market will increase. c. supply in that market will decrease. d. demand in that market will decrease. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply MSC: Interpretive
140. A decrease in the number of sellers in the market causes
a. the supply curve to shift to the left. b. the supply curve to shift to the right.
c. a movement up and to the right along a stationary supply curve.
d. a movement downward and to the left along a stationary supply curve. ANS: A PTS: 1 DIF: 2 REF: 4-3 TOP: Supply MSC: Interpretive
141. Which of the following is a determinant of market supply curve but not a determinant of an individual seller’s
supply?
a. technology b. expectations c. input prices
d. the number of sellers ANS: D PTS: 1 DIF: 2 REF: 4-3 TOP: Market supply | Individual supply MSC: Interpretive 142. A movement along the supply curve might be caused by a change in
a. technology. b. input prices.
c. expectations about future prices.
d. the price of the good or service that is being supplied. ANS: D PTS: 1 DIF: 2 REF: 4-3 TOP: Supply MSC: Interpretive
143. Lead is an important input in the production of crystal. If the price of lead decreases, other things equal, we would
expect the supply of
a. crystal to be unaffected. b. crystal to decrease. c. crystal to increase. d. lead to increase. ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Inputs MSC: Applicative 144. Suppose you make jewelry. If the price of gold falls, we would expect you to
a. be willing and able to produce less jewelry than before at each possible price. b. be willing and able to produce more jewelry than before at each possible price. c. face a greater demand for your jewelry. d. face a weaker demand for your jewelry. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Inputs MSC: Applicative
Chapter 4/The Market Forces of Supply and Demand ? 139
145. A technological advance will shift the
a. supply curve to the right. b. supply curve to the left. c. demand curve to the right. d. demand curve to the left. ANS: A PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Technology MSC: Interpretive
146. An advance in production technology will
a. increase a firm's costs.
b. allow firms to raise the price of their product.
c. shift the supply curve to the right, but the demand curve will be unaffected. d. shift the supply curve to the right and shift the demand curve to the right. ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Technology MSC: Interpretive
147. A dress manufacturer recently has come to expect higher prices for dresses in the near future. We would expect
a. the dress manufacturer to supply more dresses now than it was supplying previously. b. the dress manufacturer to supply fewer dresses now than it was supplying previously. c. the demand for this manufacturer's dresses to fall.
d. no change in the dress manufacturer's current supply; instead, future supply will be affected. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Expectations MSC: Interpretive 148. Holding the nonprice determinants of supply constant, a change in price would
a. result in either a decrease in supply or an increase in supply. b. result in a movement along a stationary supply curve. c. result in a shift of demand.
d. have no effect on the quantity supplied. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply MSC: Interpretive 149. A supply curve slopes upward because
a. as more is produced, total cost of production falls. b. an increase in input prices increases supply.
c. the quantity supplied of most goods and services increases over time.
d. an increase in price gives producers an incentive to supply a larger quantity. ANS: D PTS: 1 DIF: 2 REF: 4-3 TOP: Supply curve MSC: Interpretive
150. Which of the following events could shift both the demand curve and the supply curve for a good?
a. A technological advance pertaining to the production of the good is observed. b. Incomes of all buyers of the good increase. c. The number of sellers of the good increases.
d. Everyone revises upward their expectation of next month’s price of the good. ANS: D PTS: 1 DIF: 2 REF: 4-3
TOP: Demand curve | Supply curve | Expectations MSC: Interpretive
151. An increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these
two events,
a. the demand for tires increases and the supply of tires decreases. b. the supply of tires decreases and the demand for tires is unaffected. c. the supply of tires increases and the demand for tires is unaffected. d. none of the above is necessarily correct. ANS: D PTS: 1 DIF: 3 REF: 4-3 TOP: Supply | Inputs | Technology MSC: Applicative
140 ? Chapter 4/The Market Forces of Supply and Demand
Figure 4-5 152. Refer to Figure 4-5. The movement from point A to point B on the graph would be caused by
a. a decrease in the price of the good. b. an increase in the price of the good. c. an advance in technology. d. a decrease in input prices. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply curve MSC: Interpretive 153. Refer to Figure 4-5. The movement from point A to point B on the graph is called
a. a decrease in supply. b. an increase in supply.
c. an increase in the quantity supplied. d. a decrease in the quantity supplied. ANS: C PTS: 1 DIF: 1 REF: 4-3 TOP: Quantity supplied MSC: Definitional
154. Refer to Figure 4-5. The movement from point A to point B on the graph represents
a. an increased willingness and ability on the part of suppliers to supply the good at each possible price. b. an increase in the number of suppliers. c. a decrease in the price of a relevant input.
d. an increase in the price of the good that is being supplied and suppliers’ response to that price change. ANS: D PTS: 1 DIF: 2 REF: 4-3 TOP: Supply curve MSC: Interpretive 155. In a market, to find the total amount supplied at a particular price,
a. we must add up all of the amounts that firms are willing and able to supply at that price.
b. we must take the average of the amounts that firms are willing and able to supply at that price. c. the tastes and preferences of buyers must be established. d. all determinants of demand must be taken into account. ANS: A PTS: 1 DIF: 2 REF: 4-3 TOP: Market supply MSC: Interpretive
156. When we compare an increase in supply with an increase in quantity supplied, we know that
a. the former is depicted by a movement along the supply curve and the latter is depicted by a shift of the curve. b. the former could be caused by a decrease in input costs and the latter would be caused by an increase in the price
of the good.
c. both are always caused by a change in demand.
d. both are always caused by a change in the number of market participants. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Shifts of curves MSC: Applicative
Chapter 4/The Market Forces of Supply and Demand ? 141
157. A leftward shift of a supply curve is called
a. an increase in supply. b. a decrease in supply.
c. a decrease in quantity supplied. d. an increase in quantity supplied. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Shifts of curves MSC: Definitional
158. Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government
increases the minimum wage by $1.00 an hour it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left.
d. firm must increase output to maintain profit levels. ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Inputs MSC: Applicative 159. If car manufacturers begin utilizing new labor-saving technology on their assembly lines, we would not expect
a. a smaller quantity of labor to be used. b. the supply of cars to increase. c. costs to the firm to fall.
d. individual car manufacturers to move up and to the right along their individual supply curves. ANS: D PTS: 1 DIF: 2 REF: 4-3 TOP: Individual supply | Technology MSC: Applicative 160. Recent forest fires in the western states are expected to cause the price of lumber to rise in the next 6 months. As a
result we can expect the supply of lumber to a. fall in 6 months, but not now.
b. increase in 6 months when the price goes up. c. fall now.
d. increase now to meet as much demand as possible. ANS: C PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Expectations MSC: Applicative 161. If suppliers expect the price of their product to fall in the future they will
a. decrease supply now. b. increase supply now.
c. decrease supply in the future but not now. d. increase supply in the future but not now. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Expectations MSC: Interpretive
162. Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its
leading competitor Toysorama is mass producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funsters should
a. “fight fire with fire” by decreasing supply of its doll for 6 weeks and then increasing the supply. b. increase the supply of their doll now before the other doll hits the market. c. increase the price of their doll now. d. discontinue their doll. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Expectations MSC: Applicative 163. Suppose there is an increase in steel prices. We would expect the supply curve for steel barrels
a. to shift rightward. b. to shift leftward. c. to become flatter. d. to remain unchanged. ANS: B PTS: 1 DIF: 2 REF: 4-3 TOP: Supply | Inputs MSC: Applicative