Chapter 4 /The Market Forces of Supply and Demand ? 237
83. 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 producing the good have decreased. d. the price of a complementary good has decreased.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Complements
84. Which of the following might cause the demand curve for an inferior good to shift to the left?
a. a decrease in income
b. an increase in the price of a substitute c. an increase in the price of a complement d. None of the above is correct.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3 REF: 4-2 LOC: Supply and demand
TOP: Complements
85. When it comes to people's tastes, economists generally believe that
a. tastes are based on forces that are well within the realm of economics.
b. tastes are based on historical and psychological forces that are beyond the realm of economics. c. tastes can only be studied through well-constructed, real-life models.
d. since tastes do not directly affect demand, there is little need to explain people's tastes.
ANS: B
NAT: Analytic MSC: Definitional
DIF: 1 REF: 4-2 LOC: Supply and demand
TOP: Tastes
86. Economists normally
a. do not try to explain people's tastes, but they do try to explain what happens when tastes change. b. believe that they must be able to explain people's tastes in order to explain what happens when
tastes change.
c. do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of
goods are substitutes or complements.
ANS: A
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
87. 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. shampoo to increase.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
88. Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who
eat it. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
238 ? Chapter 4 /The Market Forces of Supply and Demand
89. If buyers today become more willing and able than before to purchase larger quantities of Vanilla Coke at
each price of Vanilla Coke, then
a. we will observe a movement downward and to the right along the demand curve for Vanilla Coke. b. we will observe a movement upward and to the left 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
90. A very hot summer in Atlanta will cause
a. the demand curve 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 tank tops.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
91. If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight
gain, then we likely would see
a. an increase in demand for brown sugar and a decrease in demand for white sugar. b. a decrease in demand for brown sugar and an increase in demand for white sugar. c. an increase in demand for both brown sugar and white sugar.
d. no change in demand for either type of sugar because weight loss is not a determinant of demand.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
92. Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements run on television encourage people to walk or ride bicycles instead
of driving cars.
d. The price of gasoline rises.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
93. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Tastes
94. Today, people changed their expectations about the future. This change
a. can cause a movement along a demand curve. b. can affect future demand, but not today’s demand. c. can affect today’s demand.
d. cannot affect either today’s demand or future demand.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
Chapter 4 /The Market Forces of Supply and Demand ? 239
95. If Juan expects to earn a higher income next month, he may choose to
a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services. c. decrease his current demand for goods and services.
d. move along his current demand curves for goods and services.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
96. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped
out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result, a. your demand for peanut butter will increase, but not until the end of the year. b. your demand for peanut butter increases today.
c. your demand for peanut butter decreases as you look for a substitute good. d. your demand for peanut butter shifts left today.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
97. Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result
of this information, today’s demand curve for Mustangs a. shifts to the right. b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the
given information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next month.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
98. What will happen in the rice market now if buyers expect higher rice prices in the near future?
a. The demand for rice will increase. b. The demand for rice will decrease. c. The demand for rice will be unaffected. d. The supply of rice will increase.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
99. 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
NAT: Analytic MSC: Applicative
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Expectations
100. If the number of buyers in a market decreases, then
a. demand will increase. b. demand will decrease. c. supply will increase. d. supply will decrease.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Number of buyers
240 ? Chapter 4 /The Market Forces of Supply and Demand
101. Which of the following does not affect an individual's demand curve?
a. expectations b. income
c. prices of related goods d. the number of buyers
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Number of buyers
102. 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 left along the demand curve.
ANS: A
NAT: Analytic MSC: ApplicativeFigure 4-2
priceDIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Number of buyers
PP'ABDQQ'quantity103. Refer to Figure 4-2. 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
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Demand curve
104. Refer to Figure 4-2. The movement from point A to point B on the graph is 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
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Demand curve
Chapter 4 /The Market Forces of Supply and Demand ? 241
105. Refer to Figure 4-2. 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
NAT: Analytic DIF: 2 REF: 4-2 LOC: Supply and demand
TOP: Law of demand
MSC: InterpretiveFigure 4-3
priceD'Dquantity106. Refer to Figure 4-3. The shift from D to D’ 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
DIF: 2 REF: 4-2 NAT: Analytic LOC: Supply and demand
TOP: MSC: Interpretive
107. Refer to Figure 4-3. The movement from D to D’ 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
DIF: 2 REF: 4-2 NAT: Analytic LOC: Supply and demand
TOP: MSC: Interpretive
108. Refer to Figure 4-3. The movement from D’ to D could be caused by
a. a decrease in price.
b. a decrease in income, assuming the good is inferior.
c. buyers expecting the price of the good to fall in the near future. d. an increase in the price of a complement.
ANS: B
DIF: 2 REF: 4-2 NAT: Analytic LOC: Supply and demand
TOP: MSC: Interpretive
Demand curve
Substitutes
Inferior goods