CLEP Macroeconomics chapter practice4 questions

05 Supply, Demand, and Government Intervention

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

The price of a good that buyers treat as a substitute for tea rises, with no other change. The demand for tea

A dearer substitute sends buyers toward tea at every tea price, so the whole curve moves right. A reverses the substitution. C and D treat a related good's price as though it were tea's own price, which would produce movement rather than a shift, and B confuses a shift with a change in the curve's slope.
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E. shifts to the right

A dearer substitute sends buyers toward tea at every tea price, so the whole curve moves right. A reverses the substitution. C and D treat a related good's price as though it were tea's own price, which would produce movement rather than a shift, and B confuses a shift with a change in the curve's slope.

Question 2

Question 2 of 4

A legal maximum price is set below the equilibrium price in a competitive market. Which of the following results?

Below equilibrium, the legal maximum leaves quantity demanded above quantity supplied. Choice E reverses the imbalance, C describes a floor rather than a ceiling, and A and B invent curve shifts that a price control does not cause.
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D. A shortage at the controlled price

Below equilibrium, the legal maximum leaves quantity demanded above quantity supplied. Choice E reverses the imbalance, C describes a floor rather than a ceiling, and A and B invent curve shifts that a price control does not cause.

Question 3

Question 3 of 4

At a controlled rent, 900 apartments are demanded each month and 620 apartments are supplied. The resulting shortage is

The shortage is 900-620=280 apartments. B subtracts digit by digit without carrying the borrow, C and D each report one of the two quantities by itself, and E adds them where the gap calls for subtraction.
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A. 280

The shortage is 900-620=280 apartments. B subtracts digit by digit without carrying the borrow, C and D each report one of the two quantities by itself, and E adds them where the gap calls for subtraction.

Question 4

Question 4 of 4

At a price of $8 the quantity demanded is 40 units and the quantity supplied is 70 units. In a competitive market, price will

Quantity supplied exceeds quantity demanded by 70-40=30 units, and unsold stock pushes sellers to cut the price until the gap closes. A reads a surplus as though it were a shortage. B hands price setting to sellers, when in a competitive market neither side posts it. C denies that an imbalance moves price at all, and E halts the adjustment at today's quantity supplied, which itself shrinks as the price falls.
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D. fall, because 30 units go unsold

Quantity supplied exceeds quantity demanded by 70-40=30 units, and unsold stock pushes sellers to cut the price until the gap closes. A reads a surplus as though it were a shortage. B hands price setting to sellers, when in a competitive market neither side posts it. C denies that an imbalance moves price at all, and E halts the adjustment at today's quantity supplied, which itself shrinks as the price falls.

Quiz complete