Chapter 3 Macro/Micro Economics Exam (does NOT cover Chapter 4)
[Pre-Chapter][List] What are the five most important variables that shift the market supply curve?
(remind me to fill in)
[Chapter] [Questions] 26. [Refer to Figure 3-4] At a price of $25, how many units will be sold? A) 400 B) 500 C) 600 D) 800
B) 500
[Chapter] [Questions] 41. Prices of commercial airline tickets (assume that this is a normal good) have fallen in recent months. Over this same period, the price of jet fuel has risen and consumer incomes have fallen. Which of the following best explains the falling prices of airline tickets? A) The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the left. B) The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left. C) The demand curve and the supply curve for airline tickets have both shifted to the right. D) The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left.
B) The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left.
[Pre-Chapter][True/False] A positive technological change will cause the quantity supplied of a good to increase.
False
[Pre-Chapter][True/False] An increase in quantity supplied is represented by a rightward shift of the supply curve.
False
[Pre-Chapter][True/False] An inferior good is a good for which the quantity demanded increases as the price decreases, holding everything else constant.
False
[Pre-Chapter][True/False] If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.
False
[Pre-Chapter][True/False] If the price of a product is expected to increase in the future, the supply today will increase
False
[Pre-Chapter][True/False] Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.
False
[Pre-Chapter][True/False] The income effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded
False
[Pre-Chapter][True/False] The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product.
False
[Pre-Chapter][Where would it shift?] Indicate whether the situation would shift the supply curve to the left, to the right, or not at all. d. A DECREASE in the expected future price of a product
Right
[Pre-Chapter][Where would it shift?] Indicate whether the situation would shift the supply curve to the left, to the right, or not at all. e. A DECREASE in the current price of the product
Right
[Pre-Chapter][Short Answer] If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry, what impact would this have on the supply and demand in the market for airline service, assuming no other changes take place in the market?
SUPPLY CURVE WILL SHIFT TO THE RIGHT DEMAND CURVE WILL NOT BE AFFECTED
What is the capital of Sweden?
Stockholm
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. b. eyeglasses and contact lenses
Substitutes
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. e. Heineken and Corona
Substitutes
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. e. red wine and white wine
Substitutes
[Chapter] [Questions] 8. Factory incentives on cell phones have encouraged consumers to upgrade their phones. How does this affect the market for Bluetooth headsets? (how is demand affected)
The demand for bluetooth headsets increases.
[Chapter] [Questions] 6. Studies have shown links between green tea consumption and cancer prevention. How does this affect the market for it? (how will this affect the demand curve and why)
The green tea demand curve shifts to the RIGHT because of a change in tasts in favor of green tea.
[Pre-Chapter][True/False] A change in quantity supplied is represented by a movement along the supply curve.
True
[Pre-Chapter][True/False] A decrease in supply is caused by a decrease in the price of a the product.
True
[Pre-Chapter][True/False] A decrease in the number of firms in a market will cause supply to increase.
True
[Pre-Chapter][True/False] A normal good is a good for which the demanded decreases as income decrease, holding everything else constant
True
[Pre-Chapter][True/False] An increase in population results in an increase in demand.
True
[Pre-Chapter][True/False] If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.
True
[Pre-Chapter][True/False] The substitution effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.
True
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. a. House plants and potato chips
Unrelated
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. b. Coca Cola and Volkswagens
Unrelated
[Chapter] [Questions] 1. The income effect of a price change results in a:
shift of the demand curve due to a change in purchasing power brought about by the price change
[Chapter] [Questions] 4. Suppose that when the price of oranges decreases, the Sarita decrease her purchase of peaches. To Sarita, oranges and peaches are _____________
substitutes
[Chapter] [Questions] 2. How has the growing popularity of factory outlet stores affected the market for clothing at retail department stores?
the demand curve for clothing at retail department stores shifts to the left.
[Chapter] [Questions] 7. How does the increasing use of digital cameras affect the market for traditional camera film? (how will this affect the demand curve)
the demand curve for traditional camera film shifts to the left
[Chapter] [Questions] 10. If in the market for apples the supply has decreased then: (what would happen to the supply curve)
the supply curve for apples has shifted to the left.
[Pre-Chapter][Short Answer] Explain the difference between substitutes and complements.
"1. Substitutes ""substitute"" for another product 2. Complements ""compliment"" with another product"
[Chapter] [Questions] 23. Unfortunately, Number 23 can not be done since Quizlet doesn't allow images to be put in without me paying. Sorry
:(
[Pre-Chapter][Short Answer] What is the difference between a "change in demand" and a "change in quantity demanded"?
A change in demand is when the whole curve shifts and a change in quantity demanded is movement along the demand curve due to a change in price.
[Chapter] [Questions] 47. Digital video recorders (DVRs) were introduced to the market in 1999, and new technology has allowed for the cost of manufacturing the recorders to decline significantly since the initial introduction. How did this change in technology affect the market for DVRs? A) The new technology caused an increase in the supply of DVRs and a decrease in price of DVRs. B) The new technology caused an increase in the supply of DVRs and an increase in price of DVRs. C) The new technology caused an decrease in the demand for DVRs. D) The new technology caused an increase in the quantity of DVRs supplied.
A) The new technology caused an increase in the supply of DVRs and a decrease in price of DVRs.
[Chapter] [Questions] 20. A decrease in the price of pork will result in A) a smaller quantity of pork supplied. B) a larger quantity of pork supplied. C) a decrease in the demand for pork. D) an increase in the supply of pork.
A) a smaller quantity of pork supplied.
[Chapter] [Questions] 19. Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease? A) an increase in the price of ostriches B) a decrease in the price of goats C) an increase in the demand for goats D) an increase in the price of ostrich feed
A) an increase in the price of ostriches
[Chapter] [Questions] 32. [Refer to Figure 3-5] At a price of $15, the quantity sold A) is 2 units. B) is 4 units. C) is 6 units. D) cannot be determined.
A) is 2 units.
[Chapter] [Questions] 36. Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline, A) the supply curve shifted to the left resulting in an increase in the equilibrium price. B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.
A) the supply curve shifted to the left resulting in an increase in the equilibrium price.
[Chapter] [Questions] 25. [Refer to Figure 3-4] If the price is $25, A) there would be a surplus of 300 units. B) there would be a shortage of 300 units. C) there would be a surplus of 200 units. D) there would be a shortage of 200 units.
A) there would be a surplus of 300 units.
[Chapter] [Questions] 45. During the 1990s positive technological change in the production of chicken caused the price of chicken to fall. Holding everything else constant, how would this affect the market for pork (a substitute for chicken)? A) The supply of pork would increase and the equilibrium price of pork would decrease. B) The demand for pork would decrease and the equilibrium price of pork would decrease. C) The demand for pork would increase because consumers could afford to buy more chicken and pork. D) The demand for pork would decrease and the equilibrium price of pork would increase.
B) The demand for pork would decrease and the equilibrium price of pork would decrease.
[Chapter] [Questions] 50. Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)? A) The supply of wheat would increase and the equilibrium price of wheat would decrease. B) The demand for wheat would decrease and the equilibrium price of wheat would decrease. C) The demand for wheat would increase because consumers could afford to buy more wheat and corn. D) The demand for wheat would decrease and the equilibrium price of wheat would increase.
B) The demand for wheat would decrease and the equilibrium price of wheat would decrease.
[Chapter] [Questions] 48. "Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement? A) The statement will be true if consumer tastes for Coke and Pepsi do not change. B) The statement is false because a change in the price of Coke would not change the demand for Coke. C) The statement is false because Pepsi is an inferior good; Coke is a normal good. D) The statement is false because one cannot assume that Coke and Pepsi are substitutes for all consumers.
B) The statement is false because a change in the price of Coke would not change the demand for Coke.
[Chapter] [Questions] 35. If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal? A) The supply of Lincoln letters would have to be less than the supply of Booth letters. B) The supply of Booth letters would have to be less than the supply of Lincoln letters. C) The supply of Lincoln letters and the supply of Booth letters would have to be equal. D) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters.
B) The supply of Booth letters would have to be less than the supply of Lincoln letters.
[Chapter] [Questions] 14. Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? A) an increase in the price of soybeans B) a decrease in the price of corn C) an increase in the demand for corn D) an increase in the price of soybean seeds
B) a decrease in the price of corn
[Chapter] [Questions] 17. An increase in the price of MP3 players will result in A) a smaller quantity of MP3 players supplied. B) a larger quantity of MP3 players supplied. C) a decrease in the demand for MP3 players. D) an increase in the supply of MP3 players.
B) a larger quantity of MP3 players supplied
[Chapter] [Questions] 21. At market equilibrium, A) demand equals supply. B) quantity demanded equals quantity supplied. C) surpluses are greater than shortages. D) shortages are greater than surpluses.
B) quantity demanded equals quantity supplied.
[Chapter] [Questions] 28. [Refer to Figure 3-4] At a price of $20, how many units will be sold? A) 400 B) 500 C) 600 D) 800
C) 600
[Chapter] [Questions] 29. [Refer to Figure 3-4] At a price of $20, how many units will be supplied? A) 400 B) 500 C) 600 D) 800
C) 600
[Chapter] [Questions] 46. When Toyota introduced its 2010 Prius, it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model. Which of the following would explain the price differential? A) The demand for the Prius had increased, and the supply of the Prius remained unchanged. B) The supply of the Prius had decreased, and the demand for the Prius remained unchanged. C) The demand for the Prius had decreased, and the supply of the Prius had increased. D) The demand for the Prius had increased, and the supply of the Prius had decreased.
C) The demand for the Prius had decreased, and the supply of the Prius had increased.
[Chapter] [Questions] 33. Which of the following describes a characteristic of a perfectly competitive market? A) There are many buyers but few sellers. B) There are many sellers but few buyers. C) There are many buyers and sellers. D) Equilibrium is achieved when demand for the product sold in the market equals the supply.
C) There are many buyers and sellers.
[Chapter] [Questions] 24. Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see A) a surplus of gasoline. B) the quantity demanded equal to the quantity supplied. C) a shortage of gasoline. D) an increase in the demand for gasoline.
C) a shortage of gasoline.
[Chapter] [Questions] 27. [Refer to Figure 3-4] At a price of $25, how many units will be supplied? A) 400 B) 500 C) 600 D) 800
D) 800
[Chapter] [Questions] 18. Which of the following would cause a decrease in the supply of peanut butter? A) a decrease in the price of jelly (assuming that peanut butter and jelly are complements) B) a decrease in the price of peanut butter C) an increase the price of peanuts D) an increase in the technology used to produce peanut butter
C) an increase the price of peanuts
[Chapter] [Questions] 49. Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would A) decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes. B) increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes. C) decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. D) decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.
C) decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes.
[Chapter] [Questions] 43.Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and a fungal disease destroys a large portion of the grape harvest of California vineyards. In the market for red wine, these two developments would A) increase demand and increase supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. B) increase demand and decrease supply resulting in a decrease in both the equilibrium quantity and the equilibrium price of red wine. C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. D) increase demand and decrease supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.
C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine.
[Chapter] [Questions] 40. Assume that the price for lawn care has fallen and sales of lawn care services have also fallen. One can conclude that A) the law of supply has been violated. B) the number of lawn care service companies has increased. C) the demand for lawn care service has decreased. D) lawn care services are deliberately charging low prices because they want to discourage people from maintaining their own lawns.
C) the demand for lawn care service has decreased.
[Chapter] [Questions] 39. Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that A) the law of demand has been violated. B) the number of personal trainers has increased. C) the demand for personal trainers has increased. D) personal trainers are deliberately charging high prices because they provide services for wealthy clients.
C) the demand for personal trainers has increased.
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. a. Swim Fins and scuba tanks
Complements
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. c. Motorcycles and glasses
Complements
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. c. motorcycles and gasoline
Complements
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. d. Ice and ice chests
Complements
[Pre-Chapter][State the relation] Are these complements, substitutes, or unrelated. d. smartphones and apps
Complements
[Chapter] [Questions] 34. Which of the following is evidence of a shortage of chocolate? A) Firms lower the price of chocolate. B) The price of chocolate is raised in order to increase sales. C) The equilibrium price of chocolate falls due to a decrease in demand. D) The quantity of chocolate demanded is greater than the quantity supplied.
D) The quantity of chocolate demanded is greater than the quantity supplied.
[Chapter] [Questions] 42. Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over this same period, the price of the components used to produce smartphones has also fallen and consumer incomes have risen. Which of the following best explains the falling prices of smartphones? A) The supply curve for smartphones has shifted to the right while the demand curve for smartphones has shifted to the left. B) The demand curve for smartphones has shifted to the right more than the supply curve has shifted to the right. C) The demand curve and the supply curve for smartphones have both shifted to the left. D) The supply curve for smartphones has shifted to the right more than the demand curve has shifted to the right.
D) The supply curve for smartphones has shifted to the right more than the demand curve has shifted to the right.
[Chapter] [Questions] 44. A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in A) a decrease in the equilibrium quantity of eggs and no change in the equilibrium price. B) a decrease in the equilibrium price of eggs and no change in the equilibrium quantity. C) a decrease in the equilibrium price of eggs; the equilibrium quantity may increase or decrease. D) a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease.
D) a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease.
[Chapter] [Questions] 37. Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except A) technological advancement in the production of electric car batteries. B) an increase in the number of manufacturers of electric cars. C) a decrease in the price of lithium, which is used in the electric car batteries. D) an increase in the price of gasoline.
D) an increase in the price of gasoline.
[Chapter] [Questions] 38. Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect? A) technological advancement in the production of electric car batteries. B) an increase in the number of manufacturers of electric cars. C) a decrease in the price of lithium, which is used in the electric car batteries. D) an increase in the price of gasoline.
D) an increase in the price of gasoline.
[Chapter] [Questions] 22. At a product's equilibrium price A) anyone who needs the product will be able to buy the product, regardless of ability to pay. B) the federal government will provide the product to anyone who cannot afford it. C) not all sellers who are willing to accept the price will find buyers for their products. D) any buyer who is willing and able to pay the price will find a seller for the product.
D) any buyer who is willing and able to pay the price will find a seller for the product.
[Chapter] [Questions] 16. The supply curve for umbrellas A) shows the supply of umbrellas consumers are willing and able to buy at any given price. B) is downward sloping. C) shows the relationship between the quantity of umbrellas firms are willing and able to supply and the quantity of umbrellas consumers are willing and able to purchase. D) shows the relationship between the price of umbrellas and the quantity of umbrellas supplied.
D) shows the relationship between the price of umbrellas and the quantity of umbrellas supplied.
[Chapter] [Questions] 30. [Refer to Figure 3-5] At a price of $5, A) there would be a surplus of 4 units. B) there would be a scarcity of 4 units. C) there would be a shortage of 6 units. D) there would be a shortage of 4 units.
D) there would be a shortage of 4 units.
[Chapter] [Questions] 31. [Refer to Figure 3-5] At a price of $0, A) there would be a surplus of 8 units. B) there would be a surplus of 0 units. C) there would be a shortage of 0 units. D) there would be a shortage of 8 units.
D) there would be a shortage of 8 units.
[Pre-Chapter][Where would it shift?] Indicate whether the situation would shift the supply curve to the left, to the right, or not at all. a. An increase in the price of an input
Left
[Pre-Chapter][Where would it shift?] Indicate whether the situation would shift the supply curve to the left, to the right, or not at all. c. An increase in the price of a substitute in production
Left
[Pre-Chapter][Short Answer] What is the difference between a demand schedule and a demand curve?
ONES A GRAPH; ONES A TABLE; BOTH SHOW RELATION BETWEEN PRICE OF PRODUCT AND QUANTITY DEMAND
[Pre-Chapter][Discussion] Discuss the correct and incorrect economic analysis of the statement: "If a disease kills a lot of turkeys, the supply of turkeys will decrease. This will result in a price increase, which will then a cause the supply of turkeys to increase."
PRICE INCREASE WOULD NOT SHIFT THE SUPPLY CURVE
[Pre-Chapter][Where would it shift?] Indicate whether the situation would shift the supply curve to the left, to the right, or not at all. b. An increase in productivity
Right
[Chapter] [Questions] 13. The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters. How does the fact that home improvement stores now offer these products affect the tankless water heater market?
The supply curve for tankless water heaters shifts to the right.
[Chapter] [Questions] 11. If the United States lifted the embargo on Cuban products, what would happen in the U.S. market for Cuban cigars? (the supply curve)
The supply curve would shift to the right.
[Chapter] [Questions] 3. According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this info, how would you describe alcohol and marijuana? (complements, substitutes, etc)
The two good are complements in consumption
[Chapter] [Questions] 12. George Gnat subscribes to a monthly pest control service for his home. Last week the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips. How is the market for pest control services affected by this? (the supply)
There is a decrease in the supply of pest control services.
[Chapter] [Questions] 15. Which of the following would shift the supply curve for energy drinks to the left? A) a decrease in the expected future price of energy drinks B) an increase in consumer income (assuming that energy drinks are normal goods) C) a decrease in the number of firms that produce energy drinks D) a decrease in the price of an input used to produce energy drinks
a decrease in the number of firms that produce energy drinks
[Chapter] [Questions] 5. Suppose that when the price of pickles decreases. Teddy increase his purchase of ketchup. To Teddy, pickles and ketchup are ____________
complements
[Chapter] [Questions] 9. The demand for soft drinks in the United States has been ________ while the global demand has been ________.
decreasing; increasing
[Pre-Chapter][Short Answer] In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?
the market for new cars would Decrease the market for car insurance would Decrease