Chapter 4 Section 4 28-55

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A) Both the supply and the demand for new houses increased, and the supply increased by more than the demand. B) The demand for new houses increased, and the supply did not change. C) Both the supply and demand for new houses decreased. D) The supply of new houses decreased, and the demand for new houses did not change. E) The supply of new houses increased, and the demand for new houses did not change.

B

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; does not change

B

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price ________, and the equilibrium quantity ________. A) rises; increases B) rises; does not change C) falls; does not change D) falls; decreases E) falls; increases

A

For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of taco chips? A) The equilibrium price of taco chips falls, and the equilibrium quantity decreases. B) The equilibrium price of taco chips rises, and the equilibrium quantity decreases. C) There is no change in the equilibrium price of taco chips, and the equilibrium quantity increases. D) The equilibrium price of taco chips could rise, fall, or stay the same, and the equilibrium quantity increases. E) The equilibrium price of taco chips rises, and the equilibrium quantity increases.

A

If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________. A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease E) not change; increase

A

Suppose that the price of bread rises. This rise could be the result of A) a decrease in the supply of bread. B) an increase in the supply of bread. C) a decrease in the demand for bread. D) Both answers A and C are correct. E) Both answers B and C are correct.

A

Suppose the equilibrium price of movie tickets is $10. If the supply curve for movies shifts ________, the equilibrium price will ________. A) rightward; decrease B) leftward; decrease C) rightward; increase D) leftward; not change E) rightward; not change

A

Suppose the equilibrium quantity of movie tickets is 1000. If the demand curve shifts ________, the equilibrium quantity of movie tickets will ________. A) rightward; increase B) rightward; decrease C) leftward; increase D) rightward; not change E) leftward; not change

A

The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month. Many new Web design firms now enter the market. As a result, A) the supply of Web pages increases and the price falls. B) the supply curve of Web pages shifts leftward and the price falls. C) the demand for Web pages increases and the price rises. D) the supply of Web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward. E) the demand for Web pages increases and the price falls.

A

Which of the following lowers the equilibrium price of a canoe? A) an increase in the supply of canoes B) an increase in the demand for canoes C) an increase in the quantity of canoes supplied D) a decrease in the supply of canoes E) Both answers A and B are correct.

A

Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of gasoline leads to a A) leftward shift of the demand curve for SUVs and the supply curve of SUVs. B) leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs. C) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of SUVs. D) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs. E) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.

B

Fresh orange juice and frozen orange juice are substitutes in production. The price of fresh orange juice rises. As a result, the equilibrium price of frozen orange juice ________ and the equilibrium quantity ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases

B

If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ________, and the equilibrium quantity ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases

B

If an early frost destroys most of the apple crop, the equilibrium price of an apple ________ and the equilibrium quantity ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases

B

If good weather conditions result in a larger than normal crop of peaches, then the A) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. B) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. C) demand curve for peaches shifts leftward. D) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases. E) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases.

B

If the price of tangerines increases, the price of oranges also rises because A) consumers consider the two goods complements, and so sellers decreased the supply of oranges. B) consumers consider the two goods substitutes, and demand for oranges increases. C) if the supply of tangerines decreased, then the supply of oranges also must decrease. D) buyers must have expected a higher price for oranges and thus increased their demand for oranges. E) buyersʹ incomes must have decreased, and oranges are an inferior good.

B

Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________, and the equilibrium quantity of cream cheese ________. A) rises; decreases B) rises; increases C) falls; decreases D) does not change; does not change E) falls; increases

C

If a market begins in equilibrium and then the demand curve shifts leftward, a A) shortage is created, which is eliminated by a fall in price. B) shortage is created, which is eliminated by a rise in price. C) surplus is created, which is eliminated by a fall in price. D) surplus is created, which is eliminated by a rise in price. E) surplus is created, which is eliminated by the supply curve shifting leftward.

C

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a result, the equilibrium quantity of gasoline ________ and the equilibrium price of gasoline ________. A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls E) does not change; rises

C

The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then A) the market is in equilibrium. B) there is a surplus and the price of t-shirts will rise. C) the quantity demanded is greater than quantity supplied. D) there is a shortage and the price of t-shirts will fall. E) there is a surplus and the price of t-shirts will fall.

C

When personal computers were first produced, the price was very high. As time passed, the price of personal computers fell because A) the demand for personal computers decreased. B) the initial price was too high and nobody bought personal computers. C) there were technological advances in the production of personal computers. D) peopleʹs incomes increased and personal computers are an inferior good. E) None of the above answers is correct.

C

When the demand curve shifts rightward and the market moves to a new equilibrium, then the A) supply increases. B) supply decreases. C) quantity supplied increases. D) quantity supplied decreases. E) price falls to restore the equilibrium.

C

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ so that the price of a computer chip ________. A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls E) decreases; does not change

D

Suppose that over the next few years, the demand for dancing to country and western music decreases. Hence, at country and western dance clubs, the equilibrium price of admission ________, and the equilibrium quantity of dancing ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases

D

Suppose that people decide riding scooters is no longer fun. The equilibrium price of a scooter ________, and the equilibrium quantity of scooters ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases

D

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A) The wage paid carpenters who build new houses might have risen. B) A technological advance in framing a new house might have occurred. C) The rent for nearby apartments might have fallen. D) More home buyers might have moved into the area. E) The cost of wood framing used to build houses might have fallen.

D

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________. A) rises; increases B) rises; decreases C) rises; does not change D) falls; decreases E) falls; increases

E