ECN 150: Chapter 3

Refer to the figure. Producer surplus at a price of $40 is: $200. $100. $400. $600.

$100.

In the figure, a $10 tax is imposed on the market for lobsters. What is the market price that lobster producers would need to receive to induce them to produce 5,000 bushels of lobster per day? $10 $40 $50 $60

$60

A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve. True False

True

A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve. True False

True

Refer to the figure. Which factor would cause the change in the figure? a decrease in the price of a complement good a decrease in the price of the product a decrease in the price of a substitute good an increase in taxes

a decrease in the price of a complement good

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________. decrease; decrease increase; increase decrease; increase increase; decrease

decrease; decrease

A demand curve indicates that: the quantity demanded of a good is higher when its price is higher. the quantity demanded of a good is higher when its price is lower. the demand for a good is higher when its price is lower. the demand for a good is higher when its price is higher.

the quantity demanded of a good is higher when its price is lower.

In the diagram, for a market price of $4 total consumer surplus equals: $30. $60. $100. $75.

$30.

Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market if the market price is $60. $800 $1,600 $2,400 $1,200

$800

A decrease in the cost of inputs will shift the supply curve down and to the right. True False

True

Advances in technology such as personal computers and cellular telecommunications are indicated in the supply graph by a movement along the supply curve. True False

True

A good is considered normal if demand for it ______ when income ______. increases; increases decreases; increases stays the same; decreases increases; decreases

increases; increases

Refer to the figure. What is the maximum amount that buyers are willing and able to pay at a price of $45 per book? 300 books 450 books 100 books 0 books

100 books

(Figure: Good X) From the figure, the maximum price that consumers are willing to pay for _____ units of Good X is _____ per unit. 36; $4 11; $4 36; $12 26; $4

36; $4

(Figure: Bananas) Refer to the figure. If the price of bananas is $10 a pound, which number is closest to the number of pounds that suppliers will supply? 5 50 60,000 80,000

80,000

A higher opportunity cost of producing a good increases the supply of that good. True False

False

Advertising, fads, and fashion are examples of influences on demand that are generally referred to as altering expectations about products. True False

False

An increase in a per unit production tax ______ supply. increases decreases does not change changes in an indeterminate direction

decreases

In the diagram, the current demand curve for chicken legs is represented by D1. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will: shift to D2. shift to D3. remain at D1. shift to D2 and then back to D1.

shift to D3.

A government subsidy to producers causes the: supply of the product to increase. supply of the product to decrease. supply curve to change slope. supply curve to shift up and to the left.

supply of the product to increase

Refer to the figure. Calculate the dollar amount of consumer surplus being earned in this market when the price is $30 and there are 300 units consumed. $4,500 $9,000 $18,000 $450

$4,500

Refer to the figure. What is the maximum price per book that buyers are willing to pay for 2,500 books? $60 $45 $30 $15

$45

Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100. $5,000 $10,000 $100 $200

$5,000

Refer to the figure. The market price of the product is $20 per unit. Calculate the dollar amount of consumer surplus being earned in this market. $120,000 $60,000 $100,000 $80,000

$60,000

Refer to the figure. If the price of bananas in the diagram is $6 a pound, what is the total producer surplus? $80,000 $120,000 $160,000 $240,000

$80,000

(Figure: Bananas) Refer to the figure. If the price of bananas is $2 a pound, how many pounds of bananas will suppliers supply? 0 1 10 10,000

0

(Figure: Good X) From the figure, which statement is TRUE? At a price of $12 per unit, consumers are willing and able to purchase between 11 and 26 units of Good X. 36 units of Good X can be purchased by spending a total of $4. At a price of $6 per unit, consumers are willing and able to purchase 26 units of Good X. At a price of $4 per unit, consumers are willing and able to purchase 11 units of Good X.

At a price of $6 per unit, consumers are willing and able to purchase 26 units of Good X.

Which of the following could explain the figure? Consumer income increases in the market for a normal good. Consumer income falls in the market for a normal good. Consumer income rises in the market for an inferior good. Consumer income remains the same and the price of the good falls.

Consumer income increases in the market for a normal good.

Refer to the two figures. Which statement is TRUE? Figure A depicts the expectation that the future price will decrease. Figure A depicts an increase in taxes. Figure B depicts falling input prices. Figure B depicts technological innovations.

Figure A depicts the expectation that the future price will decrease.

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases? The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases. The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases. The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases. The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.

The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases.

A decrease in expected future supply of a good will lead to: a change in the demand for the good, but not until the supply actually goes down. a change in the price of the good, but not until the supply actually goes down. a change in the demand for the good even before the supply actually decreases. no change in the demand for the good.

a change in the demand for the good even before the supply actually decreases.

A decrease in the price of one substitute good causes: an upward movement along the demand curve for the other substitute good. a downward movement along the demand curve for the other substitute good. a rightward shift in the demand curve for the other substitute good. a leftward shift in the demand curve for the other substitute good.

a leftward shift in the demand curve for the other substitute good.

A decrease in demand refers to: a rightward shift of the demand curve. a leftward shift of the demand curve. an upward movement along the demand curve. a downward movement along the demand curve.

a leftward shift of the demand curve.

A decrease in production costs at any given quantity ______ supply. increases decreases does not change may increase or decrease

increases

An increase in a per unit production subsidy ______ supply. increases decreases does not change changes in an indeterminate direction

increases

A farmer can grow either apples or oranges. An increase in the price of apples ______ the opportunity cost of growing oranges so that the supply curve of oranges shifts ______. decreases; down and to the right increases; down and to the right decreases; up and to the left increases; up and to the left

increases; up and to the left

A farmer can grow soy or sorghum. If the price of soy increases, the opportunity cost of growing sorghum ______, shifting the supply curve of sorghum ______. decreases; up and to the left increases; up and to the left decreases; down and to the right increases; down and to the right

increases; up and to the left

A decrease in the opportunity cost of steel production will: increase the price of steel. make suppliers more likely to produce steel, thus shifting the supply curve up and to the left. make suppliers more likely to produce steel, thus shifting the supply curve down and to the right. entice producers to produce more substitute goods.

make suppliers more likely to produce steel, thus shifting the supply curve down and to the right.

A change in which factor would shift the supply curve? the price of the good being sold the demand for the product production technology the willingness of consumers to pay

production technology

Which of the following factors would cause the change in the figure? an increase in the price of a complement good a decrease in peoples' willingness to pay for the good an increase in the price of a substitute good an increase in income for an inferior good

an increase in the price of a substitute good