Econ #2 practice

Which of the following will not increase the demand for burritos?

A big burritos sale.

Which of the following will increase the supply of wheat?

A decrease in the price of fertilizer.

Which of the following will NOT increase the demand for porcelain tea sets?

A fall in the price of porcelain

Which of the following will increase the demand for frisbees?

A rise in the price of nerf footballs (a substitute)

Which of the following would not be expected to decrease the demand (shift the demandcurve) for grape soda?

An increase in the price of grape soda

Which of the following would not be expected to reduce the demand (shift the demandcurve) for peanut butter?

An increase in the price of peanut butte

Which of the following is most likely to increase the demand (i.e., shift thedemand curve) for downtown parking?

Lower gasoline prices

What happens in the market for cream cheese when the price of cream (an input) falls?

Supply increases

If the supply of "roots" (an input) increases, what would we expect to happen in themarket for root beer?

Supply to increase

What would happen in the market for corn tacos if the price of corn increased while theprice of wheat tacos (a substitute) decreased?

The equilibrium quantity would decrease but the impact on price would be uncertain.

Supply and demand are always more elastic in the long-run because

a greater range of actions can be taken in longer periods

The law of demand states that

as prices go up, quantity demanded goes down

When demand decreases

both price and quantity fall

When the demand for something increases

both price and quantity rise

Which of the following would reduce the demand for orange juice?

A decrease in the price of grape juice

Which of the following would cause an increase in the demand for potato chips?

A fall in the price of dip if dip and potato chips are complements.

Which of the following is most likely to increase the demand for motorcycles?

A fall in the price of motorcycle helmets

Which of the following will increase the demand for snowboards?

A fall in the price of ski lift tickets.

Which of the following will increase the demand for waffles (shift the demandcurve outwards)?

A fall in the price of waffle syrup.

Which of the following will NOT increase the demand (shift the demand curve) forcoffee?

A great coffee harvest.

Which of the following will NOT increase the supply of titanium golf clubs?

A rise in the demand for golf clubs

Which of the following will lead to an increase in the demand for satellite TV?

A rise in the price of Netflix (a substitute).

Which of the following is most likely to have been responsible for the rise on the cost of hiring university faculty?

A rising demand for college faculty

At the intersection of the supply curve and the demand curve

All of the above

For which of the following is there a market?

All of the above

If a frost kills a significant amount of the Brazilian coffee crop, we can expect

All of the above

The demand curve shows _______ and the supply curve shows ______.

All of the above

Which of the following will increase the market price of coffee?

All of the above

Which of the following will increase the quantity of coffee consumed?

All of the above

Which of the following will increase the quantity of photocopiers supplied?

All of the above

Which of the following will increase the quantity of surfboards demanded?

All of the above

Which of the following will increase the demand (shift the demand curve) for mahogany desks?

All of the above but a fall in the price of mahogany

Which of the following will increase the number of umbrellas sold?

All of the above will increase the number of umbrellas sold

Which of the following will NOT increase the quantity of coffees demanded?

All of the above will increase the quantity of coffee demanded.

A supply curve shows

All of the above.

Prices are important because they

All of the above.

Suppose Clemson passes a law that forbids the construction of new houses within city limits. We would expect

All of the above.

The market-clearing price is

All of the above.

Which of the following will increase the supply (i.e., shift the supply curve) of brass key rings?

An improvement in key ring-making technology

A rise in income will tend to

Any of the above, depending on the product and your preferences.

Why does quantity demanded fall as price rises?

Because people switch to substitutes

For which of the following is demand likely to be the most elastic?

BiLo's Wheat sourdough bread

What would happen in the market for interior house paint if the price of paintbrushes fallswhile the price of wallpaper (a substitute) rises?

Both equilibrium price and quantity would increase.

Which of the following is least likely to increase the number of burritos that Moe's burrito shop sells?

Consumer income falls, and burritos are a normal good

What happens in the market for tires when the cost of aluminum (an input to automobile production) increases?

Demand decreases

What happens in the market for ink when the price of the lead used to make pencils rises?

Demand increases.

If the supply of orange juice increases, what would we expect to happen in the market for apple juice (a substitute)?

Demand to decrease

If the supply of peanut butter increases, what would we expect to happen in the marketfor tuna (a substitute for peanut butter on sandwiches)?

Demand to decrease

If the supply of snowboards increases, what would we expect to happen in the market forskis (a substitute)?

Demand to decrease

If the supply of tea increases, what would we expect to happen in the market for coffee (a substitute)?

Demand to decrease.

If the supply of peanut butter increases, what would we expect to happen in the marketfor jelly (a complement)?

Demand to increase.

Doug likes tomatoes now more than he did last year. Therefore

Doug is willing to pay more for tomatoes than last year.

What would happen in the market for beef salami if the prices of both baloney (asubstitute) and cattle feed fall?

Equilibrium price would decrease but the effect on quantity would be uncertain

Suppose that the price of a substitute for good X falls and the price of the raw materials used to manufacture good X increases. What would you expect to happen in the market for good X?

Equilibrium quantity would decrease, but the impact on equilibrium price would be uncertain

Suppose that the price of Hershey bars (a substitute) falls and the price of peanuts (aninput) rises. What would you expect to happen to the price and quantity of Snickers bars on the market?

Equilibrium quantity would decrease, but the impact on equilibrium price would be uncertain.

Suppose that the price of orange juice rises and the price of apples falls. What would youexpect to happen to the price and quantity of apple juice?

Equilibrium quantity would increase, but the impact on equilibrium price would be uncertain

What would happen in the market for news programs if the salaries of anchormen and women fall while the price of newspapers (a substitute) rises?

Equilibrium quantity would increase, but the impact on equilibrium price would be uncertain

Suppose that the supply of root beer (a complement) increases and the price of cream (aninput) falls. What would you expect to happen to the market price and quantity of icecream?

Equilibrium quantity would increase, but the impact on equilibrium price would be uncertain.

If the demand for bread increases, what would we expect to happen to the quantity of wheat supplied?

It to go up

Suppose you like to make and eat coconut cream pies. What will a rise in the price of coconuts do to your demand for cream?

It will decrease

If the demand function is QD = 40-2P and price rises by 10, what will happen to quantitydemanded?

It will fall by 20 at most.

Which of the following will decrease the supply (i.e., shift the supply curve) of chocolatecakes?

Just A rise in the price of chocolate and A rise in the price of flour.

Which of the following will increase the quantity of brass key rings supplied?

Just a rise in the demand for key rings and an improvement in key ring-making technology

For which product is demand likely to be the most elastic?

Kellog's Raisin Bran at BiLo

Which of the following will increase the supply of photocopiers?

New technology that makes it possible to manufacture photocopiers much more cheaply.

An increase in the price of gasoline

None of the above

Which of the following is/are true?

None of the above

Which of the following will increase the market price of chocolate eclairs?

None of the above.

A new report shows that most sardines have high mercury content (mercury is harmful to humans). What happens to the equilibrium price and quantity of sardines?

Price decreases; quantity decreases

A new type of netting increases the productivity of tuna fisherman. What happens to the equilibrium price and quantity of tuna?

Price decreases; quantity increases

Good weather produces an unexpectedly abundant cocoa crop. What happens to the equilibrium price and quantity of chocolate (cocoa is an ingredient in chocolate production)?

Price decreases; quantity increases

A major oil spill wipes out a substantial portion of ocean cod. What happens to the equilibrium price and quantity of cod?

Price increases; quantity decreases

Suppose that now-illegal drugs are legalized, increasing both the supply anddemand. We would expect

Quantity to go up, but the effect on price to be uncertain

Which of the following will increase the supply of oranges?

Terrific orange growing weather

What effect would a reduction in the U.S. selling price of Japanese-made cars have onthe U.S. demand for American-made cars?

The demand would decrease

What would happen in the market for pizza in restaurants if the price of flour increased and the price of a meal in a Chinese restaurant increased?

The equilibrium price of pizza would increase, but the impact on the amount of pizza sold would be uncertain

What would happen in the market for silk shirts if the price of silk falls while the price of cotton shirts (a substitute) also falls?

The equilibrium price would decrease, but the impact on equilibrium quantity would be uncertain.

What would happen in the market for pens if both the price of ink (an input) and the priceof pencil lead falls?

The equilibrium price would decrease, but the impact on quantity would be uncertain

What would happen in the market for ramen noodles if the price of wheat (an input) fallswhile consumer income rises (ramen noodles are an inferior good)?

The equilibrium price would decrease, but the impact on quantity would be uncertain.

Suppose that the price of oranges and apples rises. What would you expect to happen tothe market price and quantity of orange juice?

The equilibrium price would increase, but the impact on equilibrium quantity would be uncertain

What would happen in the market for skis if there is a lot of snow (which makes skiingmore fun) but this also makes it more difficult to ship skis into town?

The equilibrium price would increase, but the impact on quantity would be uncertain

What would happen in the market for shredded wheat cereal if the price of wheatdecreased while the price of corn flakes (a substitute) increased?

The equilibrium quantity would increase but the impact on price would be uncertain.

Which of the following would make the demand for education at Clemson more elastic?

The founding of four more universities in South Carolina

For which of these goods would demand be least elastic?

all breakfast foods

Which of the following would make the demand for Pepsi more elastic?

The launching of five new brands of cola by five different companies

Which of the following would increase demand for aardvark meat?

The new belief that eating aardvark makes you beautiful

The demand for snowboards depends upon

all of the above

The development of a lower cost way of making wheat flour

all of the above

If a good is "normal," an increase in income will result in

an increase in demand for the goo

A supply curve slopes upwards because

an increase in price gives producers an incentive to supply a larger quantity

Suppose the price of tea increases. As a result, we would expect to see

an increase in the demand for coffee (a substitute

If Clemson raises the price of on-campus parking, you would expect to see

an increase in the demand for off-campus parking

Which of the following would cause a decrease in the demand for coffee?

an increase in the price of sugar if you drink your coffee with sugar

The thing least likely to change the demand (shift the demand curve) for a university education is

an increase in university tuition charges

We observe that the price of paper clips has risen and the quantity being sold onthe market has fallen. Which of the following is the most likely explanation?

The supply of paper clips has decreased

Which of the following is the most important advantage to a society of using money rather than relying exclusively on barter?

The use of money lowers the cost of exchanging goods

Which of the following is least likely to shift the demand for the burrito that Moe's burrito shop sells?

They hold a big burrito sale

How do buyers and seller coordinate their desires?

Through their independent effect on prices.

If demand is elastic, we would expect

a big change in quantity when price changes.

Which of the following would lead to an increase in both the equilibrium price and quantity of an inferior good, such as macaroni and cheese?

a decrease in income

A demand curve is

a generally downward-sloping line relating the price of a good with the quantity demanded

Which of the following would cause both the equilibrium price and the equilibriumquantity of pears to decrease?

a lower price for apples

A decrease in the supply of aluminum bicycles could result from

a rise in the price of aluminum

A decrease in the supply of aluminum bikes (i.e., a shift in the supply curve)could result from

a rise in the price of aluminum.

Which of the following will increase the demand for tea?

a rise in the price of coffee.

If a price rise of 9% leads to a rise in quantity supplied of 12%, we know that supply is

elastic

If you drop your prices and total revenue increases, demand must be

elastic

When the supply and demand for a good both increase,

equilibrium price may increase, decrease, or remain unchanged

Which of the following would you expect to have the least elastic demand?

food.

If the price of tickets to Chicago Bears games rises by 10% and the quantity demandedrises by 8%, we can conclude that demand for Bears tickets

has increased

If the demand for french bread is elastic and the baker holds a french bread sale

he will sell a lot more bread

Which of the following would you expect to have the least elastic demand?

headache medicine

If instead there is a major frost in Florida that kills fifty percent of the orange crop, we would expect to see

higher orange prices

If land suitable for shopping centers may also be used for go-cart tracks, an increase in the demand for go-cart driving will

raise the cost of building shopping centers

An increase in the demand for rental apartments will

raise the price and increase the quantity supplied

f Clemson decides to increase tuition so as to raise its revenues, it must believe that

the demand for education at Clemson is inelasti

A rational decision-maker takes action only if

the marginal benefit is greater than the marginal cost

Which of the following is NOT an important determinant of the level of demand?

the price of inputs

If the price of grapes falls

the quantity of grapes demanded increases

A demand curve indicates the value consumers get from a good. It is measured as

the quantity people will buy at various prices.

If you raise your price by 50% and quantity demanded falls by 40%, the elasticity ofdemand for your product is

.80

If a firm making widgets lowers its price by 10 percent and finds that it sells 8 percentmore widgets, the elasticity of demand for its product equals

0.8

We can then expect the total amount spent on coffee to rise if the elasticity of demand is

0.8

If price elasticity of demand for a good is 3, then a 10% increase in price would beexpected to result in a

30% decrease in quantity demanded

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

decrease the total revenue of wheat farmer

A change in safety regulation that decreases the demand and increases the supplyof airline flights will

decrease ticket prices

A frost that destroys half of Florida's orange crop will make orange growers unhappy only if

demand for oranges is elastic

It seems that every year around Valentine's day the price of roses rises sharply. This is probably because

demand for roses increases.

If equilibrium price in a market has risen from $1 to $5 and the equilibrium quantity has risen from 100 to 500, we would know that

demand has increased

If you discover that the equilibrium price and quantity of soybeans has risen, you would conclude that

demand has increased

A normal good is one for which

demand increases when income increases

If you are told "Nobody will buy more of that product even if they cut the price in half," you can conclude that

demand is inelastic

If price and quantity both increase, you know that

demand must have increased

If you read in the newspaper that the price of a product has risen, and that the quantity of the product sold on the market has risen as well, you know that

demand must have increased

The demand curve represents _____ while the supply curve represents _____.

benefits, costs

The price of ham rises sharply. What happens to the equilibrium price and quantity ofcheese (ham and cheese are complements)?

both price and quantity fall.

When the demand for something falls

both price and quantity fall.

What happens to the equilibrium price and quantity of tomato juice after the hurricane(orange juice and tomato juice are substitutes)?

both price and quantity rise

If price is raised by $2 and quantity falls by 20 percent, the elasticity of demand

can not be determined without more information

When you go to the supermarket you find that there is exactly the kind of deodorant you wanted on the shelf. This is because

changes in price spurred by the actions of many different consumers indicate to Safeway the level of demand

A friend of yours tells you that despite the price of coffee reaching an all-time high, coffee growers are drinking more coffee than they did before the price rise. An explanation of this that fits with economic thinking is that

coffee farmers have been made wealthier by the increase in coffee prices and thus increase their demand for coffee

The fact that more teachers per student are employed now than 20 years ago (i.e.,equilibrium quantity has increased) tells us that

either demand or supply has increased

If equilibrium price has fallen from $5.50 to $4.75, we would know that

either supply has increased or demand has decreased

If you paid $25,000 for your car just a short while ago, but the best offer you can get for it now is $12,000. You should only sell the car

if its worth to you is less than $12,000

The law of supply predicts that

if price goes up, quantity supplied will not fall whether or not demand changes

Anything that increases the value that potential buyers receive from a good may beexpected to

increase demand.

A businesswoman says "No matter how much we cut price, we just don't seem to get anynew customers." In other words, she thinks demand for her product is

inelastic

If a 10% increase in the price of beer reduces the quantity demanded by 8%, then demand for beer is

inelastic

If a good is a necessity, demand for that good would tend to be

inelastic

If price rises from 20 percent and quantity demanded falls by 12%, we know that demand is

inelastic

Coffee growers will be happy about the frost only if demand is

inelastic.

The economic model

is about how people make choice

If a 25% increase in the price of skateboards reduces the quantity demanded by 500, thendemand for skateboards

is downward sloping, but there is not enough information to calculate the elasticity

f a $1 increase in price reduces the quantity demanded by 10%, we know that demand

is downward sloping, but we don't have enough information to calculate the elasticity

An article in the newspaper suggests that an Indian tribe should use coal rather than gas power because the tribe owns 114 billion tons of coal reserves. This statement

is false because it ignores opportunity costs

The concept of opportunity cost suggests that the cost to airlines of allowingemployees to fly for free

is greater at Christmas than in mid-February.

If a frost destroys much of the Florida orange crop

just the supply of orange juice will decrease and the price of oranges will rise

Suppose you sell jewelry boxes, and a business consultant you have hired determines that demand for your product is elastic. If you want to increase your total revenue, you should therefore

lower the price of your jewelry boxes

The demand for Kellogg's Corn Flakes tends to be very elastic because

many other cereals are almost perfect substitutes

An increase in the price of oranges

may be caused either by an increase in demand or a decrease in supply

The demand for potatoes tends to be less elastic than the demand for movies because

movies have better and closer substitutes.

The supply curve slopes upward because

opportunity costs rise with the quantity supplied.

Demand for maple nut ice cream tends to be elastic because

other flavors of ice cream are almost perfect substitutes

Which of the following is likely to have the least elastic supply?

paintings by Rembrandt

If the price of peanut butter increases and the demand for jelly increases as a result, then

peanut butter and jelly are substitutes

Which of the following would you expect to have the least elastic demand?

penicillin

Doctors charge high fees because

people are willing to pay high fees for medical services

The law of demand would lead you to expect that if the price of butter goes up,

people will buy more margarine

If a supplier can sell as much as it wants at $10 per unit, but none at all at $10.01, we know that the demand it faces is

perfectly elastic

The quantity supplied will increase with an increase in price only if supply is not

perfectly inelastic

"A doubling in gasoline prices has not reduced purchases at all." The speaker evidentlybelieves that demand for gasoline is

perfectly inelastic.

"Elasticity" measures the relationship between

price and quantity

A rise in demand results in

price and quantity up

If the price of cattle feed falls, what happens to equilibrium price and quantity of beef?

price falls and quantity rises

A hurricane destroys half of California orange groves. What happens to the equilibriumprice and quantity of orange juice?

price rises, quantity falls

Demand is said to be inelastic if

quantity demanded moves proportionately less than price

A "normal good" is a good for which

quantity demanded rises when income rises.

The market clearing price of a good is the price at which

quantity supplied equals quantity demanded

The "law of demand"

says that people buy less of a good when price rises

The "law of demand"

says that people don't buy more of a good when price rises

Suppose that a fall in the price of good X causes less of good Y to be sold. This would mean that X and Y are

substitutes

If equilibrium price in a market has risen from $10 to $25 and the equilibrium quantity has fallen from 50,000 to 35,000, we would know that

supply has decreased

If equilibrium price in a market has risen from $5 to $10 and the equilibrium quantity hasfallen from 100 to 50, we would know that

supply has decreased

If then you discover that you were mistaken, and that, although the price had risen, the equilibrium quantity of soybeans has actually fallen, you would know that

supply has decreased.

If equilibrium price has fallen from $5.50 to $4.75 while equilibrium quantity has risenfrom 10,000 to 12,000, we would know that

supply has increased

If quantity supplied responds only slightly to a change in price, then

supply is inelastic

If price decreases and quantity increases, you know that

supply must have increased

If someone tells you that they "can't live without" something, you would assume,

that their demand is likely to be inelastic

Elasticity of demand depends on

the closeness of substitutes.

The marginal cost of taking your car for a spin around the block includes which ofthe following

the cost of the gas you use up driving around the block

The supply curve for pasta reflects

the cost of the wheat from which pasta is made.

f I tell you that the price of cameras has fallen and the number sold has fallen rather thanrisen, you would know that

the demand for cameras has decreased.

If the price of coffee falls and the quantity of coffee demanded falls as well, weknow that

the demand for coffee has fallen

If you discover that the price of college education has risen and the number of students seeking to enroll has increased as well, you would know that

the demand for college education has increased

If the price of batteries rises, you would expect

the demand for electricity to increase

Professional football players receive on average much higher wages than professional soccer players in the United States because

the demand for football games is greater

If the price of a substitute for good X increases, then

the demand for good X increases

If peanut butter and jelly are complements, as the price of jelly goes up,

the demand for peanut butter goes down

If peanut butter and jelly are substitutes, as the price of jelly goes up,

the demand for peanut butter goes up

Which of the following will not decrease the supply of burritos.

the discovery that eating burritos causes cancer.

A technological breakthrough reduces the cost of pie crust. What is the effect on the market for cherry pies?

the equilibrium price decreases; the equilibrium quantity increases

What is the effect on the market for cherries?

the equilibrium price increases; the equilibrium quantity increases

If the price of olives rises just as new studies reveal additional health benefits from usingolive oil, we would expect

the equilibrium price of olive oil to rise, but the effect on quantity to be uncertain.

f you hear that a terrible frost has ravaged the California citrus crop, you would expect

the equilibrium price of orange juice to rise and the quantity to fall

If an unusually cold summer discourages people from eating ice cream while lowering the cost of storing ice cream, we would expect

the equilibrium price to fall, but the effect on quantity to be uncertain

If an exceptionally snowy winter makes for great skiing conditions but also raisesthe cost of shipping-in skis, we would expect

the equilibrium price to rise, but the effect on quantity to be uncertain

If a new technology is developed that allows twice the soybeans to be grown athalf the cost, and at the same time a new soybean drink becomes the hottest thingin town, we would expect

the equilibrium quantity to rise, but the effect on price to be uncertain

Jon needs 200 cases of Cristal champagne to cater a wedding. First, Jon visits all thewine shops located within ten miles, but can't get enough cases. Then Jon visits all wineshops located between 10 and 50 miles, but still is short a few cases. Finally Jon visits all wine shops located within 50 and 100 miles, and gets the last few cases he needs. Jon's struggles illustrate

the law of supply

Good economic decisions are those for which

the marginal benefits are greater than the marginal cost.

Suppose a landmark court case makes it more expensive to run Day Care centers, but also makes it less likely that children cared for will be harmed. We can expect

the price of Day Care services to increase

If there is excess demand for burritos, we would expect

the price of burritos to rise

If Florida has a bumper orange crop, we can expect that

the price of grapefruit will fall if grapefruit and oranges are substitutes

If the elasticity of demand of for camera film is 2.6, and the price of film is raised by 10 percent,

the quantity demanded will fall by 26 percent

The recent drought in the Midwest has been severe, and experts say that roughly half thecorn crop has been damaged. As a result, we would expect:

the supply of corn to decrease

If the price of silver falls, you would expect

the supply of silver jewelry to increase.

f I tell you that the price of snowboards has risen and the quantity of snowboards on themarket has fallen, you know that

the supply of snowboards has decreased

If the supply of a good is absolutely fixed (like wine bottled in 1983)

the supply will be vertical

If there is excess demand for farm laborers, we would expect

the wage paid to farm laborers to rise

When the price of a good or service changes,

there is a movement along a given demand curve

When there is excess supply

there is downward pressure on price

If quantity demanded falls by 100,000 when price rises by 2 cents, we know that

there is not enough information to calculate elasticity

If we raise price by 10 cents and quantity demanded falls by 10,000 units, we would conclude that

there is not enough information to determine whether demand is elastic or not

Buyers and sellers communicate primarily

through their willingness to buy and sell at various prices.

In economics, the cost of something is

what you give up to get it

When you are a student, you are more likely to go by bus; once you have a job, you aremore likely to fly. This is because once you have a job

your demand for transportation becomes less elastic since your opportunity costs increase