Econ 4

A perfectly competitive market consists of products that are all slightly different from one another.

False

An increase in the price of steel will shift the supply of cars to the right.

False

If apples and oranges are substitutes, an increase in the price of apples will decrease the demand for oranges.

False

If there is a shortage of a good, then the price of that good tends to fall.

False

If there is an increase in supply accompanied by a decrease in demand for coffee, then there will be a decrease in both the equilibrium price and quantity in the market for coffee.

False

The law of demand states that an increase in the price of a good decreases the demand for that good.

False

When the price of a good is below the equilibrium price, it causes a surplus.

False

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Price will increase; quantity is ambiguous.

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

Price will increase; quantity is ambiguous.

Which of the following statements is true about the impact of an increase in the price of lettuce?

The equilibrium price and quantity of salad dressing will fall.

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

There is an increase in the demand for apples and an increase in the quantity supplied of apples.

An advance in the technology employed to manufacture roller blades will result in a decrease in the equilibrium price and an increase in the equilibrium quantity in the market for roller blades.

True

An oligopolistic market has only a few sellers.

True

If Coke and Pepsi are substitutes, an increase in the price of Coke will cause an increase in the equilibrium price and quantity in the market for Pepsi.

True

If consumers expect the price of shoes to rise, there will be an increase in the demand for shoes today.

True

If golf clubs and golf balls are complements, an increase in the price of golf clubs will decrease the demand for golf balls.

True

If pencils and paper are complements, an increase in the price of pencils causes the demand for paper to decrease or shift to the left.

True

The law of supply states that an increase in the price of a good increases the quantity supplied of that good.

True

The market supply curve is the horizontal summation of the individual supply curves.

True

Which of the following shifts the demand for watches to the right?

a decrease in the price of watch batteries if watch batteries and watches are complements

A decrease (leftward shift) in the supply for a good will tend to cause

an increase in the equilibrium price and a decrease in the equilibrium quantity.

An increase (rightward shift) in the demand for a good will tend to cause

an increase in the equilibrium price and quantity.

All of the following shift the supply of watches to the right except

an increase in the price of watches.

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

an inferior good.

An inferior good is one for which an increase in income causes a(n)

decrease in demand.

The law of demand states that an increase in the price of a good

decreases the quantity demanded for that good.

The law of supply states that an increase in the price of a good

increases the quantity supplied of that good.

A perfectly competitive market has

many buyers and sellers.

A monopolistic market has

only one seller.

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are

substitutes.

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect

the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

Suppose there is an increase in both the supply and demand for personal computers. Further, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect

the equilibrium quantity to rise and the equilibrium price to fall.

If the price of a good is equal to the equilibrium price,

the quantity demanded is equal to the quantity supplied and the price remains unchanged.

If the price of a good is below the equilibrium price,

there is a shortage and the price will rise.

If the price of a good is above the equilibrium price,

there is a surplus and the price will fall.