ECON CH 4
21 Which of the following events could cause an increase in the supply of ceiling fans? a. The number of sellers of ceiling fans increases. b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. c. There is an increase in the price of the motor that powers ceiling fans. d. All of the above are correct.
B
If the supply of a product decreases, we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.
A
22 The supply of a good is negatively related to the a. price of inputs used to make the good. b. demand for the good by consumers. c. price of the good itself. d. amount of profit a firm can expect to receive from selling the good.
A
31 A decrease in input costs to firms in a market will result in a. a decrease in equilibrium price and an increase in equilibrium quantity. b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and no change in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity.
A
36 In markets, prices move toward equilibrium because of a. the actions of buyers and sellers. b. government regulations placed on market participants. c. increased competition among sellers. d. buyers' ability to affect market outcomes.
A
Economists in general a. do not try to explain people's tastes, but they do try to explain what happens when tastes change. b. believe that they must be able to explain people's tastes in order to explain what happens when tastes change. c. do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.
A
If buyers and sellers in a certain market are price takers, then individually a. b. c. d. they have no influence on market price. they have some influence on market price, but that influence is limited. buyers will be able to find prices lower than those determined in the market. sellers will find it difficult to sell all they want to sell at the market price.
A
Two goods are substitutes if a decrease in the price of one good a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.
A
Which of the following is not a determinant of demand? a. the price of a resource that is used to produce the good b. the price of a complementary good c. the price of the good next month d. the price of a substitute good
A
Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and a decrease in the price of raw cotton b. a decrease in the price of wool shirts and a decrease in the price of raw cotton c. an increase in the price of wool shirts and an increase in the price of raw cotton d. a decrease in the price of wool shirts and an increase in the price of raw cotton
B
Which of the following statements is correct? a. Buyers determine supply and sellers determine demand. b. Buyers determine demand and sellers determine supply. c. Buyers and sellers as one group determine supply, but only buyers determine demand. d. Buyers and sellers as one group determine demand, but only sellers determine supply.
B
10. With respect to the variables price and quantity demanded, a. price and quantity demanded are independent of each other. b. price is the dependent variable and quantity demanded is the independent variable. c. price is the independent variable and quantity demanded is the dependent variable. d. price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers.
C
12 When we move along a given demand curve, a. only price is held constant. b. income and the price of the good are held constant. c. all nonprice determinants of demand are held constant. d. all determinants of quantity demanded are held constant.
C
15 To find the market demand for a product, individual demand curves are summed a. vertically. b. diagonally. c. horizontally. d. and then averaged.
C
18 A very hot summer in Atlanta will cause a. the demand for lemonade to shift to the left. b. the demand for air conditioners to decrease. c. the demand for jackets to decrease. d. a movement downward and to the right along the demand curve for jackets.
C
19 Which of these statements best represents the law of demand? a. When buyers' tastes for a good increase, they purchase more of the good. b. When income levels increase, buyers respond by purchasing more of most goods. c. When the price of a good falls, buyers respond by purchasing more of the good. d. When buyers' demands for a good increase, the price of the good will increase.
C
25 An advance in production technology will a. increase a firm's costs. b. allow firms to raise the price of their product. c. shift the supply curve to the right, but the demand curve will be unaffected. d. shift the supply curve to the right and shift the demand curve to the right.
C
29 Recent forest fires in the western states are expected to cause the price of lumber to rise in the next 6 months. As a result we can expect the supply of lumber to a. fall in 6 months, but not now. b. increase in 6 months when the price goes up. c. fall now. d. increase now to meet as much demand as possible.
C
30 The price at which quantity supplied equals quantity demanded is called the a. coordinating price. b. monopoly price. c. equilibrium price. d. All of the above are correct.
C
40 If goods A and B are complements, then an increase in the price of good A will result in a. more of good A being sold. b. more of good B being sold. c. less of good B being sold. d. no difference in the quantity sold of either good.
C
41 If the demand for a product increases, we would expect a. equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price to decrease and equilibrium quantity to increase. c. equilibrium price and equilibrium quantity both to increase. d. equilibrium price and equilibrium quantity both to decrease.
C
46 Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation? a. Consumers have experienced an increase in income and beef-production technology has improved. b. The price of chicken has risen and the price of steak sauce has fallen. c. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and his or her longevity. d. The demand curve for beef must be positively sloped.
C
Lead is an important input in the production of crystal. If the price of lead decreases, other things equal, we would expect the supply of a. crystal to be unaffected. b. crystal to decrease. c. crystal to increase. d. lead to increase.
C
Suppose that demand decreases and supply decreases. What would you expect to occur in the market for the good? a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Both equilibrium price and equilibrium quantity would increase.
C
Suppose today people change their expectations about the future. This change in expectations a. results in a movement along a demand curve. b. can affect future demand, but not today's demand. c. can affect today's demand. d. cannot affect either today's demand or future demand.
C
Which of the following events would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity? a. an increase in supply and an increase in demand b. an increase in supply and a decrease in demand c. a decrease in supply and an increase in demand d. a decrease in supply and a decrease in demand
C
13 When the number of buyers in a market increases, a. the market demand curve shifts to the right. b. the demand curves of the individual demanders in the market are unaffected. c. the market demand for the good in question increases. d. Al of the above are correct.
D
26 A supply curve slopes upward because a. as more is produced, total cost of production falls. b. an increase in input prices increases supply. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity.
D
A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price.
D
A likely example of substitute goods for most people would be a. peanut butter and jelly. b. tennis balls and tennis rackets. c. televisions and subscriptions to cable television services. d. pencils and pens.
D
Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve? a. (quantity demanded = 4, price = $2.50) b. (quantity demanded = 16, price = $2.50) c. (quantity demanded = 3, price = $1.50) d. (quantity demanded = 10, price = $1.00)
D
The negative relationship between price and quantity demanded a. applies to most goods in the economy. b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct.
D
Which of the following is a determinant of market supply curve but not a determinant of an individual seller's supply? a. technology b. expectations c. input prices d. the number of sellers
D
An increase in the price of pizza will shift the demand curve for pizza to the left.
FALSE
Baseballs and baseball bats are substitute goods.
FALSE
If a company making frozen orange juice expects the price of their product to be higher next month, it will supply more to the market this month.
FALSE
If the demand for a good falls when income falls, the good is called an inferior good.
FALSE
Surpluses drive price up while shortages drive price down.
FALSE
The law of demand states that the quantity demanded of a product is positively related to price.
FALSE
The market demand is the average of all of the individual demands for a particular good or service.
FALSE
Prices, which are determined by all buyers and sellers as they interact in the marketplace, allocate the economy's scarce resources.
TRUE
The behavior of buyers and sellers drives markets toward equilibrium.
TRUE
When an increase in the price of one good lowers the demand for another good, the two goods are called complements.
TRUE
Whenever a determinant of demand other than price changes, the demand curve shifts.
TRUE