ECON Problem Set #4

Which of the following scenarios illustrates the law of demand?

Mauricio buys fewer pencils at $2 per pencil than $1 per pencil AND Aymee buys fewer sweaters at $50 each than at $35 each

The demand curve is the downward-sloping line that shows the relationship between price and quantity demanded...(T/F)?

True

Which of the following BEST illustrates the law of supply?

When ketchup prices increases, ketchup firms increased their quantity supplied of ketchup

Suppose that bagels and muffins are substitutes. If the price of bagels decrease, we would expect

the demand curve for muffins will shift to the LEFT

If consumers are advised that multigrain bread will substantially lower the risk of cancer, which of the following will happen in the market for multigrain bread?

the demand curve will shift to the RIGHT, INCREASING the price of multi grained bread

A demand curve is the representation of

the demand schedule

If both the supply and demand curves shift to the left, which of the following would happen?

the equilibrium quantity decreases and the equilibrium price is ambiguous

The only variable that can cause movement along the demand curve is..

the price of the good itself

Which of the following events would increase the supply of tomatoes

A DECREASE in the cost of fertilizers for tomato plants

Suppose that consumers and farmers expect the price of wheat will increase next month. The result will be that

DEMAND for wheat will INCREASE today AND SUPPLY for wheat will DECREASE today

Tickets to see a Beyonce concert at the Staples Center was sold out within 10 minutes of going on sale. Many fans were disappointed that they could not see the concert. This implies that.... demand is higher>>>>supply is low

The price of a ticket was set below the equilibrium price

The price of oranges has risen dramatically. Which of the following is likely to happen?

The quantity of oranges supplied will INCREASE

Suppose that convection ovens are a normal good. Suppose that the income of households decrease, while at the same time there is a reduction in the cost of inputs for convection ovens. We would expect that the equilibrium price of convection ovens will _________ while the new equilibrium quantity of convection ovens will _________

decrease; be ambiguous

If Motel 6 rooms are an inferior good, an increase in income will

shift the demand curve for Motel 6 rooms to the LEFT

Suppose that convection ovens are a normal good. Suppose that the income of households decrease, while at the same time there is a reduction in the cost of inputs for convection ovens. As a result of these simultaneous changes, the demand curve for convection ovens WILL _________ while the supply curve for convection ovens will _______

shift to the LEFT; shift to the RIGHT