Economics - Homework 3

Which of the following will not shift the demand curve for a good? A. an increase in population B. an increase in consumer incomes C. a decrease in the price of a substitute good D. an increase in the price of the good

an increase in the price of the good

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A. an inferior good. B. a necessity. C. a normal good. D. a neutral good.

an inferior good.

The income effect of a price change refers to the impact of a change in A. the price of a good on a consumer's purchasing power. B. the quantity demanded when income changes. C. income on the price of a good. D. demand when income changes.

the price of a good on a consumer's purchasing power.

If in the market for apples the supply has decreased then A. the supply curve for apples has shifted to the left. B. there has been a movement downwards along the supply curve for apples. C. there has been a movement upwards along the supply curve for apples. D. the supply curve for apples has shifted to the right.

the supply curve for apples has shifted to the left.

Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline, A. the demand curve shifted to the right resulting in an increase in the equilibrium price. B. the demand curve shifted to the left resulting in a decrease in the equilibrium price. C. the supply curve shifted to the right resulting in an increase in the equilibrium price. D. the supply curve shifted to the left resulting in an increase in the equilibrium price.

the supply curve shifted to the left resulting in an increase in the equilibrium price.

Table 3-1 Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be A. 51 lb. B. 63 lb. C. 76 lb. D. 146 lb.

63 lb.

What is the difference between an "increase in demand" and an "increase in quantity demanded"? A. There is no difference between the two terms; they both refer to a shift of the demand curve. B. An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. C. There is no difference between the two terms; they both refer to a movement downward along a given demand curve. D. An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

Which of the following statements is true? A. An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. B. If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. C. A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. D. If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.

An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.

Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, scarcity is eliminated. B. At equilibrium, quantity demanded equals quantity supplied. C. At equilibrium, market forces no longer apply. D. At equilibrium, demand equals supply.

At equilibrium, quantity demanded equals quantity supplied.

Figure 3-5 Refer to Figure 3-5. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)

Panel (a)

Figure 3-5 Refer to Figure 3-5. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)

Panel (b)

Figure 3-5 Refer to Figure 3-5. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)

Panel (d)

A movement along the demand curve for toothpaste would be caused by A. a change in the price of toothbrushes. B. a change in the price of toothpaste. C. a change in population. D. a change in consumer income.

a change in the price of toothpaste.

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as A. a decrease in quantity demanded. B. a decrease in demand. C. a decrease in consumers' taste for chocolate. D. a change in consumer income.

a decrease in quantity demanded.

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? A. a decrease in the price of corn B. an increase in the price of soybeans C. an increase in the demand for corn D. an increase in the price of soybean seeds

a decrease in the price of corn

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase? A. an increase in the price of flour B. an increase in the price of rye bread, a substitute for white bread C. a decrease in the price of flour D. an increase in the price of butter, a complement for white bread

a decrease in the price of flour

If the price of grapefruit rises, the substitution effect due to the price change will cause A. a decrease in the demand for oranges, a substitute for grapefruit. B. a decrease in the quantity demanded of grapefruit. C. a decrease in the quantity supplied of grapefruit. D. a decrease in the demand for grapefruit.

a decrease in the quantity demanded of grapefruit.

Holding everything else constant, an increase in the price of MP3 players will result in A. an increase in the supply of MP3 players. B. a decrease in the quantity of MP3 players supplied. C. a decrease in the quantity of MP3 players demanded. D. a decrease in the demand for MP3 players.

a decrease in the quantity of MP3 players demanded.

The phrase "demand has increased" means that A. a demand curve has shifted to the right. B. there has been a downward movement along a demand curve. C. a demand curve has shifted to the left. D. there has been an upward movement along a demand curve.

a demand curve has shifted to the right.

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is A. a normal good. B. a complement. C. a necessity. D. a neutral good.

a normal good.

At a product's equilibrium price A. any buyer who is willing and able to pay the price will find a seller for the product. B. the federal government will provide the product to anyone who cannot afford it. C. not all sellers who are willing to accept the price will find buyers for their products. D. anyone who needs the product will be able to buy the product, regardless of ability to pay.

any buyer who is willing and able to pay the price will find a seller for the product.

The law of demand implies, holding everything else constant, that A. as the price of bagels increases, the quantity of bagels demanded will decrease. B. as the price of bagels increases, the quantity of bagels demanded will increase. C. as the price of bagels increases, the demand for bagels will decrease. D. as the price of bagels increases, the demand for bagels will increase.

as the price of bagels increases, the quantity of bagels demanded will decrease.

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result A. the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease. B. the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase. C. the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease. D. both the equilibrium price and quantity of MP3 players will increase.

both the equilibrium price and quantity of MP3 players will increase.

A supply schedule A. is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. B. is a table that shows the relationship between the price of a product and the quantity of the product supplied. C. is the relationship between the supply of a good and the cost of producing the good. D. is a curve that shows the relationship between the price of a product and the quantity of the product supplied.

is a table that shows the relationship between the price of a product and the quantity of the product supplied.

The substitution effect of a price change refers to A. the shift of a demand curve when the price of a substitute good changes. B. the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes. C. the movement along the demand curve due to a change in purchasing power brought about by the price change. D. the shift in the demand curve due to a change in purchasing power brought about by the price change.

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

If a firm expects that the price of its product will be higher in the future than it is today A. the firm has an incentive to increase supply now and decrease supply in the future. B. the firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future. C. the firm has an incentive to decrease supply now and increase supply in the future. D. the firm will go out of business.

the firm has an incentive to decrease supply now and increase supply in the future.

The demand for lobster is lower in the spring than in the summer. If the price of lobster is higher in spring than in summer then A. there are more substitutes for lobster in summer than there are in spring. B. consumers' tastes for lobster are greater in spring than in summer. C. the supply of lobster is greater in summer than in spring. D. there is a shortage of lobster in spring and a surplus of lobster in summer.

the supply of lobster is greater in summer than in spring.

Figure 3-3 Refer to Figure 3-3. At a price of $5, A. there would be a shortage of 4 units. B. there would be a scarcity of 4 units. C. there would be a shortage of 6 units. D. there would be a surplus of 4 units.

there would be a shortage of 4 units.

Figure 3-2 Refer to Figure 3-2. If the price is $25, A. there would be a surplus of 200 units. B. there would be a shortage of 200 units. C. there would be a surplus of 300 units. D. there would be a shortage of 300 units.

there would be a surplus of 300 units.

An increase in the equilibrium price for a product will result A. when there is a decrease in supply and an increase in demand for the product. B. when there is a decrease in supply and a decrease in demand for the product. C. when there is an increase in demand and an increase in the number of firms producing the product. D. when the quantity demanded for the product exceeds the quantity supplied.

when there is a decrease in supply and an increase in demand for the product.