Exam 2: chapter 3

The rationing function of prices referred to the

Capacity of a competitive market to equalize quantity demanded and quantity supplied

When in economist says that the demand for a product has increased, that means that:

Consumers are now willing to purchase more of this product at each possible price

Suppose an excise tax is Imposed on product ask. We except this tax to:

Decrease the demand for complementary good Y and increase the demand for substitute product Z

Suppose that in each four successive years producers sell more of their product at a lower price. This could be explained

In terms of a stable demand curve and increasing supply

"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." " The price of corn rises and falls in response to the changes in supply and demand." In which of these two statements are the demand and supply being used correctly

In the second statement

Which of the following will cause a decrease in the market equilibrium price and an increase in the equilibrium quantity

Increase in supply

When the price of oil declined significantly, the price of gasoline also declines. The latter occurs because of a(n)

Increase in the supply of gasoline

Other things equal, and excise tax on a product will

Increase its supply

A government subsidy to the producers of a product:

Increase product supply

Recent hurricane destroys have to orange crop. This change in economic circumstances would be to:

Increase the price by decrease the quantity of oranges

College students living off campus frequently consume large amounts of Ramen noodles and boxed macaroni and cheese when they finish school and start careers their consumption of both goods frequently declines. This suggests that Ramen noodles and boxed macaroni and cheese are:

Inferior goods

A market:

Is an institution that brings together buyers and sellers

The upward slope of the supply curve reflects the:

Law of supply

Equilibrium price and quantity in a market usually produces allocative efficiency because:

Marginal benefit and marginal cost or equal at that point

If in economy produces its most want to good and uses outdated production methods, it is:

Not achieving productive efficiency

And excise tax placed on gasoline would

Not change the demand for gas and decrease the supply of gas

The law of demand states that, other things equal:

Price and quantity demanded are inversely related

Assuming that heating oil and natural gas are substitutes for each other. If the supply of natural gas increases due to new discoveries that's lowering the price of natural gas what happens to that market price and quantity of heating oil?

Price decreases and quantity decreases

The law of supply indicates that, other things equal:

Producers will offer more of a product at higher prices than at low prices

Allocative efficiency is concerned with

Producing the combination of goods most desired by society

Which of the following statements is true about productive and Allocative efficiency

Realizing Allocative efficiency implies that productive efficiency has been realized

Suppose that tacos and pizza or substitutes, and that soda and Pizza are complements. We would expect an increase in the price of pizza to:

Reduce the demand for soda and increase the demand for tacos

Assume a drought in the Great Plains reduce the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are consumers substitute for bread, we would expect the price of week to

Rise, The supply bread to decrease, in the demand for potatoes to increase

An improvement in production technology will:

Shift the supply curve to the right

A leftward shift of a product supply curve might be caused by

Some firms leaving an industry

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:

Substitute goods in the higher price for oil increase the demand for natural gas

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

Supply curve for cigarettes leftward

Which of the following would most likely increase the demand for gasoline?

The exception by consumers that gasoline prices will be higher in the future

AlLocative efficiency involves determining:

The mix of output that will maximize societies satisfaction

In moving along a supply curve, which of the following is not held constant?

The prices of the product for which the supply curve is relevant

Allocative efficiency refers to:

The production of the product mix most wanted by society

At the point where the demand and supply curve for product intersect:

The quantity that consumers want to purchase in the amount producers choose to sell are the same

If all the firms in a competitive industry are legally required to meet new regulations that increase their cost of production:

The supply of the will decrease

Productive efficiency refers to

The use of the least-cost Method of production

At the equilibrium price:

There are no pressures on price to either rise or fall

Assuming conventional supply and demand curves, changes in the determinants of both supply and demand will generally

Alter both equilibrium price and quantity

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that:

Amount of oranges that will be available at various prices has declined

Rent controls creates a shortage of rental apartments. Suppose city facing such a shortage of rental apartments illuminates rent control. Which of the following is most likely to occur?

An increase in rent in an increase in the number of apartments supplied

A firm supply curve is upsloping because:

Beyond some point of the production costs of additional units of output will rise

In economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:

Bicycles are normal goods

In the past few years, the demand for donuts has increased greatly. This increase in demand might best be explained by

A change in buyers taste

Which of the following will not cause the demand for a product k to change

A change in the price of product k

If the demand for a steak( a normal good) shifts to the left, the most likely reason is that:

A consumer income have fallen

If Producers must obtain higher prices than before to produce a given level of output, then the following has occurred:

A decrease in supply

If two goods are complements:

A decrease in the price of one will increase demand for the other

Economist use the term demand you refer to

A scheduled of various combination of market prices and amount/qualities demanded

Markets, viewed from the perspective of the supply and demand model:

Assume many buyers and sellers of a standardized product

A recent study found that increase in the federal tax on beer (and thus an increase in the price of beer)demand for marijuana. We can conclude that:

Beer and marijuana are complementary goods

The market demand for a product will increase if:

Buyers purchase more of the product at each price which might exist

A market is in equilibrium:

If the amount producers want to sell is equal to the amount consumers want to buy

Which of the following is most likely to be an interior good?

Used clothing

Increasing marginal cost of production explains:

Why the supply curve is upsloping