HW 2 (macro)

Which of the following will result in an increased price of milk?

A shift to the right of the demand curve for milk.

The concept of the invisible hand is important because:

All of the above (It underlies belief in free markets, it suggests that market systems are efficient, AND it leads to laissez faire).

There is equilibrium in the market when:

All of the above are true (There is no shortage, there is no surplus, AND price is established where the supply curve and the demand curve intersect).

Which of the following always results in an increase in price and quantity:

An increase in demand with no change in supply.

It's certain that the equilibrium price will fall when:

The supply curve shifts to the right and the demand curve shifts to the left.

In sketching market supply and demand curves, which of the following is true?

The vertical axis is price, the horizontal axis is quantity, the upward sloping curve is supply, and the downward sloping curve is demand.

A maximum price set below the equilibrium price is a:

Price ceiling.

If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is _____ cents.

70.

Which of the following would result in a MOVEMENT ALONG the demand curve?

A change in costs of production.

The primary difference between a change in demand and a change in the quantity demanded is:

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.

Which of the following would not change the demand for automobiles?

A change in the cost of steel.

Which of the following would shift the demand curve for new textbooks to the right?

An increase in college enrollments.

A negative relationship between the quantity demanded and price is called the law of _____.

Demand.

Price ceilings which lead to shortages will impose costs on society because they:

Do all of the above (Will lead to long waiting lines, may result in in black market prices which are higher than the market-determined price would be, and lead to a smaller quantity offered on the market).

Those who make economic policy concerning price controls often do so in order to:

Establish a more equitable result based on normative judgments.

According to the idea of laissez faire,

Governments should not intervene in markets without a good economic reason.

A decrease in the price of eggs, all other things unchanged, will result in a(n):

Greater quantity of eggs demanded.

A shift of a demand curve to the right, all other things unchanged, will:

Increase equilibrium price and quantity.

The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing handheld calculators improves. Which panel best describes how this will affect the market for handheld calculators:

Panel A.

The exhibit shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel best describes how this will affect the market for chocolate?

Panel C.

In the 'standard' supply and demand graph, which of the following is correct:

Quantity goes on the horizontal axis while price goes on the vertical axis.

If economists say, "the price is too high," they mean that:

Quantity supplied is greater than quantity demanded.

If demand and supply both shift to the right, then:

Quantity will go up, but price could go up, down, or stay the same.

Supply is best defined as the:

Relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity.

Without rent controls, the equilibrium rent is _____ and the equilibrium quality is _____.

Rent 2; Q 2.

A market is a set of arrangements where:

Buyers and sellers can get together and buy and sell.

If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is _____ bags per month.

25.

The primary difference between a change in supply and a change in the quantity supplied is:

A change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.

The equilibrium price in a market is established subject to the all other things unchanged condition (ceteris paribus) and, therefore, very well may change due to:

A change in the price of resource inputs used to produce the good.

A decrease in demand, with no change in supply, will lead to _____ in equilibrium quantity and _____ in equilibrium price.

A decrease; a decrease.

If a demand curve shifts to the left, then:

A lower equilibrium price and quantity would result.

If the government sets out to help low-income people by establishing a maximum amount for rent:

A price ceiling has been set and a shortage of rental units may occur.

Demand is defined as:

A schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.

A decrease in supply means:

A shift to the left of the entire supply curve.

A decrease in the price of a good will, all other things unchanged, result in:

An increase in the quantity demanded.

It is true that the equilibrium quantity will always go up if supply:

And demand both increase.

The relationship between the value and price of a stock suggests that:

Both A and B are true (The equilibrium price of a stock strikes a balance between those who think the stock is worth more and those who think it's worth less at the current price AND it is the market's best guess regarding the expected value of the company's future profits).

Price controls:

Can result in inequitable outcomes.

According to the concept of the invisible hand:

Competitive free market systems are efficient under certain conditions.

The bulk of a nation's output is produced by:

Corporations.

A market shortage occurs if the quantity:

Demanded is greater than the quantity supplied.

An increase in demand, all other things unchanged, will result in a(n) _____ in the equilibrium price and a(n) _____ in the equilibrium quantity.

Increase; increase.

Dramatic reductions in costs of producing computers in the 1980's and equally dramatic increases in demand for computers resulted in:

Increases in quantity of computers and reductions on the price of computers.

A price ceiling will have no effect if:

It is set above the equilibrium price.

A ceiling price set in the policy of rent controls:

May result in some people who rent out units to leave the business because they cannot cover costs.

The U.S. economy can be characterized as:

Mixed economy.

In a competitive market, when price is below the equilibrium price, there will be pressure for the price is:

Rise.

A supply curve that is upward sloping means that:

Suppliers will want to sell more at higher prices.

The intersection of the supply and demand curves indicates:

The equilibrium solution in the market.

A persistent shortage may occur if:

The government imposes a price ceiling.