LC3: LearningCurve - Ch. 3: Supply and Demand

True or False: A technological improvement in the production of a good causes a decrease in quantity. This is _____.

False

True or False: If the number of producers increases, market supply will decrease. This is _____.

False

True or False: If the price of an input decreases, supply increases and the equilibrium price increases. This is _____.

False

True or False: If the quantity demanded is less than the quantity supplied there is a shortage. This is _____.

False

A schedule showing the quantity of a product that producers are willing to sell at each possible price is known as a _____ schedule.

Supply

Suppose that corn farmers are considering how much corn they should sell at harvest. Everyone expects that next year's corn harvest to be much worse than this year's due to weather. Farmers sell corn throughout the year in a competitive market. They can sell corn immediately or wait for the prices to change. If they think the weather will be bad next year, what will happen in the market for corn due to the farmers' actions?

The current supply will decrease.

Assume that the health insurance premiums of auto workers decrease. What will happen in the market for automobiles?

The equilibrium price will decrease and the equilibrium quantity will increase.

What happens if a sports team has a surplus of tickets to one night's game?

The price will fall.

Suppose Jeremy hears a news story reporting that the price of sky-diving lessons has gone up. According to the law of supply, what would he expect as a result?

The quantity of skydiving lessons supplied will increase.

Suppose the price of sprinkler systems increases. Which statement best describes the response that can be expected with regard to supply?

The quantity of sprinkler systems supplied will increase.

If skim milk and cream are complements in production, when the price of cream decreases, what happens in the market for skim milk?

The supply of skim milk decreases.

Suppose that the number of bookstores selling textbooks in a university town increases. What will happen in the market for textbooks?

The supply will shift to the right.

True or False: A technological improvement in the production of a good causes a decrease in price. This is _____.

True

A market with many buyers and sellers is:

a competitive market.

Suppose that vegetable farmers decide to sell fewer beans at each possible price. This represents _____ and is shown by _____.

a decrease in supply; a shift of the supply curve to the left

According to the law of demand:

a decrease in the price of cotton would cause an increase in the quantity of cotton demanded.

Suppose that apples and grapes are substitutes. Which change will decrease the demand for grapes?

a decrease in the supply of apples

According to the law of demand:

an increase in quantity demanded can arise from a decrease in price.

Competitive markets:

are easier to model than other markets.

If the price of an input increases, the quantity supplied:

at any given price will be less than before.

The demand curve for a normal good will shift to the left if there is a(n):

decrease in income

According to the law of supply, a decrease in the price of crackers will:

decrease the quantity of crackers supplied.

If the price of an input increases, supply:

decreases and the supply curve shifts to the left.

Since price and quantity supplied are directly related, the supply curve:

has a positive slope.

The downward slope of the demand curve shows that a(n):

increase in price causes a decrease in quantity demanded.

Shifting the supply curve to the right represents a(n):

increase in supply.

According to the law of supply, an increase in the price of petroleum will:

increase the quantity of petroleum supplied.

Suppose that the number of students enrolled at Big University doubles. In the local market for college textbooks, demand will:

increase.

If the price of an input decreases, supply:

increases and the supply curve shifts to the right.

The slope of the demand curve:

is negative.

According to the law of demand as:

price decreases, the quantity demanded increases.

According to the law of demand as:

price increases, the quantity demanded decreases.

The supply curve has a positive slope because:

producers are willing to sell more at higher price.

According to the law of demand, when the price of a product decreases:

quantity demanded increases.

If the price of e-book textbooks increases from $50 to $55, the:

quantity demanded of e-books will decrease.

If the price of e-book textbooks decreases from $60 to $55, the:

quantity demanded of e-books will increase.

According to the law of demand, if the price of pencils increases from $1 to $1.25, the:

quantity demanded of pencils will decrease.

The supply curve for lemonade has a positive slope, because as the price increases, the:

quantity of lemonade supplied increases.

The amount of a good that producers are willing to sell at some specific price is known as:

quantity supplied.

If the American Medical Association announces that eating a candy bar a day will decrease life expectancy by 10 years, the demand for candy bars will:

shift to the left.

A decrease in demand is indicated by:

shifting the entire demand curve to the left.

An improvement in production technology for a good:

shifts the supply curve to the right.

Which of the following is a competitive market?

small farmers in Kansas selling their wheat

If the price of an input increases:

supply decreases and the equilibrium price increases.

If the American Medical Association reports that drinking six cups of coffee per day prevents cancer:

the demand for coffee will increase.

According to the law of demand, when the price of a product increases:

the quantity demanded decreases.

A competitive market is a market in which:

there are many buyers and sellers.

Suppose that the graph represents the demand and supply of bicycles in a small town. Quantity of bicycles (per day) along the horizontal axis and Price of bicycles along the vertical axis. The demand curve has a negative slope, which starts at 2 bicycles, 400 dollars and ends at 8 bicycles, 100 dollars. The supply curve has a positive slope, which starts at 2 bicycles, 100 dollars and ends at 8 bicycles, 400 dollars. The curves intersect at 5 bicycles, 250 dollars. There is a surplus of _____ bicycles if the price is $300.

2

Suppose that the graph represents the demand and supply of bicycles in a small town. Quantity of bicycles (per day) along the horizontal axis and Price of bicycles along the vertical axis. The demand curve has a negative slope, which starts at 2 bicycles, 400 dollars and ends at 8 bicycles, 100 dollars. The supply curve has a positive slope, which starts at 2 bicycles, 100 dollars and ends at 8 bicycles, 400 dollars. The curves intersect at 5 bicycles, 250 dollars. There is a shortage of two bicycles if the price is, in numerals, $_____.

200

Suppose that the graph represents the demand and supply of bicycles in a small town. Quantity of bicycles (per day) along the horizontal axis and Price of bicycles along the vertical axis. The demand curve has a negative slope, which starts at 2 bicycles, 400 dollars and ends at 8 bicycles, 100 dollars. The supply curve has a positive slope, which starts at 2 bicycles, 100 dollars and ends at 8 bicycles, 400 dollars. The curves intersect at 5 bicycles, 250 dollars. There is a surplus of _____ bicycles if the price is $350.

4

Suppose that the table represents demand and supply for lobsters in a competitive market. Price, Quantity demanded, and Quantity supplied reads as follows: Price: 25 dollars; Quantity demanded: 0; Quantity supplied: 1000. Price: 20 dollars; Quantity demanded: 300; Quantity supplied: 800. Price: 15 dollars; Quantity demanded: 600; Quantity supplied: 600. Price: 10 dollars; Quantity demanded: 900; Quantity supplied: 400. Price: 5 dollars; Quantity demanded: 1200; Quantity supplied: 200. Using a numeral/numerals, if the price is $_____, there is a shortage of 1000 lobsters.

5

Suppose that the graph represents the demand and supply of bicycles in a small town. Quantity of bicycles (per day) along the horizontal axis and Price of bicycles along the vertical axis. The demand curve has a negative slope, which starts at 2 bicycles, 400 dollars and ends at 8 bicycles, 100 dollars. The supply curve has a positive slope, which starts at 2 bicycles, 100 dollars and ends at 8 bicycles, 400 dollars. The curves intersect at 5 bicycles, 250 dollars. There is a surplus of _____ bicycles if the price is $400.

6