Macro Econ Chapter 4

Jamal is an engineer working at a large lithium-ion battery producer. He recently made a breakthrough causing the production cost of lithium-ion batteries used in smartphones to go down. In the market for smartphones, this innovation will cause the equilibrium quantity to _____ and the equilibrium price to _____.

rise; fall

Which of these BEST describes a planned economy?

A country's prime minister decides that she knows what is best for her country, and dictates all factors of production for her nation.

How do you summarize the behavior of many individual buyers?

A downward-sloping demand curve

Why is it that water is so cheap when it's essential to life?

Because although the benefit is great, the cost of production is low.

A dust storm destroys the majority of a farmer's peanut crop, causing him to raise the price of his peanut butter. What kind of shift does this create in the market for jelly, a complement to peanut butter?

Decrease in demand

Malik is a local politician running for governor in his state. What role does Malik play in the market for votes?

Demander

Krishan goes to a local bank to make a deposit in his savings account. While there, he considers the principles of economics that he has been learning at the university. He concludes that in this situation he is a supplier of credit. How is this so?

He is supplying the bank with his savings, which the bank will in turn lend out to other borrowers.

A wildly popular but aging rock band announces that their upcoming tour will be the last one before they retire. What effect will this likely have in the market for this band's concert tickets?

Increase in demand

A guitar manufacturer finds a cheaper source for wood in the production of their electric guitars. During this time, a sharp decrease occurs in the popularity of rock music in favor of electronic dance music created using computers. What effect will this have on price and quantity?

Price falls; the change in quantity is unknown

There is a decrease in supply followed by a decrease in demand. What effect will this have on price and quantity?

Quantity will decrease, but the change to price is unknown.

Marco owns a shoe store. He recently got an exclusive pair of shoes that he decides to sell for $300 when all other vendors are selling them for $250. Marco is surprised when nobody comes to buy the shoes from him. What situation has Marco created?

a surplus

All of these factors shift the demand curve EXCEPT: (a: prices of complements and substitutes. b:productivity. c:expectations. d: the number and type of consumers.)

b

Julie's family is preparing for their Fourth of July cookout, so they head to the local grocery store. Among the pandemonium they are able to obtain everything on their shopping list, including hot dogs and hamburgers. In the market for hamburgers, the Fourth of July creates an increase in the _____ for hamburger and a(n) _____ in the equilibrium price and quantity of hamburgers.

demand; increase

An increase in supply holding demand constant creates a decrease in:

equilibrium price.

When demand in the market is high, price is _____.

high

Movement along the demand curve due to a change in price is referred to as a change in _____.

quantity demanded

In the market for grades, the professor is on the _____ side.

supply

Which of these BEST describes a market economy?

due to lower labor costs, many manufacturers offshore their work force leading to the loss of many local jobs. (The manufacturing companies are responding to incentives around price (wages in a labor market) to decide where and how to produce goods which is an example of a market activity.)