Micro 8 Demand and supply Exam

A price floor, such as minimum wage

results in a surplus if the price floor is more than the equilibrium price

The above table shows the demand schedule and supply schedule for chocolate chip cookies. If the price is $4.00 per pound, there is a

shortage of 3 pounds of chocolate chip cookies

The above table shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and equilibrium price for chocolate chip cookies?

4 pounds, $5.00 per pound

The above table shows the demand schedule and supply schedule for chocolate chip cookies. An increase in income results in an increase in the demand for chocolate cookies by an amount of 3 pounds at every price. What are the new equilibrium quantity and equilibrium price?

5 pounds, $6.00 per pound

Which of the following results in a movement along the supply curve of spinach but does not shift the supply curve for spinach?

A rise in the price of spinach

Which of the following is likely to result in a shift in the supply curve for sweaters?

An increase in the price of wool

Which of the following is not a determinant of demand that causes a shift in the demand curve?

Cost of an input

Taxes cause a(n) ____ in the supply curve while subsidies cause a(n) ______ in the supply curve

Decrease, Increase

All the following are examples of external supply shocks except

Decreased demand for a good or service

What happens in the market for airline travel when the price of traveling on public transportation decreases? (hint: airline travel and public transportation are substitutes)

Demand curve shifts to the left (decreases)

What happens in the market for Pepsi when the price of Coca-Cola increases?

Demand curve shifts to the right (increases)

A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of potato chips demanded. The price elasticity of demand for potato chips is

Elastic

A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. The price elasticity of demand for breakfast cereal is

Inelastic

The law of demand states that there is a(n) ______ relationship between price and quantity demanded

Inverse or negative

The price of hot dogs increases, what happens in the market for hot dogs?

Movement along the demand curve

What is the law of supply?

The higher the price, the larger the quantity supplied

In a given market, how are the equilibrium price and the market-clearing price related?

They are the same price

When a price ceiling is imposed in a market

a persistent shortage results

Government intervention would occur under which type of economy

central-command economy or mixed economy

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that sellers are willing and able to sell