Micro Chapter 4

An increase in quantity demanded is a shift in the entire demand curve. a) true b) false

b) false

A decrease in the supply of milk will lead to a decrease in the QUANTITY DEMANDED of milk. a) true b) false

a) true

An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity? a) The equilibrium price decreases; the change in the equilibrium quantity is uncertain. b) The equilibrium price decreases; the equilibrium quantity increases. c) The equilibrium price increases; the change in the equilibrium quantity is uncertain d) The equilibrium price increases; the equilibrium quantity decreases.

c) the equilibrium price increases; the change in the equilibrium quantity is uncertain

After a hurricane in Florida destroys half of the orange crop, economists predict: a) an increase in both orange prices and orange sales. b) a decrease in both orange prices and orange sales. c) an increase in orange prices and a decrease in orange sales. d) a decrease in orange prices and an increase in orange sales.

c) an increase in orange prices and a decrease in orange sales

An increase in supply and a decrease in demand occur in a market. What happens to the equilibrium price and quantity? a) The equilibrium price decreases; the change in the equilibrium quantity is uncertain. b) The equilibrium price decreases; the equilibrium quantity increases. c) The equilibrium price increases; the change in the equilibrium quantity is uncertain. d) The equilibrium price increases; the equilibrium quantity decreases.

a) the equilibrium price decreases; the change in the equilibrium quantity is uncertain

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied, at the given price. a) true b) false

a) true

An increase in quantity demanded is a movement along a fixed demand curve caused by a shift in the supply curve. a) true b) false

a) true

A free market achieves an equilibrium price and quantity due to: a) the combined actions of buyers and sellers. b) increased competition among sellers. c) government regulations placed on market participants. d) buyers' ability to affect market outcomes

a) the combined actions of buyers and sellers.

A(n) ______ causes the equilibrium price to ______ and equilibrium quantity to ______. a) decrease in supply; rise; fall b) decrease in demand; fall; rise c) increase in supply; rise; rise d) increase in demand; rise; fall

a) decrease in supply; rise; fall

An increase in demand causes a: a) temporary shortage at the old equilibrium price and a higher new equilibrium price and quantity. b) permanent shortage, leaving the equilibrium price and quantity unchanged. c) temporary surplus at the old equilibrium price and a lower equilibrium price and quantity. d) temporary shortage at the old equilibrium price, a higher new equilibrium price, and a lower new equilibrium quantity.

a) temporary shortage at the old equilibrium price and a higher new equilibrium price and quantity

An increase in supply causes a temporary surplus at the old equilibrium price. a) true b) false

a) true

An early frost in the vineyards of Napa Valley would cause a(n): a) increase in the demand for wine, increasing price. b) increase in the supply of wine, decreasing price. c) decrease in the demand for wine, decreasing price. d) decrease in the supply of wine, increasing price.

d) decrease in the supply of wine, increasing price

A demand curve shows the relationship between: a) quantity demanded and quantity supplied, which are positively related. b) quantity demanded and quantity supplied, which are negatively related. c) price and quantity demanded, which are positively related. d) price and quantity demanded, which are negatively related.

d) price and quantity demanded, which are negatively related

A decrease in demand for a good will lead to a decrease in the price of the good, but an increase in the quantity supplied. a) true b) false

b) false

A decrease in supply raises the price of a good, but it also decreases the quantity demanded, which lowers the price of a good. The net effect on price is ambiguous. a) true b) false

b) false

A market shortage can be defined as a situation in which the quantity supplied in a market is greater than the quantity demanded, at the given price. a) true b) false

b) false

An increase in demand causes an increase in quantity supplied, which causes a decrease in price. a) true b) false

b) false

The Arab Oil Embargo of 1973, the Iranian Revolution of 1979, and the Gulf War of 1991 all affected oil prices by: a) increasing the demand for oil. b) reducing the supply of oil. c) reducing the demand for oil. d) increasing the supply of oil.

b) reducing the supply of oil