Microeconomics Chapter 3 Part 2
The change in the price of a good leads to a change in ________, which leads to a ________.
quantity supplied; movement along a supply curve
The amount of excess supply is
4
Two normal goods cannot be substitutes for each other
False
This market will be in equilibrium if the price per pizza is
$9
The price of hard drives used in the manufacturing of laptop computers has risen. This will lead to ________ laptop computers.
A decrease in the supply of
The diagram to the right illustrates a supply curve. The development of the supply curve will be studied when you know a little more about costs. For now, assume that as price increases, revenues increase, and, ceteris paribus, profits rise. Therefore, firms will supply a greater quantity. The supply curve depicts the specific relationship between price and quantity supplied, known as the law of supply. How do economists define the law of supply?
A positive relationship between quantity supplied and price.
A change in quantity supplied is reflected by a shift of the supply curve.
False
A shift of the supply curve is caused by a change in a good's own price.
False
When quantity demanded exceeds quantity supplied, price tends to fall.
False
A decrease in quantity supplied is represented by a movement from
Point B to Point C along supply curve Upper S 2S2.
A shift in supply causes the price of a good to fall. The shift must have been an increase in supply
True
An increase in the wage rate of steel workers will reduce the supply of steel.
True
Quantity supplied is determined by how much producers are willing and able to produce.
True
The market supply of a product is the sum of all the individual quantities of the product supplied at each price.
True
When quantity supplied exceeds quantity demanded, price tends to fall.
True
Assume hamburgers are a normal good. An increase in income will cause a movement from:
Upper D 1D1 to Upper D 2D2
An increase in the number of cattle ranchers will cause a movement from:
Upper S 2S2 to Upper S 1S1.
The supply curve for hula hoops shifts from Upper S 0S0 to Upper S 1S1. This could be caused by
a decrease in the number of firms selling hula hoops.
If the price of chili increases, there will be ________ of chili cheese fries.
a decrease in the supply
If the price per pizza is $12, the price will
decrease because there is an excess supply in the market.
Refer to the information provided in the figure at right to answer the question that follows. A movement from Point A to Point B on supply curve Upper S 2S2 would be caused by a(n)
decrease in the demand for pizza
At a price of $30, there is an excess
demand of 450 sunglasses.
If the current price of a product is below the market equilibrium price, there is ________ of this product
excess demand, or a shortage
If the price per pizza is $15, there is a(n)
excess supply of 600 units.
If the current price of a product is above the market equilibrium price, there is ________ of this product.
excess supply, or a surplus
If this market is unregulated and the price is currently $90, you would expect that the price of sunglasses would
fall to $60, where quantity demanded equals quantity supplied
An increase in the price of inputs needed to produce a product will, ceteris paribus, result in a
leftward shift of the supply curve.
Ceteris paribus, if the cost of producing orange juice increases, the equilibrium price of orange juice will ________ and the equilibrium quantity of orange juice will ________.
increase, decrease
Refer to the information provided in the figure at right to answer the question that follows. An increase in the price of pizza sauce will cause a movement from Point B on supply curve Upper S 2S2 to
supply curve Upper S 1S1.
A decrease in the wage rate of pizza makers will cause a movement from Point B on supply curve Upper S 2S2 to
supply curve Upper S 3S3.
Refer to the information provided in the figure at right to answer the question that follows. A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Point B on supply curve Upper S 2S2 to
supply curve Upper S 3S3.
At a price of $90, there is an excess
supply of 450 sunglasses.
For a firm that wishes to maximize profits, its decision about what quantity of output to supply depends on all of the following except
the demand for the product.
A frozen food manufacturer can produce either pizzas or calzones. As the result of an increase in the price of calzones, the firm produces more calzones and fewer pizzas. An economist would explain this by saying
there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza.
Equilibrium is the condition that exists
when quantity demanded equals quantity supplied.
The market for sunglasses is in equilibrium at a price of _____ and a quantity of _____ sunglasses.
$60; 450
Ceteris paribus, if the price of Pepsi increases, the equilibrium price of Coca-Cola will ________ and the equilibrium quantity of Coca-Cola will ________.
increase; increase
