Pre-Chapter Questions 2: Chapter 3, Part 1.Assignment

Is the supply curve upward or downward sloping?

upward

A supply curve is ______. Multiple choice question. - a schedule or graph showing the quantity of a good that buyers wish to buy at each price - a schedule or graph showing the quantity of a good that sellers wish to sell at each price

a schedule or graph showing the quantity of a good that sellers wish to sell at each price

what type of graph is depicted by the picture? - demand curve - supply curve

demand curve Reason: Demand curves are downward-sloping with respect to price. supply curve Reason: The curve above is downward-sloping with respect to price, so we know it is a demand curve. Supply curves are upward-sloping with respect to price.

Is a demand curve upward or downward sloping?

downward demand = down

Suppose that as the price of coffee increases, consumers purchase less coffee in part because they can no longer afford to buy as much coffee as they used to. This reduction in the quantity of coffee demanded is known as the _____ of a price change. - income effect - substitution effect

income effect Reason: The income effect captures the change in the quantity demanded of a good that results because a change in the price of a good changes the buyer's purchasing power. substitution effect Reason: The income effect captures the change in the quantity demanded of a good that results because a change in the price of a good changes the buyer's purchasing power.

If the price of butter increases, the quantity of butter demanded will ______. - decrease - increase

- decrease Reason: As price increases, quantity demanded decreases. - increase

A buyer's reservation price is the Multiple choice question. - largest dollar amount the buyer would be willing to pay for a good. - the minimum amount the buyer would be willing to pay for a good. - the actual dollar amount the buyer pays for a good.

largest dollar amount the buyer would be willing to pay for a good. Reason: A buyer's reservation price is the largest dollar amount the buyer would be willing to pay for the good.

In the figure to the right, when the price of milk is $3 per gallon Multiple select question. - buyers would like to buy more than 5,000 gallons of milk per day. - the market is in equilibrium. - the quantity supplied equals the quantity demanded. - suppliers would like to sell more than 5,000 gallons of milk per day.

- buyers would like to buy more than 5,000 gallons of milk per day. - the market is in equilibrium. - the quantity supplied equals the quantity demanded. - suppliers would like to sell more than 5,000 gallons of milk per day.

Suppose that as the price of movie tickets increases, people go to the movies less often and instead rent movies at home. The resulting reduction in the quantity of movies demanded is known as the _____ of a price change. Multiple choice question. - income effect - substitution effect

income effect Reason:The substitution effect captures the changes in the quantity demanded of a good that results because buyers switch into or out of substitutes as the price of the good changes. substitution effect Reason:The substitution effect captures the changes in the quantity demanded of a good that results because buyers switch into or out of substitutes as the price of the good changes.

Given the figure on the right, if the government imposes a price ceiling of $2 per gallon on milk, the quantity of milk demanded will equal - 3000 gal per day - 4000 gal per day - 5000 gal per day - 7000 gal per day The horizontal axis represents quantity (thousands of gallons per day) ranging from 0 through 10 in increments of 1, while vertical axis represents price (dollars per gallon) ranging from 0 through 6 in increments of 1. The data is as follows: The demand curve decreases from (1, 5) to (9, 1) through (3, 4), (5, 3), and (7, 2). The supply curve increases from (1, 1) to (9, 5) through (3, 2), (5, 3), and (7, 4). The curves intersect at (5, 3). Note: All data is approximate.

- 3,000 gallons per day. - 5,000 gallons per day. - 4,000 gallons per day. - 7,000 gallons per day. Reason: The demand curve tells us that when the price of milk is $2 per gallon, the quantity of milk demanded is 7,000 gallons per day.

Given the figure on the right, if the government of Pleasantville makes it unlawful to charge more than $500 per month for a one-bedroom apartment, then this would result in an excess Multiple choice question. - supply of 20,000 apartments per month. - demand of 20,000 apartments per month. - supply of 10,000 apartments per month. - demand of 10,000 apartments per month. The horizontal axis represents quantity (thousands of units per month) ranging from 0 through 50 in increments of 5, while vertical axis represents price (dollars per unit) ranging from 0 through 1500 in increments of 250. The data is as follows: The demand curve decreases from (5, 1250) to (45, 250) through (15, 1000), (25, 750), and (35, 500). The supply curve increases from (5, 250) to (45, 1250) through (15, 500), (25, 750), and (35, 1000). The curves intersect at (25, 750). Note: All data is approximate.

- supply of 20,000 apartments per month. - demand of 20,000 apartments per month. Reason:When the price is $500, quantity demanded is 35,000 units per month, and the quantity supplied is 15,000 units per month, implying an excess demand of 20,000 units per month. - supply of 10,000 apartments per month. - demand of 10,000 apartments per month.