Unit 2 EXAM Prep

A simultaneous increase in demand and decrease in supply would lead to:

uncertain effect on the equilibrium quantity but an increase in the equilibrium price.

Each point on the supply curve shows the:

quantity supplied at that price.

If supply for computer games decreases due to higher prices for labor, but demand for computer games increases, then the equilibrium price change

rises and the change in equilibrium quantity is indeterminate.

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A ____ and the quantity sold ____.

rose; rose

Refer to Table 4-1. Shown are the demand schedules for gourmet ice cream of two individuals and the rest of the market. At a price of $8, the quantity demanded in the market would be:

12

Refer to Figure 5-1. The equilibrium price of butter is:

3$

Refer to the table below. If these three firms represented the entire market, how many mid-sized autos would be supplied at a price of $30,000?

54,000

Refer to Table 5-1. What is the equilibrium price in the example?

7$

Which of the following is the correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied.

Are markets always in equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium.

Which of the following scenarios would prompt producers to supply less now than they otherwise would have?

Producers expecting a higher price in the future

Refer to Figure 5-5. At price PR, what quantity of gasoline will be sold?

Qs

Minimum wage laws have little or no effect in this segment.

Skilled workers

What is the most likely effect of deregulation on the supply curve?

Supply curve will shift to the right

How will a decrease in price tend to affect supply?

Supply will not change.

Which of the following is not held constant when moving along a product's demand curve?

The price of the product itself.

Which of the following is most likely to be an inferior good?

Used clothing.

Refer to Table 5-4. If the government imposes a $2.50 price ceiling:

a 1,200,000 gallon shortage will result.

Ceteris paribus, the fear among travelers created by the 9-11 attacks would have what impact on the market for air travel?

a decrease in equilibrium price and a decrease in equilibrium quantity.

As a result of the decline in the real estate markets, many sellers and builders were very eager to sell their homes. As a result of this greater willingness to sell, we would expect to see:

a decrease in equilibrium price and an increase in equilibrium quantity.

Refer to Table 5-5. If the government were to remove a $3.50 price floor in the milk market, the result would be:

a decrease in price and increase in the quantity of milk demanded.

When the demand and supply of grapes both increase at the same time, we can safely predict that the:

quantity of grapes bought and sold will rise.

All of the following factors will affect the supply of shoes except one. Which will not affect the supply of shoes?

an increase in consumer income

Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit. That change would be described as:

an increase in demand.

An increase in costs associated with additional security measures taken by the airlines is most likely to lead to:

an increase in equilibrium price and a decrease in equilibrium quantity.

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:

an increase in the demand for flour.

Which of the following could be responsible for an increase in the price of wheat?

an increase in the demand for wheat

If both the supply and demand curves shift to the left, then we can conclude that there will be a(n):

decrease in the equilibrium quantity sold.

If the demand for milk is downward sloping, then an increase in the price of milk will result in a(n):

decrease in the quantity of milk demanded.

If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to:

decrease, and the equilibrium price is likely to decrease.

Question 5 1 / 1 point All of the following would shift a product's demand curve except a(n):

increase in the price of the product.

A shortage exists in the market for corn at the prevailing price. The shortage will be eliminated by a price:

increase, increasing the quantity supplied and decreasing the quantity demanded.

The supply of newspapers will decline if:

newsprint becomes more expensive.

A demand curve shows the relationship between price and quantity demanded, "other things remaining constant (ceteris paribus)." The other things that remain constant include all of the following except the:

price of the product.

The difference between a change in quantity demanded and a change in demand is that a change in:

quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations.

An upward-sloping supply curve shows that:

suppliers are willing to increase production of their goods if they receive higher prices for them.

Refer to Figure 5-1. If the current price of butter equals $2, you would expect to find:

that the market is not in equilibrium, and that the quantity demanded is greater than the quantity supplied.

Refer to Figure 5-1. If the current price of butter equals $5, you would expect to find:

that the market is not in equilibrium, and that the quantity supplied is greater than the quantity demanded.

CNN announces that bad weather in Central America has greatly reduced the number of cocoa bean plants, and, as a result, it is expected that the price of chocolate will rise in the near future. As a result:

the current market demand for chocolate will increase.

Assuming that Chinese food and Thai food are substitutes, if P. F. Chang's Chinese Restaurant reduces its prices:

the demand for meals at the Bahn Thai restaurant will decrease.

If the price of tennis rackets were to increase, we would expect:

the demand for tennis balls to decrease.

The quantity of a good bought and sold in a market will be below the equilibrium quantity if:

the market price is either above or below the equilibrium price

When there is an excess quantity supplied of a product at the current price, then:

the price will tend to fall.

When there is an excess quantity demanded of a product at the current price, then:

the price will tend to rise.

The law of demand asserts that:

the quantity of a good that people will buy is inversely related to the product's price.

Assume a price floor is imposed at the current equilibrium price in the market for lettuce. If the demand for lettuce then increases:

the quantity of lettuce supplied will increase.

There is an increase in demand for personal computers at the same time their input costs fall. We would expect that:

the quantity sold will increase, but the effect on price is uncertain.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

the quantity supplied at that price.

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.