CH4

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises.

Pizza is a normal good if the demand

for pizza rises when income rises.

A likely example of substitute goods for most people would be

pencils and pens.

A demand schedule is a table that shows the relationship between

price and quantity demanded.

Which of the following changes would not shift the demand curve for a good or service?

A change in the price of the good or service.

Which of the following is not an example of a market?

A small town has only one seller of electricity.

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

Both the equilibrium price and quantity would increase.

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Buyers would not be willing to buy as much as before at each relevant price.

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

False

If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

False

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

False

Assume Lianna buys coffee beans in a competitive market. It follows that

Lianna cannot influence the price of coffee beans even if he buys a large quantity of them.

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Price would fall, and the effect on quantity would be ambiguous.

Which of the following would shift the supply of Green Bay Packers football jerseys to the left?

The cost of the fabric used to make the jerseys increases.

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

The equilibrium price would increase, and the equilibrium quantity would decrease.

Which of the following events would cause the price of oranges to fall?

The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

The price of olives rises.

Which of the following is not a determinant of the demand for a particular good?

The prices of the inputs used to produce the good

The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result, which of the following statements is not true?

There is a shortage of blue jeans at the $30 price.

Which of the following is not a characteristic of a perfectly competitive market?

There is no free entry or exit.

Supply and demand together determine the price and quantity of a good sold in a market.

True

The actions of buyers and sellers naturally move markets toward equilibrium.

True

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

True

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks.

A group of buyers and sellers of a particular good or service is called

a market.

If the demand for a good falls when income falls, then the good is called

a normal good.

If a surplus exists in a market, then we know that the actual price is

above the equilibrium price, and quantity supplied is greater than quantity demanded.

If muffins and bagels are substitutes, a higher price for bagels would result in

an increase in the demand for muffins.

A competitive market is a market in which

no individual buyer or seller has any significant impact on the market price.

Equilibrium quantity must decrease when demand

decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

Equilibrium price must decrease when demand

decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.

Two goods are substitutes when a decrease in the price of one good

decreases the demand for the other good.

Two goods are complements when a decrease in the price of one good

increases the demand for the other good.

The law of supply states that, other things equal, when the price of a good

rises, the quantity supplied of the good rises.

If Miguel expects to earn a higher income next month, he may choose to

save less now and spend more of his current income on goods and services.

A monopoly is a market with one

seller, and that seller sets the price.

The quantity supplied of a good is the amount that

sellers are willing and able to sell.

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

supply of Ashley's bread will increase.

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease.

If something happens to alter the quantity demanded at any given price, then

the demand curve shifts.

If the supply of a product increases, then we would expect equilibrium price

to decrease and equilibrium quantity to increase.

The quantity demanded of a good is the amount that buyers are

willing and able to purchase.