CHAPTER 2- Quiz

Assume the demand function fir good X can be written as Qd = 80 - 3Py + 10I, where Px = the price of X, Py = the price of good Y, and I = Consumer income. According to this equation: a. X and Y are complements b. X and Y are substitutes c. a rise in the price of Y would cause the demand for X to decrease d. I is an inferior good

b. X and Y are substitutes

if the price of salmon increases relative to the price of cod, the demand for a. salmon will increase b. cod will increase c. salmon will decrease d. cod will decrease

b. cod will increase

All else constant, as more firms substitute alternative materials, e.g., plastic, for copper, the market price of copper would be expected to: a. increase b. decrease c. cannot be determined with the information given d. stay the same

b. decrease

all else constant, all of the following would cause the demand curve for a good to shift except: a. a change in the number of buyers b. a change in consumer's incomes c. a change in the price of a related goods d. a change in the cost of producing the good

d. a change in the cost of producing the good

Which of the following statement is correct? a. A change in demand or supply can only be caused by a change in price b. a simultaneous decrease in demand and increase in supply will result in an increase in equilibrium price and uncertain effect on quantity c. if price is currently above equilibrium, market adjustments will result in a decrease in price and quantity supplied d. an increase in supply invariably leads to a shortage in the affected market

c. If price is currently above equilibrium, market adjustments will result in a decrease in price and quantity supplied

Which of the following would not cause the supply curve for gasoline to shift? a. a change in the wages paid to gas station attendants b. a change in the number of gas stations c. a change in the incomes of drivers d. A change in the cost of refining oil

c. a change in the incomes of drivers

In the market for French wines, an increase in demand is illustrated by: a. a movement up the demand curve b. a shift of the demand curve to the left c. a shift of the demand curve to the right d. a movement down the demand curve

c. a shift of the demand curve to the right

According to the case for analysis (Demand and Supply in the Copper Industry) in the text, all of the following can lead to a decline in the price of copper except: a. steady production uninterrupted by labor strikes or natural disasters b. an increase in mining of higher grade materials c. a surge in demand from foreign importers d. substitution away from copper to other materials such as aluminum and plastic

c. a surge in demand from foreign importers

In the market for cell phones, all of the following would cause the supply of cell phones to change except: a. an increase in the cost of labor used to produce cell phones b. an improvement in the technology used to produce cell phones. c. an increase in the number of buyers in the market for cell phones d. a change in cell phone producers' expectations

c. an increase in the number of buyers in the market for cell phones

Assume the demand function for good X can be written as Qd = 80 - 3Px - 6Py + 10I, where Px = the price of X, Py is the price of Y and I is consumer income. If the price of Y decreases by 5 dollars, what would the reduction in Px have to be in order to keep the quantity demanded of X unchanged by the change in the price of Y? a. decreased by 2.5 dollars b. decreased by 5 dollars c. decreased by 10 dollars d. decreased by 1 dollar

c. decreased by 10 dollars

"Demand" is best defined as the relationship between: a. the current price of a good and the quantity demanded at that price b. the amount of income someone has and the price he is willing to pay for a good. c. the price of a good and the quantity consumers are willing and able to buy at each price level d. the quantity supplied and the price people are willing to pay for a good

c. the price of a good and the quantity consumers are willing and able to buy at each price level

"Supply" is best defined as the relationship between: a. the quantity supplied and the price people are willing to pay for a good b. the cost of producing a good and the price consumers are willing to pay for it c. the price of a good or service and the quantity supplied by producers at each price during a period of time d. the current price of a good and the quantity supplied at that price

c. the price of a good or service and the quantity supplied by producers at each price during a period of time

All of the following are non-price factors that influence demand except: a. tastes and preferences b. income c. quantity supplied d. the prices of related goods

c. quantity supplied

DSL and broadband internet service would be considered an example of: a. inferior goods b. complementary goods c. substitute goods d. giffen goods

c. substitute goods

A "change in demand" is caused only by a change in the price of the good True False

False

Assume the supply function for good X can be written asQs = -100 + 27Px - 5Py - 1.8Wwhere Px = the price of X,Py = the price of good Y, andW = Wage index for workers in industry X.This equation implies that X and Y are complements in production. true false

False

Assume the supply function for good X can be written asQs = -100 + 27Px - 5Py - 1.8Wwhere Px = the price of X,Py = the price of good Y, andW = Wage index for workers in industry X.This equation implies that X and Y are substitutes in production. true false

True

Which of the following would cause a change in supply, as opposed to a change in quantity supplied, in the market for used homes? a. a decrease in the price of rental housing b. a decrease in the mortgage rates c. an increase in the incomes of home buyers d. an increase in the number of buyers in the market for used homes

a. a decrease in the price of rental housing

If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will: a. increase b. decrease c. cannot be determined d. stay the same

a. increase

Referring to the previous question, all else constant, a 5 unit increase in the wage index would cause: a. quantity supplied to decrease by 9 units and be shown by a leftward shift of the supply curve. b. quantity supplied to decrease by 9 units and be shown by a movement down the supply curve. c. quantity supplied to increase by 9 units and be shown by a movement up the supply curve.

a. quantity supplied to decrease by 9 units and be shown by a leftward shift of the supply curve

In order to import German goods into the United States, U.S. importers must buy those goods with German currency, i.e., Euros. Assume, all else constant, there is a decrease in the price of U.S.-made cars compared to the price of German cars. Based on this information, we can conclude, with certainty, that in the market for Euros (where the price of Euros is measured in dollars), this would cause: a. an increase in the equilibrium price of Euros b. a decrease in the equilibrium price of Euros. c. a decrease in the equilibrium quantity of Euros. d. an increase in the equilibrium quantity of Euros.

b. a decrease in the equilibrium price of Euros.

Referring to the previous question, all else constant, a one unit increase in the price of good Y would cause the quantity demanded of good X to: a. decrease by 5 units b. decrease by 2 unites c. increase by 2 units d. decrease by 1 unit

b. decrease by 2 units

All esle held constant, an increase in foreign imports of cameras would cause the supply of cameras in the United States to: a. cannot be determined with the information given b. increase c. decrease d. stay the same

b. increase

Which of the following is not considered a factor that influences supply? a. production taxes and subsidies b. the number of buyers c. resource prices d. technology

b. the number of buyers

Assume the supply function for good X can be written as Qs = -100 + 27Px - 5Py - 1.8W, where Px = the price of X, Py = the price of good Y, and W = Wage index for workers in industry X. According to this equation: a. each one unit increase in price causes quantity supplied to increase by 73 units b. X and Y are complements in production c. a decrease in wages wouls cause a decrease in the quantity supplied at each price d. X and y are substitutes in production

d. X and y are substitutes in production

A home theater system and an HD television would be considered an example of: a. giffen goods b. inferior goods c. substitute goods d. complementary goods

d. complementary goods

Many people consider hot dogs to be in inferior good. For such people, all else held constant, a decrease in income would cause their demand for hot dogs to: a. cannot be determined with the information given b. stay the same c. decrease d. increase

d. increase

An increase in the number of buyers in the market for LED TVs would cause the market demand curve for LED TVs to: a. stay the same because market demand doesn't depend on the number of buyers b. shift left or right depending on whether the new buyers purchase more or less than existing customers at each price c. shift left d. shift right

d. shift right

Assume the demand function for good X can be written asQd = 80 - 3Px + 2Py + 10Iwhere Px = the price of X,Py = the price of good Y, andI = Consumer income.This equation implies that X and Y are substitutes. True Fals

true

Assume the market for cell phone service is initially in equilibrium. An increase in supply would cause a surplus at the initial equilibrium price. The market adjustment would then involve a decrease in price which would in turn cause quantity demanded to increase and quantity supplied to decrease until equilibrium is reestablished. true false

true