Chapter 3 Econ
Which of the following would cause a decrease in the demand for fish?
A decrease in the price of chicken, a substitute for fish.
Which of the following is consistent with the law of demand?
A doubling of the price of salt led to a 5 percent drop in the quantity of salt purchased.
Which of the following will cause an outward (rightward) shift in supply?
A technological improvement.
Which of the following will NOT affect the supply of trucks?
NOT AFFECT-> a decrease in the price of trucks AFFECT-> an increase in the price of steel an increase in the productivity of auto workers an increase in the productivity of truck factories
Suppose that at first the price of a bag of coffee is $10 and the price of a box of tea is $6. Then, the price of a bag of coffee changes to $20 and the price of a box of tea changes to $14. What has happened the money prices and relative prices of these two goods?
The money price of a bag of coffee and a box of tea have risen and the relative price of a bag of coffee has fallen while relative price of a box of tea has risen
Last year, the price of steak was $4 per pound and the price of salmon was $5 per pound. This year, the price of steak is $6 per pound and the price of salmon is $7 per pound. All other things equal, and assuming that David purchased both items before, what would you expect to happen to his purchases of steak (relative to salmon) this year?
The relative price of steak has increased, so David would be expected to purchase less.
Consider the market for laptop computers. Click on the graph to the right to determine how the following event will impact this market. Do this by illustrating the event on the graph and then assess its impact on the equilibrium quantity and the market price. Event: The number of manufacturers of laptop computers increases.
The supply increases, causing the equilibrium quantity to rise and the market price to fall.
Which of the following is true of the activities of ticket scalpers?
These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels.
All of the following will decrease the supply of airline flights except
WRONG-> a technological change that makes airplanes safer and more fuel-efficient. CORRECT-> an increase in the salaries of pilots. a reduction in the number of airline companies offering service. a rise in the price of jet fuel.
All of the following pairs of goods are substitutes except
WRONG-> we observe the price of bacon increases and the demand for eggs decreases. -> THESE ARE CORRECT we observe the price of tennis racquets decreases and the demand for golf clubs decreases. we observe the price of automobiles decreases and the demand for public transit decreases. we observe the price of coffee increases and the demand for tea increases.
All of the following pairs of goods are complements except
WRONG-> we observe the price of coffee decreases and the demand for tea decreases. THESE ARE CORRECT-> we observe the price of tennis racquets increases and the demand for tennis shoes decreases. we observe the price of bacon decreases and the demand for sausage increases. we observe the price of automobiles decreases and the demand for tires increases.
Given a good sold in a competitive market, if the price of an input used to produce that good increases, it will lead to
a decrease in supply
an increase in demand occurs when
a demand curve shifts to the right
The law of supply states that other things being equal,
as price increases, quantity supplied increases.
The law of supply states that
as price increases, quantity supplied increases, all other things equal.
According to the example in the book, medical research has shown that grapefruit juice can adversely affect the effectiveness of certain medications. This is likely to affect the demand for grapefruit because According to the same example in the book, medical research has shown that grapefruit juice can reduce the effectiveness of certain medications. However, there is also evidence that grapefruit consumption can lower cholesterol in young people. The net effect on demand from these two findings
people will buy less grapefruit because their tastes and preferences have changed. cannot be determined because they have opposite effects on demand.
Which of the following will cause an outward (rightward) shift in the supply curve?
Technological progress
Hospital Room (1 day) $300----------$325 Hotel Suite (1 night) $400----------$425
The money prices of both goods increased, the relative price of hospital rooms increased, and the relative price of hotel suites decreased.
Which of the following good is an inferior good?
When consumer income increases, the demand for eggs decreases.
Another term for the equilibrium price is
market clearing price
Which of the following would cause an increase in the market supply of drones?
an increase in the number of firms making drones
If a bottled of soda and bottled juice are substitutes, when the price of the soda rises,
demand for bottled juice rises.
The relative price of a good is that price
expressed in terms of the price of another good.
A demand schedule
is only given for a time period
A shortage will occur when
the price is below the market clearing level.
Other things being equal, the relationship between price and quantity supplied is
positive
At the market equilibrium price,
quantity demanded equals quantity supplied.
A per-unit government tax on producers of a good tends to
reduce the supply of the good
The price of one product in terms of another commodity is called its
relative price
Which of the following does NOT cause a shift in demand?
Change in the price of the good
If the demand and supply curves increase (shift outward) by identical proportions then What if the increase in demand were larger than the increase in supply? What if the increase in demand were smaller than the increase in supply?
equilibrium price stays the same and quantity rises. The equilibrium price and quantity increase. Equilibrium price falls and quantity rises.
Which of the following factors will lead to a shift in the demand curve?
Changes in consumers' tastes and preferences
Which of the following is consistent with the law of supply?
An increase in the market price of MP 3 players causes an increase in the production of MP 3 players.
According to the law of supply, price and quantity are________ related. When prices increase, the quantity supplied________ .
Directly increases
The law of supply states that there is a_________ relationship between the price and _________ Thus, as the price increases,_______ According to the law of supply, as the price of the good increases, it causes________
Positive the quantity supplied the quantity produced by firms increases a movement upward along the supply curve.
Which of the following is an implication of the law of supply? The law of supply then implies that a___________the supply curve occurs due to a change in market price.
Producers will offer more units at a higher price and fewer units at a lower price. Movement along
Which of the following causes a movement along a supply curve?
a change in price
Which of the following is consistent with the law of demand?
A reduction of the price of salt led to a 5 percent increase in the quantity of salt purchased.
Assume the cost of aluminum used by soft-drink companies increases. Which of the following correctly describes the resulting effects in the market for canned soft drinks? I. The demand for soft drinks decreases. II. The quantity of soft drinks demanded decreases. III. The supply of soft drinks decreases. IV. The quantity of soft drinks supplied decreases.
II and III.
Indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded" for cable-based Internet access service, which is a normal good. Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n) Firms providing cable-based Internet access services reduce their prices. This will cause a(n) There is a decrease in the incomes earned by consumers of cable-based Internet access services. This will cause a(n) Consumers' tastes shift away from using wireless Internet access in favor of cable-based Internet access services.
decrease in demand. increase in quantity demanded. decrease in demand. increase in demand
According to the text, firms encounter rising costs when they attempt to produce more in the same time period. As a consequence, they must be offered a higher price to be willing to incur these higher costs. The resulting relationship between price and quantity supplied is
direct (or positive) and is called the law of supply.
If Apple's iTunes Music Store increases its "fee" for its music services, the law of demand predicts
downloads would decrease
The market supply curve can be derived by
horizontally adding the individual supplies at each price level.
When the price of a good rises, there is
increase in quantity supplied
If the price of bacon rises, and as a result the demand for sausage increases, this implies that these two goods are___ If the price of tennis racquets falls, and as a result the demand for tennis balls _______,this implies that these two goods are complements If the price of coffee rises, and as a result the demand for sugar falls, this implies that these two goods are____ If the price of automobiles_____,and as a result the demand for motorbikes falls, this implies that these two goods are substitutes
substitutes increases compliments falls
Suppose a shortage for good A exists. Given this information, we know that
the price of good A will tend to rise toward the equilibrium level
A movement along a supply curve is induced by a change in
the product's price.
A shortage exists
when quantity supplied is less than quantity demanded.
