Chapter 3 Microeconomics

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

An increase in demand has been more than offset by an increase in supply

A decrease in supply, holding demand constant, will cause

Higher prices and lower quanity

The horizontal axis of a graph that shows a market demand curve indicates the

The horizontal axis of a graph that shows a market demand curve indicates the

The relationship between quantity supplied and price is _____, and the relationship between quantity demanded and price is _____.

Direct; Inverse

Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then

Do not Know

Which of the following pairs are not considered to be complementary goods? -steel and cars -cameras and memory cards -Gasoline and motor oil -Fertilizer and irrigation systems

Fertilizer and Irrigation systems

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will

decrease D, decrease P, and decrease Q.

The term "quantity demanded":

refers to the amount of a product that will be purchased at some specific price.

An effective price floor will:

result in a product surplus.

(Consider This) Dynamic pricing refers to

the ability to set equilibrium prices in real time in response to changing supply and demand conditions.

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

the marginal benefit of additional units of the good now outweigh the marginal cost.

In moving along a supply curve, which of the following is not held constant?

the price of the product itself

In constructing a demand curve for product X:

the prices of other goods are assumed constant.

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the

various places to find oranges will fall

A fall in the price of milk, used in the production of ice cream, will...

increase the supply of ice-cream

If the demand and supply curves for product X are STABLE,, a government-mandated increase in the price of X will... (price stays on the line)

increases X's supply but decreases its demand

(Consider This) Uber's dynamic pricing

keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions.

In competitive markets, a surplus or shortage will

In competitive markets, a surplus or shortage will

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Consumer expectations that the price of X will rise sharply in the future will

Increase (D) increase (S) increase (Q)

Price floors and ceiling prices: both cause shortages. both cause surpluses. cause the supply and demand curves to shift until equilibrium is established. interfere with the rationing function of prices.

Interfere with the rationing functions of prices

In moving along a demand curve, which of the following is not held constant?

Price of the product

If products C and D are close substitutes, an increase in the price of C will

Shift the demand curve of D to the right

One can say with certainty that equilibrium price will decline when...

Supply increases and Demand decreases

Assuming conventional supply and demand curves, changes in the determinants of both supply and demand will generally...

alter both Equilibrium price and quantity