Chapter 4 Demand and Supply
Which of the following statements describes the law of market forces?
A shortage of cabbage increased the price of cabbage and a surplus of corn lowered its price.
Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?
At a price of $1 gallon, we plan to sell 2,000 gallons per day.
Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?
At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.
Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.
I and IV are changes in supply and II and III are changes in the quantity supplied.
Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.
I is a change in demand and II and III are changes in the quantity demanded.
Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.
I is inferior, II is normal, III is neither, and IV is both
Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply?
If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers
In the market for smartphones, which of the following events increases the supply of smartphones?
New technology that lowers the cost of making a smartphone
Which of the following events in the market for smartphones illustrates the law of demand? 1. The price of a smartphone falls. 2. Producers announce that smartphone prices will fall next month. 3. The price of a call made from a smartphone falls. 4. The price of a call made from a land-line phone increases. 5.An increase in memory makes smartphones more popular.
Only Event #1
Which of the following events in the market for timber beams illustrates the law of supply? 1. The wage rate of sawmill workers rises. 2. The price of sawdust rises. 3. The price of a timber beam rises. 4. The price of a timber beam is expected to rise next year. 5. Environmentalists convince Congress to introduce a new law that reduces the amount of forest that can be cut for timber. 6. A new technology lowers the cost of producing timber beams.
Only Event #3
Which of the following statements by Tom demonstrates that his buying plans obey the law of demand?
The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many.
In the market for jeans, which of the following events increases the demand for a pair of jeans?
The price of a denim skirt (a substitute for jeans) rises.
Suppose that the wage rate of dairy workers falls. Explain the effect of this event on the quantity of skim milk supplied and on the supply of skim milk.
The supply of skim milk increases.
substitute in production
a good that can be produced in place of another good
substitute
a good that is consumed in place of another good
complement
a good that is consumed together with another good
complement in production
a good that is produced along with another good
demand curve
a graphic representation of a demand schedule
Other things remaining the same, a rise in the price of a good will
decrease the quantity demanded of that good
Other things remaining the same, a fall in the price of peanuts will
decrease the quantity supplied of peanuts
supply curve
graph of a supply schedule
If both demand and supply increase, the equilibrium quantity ______ and the equilibrium price ______.
increases; might rise, fall, or not change
demand schedule
list of the quantities demanded at each different price when all other influences on buying plans remain the same
supply schedule
list of the quantities supplied at each different price when all other influences on selling plans remain the same
The demand curve for smartphones shifts leftward when
producers announce that smartphone prices will fall next month
The supply curve of timber beams shifts rightward when
the price of sawdust rises or new technology lowers the cost of producing timber beams
Many Americans are selling their used cars and buying new fuel-efficient hybrids. Other things remaining the same, in the market for used cars, ______ and in the market for hybrids ______.
supply increases and the price falls; demand increases and the price rises
a decrease in the demand for chocolate with no change in the supply of chocolate will create a ______ of chocolate at today's price, but gradually the price will ______.
surplus; fall
if we observed a fall in the price of concrete and an increase in the quantity of concrete that producers sell, the most likely explanation would be that
the law of supply applies to concrete, but some other influence on selling plans has also changed and the supply of concrete has increased
The demand curve for smartphones shifts rightward when
the price of a call from a smartphone falls or the price of a call from a land-line phone rises
The supply curve of timber beams shifts leftward when
the price of a timber beam is expected to rise next year or a new law reduces the amount of forest that can be cut for timber
In market equilibrium, at the equilibrium price and equilibrium quantity
the quantity demanded equals the quantity supplied and equals the quantity bought and sold
If the price of a smartphone falls, with all other influences on buying plans remaining the same
the quantity of smartphones demanded increases
demand
the relationship between the quantity demanded of a good and the price of the good, when all other influences on buying plans remain the same
supply
the relationship between the quantity supplied of a good and the price of the good, when all other influences on buying plans remain the same
For consumers, golf clubs and golf lessons are complements. If the price of a golf club increases, the demand for golf lessons will
decrease, and the demand curve for golf lessons will shift leftward
