Chapter 4 Testing quiz (attempt 1 &2)

When the supply of 35 mm cameras increases, the new market equilibrium as compared to the old will have

a higher equilibrium quantity and a lower equilibrium price.

When the market price is higher than the equilibrium price, there is

a surplus

In the graph shown above, if market price were $6, there would be

a surplus.

When the market price is higher than the equilibrium price, there is

a surplus.

A demand schedule can be presented

as a table and a graph.

A supply schedule may be depicted

by both a table and a graph

A supply schedule may be depicted

by both a table and a graph.

When demand falls and supply remains the same, equilibrium price _______ and equilibrium quantity ________.

falls, falls

A "Black Market" is a market that will have access to scarce products and is willing to sell them at a higher price than the public market price. This can occur when there are _______.

price ceilings.

At equilibrium

quantity supplied is equal to quantity demanded.

When there is a surplus

quantity supplied is greater than quantity demanded.

When a price ceiling which had been set below equilibrium price is removed, what happens next?

quantity supplied rises

Which situation below would represent a surplus in the fertilizer market?

market price $2.50 per bag; equilibrium price $2.00.

An increase in the price of fabric (an input in the production of pants) will tend to

shift the supply curve for pants to the left

Which of the following does not shift the supply curve?

Prices

When a market operates so that there are no shortages and no surpluses, then the market is

in equilibrium.

Which of the following can cause a shifting of the demand curve for a product?

Changes in the price of a complementary good

Supply and Demand Question: What immediate effect will the following scenario have on small (Compact) automobiles such as a Ford Focus? The price of car insurance for compact cars have gone up substantially. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will decrease and quantity equilibrium will decrease.

Supply and Demand Question: What effect will the following scenario have on auto tires? Suppliers expectation that the price of auto tires will be lower in a few months. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will decrease and quantity equilibrium will increase

Supply and Demand Question: What immediate effect will the following scenario have on the Ford Focus automobile? Ford Corporation announced a "Recall" of the Ford Focus because of a serious transmission problem. "Consumer Report" magazine listed the Ford Focus as the lowest rated compact automobile when it comes to repairs and maintenance in the compact auto industry. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will decrease and quantity supplied will decrease.

Supply and Demand Question: What immediate effect will the following scenario have on auto tires? The government has increased taxes on auto tires. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will increase and quantity supplied will decrease

Supply and Demand Question: What immediate effect will the following scenario have on auto tires? The government decides to subsidize the tires industry by giving $2 for each auto tired produced. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will increase and quantity supplied will decrease.

Supply and Demand Question: What immediate effect will the following scenario have on small (Compact) automobiles such as a Ford Focus? The price of large automobiles rises due to a "large automobile tax." (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will increase and quantity supplied will increase

Supply and Demand Question: What effect will the following scenario have on auto tires? Goodyear Tires has had a successful television advertising campaign for its tires. (Suggestion: draw it out with a supply and demand graph)

Price equilibrium will increase and quantity supplied will increase.

Price ceilings keep market price

below the equilibrium price and create shortages.

A shift from S1 to S2

is the result of the Law of Supply

A shift from S1 to S2 causes equilibrium price to __________ and quantity to __________.

rise; fall.