ECN104 - Chapter 3 Module
When supply decreases, a __________ develops at the original price. Equilibrium price will __________ and equilibrium quantity will __________ as a new equilibrium is established.
shortage; rise; fall
In the previous diagram when the price is $65 per player, there is a _________ of _________ million players per month.
surplus; 40
Given linear demand curves, if demand and supply both increase but demand increases by a greater amount than supply, then:
the equilibrium price and quantity both increase.
The Niagara Escarpment had a bumper apple crop this year, significantly increasing the supply of apples in Ontario. Given this information, choose the statement that correctly describes the effect on the apple market in Ontario.
the quantity of apples demanded will increase as the price of apples falls
Which of the following is consistent with the law of supply? ◦ Fewer passengers chose to travel by airplane after the terrorist strikes of 9/11. ◦ A reduction of the price of salt led to a 5 percent increase in the quantity of salt consumed. ◦ An increase in the market price of iPhones causes an increase in the production of iPhones. ◦ The province of Ontario has less grape regulation than the province of Quebec, and grape production is lower in the province of Quebec
An increase in the market price of iPhones causes an increase in the production of iPhones.
The table above indicates the demand schedules for four types of consumers: A, B, C, and D and the number of consumers in each group (top row). The quantity demanded by each type of consumer (QA, QB, QC, and QD) is shown for market prices ranging from $10 down to $4. What is the combined quantity demanded at a market price of $4?
10,400
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?
The quantity of soft drinks demanded decreases and the supply of soft drinks decreases
On the diagram shown above, a movement from A to C represents __________.
an increase in demand
Market price is determined by _________.
both supply and demand
On the diagram shown above, a movement from A to B represents a:
change in quantity supplied.
The market for corn is initially in equilibrium. Suppose that the production of biofuels, which use corn as an input, increase, and at the same time, increases in the price of oil cause farm production costs to rise. Which of the following explains the effect on equilibrium price and quantity in the corn market?
The price of corn will rise, but the effect on equilibrium quantity cannot be determined without more information.
Other things remaining equal, the law of demand says that higher prices will lead to:
a smaller quantity demanded and lower prices to a larger quantity demanded.
The condition that exists when quantity supplied exceeds quantity demanded at the current price is known as __________.
a surplus or excess supply
All of the following will decrease the supply of airline flights except: ◦ a technological change that makes airplanes safer and more fuel-efficient ◦ a rise in the price of jet fuel ◦ a reduction in the number of airline companies offering service ◦ an increase in the salaries of pilots.
a technological change that makes airplanes safer and more fuel-efficient
Which of the following will cause an outward (rightward) shift in supply?
a technological improvement
