Econ 102 Quiz 4

A recent news story reported that OPEC is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of the many families driving and flying to vacation sites. What would be the combined effect of these two events on the summer market for gasoline?

A. an increase in the price and an unpredictable change in the quantity

It is certain that the equilibrium price will rise when

A. the supply curve shifts to the left and the demand curve shifts to the right.

It is certain that the equilibrium price will fall when:

B. the supply curve shifts to the right and the demand curve shifts to the left.

A decrease in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

C. a decrease; an increase

In the market for tacos, you observe that the equilibrium price and quantity have increased. This can be caused only by:

C. an increase in the incomes of people who eat tacos.

In the market for grass fed beef, what would cause a price increase?

D. The prices of grass and corn increase.

An increase in the price and an ambiguous change in quantity is most likely caused by:

a shift to the left in supply and a shift to the right in demand.

Say the following two events occur at the same time: 1) a decrease in the price of milk, an input in the production of cheese; 2) a decrease in the price of bagels, a complement of cheese. The following two events would lead to a(n) _________ in the market price and a(n) __________ in the market quantity of cheese.

c. indefinite change; increase

When demand and supply decrease simultaneously,

d. the equilibrium quantity falls but the change in equilibrium price is ambiguous.

Say the following two events occur at the same time: 1) an increase in the price of steel, an input in the production of cars; 2) an increase in the price of gasoline, a complement of cars. The following two events would lead to a(n) _________ in the market price and a(n) __________ in the market quantity of cars.

e. indefinite change; decrease