ECON 131- HW 3

10) Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A) The demand for new houses increased and the supply did not change. B) The supply of new houses decreased and the demand for new houses did not change. C) The supply of new houses increased and the demand for new houses did not change. D) Both the supply and demand for new houses decreased. E) Both the supply and the demand for new houses increased and the supply increased by more than the demand.

A

14) The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month. Many new Web design firms now enter the market. As a result, A) the supply of Web pages increases and the price falls. B) the supply of web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward. C) the supply curve of Web pages shifts leftward and the price falls. D) the demand for Web pages increases and the price rises. E) the demand for Web pages increases and the price falls.

A

15) A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change? A) Figure A B) Figure B C) Figure C D) Figure D E) Figure A or Figure C

A

16) Contractors can use plywood or brick to construct walls. Suppose the price of bricks increases. Which of the figures above best illustrates the effect of this change on the market for plywood? A) Figure A B) Figure B C) Figure C D) Figure D E) Figure A or Figure C depending on how contractors react to the higher price of bricks.

A

20) Both the demand for and supply of cars changes in France. You observe that the quantity of cars does not change but the price rises. Thus, which of the following occurred? A) Demand increased and supply decreased by an equal amount. B) Demand increased by a larger magnitude than supply decreased. C) Demand and supply decreased by an equal amount. D) Demand and supply increased by an equal amount. E) Demand decreased and supply increased by an equal amount.

A

21) Suppose that the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward. Which of the following could have caused these shifts? A) Desktop computers are a normal good and incomes increased, while the labor costs of producing personal computers increased. B) The price of a laptop computer, a substitute for desktop computers, fell and the cost of producing desktop computers decreased. C) Desktop computers are a normal good and incomes decreased, while the labor costs of producing personal computers increased. D) Consumers purchased more computers because of the Christmas season and the labor costs of producing desktop computers decreased. E) Desktop computers are a normal good and incomes increased, while more firms entered the market.

A

11) Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A) The wage paid carpenters who build new houses might have risen. B) More home buyers might have moved into the area. C) A technological advance in framing a new house might have occurred. D) The cost of wood framing used to build houses might have fallen. E) The rent for nearby apartments might have fallen.

B

13) Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the equilibrium quantity of cream cheese ________. A) falls; increases B) falls; decreases C) does not change; does not change D) rises; decreases E) rises; increases

B

23) Suppose that people decide riding scooters is no longer fun. The equilibrium price of a scooter ________, and the equilibrium quantity of scooters ________. A) rises; decreases B) falls; decreases C) does not change; decreases D) rises; increases E) falls; increases

B

12) Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ so that the price of a computer chip ________. A) decreases; rises B) increases; falls C) decreases; falls D) increases; rises E) decreases; does not change

C

18) In an effort to protect endangered species from the effects of logging in America's national forests, the federal government passes a law prohibiting logging in most of the state of Washington. Which of the figures above best illustrates the effect of this new law? A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above because a prohibition cannot be illustrated using demand and supply figures.

C

3) As a falling price eliminates a surplus in the jersey market, A) producers decrease the quantity of jerseys they supply, and buyers decrease the quantity of jerseys they demand. B) producers increase the quantity of jerseys they supply. C) consumers increase the quantity of jerseys they demand. D) the demand curve for jerseys shifts leftward, and the supply curve of jerseys shifts rightward. E) the demand curve for jerseys shifts rightward, and the supply curve of jerseys shifts leftward.

C

5) When there is a shortage of parking spaces at your college, the A) demand for parking spaces is greater than the supply. B) supply of parking spaces is greater than the demand. C) quantity of parking spaces demanded is greater than the quantity of parking spaces supplied. D) quantity of parking spaces supplied is greater than the quantity of parking spaces demanded. E) Both answers A and D are correct.

C

6) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.65, then A) there is a shortage of gasoline in Tulsa. B) there is a surplus of gasoline in Tulsa. C) the gasoline market in Tulsa is in equilibrium. D) without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.

C

7) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.62, then A) the gasoline market in Tulsa is in equilibrium. B) there is a surplus of gasoline in Tulsa. C) there is a shortage of gasoline in Tulsa. D) without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.

C

8) Which of the following raises the equilibrium price of cement? A) an increase in the supply of cement B) a decrease in the quantity of cement supplied C) an increase in the demand for cement D) a decrease in the demand for cement E) an increase in the quantity of cement demanded

C

9) Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of gasoline leads to a A) leftward shift of the demand curve for SUVs and the supply curve of SUVs. B) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs. C) leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs. D) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of SUVs. E) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.

C

17) New technology for producing plywood is developed. Which of the figures above best illustrates 17) this change? A) Figure A B) Figure B C) Figure C D) Figure D E) Figure A and Figure D

D

22) Suppose the equilibrium price of movie tickets is $10. If the supply curve for movies shifts ________, the equilibrium price will ________. A) rightward; increase B) leftward; decrease C) rightward; not change D) rightward; decrease E) leftward; not change

D

1) A surplus of cardboard boxes means that A) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. B) the current price of a cardboard box is less than the equilibrium price. C) at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium.. D) at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. E) More information is needed to determine if the price of cardboard boxes is higher than, lower than, or equal to the equilibrium price.

D)

2) Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price a A) surplus exists but nothing happens until either the demand or the supply changes. B) surplus exists and the price rises to restore equilibrium. C) shortage exists and the price rises to restore equilibrium. D) surplus exists and the price falls to restore equilibrium. E) shortage exists and the price falls to restore equilibrium.

D)

19) If good weather conditions result in a larger than normal crop of peaches, then the A) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases. B) demand curve for peaches shifts leftward. C) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. D) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases. E) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.

E

4) If the price is below the equilibrium price, A) the demand curve will shift leftward. B) the supply curve will shift leftward. C) the supply curve will shift rightward. D) there is a surplus. E) there is a shortage.

E