Econ 2 chapter 4 study plan
What is meant by holding all else equal and how is this concept used when discussing movements along the demand curve? A. All variables that can affect the demand for the good are held constant. B. everything else in the economy is held constant, including the price of the good. C. All variables in the model are set to equal values. D. All of the above. __________________________________ We make the assumption of holding all else equal when considering demand curves since we want to focus on the changes in the quantity demanded that result from changes in ▼ .
A. All variables that can affect the demand for the good are held constant. _________________ only the price of a good
For a trade to take place, a buyer's willingness to pay must be ____________. A. higher than the seller's willingness to accept. B. equal to the seller's willingness to accept. C. lower than the seller's willingness to accept. D. A and B only. E. All of the above.
A and B only
The lowest price that a seller is willing to receive to sell an extra unit of a good is called ▼ willingness to accept willingness to pay willingness to exchange , while the highest price that a buyer is willing to pay for an extra unit of a good is called ▼ willingness to exchange willingness to accept willingness to pay .
willingness to accept: willingness to pay
Which of the following ways of distributing the laptops would be more efficient? (Check all that apply.) A. Using flexible prices, so those who value the laptop more would pay more for it. B. Auctioning off the laptops to the highest bidders. C. Using a first-come, first-served rule. D. Using a random lottery to decide who gets the laptops.
a,b,d
if new irrigation technology improves the average yield of a vineyard then the supply curve for sparkling wine would _______
increase
How would the equilibrium price in a market be affected if there were a smallsmall increase in demanddemand and a largelarge increase in supplysupply? A. The equilibrium price would remain the same. B. The equilibrium price decreasesdecreases. C. The equilibrium price increasesincreases. D. More information is needed. It may increase, decrease, or remain the same.
B. The equilibrium price decreasesdecreases.
how would a decrease in demand affect the equilibrium price in a market? The equilibrium price would remain the same. B. The equilibrium price decreasesdecreases. C. The equilibrium price increasesincreases. D. More information is needed. It may increase, decrease, or remain the same
B. The equilibrium price decreasesdecreases.
What does it mean to say that we are running out of "cheap oil"? A. That world demand for oil is declining, which will raise the price of oil in the future. B. That there are declining reserves of low-quality oil, but there is still plenty of high-quality oil remaining. C. That oil reserves are becoming more expensive to find and extract over time. D. That we will soon deplete all the world's oil reserves, which will cause the price of oil to increase significantly.
C. That oil reserves are becoming more expensive to find and extract over time.
Lobsters are plentiful and easy to catch in August but scarce and difficult to catch in November. In addition, vacationers shift the demand for lobsters further to the right in August than in any other month. Given this information, we know that _________ is/are higher in August than in other months. A. only supply. B. neither supply nor demand. C. both supply and demand. D. only demand.
C. both supply and demand.
if people expect the price of SUVs to decrease in the future, then the demand for the Toyota Rav4 SUV would __________. a. decrease (shift left) b. increase (shift right) c. remain unchanged
Decrease (shift left)
if the number of people over the aft of 16 int eh country increased significantly, then the demand for the Toyota RAv4 SUV would ______. a. remain unchanged b. increase (shift right) c. decrease (shift left)
increase (shift right)
if sparkling wine producers expect the price of wine to decrease int eh future, then the supply curve for sparking wine would _________
increase
In a perfectly competitive market, if one seller chooses to charge a price for its good that is slightly higher than the market price, then it will _________. A. lose all or almost all of its customers. B. see no change in its number of customers. C. see a small decrease in its number of customers. D. All of the above are equally likely.
A. lose all or almost all of its customers.
Suppose conditions arise in the sugar market that would lead to a competitive equilibrium price that is below 18.75 cents per pound. In this situation, sugar mills will __________. A. not sell to private buyers at this lower price and will sell to the government instead, which will drive up the domestic price until it reaches 18.75 cents per pound. B. sell only to private buyers, since they do not need to take advantage of the government subsidy when the equilibrium price is low. C. sell some to private buyers at the lower price and sell some to the government at the higher subsidized price.
A. not sell to private buyers at this lower price and will sell to the government instead, which will drive up the domestic price until it reaches 18.75 cents per pound.
The Law of Supply states that, in most cases, the quantity supplied of a good ___________ when the price of the good rises. This means we would expect a typical supply curve to be___________. A. rises; upward-sloping. B. falls; upward-sloping. C. falls; downward-sloping. D. rises; downward-sloping.
A. rises; upward-sloping.
How would the equilibrium price in a market be affected if there were a smallsmall decrease in demanddemand and a largelarge decrease in supplysupply? A. The equilibrium price would remain the same. B. The equilibrium price increasesincreases. C. The equilibrium price decreasesdecreases. D.
B. The equilibrium price increasesincreases.
What does this imply for the price of oil in the future? A. The demand for oil will decrease, which will lead to higher prices in the future. B. The demand for oil will increase, which will lead to lower prices in the future. C. The supply of oil will increase, which will lead to lower prices in the future. D. The supply of oil will decrease, which will lead to higher prices in the future.
D. The supply of oil will decrease, which will lead to higher prices in the future.
In a perfectly competitive market, sellers _________ and buyers _________. A. are able to charge more than the market price; are able to pay less than the market price. B. cannot charge more than the market price; cannot pay less than the market price. Your answer is correct.C. cannot charge more than the market price; are able to pay less than the market price. D. are able to charge more than the market price; cannot pay less than the market price.
B. cannot charge more than the market price; cannot pay less than the market price. Your answer is correct.
Suppose people who are thinking about buying a home (demanders in the housing market) and current home owners who are thinking about selling their homes (suppliers in the housing market) suddenly believe that home prices are likely to be significantly lowerlower next year than this year. Consider the market for housing this year, as illustrated in the figure on the right. The change in the expected price of housing will ___________. A. shift the demand curve to the rightright, as home prices decreasedecrease. B. shift the demand curve to the leftleft, as buyers postponepostpone their home purchases. C. not affect the demand curve for housing, as consumers are not sensitive to future prices. D. shift the demand curve to the leftleft, as fewerfewer homes are put on the market for sale by owners.
B. shift the demand curve to the leftleft, as buyers postponepostpone their home purchases.
When graphing the new total market supply and demand curves, these curves will be _________ the individual countries' demand curves, since these curves are derived by _________. A. above and to the right of; summing both prices and quantities simultaneously. B. to the right of; summing quantities at a given price. C. directly above; summing prices for a given quantity.
B. to the right of; summing quantities at a given price.
Suppose one of your friends offered the following argument: A rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply curve, which will lead to an offsetting decrease in price. Therefore, it is impossible to tell what effect an increase in demand will have on price. Do you agree with your friend? A. No, the offsetting supply shift caused by the higher price will not be as large as the demand shift, so we know the price will rise some. B. No, the increase in price will not cause a shift of the supply curve. C. Yes, any time both the supply and demand curves shift, it becomes impossible to accurately determine the impact on the price of a good. D. Yes, since the shift in demand that raises the price must cause an offsetting shift in supply, we cannot know the impact on price.
B. No, the increase in price will not cause a shift of the supply curve.
Read the story to the right, and then answer the following questions: Based on what happened at the Richmond event, it is apparent that at a price of $50, the quantity _________ of laptops exceeded the quantity _________. This resulted in an excess _________ for laptops. A. supplied; demanded; demand B. demanded; supplied; demand C. supplied; demanded; supply D. demanded; supplied; supply
B. demanded; supplied; demand
When comparing the equilibriums in the lobster market for August and November, the equilibrium quantity is ______ in November than in August, while the equilibrium price is ______. A. higher; higher. B. lower; higher, lower, or unchanged. C. lower; lower. D. lower; unchanged.
B. lower; higher, lower, or unchanged.
The Thai government bought rice from its farmers at a price that was 40 percent higher than the prevailing market price in the country. How is this likely to affect other buyers in the domestic market for rice? A. Since the government is willing to buy any amount, firms will increase the quantity they supply, which will drive down the price of rice for everyone. B. Other buyers in the domestic market will not be affected, since the government will be buying the excess supply that exists at equilibrium. C. It will drive the price above the market price, resulting in a higher price for domestic consumers and therefore a smaller quantity demanded. D. Firms will charge domestic consumers a price below the market price, since they are charging the government a higher price.
C. It will drive the price above the market price, resulting in a higher price for domestic consumers and therefore a smaller quantity demanded.
Consider whether the Law of Demand holds in the following situations. The price of anti minus venom serumanti−venom serum, sold to those with snake bitessold to those with snake bites, increased from $45 to $52, but consumption has still remained the same. In this situation, the Law of Demand __________. A. does not hold, since the product is not sold in normal markets, so it cannot follow the Law of Demand. B. holds, since the Law of Demand must hold for all goods in all instances. C. does not hold, since the product sold is required for survival, so increasing the price did not affect consumption. D. holds, since a change in the price of the product resulted in a change in the quantity demanded of the product.
C. does not hold, since the product sold is required for survival, so increasing the price did not affect consumption.
The demand curve for anti minus venom serumanti−venom serum is __________. A. downward-sloping, since the demand for anti minus venom serumanti−venom serum reacts the same to changes in price as any other good. B. near horizontal, since even a small rise in the price will result in bite victimsbite victims cutting back on the quantity they demand. C. near vertical, since even if the price rises bite victimsbite victims will be willing to buy the same quantity.
C. near vertical, since even if the price rises bite victimsbite victims will be willing to buy the same quantity.
A pest attack on the tomato croppest attack on the tomato crop increases the cost of producing ketchupketchup. At the same time, we see the price of hamburgershamburgers falls. Suppose that after both of these events the consumption of ketchupketchup is left unchanged. In this situation, the Law of Demand __________. A. does not hold, since the product sold is a necessity, so increasing the price will not likely affect consumption. B. holds, since the Law of Demand must hold for all goods in all instances. C. holds, since the demand curves for both ketchupketchup and hamburgers are downward-sloping; it is their shifts that are determining the impact on the quantity consumed. D. does not hold, since there was no change in the quantity of ketchupketchup demanded.
C. holds, since the demand curves for both ketchupketchup and hamburgershamburgers are downward-sloping; it is their shifts that are determining the impact on the quantity consumed.
The concept of diminishing marginal benefits means that __________. A. each additional unit consumed is worth more to you than the previous one, but the additional benefit grows at a diminishing rate. B. the more of a good that you consume, the lower is your overall benefit from that good. C. as you consume more of a good, your willingness to pay for that good increases faster than the benefit you receive. D. each additional unit consumed is worth less to you than the previous one. ________________________ The concept of diminishing marginal benefits ( ) for goods that you like a lot. _______________________________ Suppose you have a flashlight that takes three batteries to power it. If you buy the batteries one at a time, for which purchase will diminishing benefits set in? A. When you buy the first battery. B. When you buy the second battery. C. When you buy the third battery. D. When you buy the fourth battery.
D. each additional unit consumed is worth less to you than the previous one. ___________________________ Holds true _________________________ D. when you buy the fourth battery
Market demand is derived by __________. A. adding up both the prices each buyer pays and the quantities that each buyer demands. B. dividing each buyer's demand by the total number of consumers in the market. C. fixing the quantity and adding up the prices that each buyer pays. D. fixing the price and adding up the quantities that each buyer demands. _________________________ Does the shape of the market demand curve differ from the shape of an individual demand curve? A. No, they both tend to be upward-sloping curves. B. Yes, individual demand curves tend to be upward-sloping, while market demand curves are horizontal. C. Yes, individual demand curves tend to be downward-sloping, while market demand curves are upward-sloping. D. No, they both tend to be downward-sloping curves.
D. fixing the price and adding up the quantities that each buyer demands. __________________________ D. No, they both tend to be downward-sloping curves.