Econ ch 4

Complete the following table by indicating whether an event will cause a movement along the supply curve for wine or a shift of the supply curve for wine, holding all else constant. An increase in the price of wine A change in expectations about the future price of wine A decrease in the price of labor (used in the production of wine)

Movement along shift shift

Suppose the price in a market is currently higher than the equilibrium price. In this case, _________ exists and we expect the price to _______. a.Equilibrium; remain constant b.A shortage; fall c.A surplus; rise d.A surplus; fall

d. A surplus; fall

What is the market quantity supplied when the price is $2.00?

16

If the price of lattes increases from $4 to $5, which of the following quantities would Mark be willing to buy, if he follows the law of demand? a.8 b.12 c.16 d.20

a. 8

True or False: When both the demand and supply curves shift, the curve that shifts by the smaller magnitude determines the effect on the undetermined equilibrium object.

false

True or False: The market for lettuce exhibits the two primary characteristics that define perfectly competitive markets. True False

True

Complete the following table by indicating whether an event will cause a movement along the supply curve for cereal or a shift of the supply curve for cereal, holding all else constant. A change in technology that makes it less costly to produce cereal An increase in the number of producers An increase in the price of cereal

shift shift movement along

What is the market quantity when the price is $2.00? a.36 b.30 c.24 d.20

b. 30

Does the increase in the price of coffee beans affect the demand or supply of lattes? a.Demand b.Supply

b. Supply

If jeans are a normal good, when consumer incomes decrease, we expect the demand for jeans to shift to the a.right b.left

b. left

What happens to the market quantity demanded when price increases? a.quantity demanded increases b.quantity demanded decreases c.quantity demanded remains the same

b. quantity demanded decreases

If Cafin8 decided to close down, what happens to the market for lattes? a.Move upward and to the right along the market supply curve for lattes. b.Move downward and to the left along the market supply curve for lattes. c.Market supply curve for lattes shifts to the left. d.Market supply curve for lattes shifts to the right.

c. Market supply curve for lattes shifts to the left.

When the price of a good increases, the market quantity demanded ______ and the market quantity supplied ______. a.Increases; decreases b.Increases; increases c.Decreases; increases d.Stays the same; increases

c. decreases, increases

The supply curve slopes upward because as the price increases, quantity supplied a.decreases. b.remains constant. c.increases.

c. increases

If a surplus exists in the hamburger market, then the current price must be ________ than the equilibrium price. For the market to reach equilibrium, you would expect ______________________.

higher sellers to offer lower prices

In a perfectly competitive market, all producers sell ________ goods or services. Additionally, there are ______ buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price _______ .

identical many takers

Complete the following table by selecting the term that matches each definition. A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices A graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices The amount of a good that buyers are willing and able to purchase at a given price The claim that, with other things being equal, the quantity demanded of a good falls when the price of that good rises

Demand schedule Demand curve Quantity demanded Law of demand

A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices The amount of a good that sellers are willing and able to supply at a given price

Supply schedule Law of supply Supply curve Quantity supplied

What can you conclude about the change in the equilibrium price and quantity following the increases in demand and supply? a.Ambiguous. b.The equilibrium price always increases. c.The equilibrium price always decreases. d.The equilibrium price always stays the same.

a. Ambiguous

Does the increase in consumers' income cause the demand for lattes to increase (shifting the demand curve to the right) or decrease (shifting the demand curve to the left)? a.Increase/Shift right b.Decrease/Shift left

a. Increase/Shift right

Suppose pizzas and burgers are substitutes. If the price of pizza increases, what happens in each market? a.Move upward and to the left along the demand curve for pizzas and the demand curve for burgers shifts to the right b.Move upward and to the left along the demand curve for burgers and the demand curve for pizzas shifts to the right c.Move downward and to the right along the demand curve for burgers and the demand curve for pizzas shifts to the left

a. Move upward and to the left along the demand curve for pizzas and the demand curve for burgers shifts to the right

What is the equilibrium price and quantity in the market for lattes? a.The equilibrium price is $3 and the equilibrium quantity is 24. b.The equilibrium price is $24 and the equilibrium quantity is 3. c.The equilibrium price is $4 and the equilibrium quantity is 18. d.The equilibrium price is $2 and the equilibrium quantity is 30.

a. The equilibrium price is $3 and the equilibrium quantity is 24

Does the increase in consumers' income affect the demand or supply of lattes? a.Demand b.Supply

a. demand

The demand curve slopes downward because as price decreases, quantity demanded a.increases b.remains constant c.decreases

a. increases

If the price of lattes increases from $4 to $5, which of the following quantities would the seller be willing to sell, if the seller follows the law of supply? a.0 b.6 c.12 d.15

d. 15

If fast food workers are paid the minimum wage and the minimun wage increases, we expect the supply of fast food to _____, causing the supply curve to shift to the _____. a.Increase; right b.Increase; left c.Decrease; right d.Decrease; left

d. decrease, left

Now suppose Congress passes a new tax that decreases the income of Miami residents. If cereal is a normal good, this will cause the demand for cereal to ___________

decrease

Suppose the market for cars is unregulated. That is, car prices are free to adjust based on the forces of supply and demand. If a shortage exists in the car market, then the current price must be ________ than the equilibrium price. For the market to reach equilibrium, you would expect _________________________.

lower buyers to offer higher prices