ECON CH3 TEST Q'S

If more firms begin producing bicycles, the ___________ curve for bicycles would shift _____________. a.supply, rightward b.demand, rightward c.supply, leftward d.demand, leftward

a, supply, rightward <As more firms enter a market, the result would be an overall increase in production. With more companies producing bicycles, there would be an increase in the supply, shifting the supply curve for bicycles rightward.>

If the buyers of lumber expect that the price of lumber six months from now will be substantially higher that it is today, then the result would be ________________ of the current demand curve for lumber. a.a rightward shift b.no shift c.a leftward shift d.an immediate leftward shift and then a rightward shift

a. a rightward shift <When buyers expect that the price of a good will be higher in the future, some buyers will choose to buy it now, thus increasing the present demand for the good. An increase in demand causes the current demand curve to shift rightward.>

Quantity demanded is higher at an equilibrium price of $4 than at an equilibrium price of $3. This can be the result of a.an increase in demand b.a decrease in demand c.an increase in supply d.an increase in demand equal to the decrease in supply

a. an increase in demand

For an inferior good, when buyers' income rises, the equilibrium price of the good will ____________ and the equilibrium quantity will ________________. a.decrease, decrease b.decrease, increase c.increase, increase d.increase, decrease

a. decrease, decrease

If the government were to make licensure requirements for automobile repair shops stricter, the result would be a ____________________ shift of the ___________________ curve for automobile repair. a.leftward; supply b.rightward; supply c.leftward; demand d.rightward; demand

a. leftward; supply <Stricter licensure requirements for automobile repair shops would reduce the number of shops, shifting the supply curve for automobile repair leftward.>

Suppose that the equilibrium price of grapes is $1.59 per pound, but the current price of grapes is $1.75. From this information, we know that there is currently a _________________ of grapes which will push the price __________________. a.surplus, downward b.shortage, upward c.surplus, upward d.shortage, downward

a. surplus, downward

One point on a market supply curve represents $2 and 200 units quantity supplied. If there are three suppliers, and at a price of $2 one of the suppliers supplies 67 units, then which of the following combinations of price and quantity supplied might hold for the other two suppliers? a.At $2, quantity supplied could be 40 units for one supplier and 93 for the other. b.At $2, quantity supplied could be 33 units for one supplier and 93 for the other. c.At $2, quantity supplied could be 84 units for one supplier and 38 for the other. d.At $2, quantity supplied could be 45 units for the other and 54 for the other. e.There is not enough information to answer the question.

a.At $2, quantity supplied could be 40 units for one supplier and 93 for the other. <200-67=133 ... find one that equals 133>

Which of the following illustrates the law of supply? a.Company ABC increases the quantity supplied of its product as the price of that product rises. b.Company ABC decreases the quantity supplied of its product as the price of that product rises. c.Joan buys more of product ABC as the price of that product falls. d.Joan buys less of product ABC as the price of that product falls.

a.Company ABC increases the quantity supplied of its product as the price of that product rises. <The law of supply states that price and quantity supplied are DIRECTLY RELATED, all else CONSTANT. As the price of the product RISES, the seller will be motivated to INCREASE the quantity supplied of the good.>

Which of the following would not cause the supply curve for good Z to shift? a.a change in the price of good Z b.a change in government regulations imposed upon the producers of good Z c.a change in the price of a resource that is necessary for the production of good Z d.a change in the number of firms producing and selling good Z

a.a change in the price of good Z

The fundamental reason why the supply curve is typically ___________________ involves the _________________________. a.upward sloping; law of diminishing marginal returns b.vertical; law of diminishing marginal returns c.upward sloping; law of diminishing marginal utility d.downward sloping; law of diminishing marginal utility

a.upward sloping; law of diminishing marginal returns <Most supply curves are upward sloping, primarily because of the law of diminishing marginal returns. An upward-sloping supply curve reflects the fact that a higher price is an incentive to producers to produce more of the good.>

When P = $4, the quantity demanded of a good is 40 units, and the quantity supplied of the good is 60 units. For every $1 decrease in the price of this good, quantity demanded rises by 5 units and quantity supplied falls by 5 units. The equilibrium price of this good is _____________ and the equilibrium quantity of this good is _______ units. a.$3, 45 b.$2, 50 c.$1, 50 d.$2, 45 e.$1, 55

b. $2, 50

***Refer to the exhibit. Which of the following would result in a move from point A to point B? <https://cxp-cdn.cengage.info/protected/prod/assets/46/f/46fb73d8-7d53-4eb8-8b23-1d9c9f7c6e30.jpg?__gda__=st=1568605607~exp=1569210407~acl=%2fprotected%2fprod%2fassets%2f46%2ff%2f46fb73d8-7d53-4eb8-8b23-1d9c9f7c6e30.jpg*~hmac=ceccf3b3de96692f484fe4708bc824618a012b7c731e0a3be021c649b075a980> a.There was a decrease in the price of a substitute. b.There was a decrease in the price of a complement. c.There was a decrease in the number of buyers. d.There was an increase in the price of a resource. e.There was a decrease in the price of a resource.

b. There was a decrease in the price of a complement.

Suppose that the government imposes a new $10 per-unit tax on the production of automobile tires. The result would be a(n) ________________ in the equilibrium price of automobile tires and a(n) ______________________in the equilibrium quantity of automobile tires. a.increase, increase b.increase, decrease c.decrease, increase d.decrease, decrease

b. increase, decrease

If the quantity demanded of good XYZ is greater than the quantity supplied of good XYZ, then the price of the good _______________________ the equilibrium price. a.Is greater than b.is less than c.is equal to d.could be either greater than or less than

b. is less than <In order for the quantity demanded to be greater than the quantity supplied, the price of the product must be below the equilibrium price. At this relatively low price the buyers want to purchase a quantity of output that is greater than the quantity of output that the sellers want to produce and sell.>

If the price a buyer pays for a good is $33 and the maximum price she would be willing and able to pay is $45, then _________________ is ______________. a.producers' surplus, $12 b.consumers' surplus, $12 c.producers' surplus $78 d.consumers' surplus, $78 e.consumers' surplus, $33

b. the consumers' surplus, $12.

***Refer to the exhibit. In the market shown, if equilibrium was originally at point Z and the new equilibrium is now at point X, this change may have been caused by <LINK> a.An increase in income (assuming we are dealing with a normal good) and a decrease in number of sellers. b.An increase in the price of a substitute and a subsidy on the production of the good. c.A decrease in income (assuming we are dealing with an inferior good) and an increase in the prices of relevant resources. d.An increase in the price of a complement and a tax on the production of the good. <https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d3804c9-4636-4c64-8765-ff6c1f1dda07.jpg?__gda__=st=1568605607~exp=1569210407~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d3804c9-4636-4c64-8765-ff6c1f1dda07.jpg*~hmac=e7ce2548e1a551995a4961f396c29e925ca7c91cebd2a21e7e710e92b52320c6>

b.An increase in the price of a substitute and a subsidy on the production of the good.

Which of the following statements is true? a.There is a surplus of a good when the quantity demanded exceeds the quantity supplied. b.The equilibrium price of a good occurs where quantity demanded and quantity supplied are equal. c.There is a shortage of a good when the quantity supplied exceeds the quantity demanded. d.The law of supply states that as the price of a good increases, the quantity supplied will decrease.

b.The equilibrium price of a good occurs where quantity demanded and quantity supplied are equal.

***Which of the following would lead to a movement up along a given demand curve for carrots? a.a decrease in the price of carrots b.an increase in the price of carrots c.an increase in the price of a substitute for carrots d.a decrease in the price of a substitute for carrots

b.an increase in the price of carrots < A demand curve is a graph showing various combinations of price and quantity demanded, with price on the vertical axis and quantity demanded on the horizontal axis. A movement up along a given demand curve for carrots would be caused by an increase in the price of carrots and leads to a decrease in the quantity demanded of carrots.>

Which of the following would cause a leftward shift of the supply curve for peanut butter? a.an increase in the price of peanut butter b.an increase in the price of peanuts c.an improvement in technology in the production of peanut butter d.a subsidy is granted to peanut butter producers

b.an increase in the price of peanuts <Peanuts are a resource in the production of peanut butter. When a resource cost rises, a firm will not be able to afford to purchase as much of the resource, and so will not be able to produce as much of the product at each possible product price. An increase in the price of peanuts would thus shift the peanut butter supply curve leftward.>

The supply of good X falls and the price of good X rises. Good Y is a substitute for good X. It follows that: a.supply of good Y will rise. b.demand for good Y will rise. c.supply of good Y will decline. d.demand for good Y will fall.

b.demand for good Y will rise.

Suppose the market for pizza slices starts out in equilibrium where the equilibrium price of a pizza slice is $1.50 and the equilibrium quantity is 600 slices. Now, suppose the government imposes a per-unit tax on the production of pizza slices. After the tax is imposed, the new equilibrium price of a pizza slice would be _________________ $1.50 and the new equilibrium quantity of a pizza slice would be ________________ 600 slices. a.less than, more than b.greater than, fewer than c.greater than, more than d.less than, fewer than

b.greater than, fewer than <An increase in taxes that raises the per-unit costs of a good will shift the supply curve for the good leftward. The result will be an increase in the good's equilibrium price and a decrease in the equilibrium quantity. Since the original equilibrium price is $1.50 per slice, we can conclude that the new equilibrium price must be greater than $1.50 and since the original equilibrium quantity is 600 slices we can conclude that the new equilibrium quantity must be fewer than 600 slices.>

Price received minus minimum selling price equals a.consumers' surplus b.producers' surplus c.total surplus d.a shortage e.a surplus

b.producers' surplus

A change in the price of X will change the _______________________ whereas a change in preferences will change the ___________________. a.supply of X; quantity supplied of X b.quantity demanded of X; demand for X c.demand for X; quantity demanded of X d.quantity demanded of X; supply of X

b.quantity demanded of X; demand for X A change in the price of X will change the quantity demand of X and a change in preferences will change the demand for

The law of demand states that price and ___________________ are ______________ related, ceteris paribus. a.demand, inversely b.quantity demanded, inversely c.quantity supplied, directly d.quantity demanded, directly

b.quantity demanded, inversely

Suppose that pasta and pasta sauce are complements. As a result of a decline in the supply of pasta, the price of pasta rises. All of the following will occur except: a.the quantity demanded of pasta will decline b.the demand for pasta sauce will increase c.the demand for pasta sauce will decrease d.the equilibrium quantity of pasta sauce will decline

b.the demand for pasta sauce will increase

If the price paid and received is $4, the maximum buying price is $20, and the minimum selling price is $2, then consumers' surplus is equal to ___________ dollars and producers' surplus is _________ dollars. a.$18, $2 b.$22, $24 c.$16, $2 d.$2, $18

c. $16, $2

Refer to Exhibit 3-2. Graph ______________ represents a situation in which the seller of the good does not have time to produce more units of the good or when additional units cannot be produced. <https://cxp-cdn.cengage.info/protected/prod/assets/07/f/07f237d8-b8a5-448a-a93f-3cb0a681ea39.png?__gda__=st=1568605607~exp=1569210407~acl=%2fprotected%2fprod%2fassets%2f07%2ff%2f07f237d8-b8a5-448a-a93f-3cb0a681ea39.png*~hmac=e0e447e237b749de138d2e4456252f258eddb308c2392e58061e74aab44d411e> a.(1) b.(2) c.(3) d.(4)

c. (3) <A vertical supply curve indicates that the seller of the good does not have time to produce more units of the good or when additional units cannot be produced.>

If the supply of oranges increases at the same time that the demand for oranges increases, what would the impact be on the equilibrium price and quantity of oranges? a.The equilibrium price of oranges would increase, but the impact on the equilibrium quantity of oranges cannot be determined without more information. b.The equilibrium quantity of oranges would decrease, but the impact on the equilibrium price of oranges cannot be determined without more information. c.The equilibrium quantity of oranges would increase, but the impact on the equilibrium price of oranges cannot be determined without more information. d.The equilibrium price of oranges would decrease and the equilibrium quantity of oranges would increase.

c. The equilibrium quantity of oranges would increase, but the impact on the equilibrium price of oranges cannot be determined without more information <An increase in the supply of oranges would shift the supply curve for oranges rightward, lowering the equilibrium price and raising the equilibrium quantity. An increase in the demand for oranges would shift the demand curve for oranges rightward, raising both the equilibrium price and quantity. The combination of these two occurrences would definitely raise the equilibrium quantity of oranges, but the impact upon the equilibrium price depends upon whether the change in supply was greater than, less than, or equal to the change in demand. Without further information about the relative magnitude of these changes, the impact on the equilibrium price cannot be determined.>

The law of ________________________ is one of the reasons that help to explain the law of demand. a.supply b.increasing opportunity costs c.diminishing marginal utility d.normative economics

c. diminishing marginal utility <The law of diminishing marginal utility states that over a given time period, the marginal utility gained by consuming successive units of a good will tend to decline. Since additional units generate less utility for the buyer, the buyer will only be willing to purchase those units if the seller reduces the price. The law of demand states that price and quantity demanded have an inverse relationship, ceteris paribus, which is supported by the law of diminishing marginal utility.>

As technology improves in the production of computers, the equilibrium price of computers will ____________ and the equilibrium quantity will _________________. a.rise, rise b.fall, fall c.fall, rise d.rise, fall

c. fall, rise <An improvement in technology refers to the ability to produce more output with the same amount of resources, reducing the per-unit production cost. At a lower per-unit production cost, the firm would be able to increase the quantity supplied at each price level, shifting the good's supply curve rightward. The result would be a decrease in the good's equilibrium price and an increase in the good's equilibrium quantity.>

Given that butter and margarine are substitutes, a shift in preferences in favor of butter would be predicted to do all of the following EXCEPT a.raise the equilibrium price of butter. b.increase the quantity supplied of butter. c.increase the supply of margarine. d.increase the demand for butter.

c. increase the supply of margarine.

Suppose that good ABC is a neutral good for Leah. If Leah's income rises, then the result will be that Leah's demand curve for good ABC will a.shift rightward. b.shift leftward. c.not shift at all. d.shift rightward immediately and then shift leftward.

c. not shift at all.

Suppose the market price of pizza is $2.50, where the quantity demanded is 200 slices and the quantity supplied is 1,000 slices. The market is experiencing a ________________ of _______________ slices of pizzas. a.shortage, 800 b.shortage, 400 c.surplus, 800 d.surplus,400

c. surplus, 800

Which of the following would lead to a shift of the demand curve for chicken noodle soup? a.a change in the price of chicken noodle soup b.the government imposes a tax on soup producers of $0.50 tax per can produced c.a change in the price of chicken rice soup d.a change in technology in the production of chicken noodle soup

c.a change in the price of chicken rice soup

If supply decreases by more than demand increases, then a.equilibrium price and quantity will rise. b.equilibrium price and quantity will fall. c.equilibrium price rises and equilibrium quantity falls. d.equilibrium quantity rises and equilibrium price falls.

c.equilibrium price rises and equilibrium quantity falls.

Elizabeth states that when the price of bread goes up, the supply of bread increases because producers will want to make and sell more bread. An economist would say that Elizabeth is using the term "supply" a.correctly. b.incorrectly, when she should be using the term "demand." c.incorrectly, when she should be using the term "quantity supplied." d.incorrectly, when she should be using the term "quantity demanded."

c.incorrectly, when she should be using the term "quantity supplied." (talkin' bout sellers side, not consumer)

On a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve is shorter than the horizontal distance to the supply curve. There is a ___________ at that price and we are clearly ____________ the equilibrium price. a.shortage; above b.shortage; below c.surplus; above d.surplus; below

c.surplus; above

"As the price of pears goes up, the demand for pears goes down." The author of this statement a.implies that demand and price have a direct relationship. b.implies that price and demand are unrelated. c.uses the word "demand" when he should use the word "quantity demanded." d.uses the word "demand" when he should use the word "supply." e.none of the above

c.uses the word "demand" when he should use the word "quantity demanded."

If Jorge's demand for hamburgers rises as his income rises, then for Jorge hamburgers are a.a bad good. b.an inferior good. c.a preferential good. d.a normal good. e.a neutral good.

d. a normal good.

If the supply for a good increases by more than the demand for the good increases, then equilibrium price will _______________ and equilibrium quantity will ______________. a.rise, rise b.rise, fall c.fall, fall d.fall, rise

d. fall, rise

If the producers of steel expect that the future price of steel will be substantially higher than it is now, the current supply curve for steel would likely a.shift rightward. b.not shift at all. c.shift rightward, then immediately leftward. d.shift leftward.

d. shift leftward. <If steel sellers predict that the price of steel will be higher in the future, they will likely reduce the amount of steel placed on the market today in favor of selling it at a later date, shifting the current supply curve leftward.>

Suppose that the price of a good is currently causing disequilibrium in the market such that the quantity demanded is greater than the quantity supplied. In this situation, there is a __________ of this good in the market, which pushes the price of the good __________ toward its equilibrium value. a.surplus, downward b.surplus, upward c.shortage, downward d.shortage, upward

d. shortage, upward

For which situation is it true that an increase in the supply of the good will not change the equilibrium price of the good? a.The supply curve is perfectly vertical and the demand curve is downward sloping. b.The supply curve is perfectly horizontal and the demand curve is downward sloping. c.The demand curve is perfectly vertical and the supply curve is upward sloping. d.The demand curve is perfectly horizontal and the supply curve is upward sloping.

d.The demand curve is perfectly horizontal and the supply curve is upward sloping.

If the supply of bread increases at the same time that the demand for bread decreases, what would the impact be on the equilibrium price and quantity of bread? a.The equilibrium price of bread would increase, but the impact on the equilibrium quantity of bread cannot be determined without more information. b.The equilibrium quantity of bread would increase, but the impact on the equilibrium price of bread cannot be determined without more information. c.The equilibrium price of bread would decrease and the equilibrium quantity of bread would remain constant. d.The equilibrium price of bread would decrease, but the impact on the equilibrium quantity of bread cannot be determined without more information.

d.The equilibrium price of bread would decrease, but the impact on the equilibrium quantity of bread cannot be determined without more information.

Suppose that the market for pizza slices starts out in equilibrium where the equilibrium price of a pizza slice is $1.50 and the equilibrium quantity is 600 slices. Now, suppose the results of a scientific study reveal that eating pizza has been linked to poor performance in school. The impact on the pizza market would likely be that the new equilibrium price of a pizza slice would be _________________ $1.50 and the new equilibrium quantity of a pizza slice would be ________________ 600 slices. a.less than, more than b.greater than, fewer than c.greater than, more than d.less than, fewer than

d.less than, fewer than

A vertical supply curve for good X indicates that as the price of good X rises a.the good's supply curve will shift leftward. b.the good's supply curve will shift rightward. c.there will be no resulting change in the quantity demanded of good X. d.there will be no resulting change in the quantity supplied of good X.

d.there will be no resulting change in the quantity supplied of good X.

Which of the following illustrates the law of demand? a.Karen buys fewer shirts at $30 each than at $25 each, ceteris paribus. b.Jingnan buys more of a given soft drink at $4 a gallon than at $3 per gallon, ceteris paribus. c.George buys fewer pens at $3 per pen than at $2 per pen, ceteris paribus. d.a, b, and c e.a and c

e. a and c

In the supply-and-demand diagram of the market for printers, the equilibrium point has moved down and to the left. What could have caused this? a.a decline in the price of printers b.a decline in the demand for printers that is greater than the increase in the supply of printers. c.an increase in the price of a printer complement d.an increase in the price of a relevant resource e.b and c

e. b and c

If the demand curve shifts leftward, this means a.quantity demanded is greater only at a particular price. b.quantity demanded is less only at a particular price. c.buyers are willing and able to purchase less of the good at every price. d.quantity demanded is less at every price. e.c and d

e. c and d

When the quantity of a good is less than the equilibrium quantity, it follows that the _____________ is ________________ the __________________. a.minimum selling price, greater than, maximum buying price b.maximum buying price, less than, minimum selling price c.maximum buying price, greater than, minimum selling price d.minimum selling price, less than, maximum buying price e.c and d

e. c and d