ECON201 Chap 3 (EXAM 1) part two
Consider the market for Ping golf clubs. Suppose the price of memberships at local golf courses increases. Assume memberships at local golf courses and Ping golf clubs are complements. Part 3 The demand curve for Ping golf clubs will shift to the _____. Instead, suppose the price of tennis rackets decreases. If tennis rackets and golf clubs are substitutes, then the demand for Ping golf clubs will ______. A. Left, Decrease B. Right, Decrease C.Left, Increase D.Right, Increase
A
Consider the supply of crude oil on the world market. In August 2011, the price of oil was roughly $80 per barrel. Which of the following changes would increase the supply of oil? The oil supply curve would shift to the right if A. future oil prices were expected to be lower. B. the cost of transporting oil were to increase. C. the prices of other petroleum-based products (substitutes) were to increase. D. the number of oil-producing countries were to decrease. E. the world price of oil were to increase.
A
Does it indicate that gasoline-powered cars and hybrids are substitutes or complements? A. Substitutes, because the more consumers buy of one good, the less they will buy of the other good. B. Substitutes, because the more consumers buy of one good, the more they will buy of the other good. C. Complements, because they are used for the same purpose. D. Complements, because they are used together.
A
Goods and services that can be used for the same purpose are ________, and goods and services that are used together are ________. A. substitutes; complements B. normal goods; inferior goods C. inferior goods; normal goods D. complements; substitutes
A
If demand decreases and supply increases, which of the following will definitely occur? A. The equilibrium price will decrease. B. The equilibrium price will increase. C. The equilibrium quantity will increase. D. The equilibrium quantity will decrease.
A
In general, the term "ceteris paribus" means Part 2 A. all else equal. B. holding everything else variable. C. unsettled mathematical paradigms. D. Both A and B
A
The Toyota Prius is a gasoline-electric hybrid car that gets 54 miles to the gallon. An article in the Wall Street Journal notes that sales of the Prius have been hurt by low gasoline prices and that: "Americans are now more likely to trade in a hybrid or an electric vehicle for an SUV...." Does the article indicate that gasoline-powered cars and gasoline are substitutes or complements? Briefly explain. A. Complements, because they are used together. B. Substitutes, because the more consumers buy of one good, the less they will buy of the other good. C. Substitutes, because the more consumers buy of one good, the more they will buy of the other good. Your answer is not correct. D. Complements, because they are used for the same purpose.
A
What do economists mean by market equilibrium? A. A market outcome where quantity supplied is equal to quantity demanded. B. A condition where a good is no longer scarce. C. A condition where a good is abundantly available.
A
When the demand curve shifts to the right, A. the equilibrium price and quantity will both increase. B. the equilibrium price will decrease and the equilibrium quantity will increase. C. the equilibrium price and quantity will both decrease. D. the equilibrium price will increase and the equilibrium quantity will decrease.
A
Which of the following is the textbook's definition of a supply curve? A. a curve that shows the relationship between the price of a product and the quantity of the product supplied B. a table that shows the relationship between the price of a product and the quantity of the product supplied C. the quantity of a good or service that a firm is willing to supply at a particular price D. None of the above.
A
"When there is a shortage of a good A. consumers compete against one another by bidding the price upward. B. as prices increase, producers are driven to produce less. C. producers react to shortages by lowering prices. D. as prices increase, consumer demand more of a particular good. E. decreasing prices lead to a change in demand. The process continues until the market is finally in equilibrium."
A
According to an article in the Wall Street Journal, the demand for orange juice is declining in the United States "as newer entrants in the beverage aisle, including more-exotic fruit juices, such as pomegranate, energy drinks and ready-to-drink coffee, have grabbed a greater share of the market." At the same time, orange juice production has been declining as bacterial infections reduce the quantity of fruit that orange trees can produce. The article notes that despite the decline in the demand for orange juice, the price of orange juice might increase. Source: Alexandra Wexler, "U.S. Orange-Juice Sales Fall to Record Low," Wall Street Journal, August 18, 2014. Given the scenario described in the article, the price of orange juice could increase if A. demand increased more than the supply decreased. B. demand decreased less than the supply decreased. C. demand increased less than the supply decreased. D. demand decreased more than the supply decreased.
B
After World War II in 1945, the United States experienced a "baby boom" as birthrates rose and remained high through the early 1960s. In 2011, the first members of the baby boom generation became older than 65. What effect will this have on the market for medicine? As the first baby boomers become older than 65, the A. demand curve for medicine will shift to the left. B. demand curve for medicine will shift to the right. C. quantity of medicine demanded will increase. D. supply curve for medicine will shift to the right. E. demand curve for medicine will become vertical.
B
In early 2017, an article in the Financial Times about the oil market quoted the chief economist of oil company BP as saying: "Pricing pressure is likely to come from the supply side, because of strong growth in US shale oil (crude oil found within shale formations), and the demand side as the rise of renewable energy, including electric vehicles, gradually slows growth in oil consumption." After reading this article, a student argues: "From this information, we would expect that the price of oil will fall, but we don't know whether the equilibrium quantity of oil will increase or decrease." Source: Andrew Ward, "BP Warns of Price Pressures from Long-Term Oil Glut," Financial Times, January 25, 2017. Is the student's analysis correct? In the market for oil, the effect of the increasing use of electric vehicles is the demand curve will shift left. In the market for oil, the effect of growth in U.S. shale oil is the supply curve will shift right. The new market equilibrium will be where A. the new demand curve intersects the original supply curve. B. the new demand curve intersects the new supply curve. C. the new demand curve intersects the original demand curve. D. the original demand curve intersects the new supply curve.
B
The equilibrium price and quantity of a product was $100 and 1,000 units per month in 2020 and is $150 and 800 units per month in 2021. Assume that relative to demand in 2020, the market demand curve shifts to the right. Relative to supply in 2020, the market supply curve shifts to the left. From 2020 to 2021, A. supply increased more than demand increased. B. supply decreased more than demand increased. C. supply increased more than demand decreased. D. supply decreased more than demand decreased.
B
The law of demand is the A. rule that, holding everything else constant, when the price of a good rises, the quantity demanded will increase, and when the price of a good falls, the quantity demanded will increase. B. rule that, holding everything else constant, when the price of a good falls, the quantity demanded will increase, and when the price of a good rises, the quantity demanded will decrease. C. requirement that when analyzing the relationship between price and quantity demanded, other variables must be held constant. D. rule that, holding everything else constant, when the price of a good rises, the quantity demanded will increase, and when the price of a good falls, the quantity demanded will decrease.
B
Which of the following is the correct definition of demand schedule? A. a curve that shows the relationship between the price of a product and the quantity of the product supplied B. a table that shows the relationship between the price of a product and the quantity of the product demanded C. the demand for a product by all the consumers in a given geographic area D. the quantity of a good or a service that a consumer is willing to purchase at a particular price
B
Which of the following is the textbook's definition of a supply schedule? A. the quantity of a good or service that a firm is willing to supply at a particular price B. a table that shows the relationship between the price of a product and the quantity of the product supplied C. a curve that shows the relationship between the price of a product and the quantity of the product demanded D. None of the above.
B
A perfectly competitive market is a market that meets the conditions of A. (1) many buyers and sellers, (2) all firms selling identical products, and (3) significant barriers to new firms entering the market. B. (1) many buyers and sellers, (2) all firms selling differentiated products, and (3) no barriers to new firms entering the market. C. (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. D. (1) few buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.
C
According to an article in the Wall Street Journal, the demand for orange juice is declining in the United States "as newer entrants in the beverage aisle, including more-exotic fruit juices, such as pomegranate, energy drinks and ready-to-drink coffee, have grabbed a greater share of the market." At the same time, orange juice production has been declining as bacterial infections reduce the quantity of fruit that orange trees can produce. The article notes that despite the decline in the demand for orange juice, the price of orange juice might increase. Source: Alexandra Wexler, "U.S. Orange-Juice Sales Fall to Record Low," Wall Street Journal, August 18, 2014. As a result of these events, the new equilibrium price of orange juice A. will decrease. B. will not change. C. could increase, decrease, or remain unchanged. D. will increase.
C
If a shortage exists in a market, we know that the actual price is A. below the equilibrium price, and the quantity supplied is greater than the quantity demanded. B. above the equilibrium price, and the quantity demanded is greater than the quantity supplied. C. below the equilibrium price, and the quantity demanded is greater than the quantity supplied. D. above the equilibrium price, and the quantity supplied is greater than the quantity demanded.
C
If a surplus exists in a market, we know that the actual price is A. below the equilibrium price, and the quantity demanded is greater than the quantity supplied. B. below the equilibrium price, and the quantity supplied is greater than the quantity demanded. C. above the equilibrium price, and the quantity supplied is greater than the quantity demanded. D. above the equilibrium price, and the quantity demanded is greater than the quantity supplied.
C
If demand and supply both increase, which of the following will definitely occur? A. The equilibrium price will increase. B. The equilibrium quantity will decrease. C. The equilibrium quantity will increase. D. The equilibrium price will decrease.
C
In early 2017, an article in the Financial Times about the oil market quoted the chief economist of oil company BP as saying: "Pricing pressure is likely to come from the supply side, because of strong growth in US shale oil (crude oil found within shale formations), and the demand side as the rise of renewable energy, including electric vehicles, gradually slows growth in oil consumption." After reading this article, a student argues: "From this information, we would expect that the price of oil will fall, but we don't know whether the equilibrium quantity of oil will increase or decrease." Source: Andrew Ward, "BP Warns of Price Pressures from Long-Term Oil Glut," Financial Times, January 25, 2017. Is the student's analysis correct? In the market for oil, the effect of the increasing use of electric vehicles is the demand curve will shift left. In the market for oil, the effect of growth in U.S. shale oil is the supply curve will shift right. The student's analysis is A. incorrect, because the equilibrium quantity will decrease. B. incorrect, because the equilibrium quantity will decrease but the equilibrium price may or may not decrease. C. correct. D. incorrect, because the equilibrium price may or may not decrease.
C
Which of the following events would shift the supply of smartphones to the right? A. an increase in the expected future price of smartphones B. a decrease in the price of smartphones C. a decrease in the price of inputs used to produce smartphones D. All of the above.
C
Which of the following illustrates the law of supply? A. A change in price causes a shift of the supply curve. B. An increase in the number of firms in an industry causes a shift of the supply curve. C. An increase in price causes an increase in the quantity supplied, and a decrease in price causes a decrease in the quantity supplied. D. All of the above illustrate the law of supply.
C
A good for which demand increases as income rises is ________, and a good for which demand increases as income falls is ________. A. a complement; a substitute B. a substitute; a complement C. an inferior good; a normal good D. a normal good; an inferior good
D
According to an article in the Wall Street Journal, the demand for orange juice is declining in the United States "as newer entrants in the beverage aisle, including more-exotic fruit juices, such as pomegranate, energy drinks and ready-to-drink coffee, have grabbed a greater share of the market." At the same time, orange juice production has been declining as bacterial infections reduce the quantity of fruit that orange trees can produce. The article notes that despite the decline in the demand for orange juice, the price of orange juice might increase. Source: Alexandra Wexler, "U.S. Orange-Juice Sales Fall to Record Low," Wall Street Journal, August 18, 2014. As a result of these events, the new equilibrium quantity of orange juice A. could increase, decrease, or remain unchanged. B. will increase. C. will not change. D. will decrease.
D
Suppose the price of a substitute to LCD televisions rises. What effect will this have on the market equilibrium for LCD TVs? The equilibrium price of LCD TVs will Part 2 A. increase and the equilibrium quantity will decrease. B. decrease and the equilibrium quantity will increase. C. decrease and the equilibrium quantity will decrease. D. increase and the equilibrium quantity will increase. E. not change and the equilibrium quantity will not change
D
The equilibrium price and quantity of a product was $100 and 1,000 units per month in 2020 and is $150 and 800 units per month in 2021. Assume that relative to demand in 2020, the market demand curve shifts to the right. Relative to supply in 2020, the market supply curve shifts to the left. The new market equilibrium is where A. the initial demand curve intersects the initial supply curve. B. there is a surplus. C. demand is greater than supply. D. the new demand curve intersects the new supply curve.
D
Which of the following is the correct definition of demand curve? A. the quantity of a good or a service that a consumer is willing to purchase at a particular price B. the demand for a product by all the consumers in a given geographic area C. a table that shows the relationship between the price of a product and the quantity of the product demanded D. a curve that shows the relationship between the price of a product and the quantity of the product demanded
D
The law of demand holds in the market for three goods, X, Y, and Z. An increase in the price of X causes an increase in the price of Y. A decrease in the price of X causes a decrease in the demand for Z. Which of the following conclusions is most strongly supported by the information given above? A. Y and Z are complements. B. X and Y are substitutes. C. Y and Z are inputs in the production of X. D. The slope of the demand curve for X is zero. E. Z is a substitute for input X in the production of Y.
E
In early 2017, an article in the Financial Times about the oil market quoted the chief economist of oil company BP as saying: "Pricing pressure is likely to come from the supply side, because of strong growth in US shale oil (crude oil found within shale formations), and the demand side as the rise of renewable energy, including electric vehicles, gradually slows growth in oil consumption." After reading this article, a student argues: "From this information, we would expect that the price of oil will fall, but we don't know whether the equilibrium quantity of oil will increase or decrease." Source: Andrew Ward, "BP Warns of Price Pressures from Long-Term Oil Glut," Financial Times, January 25, 2017. Is the student's analysis correct? In the market for oil, the effect of the increasing use of electric vehicles is the demand curve will shift ______.
Left
In early 2017, an article in the Financial Times about the oil market quoted the chief economist of oil company BP as saying: "Pricing pressure is likely to come from the supply side, because of strong growth in US shale oil (crude oil found within shale formations), and the demand side as the rise of renewable energy, including electric vehicles, gradually slows growth in oil consumption." After reading this article, a student argues: "From this information, we would expect that the price of oil will fall, but we don't know whether the equilibrium quantity of oil will increase or decrease." Source: Andrew Ward, "BP Warns of Price Pressures from Long-Term Oil Glut," Financial Times, January 25, 2017. Is the student's analysis correct? In the market for oil, the effect of growth in U.S. shale oil is the supply curve will shift _____ .
Right
he equilibrium price and quantity of a product was $100 and 1,000 units per month in 2020 and is $150 and 800 units per month in 2021. Assume that relative to demand in 2020, the market demand curve shifts to the right. Part 2 Relative to supply in 2020, the market supply curve __________
Shifts to the left
A curve that shows the relationship between the price of a product and the quantity of the product supplied.
Supply Curve
A table showing the relationship between the price of a product and the quantity of the product supplied.
Supply schedule
