Economics Chapter 3

A new wonder diet that results in a dramatic weight loss sweeps through America. The key to the diet is to eat unlimited amounts of red meat (beef) but no poultry or carbohydrate-rich foods. As millions of Americans switch to the new diet, we can expect: A. an increase in the demand for beef, leading to a shift to the right in the demand curve for beef and higher beef prices. B. an increase in the demand for beef, leading to a shift to the right in the demand curve for beef and lower beef prices. C. a decrease in the demand for beef, leading to a shift to the left in the demand curve for beef and higher beef prices. D. a decrease in the supply of beef, leading to a shift to the left in the supply curve for beef and higher beef prices.

an increase in the demand for beef, leading to a shift to the right in the demand curve for beef and higher beef prices

If the demand for tires goes down when the price of gas goes up, then tires and gas are: A. substitutes. B. both inexpensive. C. complements. D. both expensive.

complements

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that in the market for flights: A. supply increased. B. demand decreased. C. supply decreased. D. demand increased.

supply decreased

A shift of the demand curve for thin-crust pizza would not be caused by a change in:

the price of thin-crust pizza

Which of the following examples illustrates the law of demand?

Consumers buy more personal computers because prices have fallen

If tortilla chips are a normal good, what happens to equilibrium price and quantity when there is an increase in income? A. Equilibrium price decreases and equilibrium quantity increases. B. Equilibrium price decreases and equilibrium quantity decreases. C. Equilibrium price increases and equilibrium quantity increases. D. Equilibrium price increases and equilibrium quantity decreases.

Equilibrium price increases and equilibrium quantity increases

Consider the market for iPods. What happens if a fantastic new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk? A. The change in price is indeterminate and quantity decreases. B. Price increases and quantity increases. C. Price increases and the change in quantity is indeterminate. D. Price decreases and quantity increases.

The change in price is indeterminate and quantity decreases.

In the market for grass-fed beef, what would cause a price increase? A. The prices of grass and corn increase. B. There is a movement in the United States towards vegetarianism. C. The price of chicken decreases. D. Doctors tell patients that beef is full of saturated fat that causes heart attacks.

The prices of grass and corn increase

In the local market for coffee, what would happen if Joyce's Java and Everyday Joe's coffee shops go out of business? A. The demand curve shifts to the right. B. The supply curve shifts to the left. C. The supply curve shifts to the right. D. The demand curve shifts to the left.

The supply curve shifts to the left

A good is inferior if which of the following is true? A. When income increases, the demand decreases. B. When income increases, the demand increases. C. When income increases, the demand remains unchanged. D. Income and the demand are unrelated.

When income increases, the demand decreases

If chicken and beef are substitutes, then a fall in the price of chicken will bring about: A. an increase in the demand for beef. B. a decrease in the demand for beef. C. no change in the demand for beef. D. a decrease in the quantity demanded of beef.

a decrease in the demand for beef

A decrease in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price

a decrease; an increase

In much of the country, homeowners choose to heat their houses with either natural gas or home heating oil. Which of the following would cause a change in the demand for natural gas? A. a change in the price of home heating oil B. a change in income C. an increase in consumer tastes for natural gas as an energy source D. all of the above

all of the above

The market for milk is initially in equilibrium. Milk producers engage in an advertising program to encourage milk drinking, which succeeds in shifting consumer tastes toward drinking milk. More milk producers enter the market. Standard demand and supply analysis tells us that: A. the equilibrium price and quantity of milk will rise. B. the equilibrium quantity of milk will rise, but we can't determine how the equilibrium price will be affected. C. the equilibrium price of milk will rise, but we can't determine how the equilibrium quantity will be affected. D. the equilibrium price and quantity of milk will fall.

he equilibrium quantity of milk will rise, but we can't determine how the equilibrium price will be affected