Homework 2
Which of the following will result in an increased price of milk?
A shift to the right of the demand curve for milk.
The primary difference between a change in supply and a change in the quantity supplied is:
a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve
Demand is defined as:
a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.
A decrease in supply means:
a shift to the left of the entire supply curve
According to the concept of the invisible hand
competitive free market systems are efficient under certain conditions
The bulk of the nation's output is produced by:
corporations
A maximum price set below the equilibrium price is a:
price ceiling
In he 'standard' supply and demand graph, which of the following is correct
quantity goes on the horizontal axis while price goes on the vertical
If economists say, "the price is too high," they mean that:
quantity supplied is greater than quantity demanded
It's certain that the equilibrium price will fall when:
the supply curve shifts to the right and the demand curve shifts to the left.
Which of the following always results in an increase in price and quantity?
an increase in demand with no change in supply
A decrease in the price of a good will, all other things unchanged, result in:
an increase in the quantity demanded
It is true that the equilibrium quantity will always go up if supply:
and demand both increase
Which of the following would result in a MOVEMENT ALONG the demand curve?
a change in costs of production
The primary difference between a change in demand and a change in the quantity demanded is:
a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve
Which of the following would not change the demand for automobiles?
a change in the cost of steel
The equilibrium price in a market is established subject to the all other things unchanged condition (ceterius paribus) and, therefore, very well may change due to:
a change in the price of resource inputs used to produce the good
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
a decrease; a decrease
If a demand curve shifts to the left, then:
a lower equilibrium price and quantity would result
If the government sets out to help low-income people by establishing a maximum amount for rent:
a price ceiling has been set and a shortage of rental units may occur
A market is a set of arrangements where:
buyers and sellers can get together and buy and sell
Price controls:
can result in inequitable outcomes
A negative relationship between the quantity demanded and price is called the law of ______.
demand
A market shortage occurs if the quantity:
demanded is greater than the quantity supplied
Those who make economic policy concerning price controls often do so in order to:
establish a more equitable result based on normative judgements
A decrease in the price of eggs, all other things unchanged, will result in a(n):
greater quantity of eggs demanded
An area of concern in the provision of health care in the United States is that:
health-care costs and spending are too high
A shift of a demand curve to the right, all other things unchanged, will:
increase equilibrium price and quantity
An increase in demand, all other things unchanged, will result in a(n) ________ in the equilibrium price and a(n) ________ in the equilibrium quantity.
increase; increase
A price ceiling will have no effect if:
it is set above the equilibrium price.
The concept of the invisible hand is important because
it underlies belief in free markets is suggests that market systems are efficient is leads to laissez faire
A ceiling price set in the policy of rent controls:
may result in some people who rent out units to leave the business because they cannot cover costs
If demand and supply both shift to the right, then:
quantity will go up, but price could go up, down, or stay the same
Supply is best defined as the:
relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity
In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:
rise.
A supply curve that is upward sloping means that:
suppliers will want to sell more at higher prices
The relatio nship between the value and price of a stock suggests that:
the equilibrium price of a stock strikes a balance between those who think the stock is worth more and those who think it's worth less at the current price it is the market's best guess regarding the expected value of the company's future profits
The intersection of the supply and demand curves indicates:
the equilibrium solution in the market
A persistent shortage may occur if:
the government imposes a price ceiling
An important reason for the rapid increase in output in the computer industry after 1980 was:
the invention of the microchip a reduction in the size and cost of computers a great increase in demand
There is equilibrium in the market when:
there is no shortage. there is no surplus. price is established where the supply curve and the demand curve intersect.
Price ceilings which lead to shortages will impose costs on society because they:
will lead to long waiting lines. may result in black market prices, which are higher than the market-determined price would be. lead to a smaller quantity offered on the market.
