Macro Ch. 3-5

For most of human history, salt was a rare and valuable commonly that had to either be mined or extracted from the ocean through evaporation. This changed when modern chemistry allowed humans to produce it in factories. How did this development affect the market for salt? a) demand increased, causing the price to fall b) demand increased, causing the price to fall c) supply increased, causing the price to rise d) supply increased, causing the price to fall

d

If a plastic lawn furniture is an inferior good, as consumer income increases the equilibrium price of plastic furniture will ___ while the equilibrium quantity of plastic furniture will ____. a) decrease; increase b) increases; increases c) increases; decreases d) decerases; decreases

d

If college students decided that Apple computers are no longer stylish and they seek out a more aesthetically pleasing computer, what will happen in the market for Apple computers? a) demand will decrease, quantity demanded will decrease, and price will increase b) supply will decrease, quantity demanded will decrease, and price will decrease c) demand will decrease, quantity supplied will increase, and price will decrease d) demand will decrease, quantity supplied will decrease, and price will decrease

d

Which of the following could shift a demand curve to the right? a) technology for producing output improved b) technology for producing output gotten worse c) price of a complement increased d) price of a complement decreased

d

Why is consuming a quantity above equilibrium wasteful? a) because there are willing buyers of the good who do not purchase it b) it isn't wasteful c) because it creates a shortage, which generates waste d) because resources are used without making society better off

d

A supply curve indicates that: a) the supply for a good is higher when the price of that good is lower b) the quantity supplied of a good is higher when the price of that good is lower c) the supply for a good is higher when the price of that good is higher d) the quantity supplied of a good is higher when the price of that food is higher

d

An increase in production costs at any given quantity _____ supply. A) changes in an indeterminate B) increases C) decreases D) does not change

C

As world coal prices rise due to increase scarcity, the demand for wind energy should: a) remain the same b) change in an indeterminate direction c) increase d) decrease

C

If hipsters decide that Pabst Blue Ribbon has become cliché and they seek out a more ironic beverage, what will happen in the market for PBR? A) Demand will decrease, quantity demanded will decrease, and price will increase. B) Supply will decrease, quantity demanded will decrease, and price will decrease. C) Demand will decrease, quantity supplied will decrease, and price will decrease. D) Demand will decrease, quantity supplied will increase, and price will decrease.

C

Why is the world unlikely to ever literally run out of oil? A) The demand for oil is not very high. B) As the demand for oil increases, the quantity supplied increases as well. C) There is an unlimited supply of oil. D) As the cheap-to-produce oil gets used up, the price of oil will rise, encouraging conservation and production using more expensive techniques increases.

D

Consider the market for Tofurkey (a flavored tofu product and meat substitute, made from soy milk). Now suppose there is a drought in Brazil, a major soybean grower. How will this affect the market price for Tofurkey? A) It will lower the price due to the demand curve shifting to the left. B) It will raise the price due to the demand curve shifting to the right. C) It will lower the price due to the supply curve shifting to the right. D) It will raise the price due to the supply curve shifting to the left. E) It will lower the price due to the supply curve shifting to the left.

d

In markets for manufactured goods, a new form of 3-D printing technology that lowers production costs ____ supply. a) does not change b) increases c) decreases d) more information is needed

b

When participants in the stock market (both buyers and sellers) expect the price of a stock to be lower next week than they previously thought, the price of stocks ____ today. a) increases b) decreases c) stays the same d) none of the above

b

Which of the following could shift both the demand curve and the supply curve to the right? a) price of an input increased and price of a substitute decreased b) none of the other answers are correct c) price of an input increased and price of a substitute increased d) price of input decreased and price of a substitute decreased

b

As the price of a good increases: a) demand for that good will decrease b) suppliers will adjust their quantity supplied only if demand for the good declines c) it becomes profitable to produce more of the good even with higher costs of production d) it becomes profitable to produce more of the good as long as the costs of production stay the same

c

In the market for a normal good, an increase in income will cause an increase in _____, an increase in quantity ____, and a(n) ______ in price. a) supply; demanded; decrease b) demand; supplied; decrease c) demand; supplied; increase d) supply; demanded; increase

c

Vernon Smith tested the supply of demand model in the laboratory and found that: a) the results were not consistent with competitive price theory, as he expected. b) the model may work in real life, but it does not work in the laboratory c) buyers and sellers quickly converge on the predicted equilibrium d) the buyers with the lowest willingness to pay bought the goods

c

What will happen in the market for cotton as a result of a severe drought? A) The demand for cotton will increase causing the equilibrium price to rise and equilibrium quantity to rise. B)The supply of cotton will decrease causing the equilibrium price to fall and equilibrium quantity to fall. C) The supply of cotton will decrease causing the equilibrium price to rise and equilibrium quantity to fall. D) The demand for cotton will decrease causing the equilibrium price to fall and equilibrium quantity to fall.

c

When there is a recession, the price of oil tends to fall because: a) the supply of oil increases during a recession, due to technological change b) people drive more during recessions while looking for employment c) incomes fall during recession, and oil is a normal good d) the prices of substitutes for oil rising during recessions

c

Which of the following could shift a supply curve to the left? a) technology for producing output improved b) price of the product decreased c) price of an input increased d) price of an input decreased

c

If equilibrium price decreases while equilibrium quantity increases, then we know that: a) market supply has increased b) market supply has decreased c) market demand has increased d) market demand has decreased

a

If the government imposes decides to impose a price ceiling below the equilibrium price in the apartment rental market, and the market is perfectly competitive, the results will include a ____ and a ____. a) shortage; deadweight loss b) surplus; deadweight loss c) shortage; large increase in producer surplus d) surplus; large increase in producer surplus

a

If the market price is below the equilibrium price, which of the following will occur: a) quantity demanded exceeds quantity supplied and the market price will eventually rise. b) quantity demanded exceeds quantity supplied and the market price will eventually fall. c) quantity supplied exceeds quantity demanded and the market price will eventually fall. d) quantity supplied exceeds quantity demanded and the market price will eventually rise.

a

Imagine a perfectly competitive market in which at a price of $10 quantity supplied is 50 units and quantity demanded is 40 units. Equilibrium price in this market: a) is less than $10 b) is equal to $10 c) is greater than $10 d) differs from $10 in an indeterminate direction

a

In the market for a normal good, an increase in income will cause and increase in ___ and a (n) ___ in price. a) demand; decrease b) supply; increase c) supply; decrease d) demand; increase

a

The difference between the maximum price a consumer is willing to pay for a given quantity of a good and its market price is: a) consumer surplus b) producer shortage c) producer surplus d) consumer shortage

a

Which of the following does NOT shift demand? a) price b) expectations c) population d) income

a

Higher gasoline prices have led to a decrease in the demand for large SUVs. Consequently, in the market for SUVs economists are predicting: a) an increase in price and a decrease in the quantity of sales b) a decrease in both the price and quantity of sales c) an increase in both the price and quantity of sales d) a decrease in price and an increase in the quantity of sales

b

If equilibrium price increases while equilibrium quantity decreases, then we know that: a) market demand has decreased b) market supply has decreased c) market supply has increased d) market demand has increased

b

Imagine a perfectly competitive market in equilibrium. If demand decreases, bit the price is prevented from changing, the market will experience: a) excess demand b) excess supply c) no change d) a tax

b