Macro test 1 (problem set 2 questions)

Refer to Figure 4-31. What are the values of the equilibrium price and quantity?

$4 and 200 packs

Suppose that the market for cookies can be represented by the following equations:Demand: P = 12 - 0.5Qd Supply: P = 0.1Qs where P is the price per cookie, and Q represents quantity of cookies consumed per day. What is the equilibrium price of cookies in the market?

2

Suppose that the market for cookies can be represented by the following equations:Demand: P = 12 - 0.5Qd Supply: P = 0.1Qs where P is the price per cookie, and Q represents quantity of cookies consumed per day. What is the equilibrium quantity of cookies?

20

Refer to Table 4-4. If these are the only four sellers in the market, then when the price increases from $6 to $8, the market quantity supplied a. increases by 12 units. b. increases by 0.5 units. c. decreases by 4 units. d. increases by 2 units.

A. Increases by 12 Units

A competitive market is a market in which a. no individual buyer or seller has any significant impact on the market price. b. the forces of supply and demand do not apply. c. an auctioneer helps set prices and arrange sales. d. there are only a few sellers.

A. No individual buyer or seller has any significant impact on the market price.

Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if the price of this good increases.

B to A

The movement from point A to point B on the graph shows a. an increase in demand. b. an increase in quantity demanded. c. a decrease in demand. d. a decrease in quantity demanded

B. An increase in quantity demanded

A likely example of complementary goods for most people would be a. cola and lemonade. b. chips and salsa. c. lawnmowers and automobiles. d. butter and margarine.

B. Chips and Salsa

The line that relates the price of a good and the quantity supplied of that good is called the supply a. curve, and it usually slopes downward. b. curve, and it usually slopes upward. c. schedule, and it usually slopes upward. d. schedule, and it usually slopes downward.

B. Curve, and it usually slopes upward

A baker recently has come to expect higher prices for bread in the near future. We would expect a. no change in the baker's current supply of bread; instead, future supply will be affected. b. the baker to supply less bread now than she was supplying previously. c. the baker to supply more bread now than she was supplying previously. d. the demand for bread to fall.

B. the baker to supply less bread now than she was supplying previously.

Refer to Table 4-1. If the law of demand applies to this good, then Q1 could be a. 100. b. 200. c. 0. d. 400.

C. 0

Refer to Figure 4-2. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is a. 10 units. b. 15 units. c. 0 units. d. 25 units.

C. 0 Units

A group of buyers and sellers of a particular good or service is called a. an economy. b. a coalition. c. a market. d. a competition.

C. A Market

Refer to Figure 4-3 . The shift from Da to Db is called a. a decrease in demand. b. an increase in quantity demanded. c. an increase in demand. d. a decrease in quantity demanded.

C. An increase in demand

Using figure 4-1, it is apparent that the a. good is inferior. b. good is a normal good. c. demand for the good conforms to the law of demand. d. demand for the good decreases as income increases.

C. Demand for the good conforms to the law of demand

A likely example of substitute goods for most people would be a. peanut butter and jelly. b. televisions and subscriptions to cable television services. c. pencils and pens. d. tennis balls and tennis rackets.

C. Pencils and Pens

A monopoly is a market with one a. seller, and that seller is a price taker. b. buyer, and that buyer sets the price. c. seller, and that seller sets the price. d. buyer, and that buyer is a price taker.

C. seller, and that seller sets the price.

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a. a complementary good. b. a normal good. c. a substitute good. d. an inferior good.

D. An inferior good

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the a. demand for Ashley's bread will increase. b. demand for Ashley's bread will decrease. c. supply of Ashley's bread will decrease. d. supply of Ashley's bread will increase.

D. Supply of Ashley's bread will increase

Refer to Figure 4-30. In this market for iPhones, the technology improves while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity.

Equilibrium price decreases and quantity increases.

T or F, A decrease in the price of a complement will shift the demand curve for a good to the left.

False

Refer to figure 4-28. Using the points on the figure, describe the change that would occur if a news report stated that the price of this good was expected to increase next week.

It would create an increase in demand today. (A to C)

Refer to Figure 4-30. In this market for iPhones, the technology improves while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Supply will shift to the right

Refer to figure 4-28 Using the points on the figure, describe the change that would occur if consumer incomes increase and this is an inferior good. Selected Answer: The demand for the inferior good would decrease when income increases.

The demand for the inferior good would decrease when income increases. (C to A)

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation? a. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. b. The demand curve for beef must be positively sloped. c. The price of chicken has risen, and the price of steak sauce has fallen. d. Consumers have experienced an increase in income, and beef-production technology has improved

a. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.