Micro: Chapter 3 Quizzes

How do you derive a market supply curve from individual supply curves?

Add up quantities supplied by all individual producers for each price

From Diagram 3.B Which would cause the change in the demand for coffee illustrated by the shift from D1 to D2?

An increase in consumer incomes

Which statement is consistent with the law of supply?

An increase in market price will lead to an increase in quantity supplied.

Which of the following will cause the demand curve for product A to shift to the left?

An increase in money income if A is an inferior good

Which of the following characteristics lead to a downward-sloping demand curve?

An increase in purchasing power as market price decreases. Diminishing marginal utility.

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

An increase in supply

In which of the following statements are the terms "demand" and "quantity demanded" used correctly?

When the price of ice cream rose, the quantity demanded of ice cream fell and the demand for ice cream toppings fell.

A rightward shift in the demand curve for product C might be caused by:

a decrease in the price of a product that is complementary to C.

Which of the following will not cause the demand for product K to change?

A change in the price of K

From Diagram 3.D Which of the above diagrams illustrate(s) the effect of a decline in the price of personal computers on the market for computer software?

A only

Which statement is consistent with the law of demand?

A reduction in market price will lead to an increase in quantity demanded.

How do you derive a market demand curve from individual demand curves?

Add up quantities demanded by all individual consumers for each price

From Chart 3.E a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1500, will there be a surplus or a shortage? c. of how many units d. how many units will actually be rented each month e. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? f. of how many units g. how many units will actually be rented each month? h. Start at the original (correct) equilibrium price and quantity in part (a). Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, by how many units would the government have to increase the supply of housing in order to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

a. $2,000 and 12,500 demanded b. shortage c. 5,000 d. 10,000 e. surplus f. 5,000 g. 10,000 h. Fall to $1500 per month: 5,000 Fall to $1000 per month: 10,000 units Fall to $500 per month: 15,000 units

Suppose that at prices of $5, $4, $3, $2, and $1 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

improved technology for producing Z

From Chart 3.A a. Which buyer demands the most at a price of $7? b. Which buyer's quantity demanded increases the least when the price is lowered from $7 to $6? c. Which direction would the market demand curve shift if Tex withdrew from the market? d. What if Dex doubled his purchases at each possible price? e. Suppose that at a price of $6, the total quantity demanded increases from 23 to 33 units. Is this a 'change in the quantity demanded' or a 'change in demand'?

a. Rex b. Dex c. left d. right e. change in demand

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the following? a. the supply of cattle hides? b. hide prices c. the supply of leather goods d. the price of leather goods

a. decreased b. increased c. decreased d. increased

What effect will each of the following have on the supply of auto tires? a. A technological advance in the methods of producing tires. b. A decline in the number of firms in the tire industry. c. An increase in the prices of rubber used in the production of tires. d. The expectation that the equilibrium price of auto tires will be lower in the future than currently. e. A decline in the price of the large tires used for semi trucks and earth-hauling rigs (with no change in the price of auto tires). f. The levying of a per-unit tax on the producer for each auto tire sold. g. The granting of a 50-cent-per-unit subsidy for each auto tire produced.

a. increase b. decrease c. decrease d. increase e. increase f. decrease g. increase

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Smart car? a. Small automobiles become more fashionable b. The price of large automobiles rises (with the price of small autos remaining the same). c. Income declines and small autos are an inferior good. d. Consumers anticipate that the price of small autos will greatly come down in the near future. e. The price of gasoline substantially drops.

a. increase b. increase c. increase d. decrease e. cannot be determined

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that:

bicycles are normal goods.

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

consumer preferences have changed in favor of A so that they now want to buy more at each possible price.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will:

decrease D, decrease P, and decrease Q.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the prices of resources used to produce X will:

decrease S, increase P, and decrease Q.

With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will:

decrease equilibrium price and increase equilibrium quantity.

Assume, in a competitive market, price is initially above the equilibrium level. We predict that price will:

decrease, quantity demanded will increase, and quantity supplied will decrease.

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

direct, inverse

Indicate whether a change in the value of each of the following determinants of demand leads to a movement along the demand curve or a shift in the demand curve. i. Change in market price: ii. Change in income: iii. Change in consumer expectations: iv. Change in the price of a related good: v. Change in technology: vi. Change in factor prices:

i. movement along demand curve ii. shift in demand curve iii. shift in demand curve iv. shift in demand curve v. no change vi. no change

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve. i. Change in market price: ii. Change in factor productivity: iii. Change in producer expectations: iv. Change in the price of a related good v. Change in technology: vi. Change in factor prices vii. Change in taxes:

i. movement along supply curve ii. shift in supply curve iii. shift in supply curve iv. shift in supply curve v. shift in supply curve vi. shift in supply curve vii. shift in supply curve

A market is in equilibrium

if the amount producers want to sell is equal to the amount consumers want to buy.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in income, if X is a normal good, will:

increase D, increase P, and increase Q.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a close substitute for X will:

increase D, increase P, and increase Q.

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good will:

increase equilibrium price and quantity.

An increase in the price of product A will:

increase the demand for substitute product B.

At the current price there is a shortage of a product. We would expect price to:

increase, quantity demanded to decrease, and quantity supplied to increase.

A government subsidy to the producers of a product:

increases product supply.

The upward slope of the supply curve reflects the:

law of supply.

From Diagram 3.B A decrease in quantity demanded is depicted by a:

move from point y to point x.

From Diagram 3.C An increase in quantity supplied is depicted by a:

move from point y to point x.

If a legal price ceiling is set above the equilibrium price:

neither the equilibrium price nor the equilibrium quantity will be affected.

The law of supply indicates that:

producers will offer more of a product at high prices than they will at low prices.

Other things equal, if the price of a key resource used to produce product X falls, the:

product supply curve of X will shift to the right.

If we say that a price is too high to clear the market, we mean that:

quantity supplied exceeds quantity demanded.

If the price of a product increases, we would expect:

quantity supplied to increase.

From Diagram 3.C A decrease in supply is depicted by a:

shift from S2 to S1.

An improvement in production technology will:

shift the supply curve to the right.

If the price of product L increases, the demand curve for close-substitute product J will:

shift to the right

A leftward shift of a product supply curve might be caused by:

some firms leaving an industry.

In 2007 the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:

substitute goods and the higher price for oil increased the demand for natural gas.

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that:

the amount of oranges that will be available at various prices has declined.

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect:

the supply to increase as farmers plant more corn.

Economists say "price floors and ceilings stifle the rationing function of prices and distort resource allocation" because

when unrestrained, prices rise and fall to correct imbalances between the quantity supplied and quantity demanded in a market.