micro chapter 4
21. Which of the following events must cause equilibrium price to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increasesd. d. demand and supply both increases
a.
23. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 5. Then there is currently a a. shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. b. shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. c. surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. d. surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
a.
25. Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
a.
27. Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time? a. Point A to Point B b. Point C to Point B c. Point C to Point D d. Point A to Point D
a.
10. Holding the nonprice determinants of supply constant, a change in price would a. result in either a decrease in supply or an increase in supply. b. result in a movement along a stationary supply curve. c. result in a shift of demand. d. have no effect on the quantity supplied.
b.
11. The sum of all the individual supply curves for a product is called a. total supply. b. market supply. c. aggregate supply. d. total output.
b.
13. The law of supply states that, other things equal, when the price of a good a. falls, the supply of the good rises. b. rises, the quantity supplied of the good rises. c. rises, the supply of the good falls. d. falls, the quantity supplied of the good rises
b.
20. Another term for equilibrium price is a. dynamic price. b. market-clearing price. c. quantity-defining price. d. balance price.
b.
22. Refer to Table 4-7. If the price were $8, a a. shortage of 20 units would exist, and price would tend to rise. b. surplus of 25 units would exist, and price would tend to fall. c. shortage of 25 units would exist, and price would tend to rise. d. surplus of 45 units would exist, and price would tend to fall.
b.
29. New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.
b.
6. If Max experiences a decrease in his income, then we would expect Max's demand for a. each good he purchases to remain unchanged. b. normal goods to decrease. c. luxury goods to increase. d. inferior goods to decrease.
b.
9. A higher price for batteries would result in a(n) a. increase in the demand for flashlights. b. decrease in the demand for flashlights. c. increase in the demand for batteries. d. decrease in the demand for batteries.
b.
Which of the following is NOT an example of a market? a .A small town has only one seller of electricity. b. In the United States, a sick person cannot legally purchase a kidney. c. In Florida, there are many buyers and sellers of key lime pie. d. The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities.
b.
12. Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels
c.
14. Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers' supplies of a good increase, the price of the good increases.
c.
15. A movement downward and to the left along a supply curve is called a(n) a. increase in supply. b. decrease in supply. c. decrease in quantity supplied. d. increase in quantity supplied.
c.
16. Refer to Table 4-5.If these are the only four sellers in the market, then when the price decreases from $10 to $8, the market quantity supplied decreases by a. 2.5 units. b. 4 units. c. 10 units. d. 50 units.
c.
18. An improvement in production technology will a. increase a firm's costs and increase its supply. b. increase a firm's costs and decrease its supply. c. decrease a firm's costs and increase its supply. d. decrease a firm's costs and decrease its supply.
c.
19. An increase in which of the following would shift the supply curve for gasoline to the right? a. demand for gasoline b. price of gasoline c. number of producers of gasoline d. price of oil, an input into the production of gasoline
c.
24. Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the good? a. $15 b. $20 c. $30 d. $35
c.
3. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require "junk food" producers to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. We could illustrate the impact of tax on the market as producing a movement from a. Point A to Point B in Panel 1. b. Point B to Point A in Panel 1. c. Point A to Point C in Panel 2. d. Point C to Point A in Panel 2.
c.
4. When the price of hot dogs changes, the demand curve for hot dogs a. shifts because the price of hot dogs is measured on the vertical axis of the graph. b. shifts because the quantity demanded of hot dogs is measured on the horizontal axis of the graph. c. does not shift because the price of hot dogs is measured on the vertical axis of the graph. d. does not shift because the price of hot dogs is measured on the horizontal axis of the graph
c.
17. Refer to Figure 4-11.If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is a. 6 units. b. 7 units. c. 8 units. d. 14 units.
d.
2. When drawing a demand curve, a. demand is measured along the vertical axis, and price is measured along the horizontal axis. b. quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. c. price is measured along the vertical axis, and demand is measured along the horizontal axis. d. price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.
d.
26. Refer to Figure 4-19.All else equal, a decrease in the price of the grain fed to turkeys would cause a move from a. DA to DB. b. DB to DA. c. x to y. d. y to x.
d.
28. What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.
d.
5. Which of the following events would cause a movement upward and to the left along the demand curve for olives? a. The number of people who purchase olives decreases. b. Consumer income decreases, and olives are a normal good. c. The price of pickles decreases, and pickles are a substitute for olives. d. The price of olives rises.
d.
7. Soup is an inferior good if the demand a. for soup falls when the price of a substitute for soup rises. b. for soup rises when the price of soup falls. c. curve for soup slopes upward. d. for soup falls when income rises.
d.
8. Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods.
d.