Quiz 2

If the price of mozzarella cheese (an ingredient in pizza) declines due to a major technological breakthrough in the dairy industry, there would be:

an increase in the supply of pizza.

Good X and Good Y are related goods. If the price of Good X increases, and the demand for Good Y shifts left, then these goods are:

complements.

Rice and potatoes are substitute goods. If the price of rice rises, and there is a bumper crop of potatoes, then in the market for potatoes one would expect that the:

equilibrium price would rise, fall, or stay the same while equilibrium quantity would rise.

In the market for milk, when milk prices increased in 2008 one milk consumer stated that the reason he cut down on milk consumption is so that he can drive his car. This comment represents a:

movement along the demand curve.

If the price of a commodity increases, you would expect the:

quantity supplied to increase.

The ________ for tomatoes has decreased because of higher fertilizer prices.

supply

You notice that the price of DVD players falls and the quantity of DVD players sold increases. This set of observations can be the result of the:

supply of DVD players shifting to the right.

A good is inferior if:

when income increases, the demand decreases.

(Figure: Demand for Coconuts) If coconuts are considered a normal good and there is an expectation on the part of consumers that the prices of coconuts will rise significantly in the near future, then the movement that would take place in the model could be:

E to B.

An increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people consuming bread, will result in which of the following changes in the bread market?

Equilibrium price will increase, but equilibrium quantity may decrease, increase, or stay the same.

(Figure: Shifts in Demand and Supply IV) The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel best describes how this will affect the market for chocolate?

Panel B

For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes ________ in the equilibrium price of a hamburger and ________ in the equilibrium quantity of hamburgers.

a rise; an increase

If the price of hamburger decreases, it would probably result in ________ in the demand for hamburger buns.

an increase

A decrease in supply is caused by:

an increase in prices of goods that are substitutes in production.

A beneficial technological change enhances the production of the cranberry crop. At the same time, scientists discover the potential health benefits of cranberries. This will result in:

an increase in the equilibrium quantity, and an uncertain impact on the equilibrium price of cranberries.