Quiz 2 Chapter 4, chapter 4-- eco 2023, ECON 202 Chapter 4 questions, lecture 2.4 quiz, CH 4 & 5 MICROECONOMICS 130, Macro Quiz 2, Micro Quiz 2, ECO-251 Test 1, Econ HW 2, Macro Economics Exam #1, chapter 2, Econ- Chapter 3, MATH @!!

A market demand curve shows how the total quantity demanded of a good varies as A. income varies. B. price varies. C. the number of buyers varies. D. supply varies.

B

In a competitive market, each seller has limited control over the price of his product because a. other sellers are offering similar products. b. these markets are highly regulated by the government. c. buyers exert more control over the price than do sellers. d. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

A

A technological advance will shift the A. supply curve to the right. B. supply curve to the left. C. demand curve to the right. D. demand curve to the left.

A

For a market for a good or service to exist, there must be a a. group of buyers and sellers. b. specific time and place at which the good or service is traded. c. high degree of organization present. d. All of the above are correct.

A

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a A. shortage to exist and the market price of roses to increase. B. shortage to exist and the market price of roses to decrease. C. surplus to exist and the market price of roses to increase. D. surplus to exist and the market price of roses to decrease.

A

The quantity supplied of a good is the amount that a. sellers are willing and able to sell. b. sellers are able to produce. c. buyers are willing and able to purchase. d. buyers and sellers agree will be brought to market.

A

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? A. Price would fall and the effect on quantity would be ambiguous. B. Price would rise and the effect on quantity would be ambiguous. C. Quantity would fall and the effect on price would be ambiguous. D. Quantity would rise and the effect on price would be ambiguous.

A

When quantity demanded increases at every possible price, the demand curve has a. shifted to the right. b. shifted to the left. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become steeper.

A

shortage

A situation in which quantity demanded is greater than quantity supplied (Qd>Qs) and equilibrium price is greater than price (P*>P)

surplus

A situation in which quantity supplied is greater than quantity demanded (Qs>Qd) and price is greater than equilibrium price (P>P*)

If something happens to alter the quantity supplied at any given price, then A. we move along the supply curve. B. the supply curve shifts. C. the supply curve becomes steeper. D. the supply curve becomes flatter.

B

If the supply of a product increases, then we would expect A. equilibrium price to increase and equilibrium quantity to decrease. B. equilibrium price to decrease and equilibrium quantity to increase. C. equilibrium price and equilibrium quantity both to increase. D. equilibrium price and equilibrium quantity both to decrease.

B

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? 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.

B

Suppose that when income rises, the demand curve for computers shifts to the right. In this case, we know computers are A. inferior goods. B. normal goods. C. perfectly competitive goods. D. durable goods.

B

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and an increase in the price of raw cotton b. a decrease in the price of wool shirts and a decrease in the price of raw cotton c. an increase in the price of wool shirts and a decrease in the price of raw cotton d. a decrease in the price of wool shirts and an increase in the price of raw cotton

B

Which of the following would shift the supply of Green Bay Packers football jerseys to the left? a. The technology of sewing machines use to make the jerseys improves. b. The cost of the fabric used to make the jerseys increases. c. The Green Bay Packers make it to the Super Bowl. d. The price of the jerseys increases by $15.

B

who determines demand?

Buyers

A leftward shift of a supply curve is called a(n) a. decrease in quantity supplied. b. increase in quantity supplied. c. decrease in supply. d. increase in supply.

C

A movement upward and to the left along a demand curve is called a(n) a. increase in demand. b. increase in quantity demanded. c. decrease in quantity demanded. d. decrease in demand.

C

A rightward shift of a demand curve is called a(n) a. decrease in quantity demanded. b. increase in quantity demanded. c. increase in demand. d. decrease in demand.

C

A shortage exists in a market if A. there is an excess supply of the good. B. the situation is such that the law of supply and demand would predict a decrease in the price of the good from its current level. C. the current price is below its equilibrium price. D. quantity supplied exceeds quantity demanded.

C

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome? a. Students would purchase fewer than 750 cups per day. b. Student would continue to purchase 750 cups per day. c. Students would purchase more than 750 cups per day. d. We do not have enough information to answer this question.

C

The forces that make market economies work are a. politics and religion. b. taxes and government spending. c. supply and demand. d. work and leisure.

C

The quantity demanded of a good is the amount that buyers are a. willing to purchase. b. able to purchase. c. willing and able to purchase. d. willing, able, and need to purchase.

C

Today, people changed their expectations about the future. This change A. can cause a movement along a demand curve. B. can affect future demand, but not today's demand. C. can affect today's demand. D. cannot affect either today's demand or future demand.

C

When the price of a good is higher than the equilibrium price, A. a shortage will exist. B. buyers desire to purchase more than is produced. C. sellers desire to produce and sell more than buyers wish to purchase. D. quantity demanded exceeds quantity supplied.

C

When we move along a given supply curve, A. only price is held constant. B. technology and price are held constant. C. all nonprice determinants of supply are held constant. D. all determinants of quantity supplied are held constant.

C

Which of the following events will definitely cause equilibrium price to fall? A. demand increases and supply decreases B. demand and supply both decrease C. demand decreases and supply increases D. demand and supply both increase

C

Which of the following would shift the supply curve for gasoline to the right? A. An increase in the demand for gasoline. B. An increase in the price of gasoline. C. An increase in the number of producers of gasoline D. An increase in the price of oil, an input into the production of gasoline.

C

If the demand for a product decreases, then we would expect A. equilibrium price to increase and equilibrium quantity to decrease. B. equilibrium price to decrease and equilibrium quantity to increase. C. equilibrium price and equilibrium quantity to both increase. D. equilibrium price and equilibrium quantity to both decrease.

D

In a competitive market, the quantity of a product produced and the price of the product are determined by A. a single buyer. B. a single seller. C. one buyer and one seller working together. D. all buyers and all sellers.

D

In a market economy, supply and demand determine a. the price at which each good is sold but not the quantity of each good produced. b. neither the quantity of each good produced nor the price at which it is sold. c. the quantity of each good produced but not the price at which it is sold. d. both the quantity of each good produced and the price at which it is sold.

D

Soup is an inferior good if A. the demand for soup falls when the price of a substitute for soup rises. B. the demand for soup rises when the price of soup falls. C. the demand curve for soup slopes upward. D. the demand for soup falls when income rises.

D

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the 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.

D

The line that relates the price of a good and the quantity demanded of that good is called the A. demand schedule, and it usually slopes upward. B. demand schedule, and it usually slopes downward. C. demand curve, and it usually slopes upward. D. demand curve, and it usually slopes downward.

D

The unique point at which the supply and demand curves intersect is called A. market harmony. B. coincidence. C. equivalence. D. equilibrium.

D

When drawing a demand curve, A. demand is on the vertical axis and price is on the horizontal axis. B. quantity demanded is on the vertical axis and price is on the horizontal axis. C. price is on the vertical axis and demand is on the horizontal axis. D. price is on the vertical axis and quantity demanded is on the horizontal axis.

D

When supply and demand both increase, equilibrium A. price will increase. B. price will decrease. C. quantity may increase, decrease, or remain unchanged. D. price may increase, decrease, or remain unchanged.

D

Which of the following is not a characteristic of a perfectly competitive market? a. Different sellers sell identical products. b. There are many sellers. c. Sellers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.

D

who determines supply?

Sellers

A decrease in income will shift the demand curve for an inferior good to the right. T/F?

True

A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded. T/F?

True

A market is a group of buyers and sellers of a particular good or service. T/F?

True

Individual demand curves are summed horizontally to obtain the market demand curve. T/F?

True

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price. T/F?

True

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage and market price will likely rise in the future to eliminate the shortage. T/F?

True

When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied. T/F?

True

Whenever a determinant of supply other than price changes, the supply curve shifts. T/F?

True

demand curve

a graph of the relationship between the price of a good and the quantity demanded

supply curve

a graph of the relationship between the price of a good and the quantity supplied

A market

a group of buyers and sellers of a particular good or service

Equilibrium

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded (Qd=Qs)

demand schedule

a table that shows the relationship between the price of a good and the quantity demanded

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

Which of the following would cause price to decrease? a. a surplus of the good b. an increase in demand c. a shortage of the good d. a decrease in supply

a. a surplus of the good

Suppose buyers of computers and printers regard the two goods as complements. Then an increase in the price of computers will cause a(n) a. decrease in the demand for printers and a decrease in the quantity supplied of printers. b. decrease in the supply of printers and a decrease in the quantity demanded of printers. c. increase in the equilibrium price of printers and a decrease in the equilibrium quantity of printers. d. decrease in the equilibrium price of printers and an increase in the equilibrium quantity of printers.

a. decrease in the demand for printers and a decrease in the quantity supplied of printers.

Quantity Supplied (Qs)

amount that sellers are willing and able to sell at a specific price. (point on the supply curve)

At the equilibrium price, the quantity of the good that buyers are willing and able to buy a. is greater than the quantity that sellers are willing and able to sell. b. exactly equals the quantity that sellers are willing and able to sell. c. is less than the quantity that sellers are willing and able to sell. d. Either a) or c) could be correct.

b. exactly equals the quantity that sellers are willing and able to sell.

If a decrease in income increases the demand for a good, then the good is a(n) a. complementary good. b. inferior good. c. normal good. d. substitute good.

b. inferior good.

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased? a. Quantity will rise, and the effect on price is ambiguous. b. Price will fall, and the effect on quantity is ambiguous. c. Price will rise, and the effect on quantity is ambiguous. d. Quantity will fall, and the effect on price is ambiguous.

c. Price will rise, and the effect on quantity is ambiguous.

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? a. Quantity will rise, and the effect on price is ambiguous. b. Price will fall, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Price will rise, and the effect on quantity is ambiguous.

c. Quantity will fall, and the effect on price is ambiguous.

Which of the following would most likely serve as an example of a monopoly? a. a restaurant in a large city b. a dry cleaners in a large city c. a local electrical company d. a local gas station

c. a local electrical company

Which of the following events must cause equilibrium price to rise? a. demand decreases and supply increases b. demand and supply both decrease c. demand increases and supply decreases d. demand and supply both increase

c. demand increases and supply decreases

A improvement in production technology will shift the a. demand curve to the right. b. demand curve to the left. c. supply curve to the right. d. supply curve to the left.

c. supply curve to the right.

A shortage exists in a market if a. there is an excess supply of the good. b. quantity supplied exceeds quantity demanded. c. the current price is below its equilibrium price. d. All of the above are correct.

c. the current price is below its equilibrium price.

refer to table 4-8. if these are the only three sellers in the market, then the market quantity supplied at a prices of $6 is a. 12 units b. 18 units c. 6 units d. 24 units

d. 24 units

In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy's scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.

d. All of the above are correct.

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and an increase in the price of raw cotton b. an increase in the price of wool shirts and a decrease in the price of raw cotton c. a decrease in the price of wool shirts and an increase in the price of raw cotton d. a decrease in the price of wool shirts and a decrease in the price of raw cotton

d. a decrease in the price of wool shirts and a decrease in the price of raw cotton

A supply curve slopes upward because a. an increase in input prices increases supply. b. as more is produced, total cost of production falls. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity.

d. an increase in price gives producers an incentive to supply a larger quantity.

The highest form of competition is called a. arbitrage. b. monopolistic competition. c. equilibrium. d. perfect competition.

d. perfect competition.

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to a. shift rightward. b. remain unchanged. c. become flatter. d. shift leftward.

d. shift leftward.

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. firm must increase output to maintain profit levels. b. supply of bicycles will shift to the right. c. demand for bicycle assembly workers will increase. d. supply of bicycles will shift to the left.

d. supply of bicycles will shift to the left.

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls. T/F

false

Anything that decreases the quantity demanded at every price causes the demand curve to shift to the right T/F

false, decrease is to the left

anything that increases the quantity supplied at every price causes the supply curve to shift to the left T/F

false, increase is shift to the right

a movement of a point downward and to the left on the supply curve indicates an increase in the quantity supplied T/F

false, it would be a decrease in the quantity supplied

if there is a shortage, then the price of the good falls

false, price of good rises when there is a shortage

a perfectly competitive market has limited buyers and sellers T/F

false, there are many buyers and many sellers

Factors that shift the demand curve

income, prices of related goods, tastes, expectations, number of buyers

Factors that shift the supply curve

input prices, technology, expectations, number of sellers

Quantity Demanded (Qd)

the amount of a good or service that a consumer is willing and able to purchase at a given price

Law of Demand

the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises

Law of Supply

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

Anything that increases the quantity demanded at every price causes the demand curve to shift to the right T/F

true

In a perfectly competitive market, the goods offered for sale are all exactly the same. T/F

true

Prices allocate a market economy's scarce resources. T/F

true

a decrease in demand means the demand curve will shift to the left, and equilibrium quantity and equilibrium price will go down T/F

true

a decrease in supply means the supply curve shifts to the left, and equilibrium price goes up and equilibrium quantity goes down T/F

true

a market demand curve is a demand curve for all buyers T/F

true

a market supply curve is a supply curve for all sellers T/F

true

an increase in demand means the demand curve will shift to the right, and equilibrium quantity and equilibrium price will go up T/F

true

an increase in supply means the supply curve shifts to the right, and equilibrium price will go down and equilibrium quantity will go up T/F

true

an individual demand curve is a demand curve for a single buyer T/F

true

an individual supply curve is a supply curve for a single seller T/F

true

anything that decreases the quantity supplied at every price causes the supply curve to shift to the left T/F

true

equilibrium price can be determined by the intersection of the supply and demand curves T/F

true

if there is a surplus, the price of the good will fall T/F

true

there is a positive relationship between price and Qs because the marginal cost (opportunity cost) rises as additional units of a good are produced T/F

true

there is an inverse relationship between price and Qd because the marginal benefit (satisfaction) falls as additional units of a good are consumed T/F

true

No individual buyer or seller can impact the market price T/F

true, they are price takers