supply and demand
An improvement in the technology of production for a specific good is expected to cause:
lower prices and increased quantity sold
As seen in the supply and demand model, as price changes....
quantity supplied and/or quantity demanded changes
If the price of a product decreases, we would expect:
quantity supplied to decrease.
If the price of a product increases, then that would cause...
quantity supplied to increase.
What is a price ceiling?
A legal maximum on the price at which a good can be sold
What is a price floor?
A legal minimum on the price at which a good can be sold
"As the price of Yetis has gradually increased, customers have found Orcas to be a better deal. Consequently, Yeti sales have been decreasing, and Orca sales have been increasing." Using only the information in this quotation and assuming everything else constant, which of the following best describes this statement?
A movement along the demand curve for Yetis, and a shift in the demand curve for Orcas
Suppose half the people in San Diego move to Colorado Springs. How will affect the market for houses in Colorado Springs?
Demand increases, demand curve shifts to the right
What is the difference between "price controls" and "prices being set"
Price controls, though rare in a free market system, are determined by the government. In a free market system, prices are set by buyers and sellers
Why did you do the allocation chart in the Invisible Hand PBL?
Since Congress passed legislation to issue a price ceiling on gas, which would then result in a gas shortage, we had to use an allocation chart to ration which groups of people get a certain amount of gas.
a decrease in supply would best be reflected by what type of change on the graph?
Supply curve shift to the left
If prices are expected to fall in the future, what happens?
Supply will increase (NOW-always present)
"Falling airline ticket prices have caused a sharp increase in the demand for airline tickets." Speaking precisely, and using terms as they are defined by economists, choose the statement that best describes this quotation.
The quotation is incorrect: a decrease in price causes an increase in the quantity demanded, not an increase in demand.
What happens to the supply of Corn if government farm subsidies increase? Why?
There will be an increase in the Supply of Corn because farmers now have more money to produce more corn.
What happens to the supply of CDs if there's an expectation for prices to fall in the future?
There will be an increase in the supply NOW because producers will want to supply more CDs while price are higher NOW.
An increase in the supply of wheat in the United States is most likely to result from:
a change in farming technology that improves the soil for wheat
Which will NOT, ceteris paribus, cause the demand curve for good A to shift?
a change in the price of A
Which will cause a movement along the supply curve?
a change in the price of the good
Which will not cause the supply curve to shift?
a change in the price of the good
If the price of hot dogs increases, it would probably result in ________ in the demand for hot dog buns.
a decrease
Given that black beans and pinto beans are substitute goods, if the price of black beans decreases substantially, there would be:
a decrease in the demand for pinto beans.
Which would cause a decrease in quantity supplied of product A?
a decrease in the price of A
Other things constant, which of the following would NOT cause a change in the demand for sailboats?
a decrease in the price of sailboats
a point on a demand curve indicates that:
a particular price and the corresponding quantity demanded by consumers
A decrease in the supply of oranges in the United States is most likely to result from:
an increase in the cost of labor for harvesting oranges.
Which would cause an increase in quantity supplied of product A?
an increase in the price of A
a law of demand state that, other things equal...
as the price decreases, the quantity demanded will increase.
Which are NOT generally considered to be complimentary good?
beef and chicken
Which of the following factors cause a movement along the demand curve?
change in the price of the good
When the price of printers goes down and the demand for printer ink goes up, this means printers and printer ink are:
complements.
If labor wages rise, what happens to the Supply of Cars? Why?
decrease in Supply of Cars because producers have highers cost of production which reduces their ability to supply more cars
Suppose OIL becomes more expensive. How will this affect the market for GASOLINE, which is made from oil?
decrease in supply, supply curve shifts to the left
a hurricane goes through florida what happens to the suppl of oranges
decrease supply> supply line moves to the right
A rise in the price of beans, used in the production of burritos, will:
decrease the supply of burritos, causing the supply curve to shift to the left
If Apple iPhones are considered a normal good and there is expectation on the part of the consumer that the prices of Apple iPhones will fall significantly in the near future, then what would happen on the graph?
demand curve would shift to the left
If there is an overall decrease in taste and preference for Apple iPhones, then what would happen on the graph?
demand curve would shift to the left
If Android Phones are a substitute for Apple iPhone and the price of Android Phones increases, then what would happen on the graph?
demand curve would shift to the right
If Apple iPhones are considered a normal good and the overall income level of consumers is rising, then what would happen on the graph?
demand curve would shift to the right
Over the past several years, consumer tastes for CDs have decreased. This means that the ________ for CDs has ________.
demand; decreased
An increase in corporate taxes on companies making a specific good is expected to cause:
higher prices and decreased quantity sold.
What is a determinant of demand?
income
Suppose the Surgeon General announces that eating chocolate prevents heart disease. How will this affect the market for chocolate?
increase in demand, demand curve shifts to the right
technological advancements in production result in what?
increase in supply
If apples and pears are substitutes, an increase in the price of pears will:
increase the demand for apples.
If canoes and paddles are complements, a decrease in the price of canoes will:
increase the demand for paddles.
A fall in the price of milk, used in the production of ice cream, will:
increase the supply of ice cream, causing the supply curve of ice cream to shift to the right.
how is a decrease in supply reflected on a graph?
line shift to the right of original supply line
how is an increase in supply reflected on a graph?
line shift to the right of original supply line
Which is a determinant of supply?
number of suppliers
the demand curve is a representation of the relationship between the quantity of a product demanded and:
price
the law of supply states that as
price increases, quantity supplied increases.
A shift of the demand curve for Apple iPhones would not be caused by a change in the:
price of Apple iPhones.
In a free market economy, what should happen if prices are set at $10 (above equilibrium)?
prices should fall
In a free market economy, what would happen if prices are set at $1 (below equilibrium price)?
prices should increase
the horizontal axis of a graph which shows a market demand curve indicates the:
quantities which consumers will be willing and able to buy at various prices
how is a decrease in quantity supplied reflected on a graph?
shift along the supply curve downward
how is an increase in quantity supplied reflected on a graph?
shift along the supply curve upward
if product Y is an inferior good, an increase in consumer incomes will:
shift the demand curve for product Y to the left.
If peanut butter and jelly are complements, when the price of peanut butter goes up, the demand curve for jelly:
shifts to the left.
Assuming this is a free market economy, what happens at $1 (below equilibrium price)?
shortage
If subsidies decrease, what happens?
supply decreases
If taxes increase, what happens?
supply decreases
If there's a decrease in the number of suppliers, what happens?
supply decreases
if input price or cost of production rises, what happens?
supply decreases
If the price of a substitute good increases what happens to the supply of the other good?
supply decreases of the lower-price good
If subsidies increase, what happens?
supply increases
If taxes decrease, what happens?
supply increases
If there's an increase in the number of suppliers, what happens?
supply increases
if input price or cost of production falls, what happens?
supply increases
If prices are expected to rise in the future, what happens to supply?
supply will decrease (NOW-always present)
Assuming this is a free market economy, what happens at $10 (above equilibrium price)?
surplus
What is a determinant of supply?
technology
An inverse relationship between price and quantity is represented by:
the demand curve
Other things being equal, the law of demand implies that as:
the price of CDs increases, the quantity of CDs demanded will decrease.
If a legal price ceiling below the equilibrium price is imposed in a market:
the quantity demanded will exceed the quantity supplied
When the price of one fruit increases, consumers buy more of another fruit. This situation is an illustration of:
the substitution effect
When one speaks of "demand" in a particular market, this refers to:
the whole demand curve
if car manufacturers start using robots because assembly of cars will be more efficient, what happens to the supply of cars?
there is an increase in supply of cars
Assume farmers can produce both Corn and Soybeans, what happens to the supply of soybeans if the price of Corn increases? Why?
there will be a Decrease in the supply of Soybeans because more farmers will want to produce more of the higher-priced corner.
What happens to the Supply of Foreign Autos if taxes increase? Why?
there will be a decrease in Supply of Foreign Autos because it costs producers more make.
What happens to the supply of Organic Non-GMO bananas if more farmers enter the organic Non-GMO market?
there will be an increase in the supply of organic non-GMO bananas because more are now producing them.
the law of supply is illustrated by a supply curve that is...
upward sloping
What does ceteris paribus mean?
with other conditions remaining the same
