Chapter 3 Inquisitive

Suppose that both the number of buyers and the number of sellers increase. Which of the following will occur? A. The equilibrium price will increase and the effect on the equilibrium quantity is undetermined. B. The equilibrium quantity will increase and the effect on the equilibrium price is undetermined. C. The equilibrium quantity will increase and the equilibrium price will increase. D. The equilibrium quantity will increase and the equilibrium price will decrease. E. The total effect on equilibrium price and quantity is undetermined.

The equilibrium quantity will increase and the effect on the equilibrium price is undetermined.

Place in order the stages of a market experiencing a shortage and then regaining equilibrium. Start by clicking the first item in the sequence or dragging it here Sellers use increased revenue from higher prices to fund increased production. A popular celebrity endorses a product. Sellers raise prices, which causes a partial but not complete pullback of demand. Supply again matches demand. Demand for the product increases. More items are demanded than are being manufactured.

A popular celebrity endorses a product. Demand for the product increases. More items are demanded than are being manufactured. Sellers raise prices, which causes a partial but not complete pullback of demand. Sellers use increased revenue from higher prices to fund increased production. Supply again matches demand.

Which of the following could change the equilibrium price of gasoline? Correct Answer(s) A hurricane destroys an oil refinery. A newspaper runs a story on the history of the petroleum industry. Summer weather encourages people to drive more. A single gas station offers a one-time, weekend-long "free car wash with 10-gallon purchase" promotion. Incorrect Answer(s)

Correct Answer(s) A hurricane destroys an oil refinery. Summer weather encourages people to drive more. Incorrect Answer(s) A newspaper runs a story on the history of the petroleum industry. A single gas station offers a one-time, weekend-long "free car wash with 10-gallon purchase" promotion.

Suppose the government believes that there are too many cigarettes in the market. Which of the following policies could the government implement to decrease the supply of cigarettes? Correct Answer(s) Tax the manufacturing of cigarettes. Tax consumers on the purchase of cigarettes. Subsidize tobacco farmers, thus lowering the price of tobacco. Tax the tobacco crop. Incorrect Answer(s)

Correct Answer(s) Tax the manufacturing of cigarettes. Tax the tobacco crop. Incorrect Answer(s) Tax consumers on the purchase of cigarettes. Subsidize tobacco farmers, thus lowering the price of tobacco.

Consider the market for iPads and the market for Android tablets. These two goods are substitutes. Suppose the price of an iPad goes up by $20 when a major online retailer changes its sales policies. Which of the following will occur? Correct Answer(s) The demand curve for iPads will shift. The supply curve for Android tablets will shift. The equilibrium quantity of Android tablets will decrease. The equilibrium price of Android tablets will increase. The demand for Android tablets will increase. Incorrect Answer(s)

Correct Answer(s) The equilibrium price of Android tablets will increase. The demand for Android tablets will increase. Incorrect Answer(s) The demand curve for iPads will shift. The supply curve for Android tablets will shift. The equilibrium quantity of Android tablets will decrease.

For a Honda Accord, some factors shift demand left and others shift it right, as shown. Classify each factor by how it shifts the current demand curve to a new position. shifts left shifts right consumers' income increases by 10% 2% rebate on a Toyota Camry, a substitute good big sale coming in three months

consumers' income increases by 10% shifts right 2% rebate on a Toyota Camry, a substitute good shifts left big sale coming in three months shifts left free brake inspections shifts right

Suppose that the supply of automobiles is given by the equation P = -5,000 + 2,000Q where P is the price in dollars and Q is the quantity of cars. At a price of $23,000 each, how many cars will be supplied?

14 cars

Consider the market for gasoline. Suppose that a new oil-pump technology is developed, making gasoline production less costly. At the same time, war breaks out and several oil fields are destroyed. What will be the effect on supply? A. Supply will increase due to the new technology, but decrease due to war. The overall effect is unknown. B. Both the new technology and the war will cause supply to decrease. C. Both the new technology and the war will cause supply to increase. D. Supply will decrease due to the new technology, but increase due to war. The overall effect is unknown.

A. Supply will increase due to the new technology, but decrease due to war. The overall effect is unknown.

Fill in the blanks to complete the statement about Adam Smith's description of a market economy. According to Adam Smith, people are motivated by their own _______ to be as productive as possible when providing goods and services. In a market economy, the interaction between ________ results in ________ that influence the choices of consumers and firms. Goods and services are then exchanged, and resources are allocated to their highest-valued use as if guided by an ________. supply and demand self-interest an invisible hand prices tastes competitive and imperfect markets

According to Adam Smith, people are motivated by their own self-interest to be as productive as possible when providing goods and services. In a market economy, the interaction between supply and demand results in prices that influence the choices of consumers and firms. Goods and services are then exchanged, and resources are allocated to their highest-valued use as if guided by an invisible hand.

Suppose there are five buyers in a market. Which of the following represents the market demand? A. each individual demand curve represents a market demand B. the sum of the individual quantities demanded C. the median of the individual quantities demanded D. the average of the individual quantities demanded

B. the sum of the individual quantities demanded Market demand is the total quantity demanded.

In the Texas college town of "Big Cow University," hamburgers are a popular choice for the college students. Given the graph below, which of the following changes in the market would result in a shift in the demand of hamburgers for college students from D1 to D2? Correct Answer(s) The price of french fries (complement) falls. The price of hot dogs (substitute) rises. Five new burger restaurants open around campus. The college doubles its enrollment of students. Students' income rises (hamburgers are normal goods). The market price of hamburgers increases from $5 to $6. Incorrect Answer(s)

Correct Answer(s) The price of hot dogs (substitute) rises. The price of french fries (complement) falls. Students' income rises (hamburgers are normal goods). The college doubles its enrollment of students. Incorrect Answer(s) The market price of hamburgers increases from $5 to $6. Five new burger restaurants open around campus.

Suppose there are seven coffee shops located on the same busy street. If two of the coffee shops close, which of the following will occur, holding all else fixed? Correct Answer(s) The demand for coffee will decrease. The supply of coffee will decrease. The price of coffee will increase. The supply of coffee will increase, since the remaining shops will sell more than before. Incorrect Answer(s)

Correct Answer(s) The supply of coffee will decrease. The price of coffee will increase. Incorrect Answer(s) The demand for coffee will decrease. The supply of coffee will increase, since the remaining shops will sell more than before.

Which phrases would an economist use to describe the panic that created shortages during spring 2020 in the toilet paper aisles across most of America? Which ones are not correct? Correct Answer(s) There was excess demand for toilet paper.Press Space to openCorrect AnswerIncorrect Answer There was a shortage of toilet paper.Press Space to openCorrect AnswerIncorrect Answer The quantity supplied of toilet paper did not meet the quantity demanded of toilet paper.Press Space to openCorrect AnswerIncorrect Answer Demand for toilet paper was greater than the supply of toilet paper.Press Space to openCorrect AnswerIncorrect Answer Toilet paper was scarce.Press Space to openCorrect AnswerIncorrect Answer Incorrect Answer(s)

Correct Answer(s) There was excess demand for toilet paper. There was a shortage of toilet paper. The quantity supplied of toilet paper did not meet the quantity demanded of toilet paper. Incorrect Answer(s) Toilet paper was scarce. (Be careful with this one. Remember, chapter 1 described scarcity as being due to a naturally occurring phenomenon where we are unable to meet our unlimited wants with our limited resources, such as time. A shortage is due to a market condition where the price is either above or below the equilibrium price) Demand for toilet paper was greater than the supply of toilet paper.

Which of the following could be expected to cause a shift in the demand curve for men's jeans? Correct Answer(s) a decrease in the price of jeans rising income celebrities in ads for men's jeans an increase in the number of jeans buyers an increase in the price of khakis Incorrect Answer(s)

Correct Answer(s) an increase in the number of jeans buyers celebrities in ads for men's jeans an increase in the price of khakis rising incomes Incorrect Answer(s) a decrease in the price of jeans

Which of the following goods or services can be allocated by markets in a market economy? Correct Answer(s) equal treatment before the law preventive health care automotive insurance happiness Incorrect Answer(s)

Correct Answer(s) automotive insurance preventive health care Incorrect Answer(s) happiness equal treatment before the law

The law of supply applies to normal goods, but not inferior goods. True False

False

Sellers set the demand for a product, while the buyers set the supply. True False

False In fact the reverse is true. Buyers create the demand; the sellers generate the supply.

In a scenario where we expect a shift in both supply and demand, if the demand for a product increases, the price will always increase. True False

False The price could decrease if an increase in supply outweighed the increase in demand.

Fill in the blanks to complete the statement about market power. Drag word(s) below to fill in the blank(s) in the passage. In the United States, -Press Space to openas customers would be willing to paypharmaceuticala competitiveas it wantsan imperfectagriculture companies can apply for patents, which allow them to be the sole provider of certain vaccines. This is an example of -Press Space to openas customers would be willing to paypharmaceuticala competitiveas it wantsan imperfectagriculture market, because in this case the company holds the rights to be the only supplier for the entire market. Therefore, it can charge as high a price -Press Space to openas customers would be willing to paypharmaceuticala competitiveas it wantsan imperfectagriculture. as customers would be willing to pay pharmaceutical a competitive as it wants an imperfect agriculture

In the United States, pharmaceutical companies can apply for patents, which allow them to be the sole provider of certain vaccines. This is an example of an imperfect market, because in this case the company holds the rights to be the only supplier for the entire market. Therefore, it can charge as high a price as customers would be willing to pay.

Fill in the blanks to complete the statement contrasting competitive and imperfect markets. Rural Internet access, with one dominant provider that faces very little competition, is a good example of ______ market. It functions as ______. By contrast, a flea market or swap meet, where _______ buyers and sellers get together to conduct transactions, is an example of _______ market. No single _______ exerts ______ control over prices.

Rural Internet access, with one dominant provider that faces very little competition, is a good example of an imperfect market. It functions as a monopoly. By contrast, a flea market or swap meet, where many buyers and sellers get together to conduct transactions, is an example of a competitive market. No single buyer or seller exerts significant control over prices.

Apply the correct label to each situation. Demand and supply both increase. Demand and supply both decrease. Demand decreases and supply increases. Demand increases and supply decreases. 1. Pumpkins: an early frost destroyed much of the pumpkin crop. A newspaper reports zucchini is better for pie than pumpkin. 2. Taxis: public transit workers at a popular tourist attraction go on strike as a holiday weekend approaches. 3. Corn: news media run stories about people with corn allergies. The corn crop is unusually large. 4. Gasoline: a new housing development goes up. Several new gas stations are built nearby.

Pumpkins: an early frost destroyed much of the pumpkin crop. A newspaper reports zucchini is better for pie than pumpkin. Demand and supply both decrease. Taxis: public transit workers at a popular tourist attraction go on strike as a holiday weekend approaches. Demand increases and supply decreases. Corn: news media run stories about people with corn allergies. The corn crop is unusually large. Demand decreases and supply increases. Gasoline: a new housing development goes up. Several new gas stations are built nearby. Demand and supply both increase.

Fill in the blanks to complete the statement comparing taking public transportation, which is typically cheaper but crowded, and using a rideshare for transportation to and from work. In this question, suppose that using your own vehicle is not an option. Since getting to work on a crowded bus or train is an ______ good compared with using a rideshare such as Uber or Lyft, we should expect that as income increases, the demand for taking public transportation should ________. On the other hand, an Uber/Lyft ride is a _______ good. We should expect an increase in income to _______ __the demand for Uber/Lyft rides. decrease normal complementary inferior increase

Since getting to work on a crowded bus or train is an inferior good compared with using a rideshare such as Uber or Lyft, we should expect that as income increases, the demand for taking public transportation should decrease. On the other hand, an Uber/Lyft ride is a normal good. We should expect an increase in income to increase the demand for Uber/Lyft rides.

Suppose that Seattle's city government decides to increase the minimum wage for coffee shop baristas. This would _______ the supply of coffee by altering the _______. demand production process increase decrease cost of inputs

Suppose that Seattle's city government decides to increase the minimum wage for coffee shop baristas. This would decrease the supply of coffee by altering the cost of inputs.

Fill in the blanks to complete the statement about the demand for eggs. Suppose the price of eggs decreases from $5 per dozen to $4 per dozen. According to the law of _______, we should expect the ________ to increase. quantity demanded demand quantity supplied supply

Suppose the price of eggs decreases from $5 per dozen to $4 per dozen. According to the law of demand, we should expect the quantity demanded to increase.

Fill in the blanks to complete the following statement regarding the relationship between price and supply. Suppose there is a 10% rise in the price of gasoline. Then, according to the law of ____________, we expect the quantity of gasoline supplied to __________. Conversely, if the price goes ___________, quantity supplied will ___________, as well. drop increase up demand down production cost supply

Suppose there is a 10% rise in the price of gasoline. Then, according to the law of supply, we expect the quantity of gasoline supplied to increase. Conversely, if the price goes down, quantity supplied will drop, as well.

Consider the market for caramel and butterscotch ice cream toppings. For each price change, identify the likely effect on the demand curve for caramel topping. The demand curve for caramel topping will remain the same. The demand for caramel topping will increase. The demand for caramel topping will decrease. 1. The price of caramel topping decreases 2. The price of ice cream increases 3. The price of butterscotch topping increases.

The price of caramel topping decreases. The demand curve for caramel topping will remain the same. The price of ice cream increases. The demand for caramel topping will decrease. The price of butterscotch topping increases. The demand for caramel topping will increase.

Which items represent examples of Adam Smith's "invisible hand" at work? Correct Answer(s) A cafe owner discards expired food, to avoid a fine from the health department. An auto manufacturer switches from using fabric for its seats to imported leather as "quality" becomes more desirable by those purchasing new cars. A gas station owner closes on certain days of the year, for religious reasons. A store starts selling candy and ice cream when a new school opens across the street. A tailor who makes expensive, high-quality suits for clients by hand buys his own suits from a discount store. Incorrect Answer(s)

Which items represent examples of Adam Smith's "invisible hand" at work? Correct Answer(s) A store starts selling candy and ice cream when a new school opens across the street. A tailor who makes expensive, high-quality suits for clients by hand buys his own suits from a discount store. An auto manufacturer switches from using fabric for its seats to imported leather as "quality" becomes more desirable by those purchasing new cars. Incorrect Answer(s) A gas station owner closes on certain days of the year, for religious reasons. A cafe owner discards expired food, to avoid a fine from the health department.

José is a typical college student and today is his birthday. His grandma sent him a birthday card with $100 inside. With this new income, he has to make various choices about what goods to spend his birthday money on. Select whether José's options are best described as a normal or inferior good now that his income has increased by $100. frozen microwave pizza fresh delivery pizza Starbucks coffee iPad/Surface tablet pencil and paper instant coffee inferior goodPress Space to openfrozen microwave pizzafresh delivery pizzaStarbucks coffeeiPad/Surface tabletpencil and paperinstant coffee normal goodPress Space to openfrozen microwave pizzafresh delivery pizzaStarbucks coffeeiPad/Surface tabletpencil and paperinstant coffee

inferior goodPress Space to open Correct label:frozen microwave pizza Correct label:instant coffee Correct label:pencil and paper normal goodPress Space to open Correct label:fresh delivery pizza Correct label:iPad/Surface tablet Correct label:Starbucks coffee

When a change in the supply and demand occur within a market, the effect on the new equilibrium market price or quantity can be determined. However, without information on the relative size of these shifts, both price and quantity cannot be determined. Match the supply and demand changes to the outcome that is known about the new equilibrium in the market for pizza, where pizza is a normal good and cheese and dough are inputs. consumer income rises; pizza dough decreases in price consumer income falls; pizza dough decreases in price consumer income falls; cheese increases in price consumer income rises; cheese increases in price 1. output decreases; price uncertain 2. price decreases; output uncertain 3. output increases; price uncertain 4. price increases; output uncertain

output decreases; price uncertain consumer income falls; cheese increases in price price increases; output uncertain consumer income rises; cheese increases in price output increases; price uncertain consumer income rises; pizza dough decreases in price price decreases; output uncertain consumer income falls; pizza dough decreases in price

Fill in the blanks to complete the following description of the graph below. Drag word(s) below to fill in the blank(s) in the passage. Tacos are a popular food choice of college students. The demand for tacos in a local college town was at D1 originally with an equilibrium market price of _______. The market demand shifted to D2 when _______ increased in price. At the new market equilibrium price, the ________ increased by _________. $1 725 125 quantity supplied cheese nachos (a complement) hamburgers (a substitute) 475 $3 $4 supply

tacos are a popular food choice of college students. The demand for tacos in a local college town was at D1 originally with an equilibrium market price of $3. The market demand shifted to D2 when hamburgers (a substitute) increased in price. At the new market equilibrium price, the quantity supplied increased by 125.