chapter 3 micro

The primary difference between a change in supply and a change in the quantity supplied is:

a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.

Which would not cause the supply curve to shift?

a change in the price of the good

Which of the following will not cause the demand for milk (a normal good) to increase in the current time period?

a fall in the price of milk

demand is defined as

a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.

a decrease in supply means

a shift to the left of the entire supply curve

Demand and supply curves are drawn assuming ceteris paribus. This means that:

all other things besides price and quantity are assumed unchanged

A decrease in supply is caused by:

an increase in returns from other alternative activities.

An increase in supply of a good is caused by:

an increase in the number of sellers. Correct

two goods are substitutes if

an increase in the price of one leads to an increase in demand for the other.

A decrease in the price of a good will, all other things unchanged, result in:

an increase in the quantity demanded.

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

an increase in the supply of pizza.

An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

an increase; an increase

When the price of gas goes up and the demand for tires goes down, this means tires and gas are:

complements

If people demand more of product A when the price of B falls, then A and B are

complements.

An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to which demand shifter?

consumer expectations

A decrease in demand and a decrease in supply, will lead to a(n) ________ in equilibrium quantity and a(n) ________ in equilibrium price.

decrease; indeterminate change

A negative relationship between the quantity demanded and price is called the law of ______.

demand

Consumer preferences, prices of related goods, income, and demographic characteristics are often termed:

demand shifters

The law of demand is illustrated by a demand curve that is:

downward sloping

(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S 1 and D) in equilibrium are:

$2.50 and 300 gallons.

(Exhibit: Demand and Supply of Gasoline) Given the initial equilibrium of S 1 and D, any price lower than ________ will create pressure for the price to ________ .

$2.50; rise

(Exhibit: Demand and Supply of Wheat) What are the equilibrium price and quantity in this wheat market?

$6 and 6,000 bushels

(Exhibit: Demand and Supply of Wheat) A price of ________ will result in a ________ , and a price of ________ will result in a ________ .

$8; surplus; $4; shortage

(Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is ________ bags per month.

25

Which of the following will result in an increased price of milk?

A shift to the right of the demand curve for milk.

Which of the following would shift the demand curve for new textbooks to the right?

An increase in college enrollments.

The demand curve for on-demand videos has shifted to the right. What could have caused it?

An increase in the income of buyers.

A decrease in the price of eggs, all other things unchanged, will result in a(n):

greater quantity of eggs demanded

If both the demand for a product and the supply of it increase, then the equilibrium quantity will ________ and the equilibrium price will ________.

increase; either increase, decrease, or remain constant

An increase in demand and a decrease in supply, will lead to a(n) ________ in equilibrium quantity and a(n) ________ in equilibrium price.

indeterminate change; increase

After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a(n):

inferior good.

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose consumer incomes decrease. Which panel best describes how this will affect the market for used clothing, an inferior good?

panel a

(Exhibit: Demand and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing handheld calculators improves. Which panel best describes how this will affect the market for handheld calculators?

panel c

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes?

panel c

If the demand for housing increases and the supply of housing decreases:

price will increase, but the quantity change is indeterminate

If the price in the market for a commodity is above the market equilibrium price, the:

quantity supplied exceeds the quantity demanded.

If demand and supply both shift to the right, then:

quantity will go up, but price could go up, down, or stay the same

Supply is best defined as the

relationship between the quantity of a good or service sellers are willing to offer for sale and various prices, all other things unchanged.

(Exhibit: The Market for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 60 cents, the price will:

remain unchanged.

A supply curve that is upward sloping means that:

suppliers will want to sell more at higher prices

When economists study the behavior of sellers, they are studying:

supply

Factor prices, returns from alternative activities, technology, number of firms, producer expectations, and natural events are often termed:

supply shifters

Exhibit: Demand and Supply of Wheat) If a price of $10 temporarily exists in this market, a:

surplus of 8,000 bushels will result

Plastic and steel are substitutes in the production of automobiles. If steel prices go up, all other things unchanged:

the demand curve for plastic will shift to the right

(Exhibit: The Demand for music downloads) A decrease in the price of iPods and other similar devices would result in a change illustrated by:

the move from h to i in Figure (b).

Exhibit: The Demand for music downloads) A decrease in the fee charged for music downloads would result in a change illustrated by:

the move from j to k in Figure (c).

Reference: Ref 3-7 (Exhibit: The Supply of Music downloads) A decrease in the number of websites supplying music downloads would result in a change illustrated by:

the move from p to q in Figure (b

A shift in the demand curve to the left, all other things unchanged:

will cause a movement downward along the supply curve and a lower equilibrium quantity.

(Exhibit: Demand and Supply of Gasoline) What might cause the supply curve to shift from S 2 back to the initial supply curve S 1?

The Organization of Petroleum Exporting Countries (OPEC) restricts the production of crude oil.

The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?

The equilibrium price and quantity rise