Chapter 3 Quizes

↑ Production technology:

Supply shifts right.

↑ Subsidies:

Supply shifts right

↑ Price expectations:

Damand shift right

If cream cheese and bagels are complements, then an increase in the price of cream cheese will __________ the demand for bagels. a) increase b) not change c) increase or decrease d) decrease

Decrease

↑ Income:

Demand for normal goods shifts right, while demand for inferior goods shifts left.

↑ Price of complements:

Demand shifts left

↑ Number of buyers:

Demand shifts right

↑ Price of substitutes:

Demand shifts right

↑ Tastes and preferences

Demand shifts right.

Demand refers to the goods and services people are willing to sell during a set time period. False True

False

From the seller's perspective, a relatively low price is a good price. False True

False

The law of supply states that if prices fall, consumers will purchase fewer products in the market. True False

False

When quantity demanded exceeds quantity supplied, a shortage occurs and there is downward pressure on price. True False

False

When the price of gasoline increases, the amount of money available to spend on everything else (including gasoline) falls. This effect is known as the _____ effect. income substitution marginal opportunity

Income

At the current market price in the market for smartphones, the quantity of buyers is larger than the quantity of sellers. Given this situation, we can expect the market price of smartphones to: a) Increase b) Decrease c) remain unchanged

Increase

Currently, the market for pizza pies in your neighborhood is at equilibrium. If a large number of people move into the area, we would expect the market price of pizza to: a) decrease b) increase c) remain unchanged

Increase

Which statement illustrates the law of demand? Lindsay offers to buy more sticks of chewing gum at $2 than at $1. Marcus offers to sell more sticks of chewing gum at $2 than at $1. Lindsay offers to buy more sticks of chewing gum at $1 than at $2. Marcus offers to sell more sticks of chewing gum at $1 than at $2.

Lindsay offers to buy more sticks of chewing gum at $1 than at $2.

For any given product, _____ is determined by what the market will bear. None of the answers is correct. quality price quantity

Price

Which is not a purpose that prices play in a market? Prices can help sellers determine what goods to sell. Prices communicate information about consumer preferences. Prices give buyers a means of comparing goods that are substitutes. Prices rarely change, which allows markets to be more stable.

Prices rarely change, which allows markets to be more stable.

The maximum amount of a product that sellers are willing and able to provide for sale over a particular period at various prices, ceteris paribus, is called maximal output. supply. profit. sales volume.

Supply

↑ Price expectations: Supply shifts left.

Supply shifts left

↑ Price of related commodities: Supply shifts left.

Supply shifts left

↑ Taxes: Supply shifts left.

Supply shifts left

↑ Cost of resources:

Supply shifts left.

↑ Number of sellers: Supply shifts right.

Supply shifts right

What would be the effect on the equilibrium price and equilibrium quantity of new housing if mortgage interest rates rise and the costs of building a house rise simultaneously? The equilibrium price will fall, but the equilibrium quantity cannot be predicted. The equilibrium price will rise, and the equilibrium quantity will fall. The equilibrium price cannot be predicted, but the equilibrium quantity will fall. The equilibrium price, and the equilibrium quantity will fall.

The equilibrium price cannot be predicted, but the equilibrium quantity will fall.

Whenever you construct a demand curve, which statement is TRUE? Income must be allowed to change. Tastes and preferences are variable. The price of all other goods must be held constant. The price of the good itself must be held constant.

The price of all other goods must be held constant.

Whenever you construct a demand curve, which statement is TRUE? The price of all other goods must be held constant. The price of the good itself must be held constant. Income must be allowed to change. Tastes and preferences are variable.

The price of all other goods must be held constant.

An increase in the price of a good will cause a decrease in the demand for a complementary good. False True

True

For most goods, as their prices rise, fewer units are sold. False True

True

Assume the demand schedule for smartphones is downward-sloping. If the price of smartphones increases from $200 to $600 the demand for smartphones will decrease. a decrease in quantity demanded of smartphones will occur. the demand for smartphones will increase. an increase in quantity demanded of smartphones will occur.

a decrease in quantity demanded of smartphones will occur.

Assume the demand schedule for smartphones is downward-sloping. If the price of smartphones increases from $200 to $600 a decrease in quantity demanded of smartphones will occur. an increase in quantity demanded of smartphones will occur. the demand for smartphones will decrease. the demand for smartphones will increase.

a decrease in quantity demanded of smartphones will occur.

Which factor would cause a decrease in the demand for coffee? an increase in the price of tea (a substitute for coffee) a decrease in the price of tea (a substitute for coffee) a decrease in the price of coffee an increase in the price of coffee

a decrease in the price of tea (a substitute for coffee)

If the price of sparkling water decreases, which situation would occur in the market for sparkling water, all else equal? a decrease in supply an increase in supply an increase in the quantity supplied a decrease in the quantity supplied

a decrease in the quantity supplied

Sales of luxury consumer products for cats and dogs, such as pet spas and hotels, have experienced _____ over the past decade. a large increase a modest decline a large decline little change

a large increase

If the equilibrium price of lychee fruit has fallen while the equilibrium quantity has risen, which factor may have caused it? a reduction in the price of related commodities using the same type of land for production a rise in popularity in the consumption of lychee fruit a severe drought that caused many sellers to leave the market an increase in the price of rambutan fruit, a substitute for lychee fruit

a reduction in the price of related commodities using the same type of land for production

Assuming everything else stays the same, an increase in the price of laptop computers will __________ of laptop computers. a) decrease the quantity demanded b) increase the demand c) increase the quantity demanded d) decrease the demand

a) decrease the quantity demanded

Which circumstance will cause a decrease in demand? an increase in the price of a complementary good an increase in the price of the product a decrease in income for an inferior good an increase in the price of a substitute good

an increase in the price of a complementary good

Assuming everything else stays the same, an increase in the price of smartphones will __________ of smartphones. a) increase the supply b) increase the quantity supplied c) decrease the quantity supplied d) decrease the supply

b) increase the quantity supplied

If both the supply of and the demand for a good increase simultaneously, the equilibrium price will remain unchanged. be indeterminate. increase. decrease.

be indeterminate.

When only supply or only demand changes, we can predict the resulting changes in There will be changes in neither equilibrium price nor equilibrium quantity. equilibrium price only. both equilibrium price and equilibrium quantity. equilibrium quantity only.

both equilibrium price and equilibrium quantity.

Which scenario is the MOST likely effect of a decrease in the price of tablet computers on the market for laptop computers (a substitute)? increased equilibrium price and increased equilibrium quantity increased equilibrium price and decreased equilibrium quantity decreased equilibrium price and decreased equilibrium quantity decreased equilibrium price and increased equilibrium quantity

decreased equilibrium price and decreased equilibrium quantity

People's willingness-to-pay for umbrellas is MOST likely _____ on a _____ day. lower; cloudy lower; rainy higher; sunny higher; rainy

higher; rainy

An increase in supply causes the equilibrium price to _____ and the equilibrium quantity to _____. fall; rise fall; fall rise; fall rise; rise

fall; rise

The law of demand refers to the positive relationship between price and quantity demanded. True False

false

prices typically contain more useful information for buyers than for sellers. True False

false

Markets work as if they are corrected by labor unions. corrected by forces of government. corrected by corporate forces. guided as if by an invisible hand, according to Adam Smith.

guided as if by an invisible hand, according to Adam Smith.

Willingness-to-pay is the highest value that a producer believes consumers will pay for his product. price that all the consumers in a market pay for a good or service. price a consumer pays for a good or service. highest value that a consumer believes a good or service is worth.

highest value that a consumer believes a good or service is worth.

If farmers begin using better fertilizers to grow corn, we would expect a(n) __________ in the supply of corn. a) small decrease b) no change c) large decrease d) increase

increase

When a consumer's income level falls, it is MORE likely the consumer will purchase _____ goods. substitute normal inferior complementary

inferior

Bus tickets are often considered _____ goods because _____. normal; as income rises, demand for bus tickets falls normal; as the price of a substitute good falls, demand for bus tickets falls inferior; as income rises, demand for bus tickets falls inferior; as the price of a substitute good falls, demand for bus tickets falls

inferior; as income rises, demand for bus tickets falls

The market-clearing price refers to a shortage. is the price at which quantity demanded equals quantity supplied. refers to a surplus. refers to a demand curve.

is the price at which quantity demanded equals quantity supplied.

Which market is most likely to sell a virtual good? Walgreen's Pharmacy online gaming marketplace Amazon online ticket exchange (e.g., StubHub)

online gaming marketplace

Which factor is NOT a determinant of demand? tastes and preferences production costs prices of related goods income

production costs

Other factors held constant, as the price of an iPad rises, the quantity demanded of iPads falls. demand for iPads rises. quantity demanded of iPads rises. demand for iPads falls.

quantity demanded of iPads falls.

In the market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even larger increase in the demand for online tutors. These events will cause the equilibrium price of online tutoring to _____ and the equilibrium quantity to _____. rise; rise rise; fall fall; fall fall; rise

rise; rise

CarMax is a national chain that sells used cars. The likely impact of its arrival in the market would be to _____. Everything else held constant, this would likely _____ the price of used cars. shift the supply of used cars to the left; raise shift the supply of used cars to the right; lower shift the supply of used cars to the right; raise increase the quantity supplied of used cars; lower

shift the supply of used cars to the right; lower

An increase in demand is shown as a _____ demand curve. movement down along a shift to the right of the shift to the left of the movement up along a

shift to the right of the

Which of these markets is one that returns quickly to equilibrium after it is disrupted? stock real estate oil labor

stock

If the price the U.S. Post Office charges to deliver Express Mail rises, the demand facing FedEx will rise because its respective services are _____ goods. substitute complementary luxury inferior

substitute

Which factor would change demand from D0 to D2? a change in consumer tastes so that consumers want more of the good a decrease in the price of a complementary good an increase in the price of a substitute good the expectation of a decrease in the future price of the good

the expectation of a decrease in the future price of the good

When economists refer to a market demand curve, they mean that it represents the quantity demanded by any individual consumer, multiplied by the number of consumers. the horizontal summation of individual demand curves. None of the answers is correct. the vertical summation of individual demand curves.

the horizontal summation of individual demand curves.

The law of demand states that _____ during a given period. the lower a product's price, the more of that product consumers will purchase higher prices will lead producers to offer more of their products for sale the lower a product's price, the less of that product consumers will purchase higher prices will lead producers to offer fewer of their products for sale

the lower a product's price, the more of that product consumers will purchase

If a market is NOT at equilibrium supply will shift until the market reaches equilibrium. the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium. demand will shift until the market reaches equilibrium. both supply and demand will shift until the market reaches equilibrium.

the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium.

If there is a surplus in a given market, then the price will not change. supply will increase. the price will decrease. the price will increase.

the price will decrease.

Suppose that a person discovers that, ceteris paribus, when the price of tomatoes increases, the demand for blue cheese decreases. From this he concludes that the demand curve for tomatoes has shifted to the left. tomatoes and blue cheese are substitutes. tomatoes and blue cheese are complements. tomatoes are inferior goods and blue cheese is a normal good.

tomatoes and blue cheese are complements.

Suppose that a person discovers that, ceteris paribus, when the price of tomatoes increases, the demand for blue cheese decreases. From this he concludes that tomatoes and blue cheese are complements. tomatoes are inferior goods and blue cheese is a normal good. tomatoes and blue cheese are substitutes. the demand curve for tomatoes has shifted to the left.

tomatoes and blue cheese are complements.