Chapter 4 HW

Which of the following demonstrates the law of supply? a. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup. b. When leather became more expensive, belt producers decreased their supply of belts. c. When car production technology improved, car producers increased their supply of cars. d. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters.

a. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

The line that relates the price of a good and the quantity demanded of that good is called the demand a. curve, and it usually slopes downward. b. curve, and it usually slopes upward. c. schedule, and it usually slopes upward. d. schedule, and it usually slopes downward.

a. curve, and it usually slopes downward.

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are a. substitute goods. b. inferior goods. c. complementary goods. d. normal goods.

a. substitute goods.

When the quantity demanded has increased at every price, it might be because a. the price of a complementary good has decreased. b. the costs incurred by sellers producing the good have decreased. c. income has increased, and the good is an inferior good. d. the number of buyers in the market has decreased.

a. the price of a complementary good has decreased.

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event? a. The supply would decrease. b. Buyers would not be willing to buy as much as before at each relevant price. c. The equilibrium price would rise. d. Sellers would not be able to produce and sell as much as before at each relevant price.

b. Buyers would not be willing to buy as much as before at each relevant price.

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. We do not have enough information to answer this question. b. Students would purchase more than 750 cups per day. c. Student would continue to purchase 750 cups per day. d. Students would purchase fewer than 750 cups per day.

b. Students would purchase more than 750 cups per day.

The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result, which of the following statements is not true? a. The equilibrium quantity of blue jeans exceeds the quantity demanded at the $30 price. b. There is a shortage of blue jeans at the $30 price. c. There is a surplus of blue jeans at the $30 price. d. The quantity supplied of blue jeans exceeds the quantity demanded of blue jeans at the $30 price.

b. There is a shortage of blue jeans at the $30 price.

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

b. an inferior good.

Which of the following changes would not shift the demand curve for a good or service? a. A change in expectations about the future price of the good or service. b. A change in the price of a related good or service. c. A change in the price of the good or service. d. A change in income.

c. A change in the price of the good or service.

If a surplus exists in a market, then we know that the actual price is a. below the equilibrium price, and quantity supplied is greater than quantity demanded. b. below the equilibrium price, and quantity demanded is greater than quantity supplied. c. above the equilibrium price, and quantity supplied is greater than quantity demanded. d. above the equilibrium price, and quantity demanded is greater than quantity supplied.

c. above the equilibrium price, and quantity supplied is greater than quantity demanded

A likely example of substitute goods for most people would be a. peanut butter and jelly. b. televisions and subscriptions to cable television services. c. pencils and pens. d. tennis balls and tennis rackets

c. pencils and pens.

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

c. sellers are willing and able to sell.

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

d. The cost of the fabric used to make the jerseys increases.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.

d. The equilibrium price would decrease, and the equilibrium quantity would increase.

When we move along a given supply curve, a. technology and price are held constant. b. only price is held constant. c. all determinants of quantity supplied are held constant. d. all nonprice determinants of supply are held constant.

d. all nonprice determinants of supply are held constant.

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires a. is unaffected, and the supply of tires decreases. b. is unaffected, and the supply of tires increases. c. decreases, and the supply of tires increases. d. is unaffected, and the supply of tires could increase, decrease, or stay the same.

d. is unaffected, and the supply of tires could increase, decrease, or stay the same.

If the supply of a product increases, then we would expect equilibrium price a. to increase and equilibrium quantity to decrease. b. and equilibrium quantity to both decrease. c. and equilibrium quantity to both increase. d. to decrease and equilibrium quantity to increase.

d. to decrease and equilibrium quantity to increase.