ECO 231 - Quiz 1

Refer to Table 4-11. The equilibrium price and quantity, respectively, are

$6 and 30 units

The market demand curve

represents the sum of the quantities demanded by all the buyers at each price of the good

An increase in quantity demand

results in a movement downward and to the right along the demand curve

The two words most often used by economists are

supply and demand

Refer to Figure 4-17. At a price of

$7, there is a surplus of 4 units.

The following table contains a demand schedule for a good. Price Quantity Demanded $10 100 $20 Q1 If the law of demand applies to this good, then Q1 could be

0

Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units

The following table contains a supply schedule for a good. Price Quantity Supplied $10 100 $20 Q1 If the law of supply applies to this good then Q1 could be

150

Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

200 cases

Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

5 units

Refer to Figure 4-9. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with which of the following events?

A tax was placed on cigarettes

Which of the following might cause the supply curve for an inferior good to shift to the right?

An improvement in production technology that makes production of the good more profitable

Refer to Table 4-6. Which supply schedules obey the law of supply?

Firm B's and Firm D's only

Refer to Table 4-3. Whose demand does not obey the law of demand?

Grover's

In a competitive market, the price of a product

None of the above

In a market economy, supply and demand are important because they

Play a critical role in the allocation of the economy's scares resources, determine how much of each good gets produced, can be used to predict the impact on the economy of various events and policies

Refer to Figure 4-6. Suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require "junk food" producers to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are successful, we could illustrate the plan as producing a movement from

Point A to Point B in Panel 1

Refer to Figure 4-14. Which of the following best describes the movement from E1 to E2?

a decrease in supply

Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for beach towels?

a decrease in the price of cotton

Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses?

a decrease in the price of custom wooden sleigh bed frames

When we move along a given supply curve,

all nonprice determinants of supply are held constant

Refer to Figure 4-11. The movement from point A to point B on the graph is called

an increase in the quantity supplied

In competitive markets, buyers

and sellers are price takers

A market includes

both buyers and sellers

In a market economy, supply, and demand determine

both the quantity of each good produced and the price at which it is sold

Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

decrease in the quantity supplied

The unique point at which the supply and demand curves intersect is called

equilibrium

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded for the good rises

Whish of the following is an example of a market?

gas station, garage sale, barber shop

A movement downward and to the right along the demand curve is called a(n)

increase in quantity demanded

Refer to Figure Above. The movement from point A to point B on the graph shows a(n)

increase in quantity demanded

A movement upward and to the right along the supply curve is called a(n)

increase in quantity supplied

A rightward shift of a supply curve is called a(n)

increase in supply

Equilibrium price must increase when demand

increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously.

If the price of ice cream rose to $30 per gallon, consumers would purchase fewer gallons of ice cream than if the price were $4 per gallon. If the price of chocolate sauce fell to $0.50 per can, consumers would purchase more chocolate sauce than if the price were $5 per can. These relationships illustrate the

law of demand

When a surplus exists in a market, sellers

lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated

A group of buyers and sellers of a particular good or service is called a(n)

market

The sum of all the individual supply curves for a product is called

market supply

A competitive market is a market in which

no individual buyer or seller has any significant impact on the market price

The highest form of competition is called

perfect competition

The law of demand states that, other things equal, an increase in

price causes quantity demanded to decrease

The law of supply state that, other things equal, when the price of a good

rises, the quantity supplied of the good rises

The quantity supplied of a good is the amount that

sellers are willing and able to sell

When quantity demanded increase at every possible price, the demand curve has

shifted to the right

An example of a perfectly competitive market would be the market for

soybeans

Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a

surplus to exist and the market price of chocolate-dipped strawberries to decrease

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

the equilibrium price but not above or below

A movement along the supply curve might be caused by a change in

the price of the good service that is being supplied

If the price of a good is low,

the quantity supplied of the good could be zero

The demand for a good or service is determined by

those who buy the good or service

The supply of a good or service is determined by

those who sell the good or service

The quantity demanded of a good is the amount that buyers are

willing and able to purchase