ECO2201: Week 2 Quiz

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: a.the price of Good Y will increase. b.Goods X and Y are complement goods. c.Goods X and Y are normal goods. d.Goods X and Y are substitute goods.

Goods X and Y are complement goods.

A change in price of a good or service typically causes ___________________________ for that specific good or service. a.a change along the supply curve b.a decreased demand c.a new equilibrium price d.the supply curve to shift

a change along the supply curve

The ___________ is the only price where quantity demanded is equal to quantity supplied. a.market price b.equilibrium price c.horizontal axis intercept d.vertical axis intercept

equilibrium price

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price. a.equilibrium quantity b.demand schedule c.quantity demanded d.supply schedule

equilibrium quantity

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________. a. law of demand b. income gap c. market equilibrium d. price model

law of demand

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. a. a shift in demand b. lower costs of production c. equilibrium d. higher demand

lower costs of production

In economics, the demand for a good refers to the amount of the good that people: a.need to achieve a minimum standard of living. b.would like to have if the good were free. c.will buy at alternative income levels. d.will buy at various prices.

will buy at various prices.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: a.Andy's demand for pizza to decrease. b.Andy's demand for pizza to increase. c.Andy's demand for beer to increase. d.Andy's quantity of pizza demanded to decrease.

Andy's demand for beer to increase.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." a.The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied." b.The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." c.The statement is correct. d.The statement is incorrect because it confuses a change in quantity supplied with a change in supply.

The statement is correct.

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is: a.a shift of the demand curve for beef to the right. b.a shift of the demand curve for beef to the left. c.a movement down along the demand curve for beef to the right. d.no change; only the supply curve for beef is likely to be affected.

a shift of the demand curve for beef to the left.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________. a.everything is variable. b.all else is held equal c.no one knows which variables will change and which will remain constant. d.what is true for the individual is not necessarily true for the whole.

all else is held equal

The term "ceteris paribus" means that: a.no one knows which variables will change and which will remain constant. b.all variables except those specified are constant. c.what is true for the individual is not necessarily true for the whole. d.everything is variable.

all variables except those specified are constant.

The nature of demand indicates that as the price of a good increases: a.buyers desire to purchase less of it. b.suppliers wish to sell less of it. c.more of it is desired. d.more of it is produced.

buyers desire to purchase less of it.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. a.costs of production fall b.equilibrium is achieved c.prices rise d.there is a population increase

costs of production fall

Refer to Figure 3-2. A change from Point A to Point B represents a/an: a. increase in quantity demanded. b. decrease in quantity demanded. c. increase in demand. d. decrease in demand.

decrease in quantity demanded.

Refer to Figure 3-3. A change from Point A to Point E represents a/an: a. increase in supply. b. increase in quantity supplied. c. decrease in quantity supplied. d. decrease in supply.

decrease in supply.

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ a.excess supply b.ceteris paribus c.excess demand d.a price ceiling

excess demand/shortage

Which of the following would reduce the supply of microcomputers? a.higher wage rates for the workers that assemble the computers b.a technological improvement that lowers the cost of producing the computers c.a reduction in the price of computer chips used to produce the computers d.a reduction in the price of computers.

higher wage rates for the workers that assemble the computers

Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a/an: a. decrease in demand. b. decrease in quantity demanded. c. increase in demand. d. increase in quantity demanded.

increase in demand.

Refer to Figure 3-3. A change from Point A to Point B represents a/an: a. decrease in supply. b. decrease in quantity supplied. c. increase in quantity supplied. d. increase in supply.

increase in quantity supplied.

Refer to Figure 3-3. A change from Point A to Point D represents a/an: a. decrease in quantity supplied. b. decrease in supply. c. increase in quantity supplied. d. increase in supply

increase in supply.

The demand schedule for a good: a.is determined primarily by the cost of producing the good. b.indicates the quantities that suppliers will sell at various market prices. c.indicates the quantity that people will buy at the prevailing price. d.indicates the quantities that will be purchased at alternative market prices.

indicates the quantities that will be purchased at alternative market prices.

The demand curve for a typical good has a/an: a.inverse slope because as the price goes up, the good has more profitability. b.negative slope because the good has less "snob appeal" as its price falls. c.negative slope because consumer incomes fall as the price of the good rises. d.negative slope because some consumers switch to other goods as the price rises.

negative slope because some consumers switch to other goods as the price rises.

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling. a.Price ceilings b.Subsidies c.Price floors d.Rent controls

price floors

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases. a.quantity supplied, quantity demanded b.price, quantity demanded c.quantity demanded, price d.price, quantity supplied

price, quantity demanded

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis. a.quantity supplied b.quantity demanded c.demand d.quantity

quantity

A demand curve shows the relationship between price and _________________ on a graph. a.economies of scale b.costs c.quantity demanded d.quantity produced

quantity demanded

_________________ refers to the total number of units that are purchased at that price. a.supply b.quantity c.quantity demanded d.market quantity

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. a.demand schedule b.quantity supplied c.market price d.demand curve

quantity supplied

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . a.supply curve to the left b.demand curve to the right c.demand curve to the left d.supply curve to the right

supply curve to the right

If new manufacturers enter the computer industry, then (ceteris paribus): a.some established manufacturers must exit the industry. b.the demand curve shifts to the left. c.the supply curve shifts to the right. d.the supply curve shifts to the left.

the supply curve shifts to the right.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: a.the demand curve, as consumers try to economize because of the shortage. b.the supply curve. c.the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price. d.both the supply and demand curves.

the supply curve.

According to the law of supply: a.there is a direct relationship between price and quantity demanded. b.there is a direct relationship between price and the quantity supplied. c.there is an inverse relationship between price and the quantity supplied. d.there is an inverse relationship between price and quantity demanded.

there is a direct relationship between price and the quantity supplied.

When quantity demanded decreases in response to a change in price: a.the demand curve shifts to the right. b.there is a movement up along the demand curve. c.the demand curve shifts to the left. d.there is a movement down along the demand curve.

there is a movement up along the demand curve.

But nearly all supply curves share a basic similarity: they slope _______________. a.up from right to left b.up from left to right c.down from left to right d.down from right to left

up from left to right