ECON 201 - Assn 4

23) The above figures show the market for hamburger meat. Which figure(s) shows the effect of an increase in the number of people who eat hamburger meat? A) Figure A (Demand line shifts right) B) Figure B (Demand line shift left) C) Figure C (Supply line shift left) D) Figure A and C

A) Figure A (Demand line shifts right)

36) The above figures show the market for hamburger meat. Which figure(s) shows the effect of an increase in the price of a hamburger bun, a complement for hamburger meat? A) Figure B (Demand line shift right) B) Figure C (Demand line shift left) C) Figure D (Supply line shift right) D) Figures A and B

A) Figure B (Demand line shift right)

3) Coffee (the product under study) and sugar are complements. If there is an increase in the price of sugar, there will also be A) a decrease in the price of coffee. B) a rightward shift in the demand curve for coffee. C) an increase in the price of coffee. D) a leftward shift of the supply curve of coffee.

A) a decrease in the price of coffee.

15) If, as peopleʹs incomes increase, the demand for a good increases, the good is called A) a normal good. B) a substitute. C) a complement. D) an inferior good.

A) a normal good.

6) If macaroni and cheese is an inferior good, a decrease in income will A) increase the demand for macaroni and cheese. B) decrease the demand for macaroni and cheese. C) create no income effect. D) not affect the demand for macaroni and cheese.

A) increase the demand for macaroni and cheese.

27) An increase in the number of consumers A) shifts the demand curve rightward. B) results only in a movement along the demand curve. C) shifts the supply curve leftward D) Both answers B and C are correct.

A) shifts the demand curve rightward.

24) Suppose we observe that both the equilibrium price of film cameras and the equilibrium quantity of film cameras have fallen. Which of the following could be responsible for this? A) Workers who make cameras received a pay raise. B) Consumersʹ preferences changed in favor of digital cameras. C) The price of digital cameras increased. D) Technological advances were made in film camera production.

B) Consumersʹ preferences changed in favor of digital cameras.

2) Which figure shows the effect of an announcement by the U.S. FDA that eating hamburger causes early death? B) Figure B (Demand line shift left)

B) Figure B (Demand line shift left)

17) If the quantity demanded exceeds the quantity supplied, then there is A) a shortage and the price is above the equilibrium price. B) a shortage and the price is below the equilibrium price. C) a surplus and the price is above the equilibrium price. D) a surplus and the price is below the equilibrium price.

B) a shortage and the price is below the equilibrium price.

26) Which of the following decreases the demand for an inferior good? A) a decrease in income B) an increase in income C) an increase in the price of a substitute D) a decrease in the price of a complement

B) an increase in income

5) Suppose people buy more of good 1 when the price of good 2 falls. These goods are A) inferior. B) complements. C) substitutes. D) normal.

B) complements.

25) A decrease in the expected future price of cars A) increases the current quantity demanded of cars, that is, there is a movement downward along the demand curve for cars. B) decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars. C) decreases the current quantity demanded of cars, that is, there is a movement upward along the demand curve for cars. D) increases the current demand for cars, that is, there is a rightward shift of the demand curve for cars.

B) decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars.

10) The ʺlaw of demandʺ states that, other things remaining the same, the quantity demanded of any good is A) directly related to its price. B) inversely related to its price. C) positively related to its price. D) directly related to the supply of the good.

B) inversely related to its price.

32) The ʺlaw of supplyʺ states that, other things remaining the same, firms produce A) less of a good as the required resources become scarcer. B) more of a good the higher its price. C) less of a good the more it costs to produce it. D) more of a good the less it costs to produce it.

B) more of a good the higher its price.

13) You observe that the price of a good rises and the quantity decreases. These observations can be the result of the A) demand curve shifting leftward. B) supply curve shifting leftward. C) supply curve shifting rightward. D) demand curve shifting rightward.

B) supply curve shifting leftward.

22) Price (dollars per pound) 3,4,5,6,7 Quantity supplied (pounds) 1,2,4,5,6 Quantity demanded (pounds) 7,5,4,2,1 The above table shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and equilibrium price for chocolate chip cookies? A) 2 pounds, $6.00 per pound B) 2 pounds, $3.00 per pound C) 4 pounds, $5.00 per pound D) 7 pounds, $3.00 per pound

C) 4 pounds, $5.00 per pound

19) Which of the following always raises the equilibrium price? A) a decrease in both demand and supply B) a decrease in demand combined with an increase in supply C) an increase in demand combined with a decrease in supply D) an increase in both demand and supply

C) an increase in demand combined with a decrease in supply

16) If both the demand and supply decrease, the equilibrium quantity A) increases and the equilibrium price falls. B) increases and the effect on the equilibrium price is indeterminate. C) decreases and the effect on the equilibrium price is indeterminate. D) decreases and the equilibrium price rises.

C) decreases and the effect on the equilibrium price is indeterminate.

20) Assume that beef and pork are substitutes for consumers. If the price of beef increases (the substitute good), it will shift the A) supply curve of pork rightward. B) demand curve for pork leftward. C) demand curve for pork rightward. D) supply curve of pork leftward.

C) demand curve for pork rightward.

29) A change in the price of a good A) shifts the goodʹs demand curve but does not cause a movement along it. B) shifts the goodʹs demand curve and also causes a movement along it. C) does not shift the goodʹs demand curve but does cause a movement along it. D) neither shifts the goodʹs demand curve nor causes a movement along it.

C) does not shift the goodʹs demand curve but does cause a movement along it.

14) If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the quantity demanded will ________. A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease

C) fall; increase

37) If technological advances lower the cost of computer chips, in the market for computers the equilibrium price will ________ and the quantity demanded will ________. A) rise; decrease B) rise; increase C) fall; increase D) fall; decrease

C) fall; increase

28) Which of the following is NOT one of the factors that influences the supply of a product? A) technology B) number of suppliers C) income D) expected future prices

C) income

30) Inferior goods are those for which demand increases as A) the price of a substitute falls. B) income increases. C) income decreases. D) the price of a substitute rises.

C) income decreases.

12) When the demand for a good increases, its equilibrium price ________ and quantity supplied ________. A) falls; increases B) falls; decreases C) rises; increases D) rises; decreases

C) rises; increases

8) The law of demand implies that demand curves A) shift leftward whenever the price rises. B) shift rightward whenever the price rises C) slope down. D) slope up.

C) slope down.

18) When the price is less than the equilibrium price, A) some consumers will be willing to pay a price higher than the prevailing price. B) there will be a shortage. C) the price will be forced higher. D) All of the answers in this question are correct.

D) All of the answers in this question are correct.

31) Which of the following decreases the supply of restaurant meals? A) Consumersʹ incomes increase and restaurant meals are a normal good. B) The demand for restaurant meals decreases. C) The price of movies, a complement to restaurant meals, falls. D) Waiters get a pay raise.

D) Waiters get a pay raise.

34) It is expected that the price of a bushel of wheat will increase in one month. This belief will result in A) no change in current or future supply of wheat. B) an increase in current supply of wheat. C) a decrease in future supply of wheat. D) a decrease in current supply of wheat.

D) a decrease in current supply of wheat.

4) A consumer might consider in-line skates and elbow-pads to be A) unrelated goods. B) substitutes. C) products with upward sloping demand curves. D) complements.

D) complements.

7) An increase the expected future price of a good A) increases its supply. B) decreases its demand. C) has no effect on either its demand or its supply. D) increases its demand.

D) increases its demand.

1) A decrease in demand combined with no change in supply A) decreases quantity demanded because the supply curve does not shift. B) raises the equilibrium price. C) results in only a movement rightward along the demand curve. D) lowers the equilibrium price.

D) lowers the equilibrium price.

9) The ʺlaw of demandʺ states that changes in A) demand are related directly to changes in supply. B) the quantity demanded of a good are not related to changes in the quantity supplied. C) demand are inversely related to changes in supply. D) the quantity demanded of a good are inversely related to changes in its price.

D) the quantity demanded of a good are inversely related to changes in its price.

21) A change in which of the following shifts the demand curve? A) the price of the resources used to produce the product B) the number of sellers in the market C) the technology with which the product is produced D) the tastes and preferences of consumers

D) the tastes and preferences of consumers

11) Which of the following explains why demand curves slope downward? A) substitution effect and income effect B) prices and income C) law of diminishing returns D) resources and technology E) both substitution/income effect and diminishing marginal utility

E) both substitution/income effect and diminishing marginal utility

40) T/F If demand and supply increase at the same time; we know that price falls and equilibrium quantity is indeterminate.

False

38) T/F Marginal cost (or supply price) is the minimum price that producers must receive to induce them to produce another unit of a good or service.

True

39) T/F If demand rises, quantity supplied rises. If supply increases, quantity demand increases.

True