ECON 2201 - Ch. 2 The Basics of Supply and Demand
Sugar can be refined from sugar beets. When the price of those beets falls, the demand curve for sugar would shift left. the demand curve for sugar would shift right. Correct the supply curve for sugar would shift right. the supply curve for sugar would shift left.
the supply curve for sugar would shift right.
Assume that the current market price is below the market clearing level. We would expect: upward pressure on the current market price. lower production during the next time period. a surplus to accumulate. downward pressure on the current market price.
upward pressure on the current market price.
Suppose the market price for wheat changes, and we move from point A to point B on the wheat demand curve. If the price elasticity of wheat demand was -0.3 at point A and -0.4 at point B, what is a plausible value for the arc elasticity of demand for wheat between points A and B? Correct -0.35 -0.70 -0.25 -0.45
-0.35
Which of the following will cause the demand for kerosene heaters to increase?
A decrease in the price of kerosene.
From 1970 to 2010, the real price of a college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment? A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education. A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education. A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. none of the above
A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education.
From 1970 to 2010, the real price of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs? A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs. A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs. Correct A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs. A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs.
A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs.
Even though the annual consumption of copper is now about 100 times greater than it was in 1880, the real price of copper has remained relatively unchanged. Which of the following help account for this pattern?
All of the above. (More efficient technologies reduced production costs, demand for copper grew dramatically, and new deposits that were cheaper to mine were discovered.)
Which of the following events will cause a leftward shift in the supply curve of gasoline? An increase in the wage rate of refinery workers Decrease in the price of crude oil An improvement in oil refining technology A decrease in the price of gasoline all of the above
An increase in the wage rate of refinery workers
Which of the following will cause the price of beer to rise? A shift to the left in the supply curve of beer A shift to the right in the demand curve for beer Correct both A and B none of the above
Correct both A and B
Which one of the following would NOT occur if the market price was above the market-clearing price?
Consumers would bid up the price.
Which of the following would shift the demand curve for new textbooks to the right? A fall in the price of new textbooks. A fall in the price of paper used in publishing texts Correct An increase in the number of students attending college A fall in the price of equivalent used textbooks
Correct An increase in the number of students attending college
One form of economic stimulus that state governments can use is to exempt certain types of purchases from state sales tax. For example, a law that permanently exempts business equipment from state sales tax may stimulate purchases of these goods because the law effectively reduces the price of the equipment. Business equipment such as computers or vehicles are durable goods, so should we expect the tax exemption program to have more impact on equipment demand in the short run or long run? More impact in the short run because business equipment demand becomes more income elastic in the long run Correct More impact in the short run because business equipment demand becomes more price inelastic in the long run More impact in the long run because business equipment demand becomes more income elastic in the long run More impact in the long run because business equipment demand becomes more price elastic in the long run
Correct More impact in the short run because business equipment demand becomes more price inelastic in the long run
Suppose the US demand curve for gasoline shifts rightward, and the U.S. supply curve for gasoline remains unchanged. As a result, the price of gasoline increases by 9 percent, and the equilibrium quantity increases by 3 percent. Which of the following statements is true based on this information? The price elasticity of demand for gasoline is roughly 0.33. The price elasticity of supply for gasoline is roughly 3. The price elasticity of demand for gasoline is roughly -3. Correct The price elasticity of supply for gasoline is roughly 0.33.
Correct The price elasticity of supply for gasoline is roughly 0.33.
A vertical demand curve is infinitely elastic. highly (but not infinitely) elastic. Correct completely inelastic. highly (but not completely) inelastic.
Correct completely inelastic.
Refer to Figure 2.1. At point B, demand is: infinitely elastic. Correct elastic, but not infinitely elastic. small. unit elastic. inelastic, but not completely inelastic.
Correct elastic, but not infinitely elastic. (https://lms.uconn.edu/courses/1/1155-UCONN-ECON-2201-SEC10-1185/ppg/Chapter%202%20Quiz0401131329/f1q97g1.jpg)
The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that: good A is used to produce good B. Correct goods A and B are complements. good B is used to produce good A. goods A and B are substitutes. none of the above
Correct goods A and B are complements.
Ice cream can be frozen. In the short run the magnitude of the own price elasticity of demand for ice cream: is the same as in the long run. Correct is higher than in the long run. does not depend on the fact that ice cream can be frozen. is lower than in the short run.
Correct is higher than in the long run.
When the current price is above the market-clearing level we would expect: greater production to occur during the next period. quantity demanded to exceed quantity supplied. a shortage. Correct quantity supplied to exceed quantity demanded.
Correct quantity supplied to exceed quantity demanded.
When the government controls the price of a product, causing the market price to be above the free market equilibrium price, both producers and consumers gain. all producers gain. Correct some, but not all, sellers can find buyers for their goods. only consumers gain.
Correct some, but not all, sellers can find buyers for their goods.
A product's price and the quantity consumed both increased from one year to the next. Which of the following could have happened?
Demand increased and supply remained constant.
A market is in equilibrium when..
the price is such that the amount of consumers want to buy equals the amount producers want to sell.
Which of the following would not cause the demand for Coca-Cola to shift?
The cost of producing Coca-Cola increases.
What would happen on a Supply-Demand graph if there is a decrease in the price of margarine in the market for butter? Same thing Vice Versa?
The demand curve would shift to the left (D to D') and the new equilibrium point would decrease, lower than P1. (Because the price of the product margarine is a substitute of butter and also a competitor in the butter market so the decrease in the competitor's price would result in the decrease in demand for butter in the butter market.) No, Vice versa would result in the demand curve shifting to the right.
What would happen on a Supply-Demand graph if there is an increase in average income in the market for butter? Vice Versa: If there is a decrease in average income...
The demand curve would shift to the right (D to D') and the new equilibrium point would increase, higher (P1 to P2) The demand curve would shift to the left and the new equilibrium point would decrease, lower than P1.
What would happen on a Supply-Demand graph if there is a decrease in the price of milk in the market for butter? Vice Versa: If there is an increase in the price of milk...
The supply curve would shift to the right (S to S') and the new equilibrium point would decrease, lower than P1. (Because the price of milk is a part of the production costs so if the company cut costs it will be able to increase the supply to buyers) The supply curve would shift to the left and the new equilibrium point would increase, higher than P1.
Which of the following statements is NOT true? A shortage may be reduced by shifting the supply rightward. A surplus may be reduced by shifting the demand curve rightward. Correct Unemployment in the US economy represents an excess demand for labor. A surplus may be reduced by shifting both the supply and demand curves.
Unemployment in the US economy represents an excess demand for labor.
Suppose the observed annual quantity of steel exchanged in the European market is 30 million metric tons, and the observed market price is 90 euros per ton. If the price elasticity of demand for steel is -0.3 in Europe, what is an appropriate value for the price coefficient (b) in a linear demand function Q = a - bP? b = 0.1 b = -0.1 Correct b = 0.9 b = -0.9
b = 0.9
We observe that both the price of and quantity sold of golf balls are rising over time. This is due to: increases in the price of golf clubs over time. more stringent professional requirements on the quality of golf balls requiring producers to use more expensive raw materials. continual improvements in the technology used to produce golf balls. Correct decreases in membership fees for country clubs with golf facilities.
decreases in membership fees for country clubs with golf facilities.
When supply increases, the supply curve..
shifts to the right.
This year a new oil field with substantial reserves has been discovered. Such discoveries are not made every year. Therefore an increase in the demand for oil will: increase the long-run price of oil less than the short-run price of oil. ensure that the short-run price of oil falls. increase the long-run price of oil more than the short-run price of oil. ensure that the short-run price of oil remains unchanged. ensure the long-run price of oil and short-run price of oil increase by the same amount.
increase the long-run price of oil less than the short-run price of oil.
Suppose the quantity of nursing services demanded exceeds the quantity of nursing services supplied. The nursing wage rate will: not change. decrease. increase. none of the above
increase.
Steel and aluminum are substitutes. If the price of steel decreases, other things remaining the same, we would expect the price of aluminum to ___ and the equilibrium quantity of aluminum to ___.
increase; increase.
A demand curve of the form: Q = a - bP where a and b are positive real numbers,: is an upward sloping straight line. has a constant price elasticity of demand. Correct is a downward sloping straight line. is a parabolic curve.
is a downward sloping straight line.
The income elasticity of demand is the percent change in income resulting from a one percent increase in price. Correct percent change in quantity demanded resulting from a one percent increase in income. percent change in income resulting from a one percent increase in quantity demanded. absolute change in quantity demanded resulting from a one unit increase in income. percent change in quantity demanded resulting from the absolute increase in income.
percent change in quantity demanded resulting from a one percent increase in income.
A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for b, we can use observed values for Q and P and then set -b(P/Q) equal to the: price elasticity of demand. price elasticity of supply. cross-price elasticity of demand. income elasticity of demand.
price elasticity of demand.
Suppose that unusually hot weather causes the demand curve for ice cream to shift to the right. Why will the price of ice cream rise to a new market-clearing level? The hot weather will ..
shift the demand curve to the right, initially creating a shortage until the price rises to where quantity supplied again equals quantity demanded.
For automobile demand in the U.S., the income response tends to be larger in the: short run. long run. The income response is the same in the long run and the short run. We do not have enough information to answer this question.
short run.