Econ Ch. 2

Over the next few years, several newly constructed office blocks will become available at the World Trade Center site. As well, economists expect the New York economy will continue to exhibit modest growth. What is the expected outcome for the office space market in downtown Manhattan?

Unambiguously higher equilibrium quantity, and equilibrium rental rates could be higher or lower

An increase in the price of pineapples will result in

a larger quantity of pineapples supplied.

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as

an increase in quantity demanded.

Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza,

ice cream and hot fudge are complements.

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

income

Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume that this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would

increase demand and increase supply, resulting in an increase in the equilibrium quantity quantity and an uncertain effect on the equilibrium price of red wine.

A supply schedule

is a table that shows the relationship between the price of a product and the quantity of the product supplied.

When you purchase a new pair of jeans you do so in the

product market.

All else equal, the decrease in the price of complementary products for the Apple Watch, such as Sensoria's wearable technology, would

shift the demand curve for the Apple Watch to the right.

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement?

The demand curve for California wine shifts to the right in anticipation of higher prices in the future.

How has the growing popularity of factory outlet stores affected the market for clothing at retail department stores?

The demand curve for clothing at retail department stores shifts to the left.

Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges?

The demand curve for laser printer ink cartridges shifts to the right.

How does the increasing use of digital cameras affect the market for traditional camera film?

The demand curve for traditional camera film shifts to the left.

In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant?

The demand curve shifts to the left.

In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?

The demand curve shifts to the right.

Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?

The green tea demand curve shifts to the right because of a change in tastes in favor of green tea.

Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are

substitutes in consumption.

If you are considering buying either an Apple Watch or a Samsung Gear S2, and you choose the Samsung only because the price is lower, then you consider

the Apple Watch and the Samsung Gear S2 to be substitutes.

The substitution effect of a price change refers to

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect:

the demand curve for steel to shift to the right.

If the price of automobiles was to increase, then

the demand for gasoline would decrease.

What would cause an unambiguous decrease in the real price of DVD players?

A shift to the right in the supply curve for DVD players and a shift to the left in the demand curve for DVD players.

Which of the following would cause an unambiguous decrease in the real price of DVD players?

A shift to the right in the supply curve for DVD players and a shift to the left in the demand curve for DVD players.

In 2017, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. After the hurricane, what would we expect to see happen in the market at the pre-hurricane (initial) equilibrium price?

A shortage of oranges.

You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X?

An increase in the price of a good that is a substitute for X

Assume that in recent years the cost of producing microbrew beer in the U.S. has decreased largely due to technological improvements. At the same time, more and more Americans prefer microbrew beer over wine. Which of the following best explains the effect of these events in the microbrew beer market?

Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

An increase in the expected future price of the product would be represented by a movement from

D1 to D2.

Refer to Figure 3-1. An increase in the price of a complement would be represented by a movement from

D2 to D1.

The supply curve of smartphones would shift to the right as a result of this?

Decrease in the price of an input used to produce smartphones.

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

Demand and supply will both increase.

Which of the following would cause a rightward shift in the demand curve for gasoline? I. A large increase in the price of public transportation. II. A large decrease in the price of automobiles. III. A large reduction in the costs of producing gasoline.

I and II

Economic Agents (M) receive wages and salaries from Market (K) and Economic Agents (J) receive labor services from Market (K). One segment of the circular flow diagram shows the flow of labor services from market K to economic agents J. What is market K and who are economic agents J?

K = factor market; J = firms

The following appeared in a Florida newspaper a week after a hurricane hit the state: "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in this article?

The hurricane caused an increase in the demand for building materials.

If the U.S. lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

The supply curve will shift to the right.

If the U.S. placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture?

The supply curve would shift to the left.

If the United States placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture?

The supply curve would shift to the left.

Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers.

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

a decrease in consumer income

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

a decrease in the price of cattle.

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase?

a decrease in the price of corn.

Holding everything else constant, an increase in the price of MP3 players will result in

a decrease in the quantity demanded of MP3 players demanded.

If the price of grapefruit rises, the substitution effect due to the price change will cause

a decrease in the quantity of grapefruit demanded.

The phrase "demand has increased" means that

a demand curve has shifted to the right.

An increase in the price of off-road vehicles will result in

a larger quantity of off-road vehicles supplied.

A demand curve shows the relationship between

the price of a product and the quantity of the product demanded.

One would speak of a change in the quantity of a good supplied, rather than a change in supply, if

the price of the good changes.

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is

the price of the good.

At a product's equilibrium price

the product's demand curve crosses the product's supply curve.

When an industry's raw material costs increase, other things remaining the same,

the supply curve shifts to the left.

If an increase in income leads to in an increase in the demand for peanut butter,

then peanut butter is a normal good.

If an increase in income leads to a decrease in the demand for salami,

then salami is an inferior good.

If an increase in income leads to an increase in the demand for sushi,

then sushi is a normal good.

If an increase in income leads to a decrease in the demand for sushi,

then sushi is an inferior good.

A decrease in the equilibrium quantity for a product will result

when there is a decrease in supply and a decrease in demand for the product.

A decrease in equilibrium price for a product will result

when there is an increase in supply and a decrease in demand for the product.