ECON Ch. 4

If there is an increase in both the number of buyers and the number of sellers in a market: a. demand shifts rightward and supply shifts leftward, so equilibrium quantity will definitely increase. b. demand shifts rightward and supply shifts leftward, so equilibrium price will definitely increase. c. supply and demand shift rightward, so equilibrium quantity will definitely increase. d. supply and demand shift rightward, so equilibrium price will definitely increase.

c. supply and demand shift rightward, so equilibrium quantity will definitely increase.

The law of demand states that: a. price is the only variable that can cause consumers to purchase more or less. b. consumers do not buy more or less when price changes. c. price and demand are inversely (negatively) related, ceteris paribus. d. price and quantity demanded are inversely (negatively) related, ceteris paribus.

d. price and quantity demanded are inversely (negatively) related, ceteris paribus.

If phone cases are currently selling at the price of $20, there will be a: (view image 4.3-3) a. shortage of 100 cases. b. shortage of 200 cases. c. surplus of 100 cases. d. surplus of 200 cases.

d. surplus of 200 cases.

Which of the following events will most likely cause an increase in the supply of apple juice, ceteris paribus? a. An increase in the demand for apple juice b. An increase in the price of apple juice c. An increase in the price of orange juice d. An increase in the number of apple trees planted in orchards

d. An increase in the number of apple trees planted in orchards

At a price of $15: (view image 4.3-9) a. a shortage of 4,000 pairs of blue jeans exists. b. a surplus of 4,000 pairs of blue jeans exists. c. a surplus of 8,000 pairs of blue jeans exists. d. a shortage of 8,000 pairs of blue jeans exists.

d. a shortage of 8,000 pairs of blue jeans exists.

For a normal good, an increase in consumer income leads to: a. a decrease in demand and an increase in equilibrium price. b. an increase in demand and a decrease in equilibrium quantity. c. a decrease in demand and a decrease in both equilibrium price and quantity. d. an increase in demand and an increase in both equilibrium price and quantity.

d. an increase in demand and an increase in both equilibrium price and quantity.

For an inferior good, an increase in consumer income leads to: a. a decrease in demand and a decrease in equilibrium price. b. a decrease in demand and an increase in equilibrium quantity. c. an increase in demand and an increase in both equilibrium price and quantity. d. an increase in demand and a decrease in equilibrium quantity.

a. a decrease in demand and a decrease in equilibrium price.

The equilibrium price of a phone case is: (view image 4.3-3) a. $10 because there are no buyers who will pay a price of more than $10. b. $15 because the quantity supplied is equal to the quantity demanded at this price. c. any price between $10 and $20 because people are willing to pay at least $20 for 400 cases and sellers are willing to accept no less than $40 for 400 cases. d. $20 because there are no sellers who will accept a price of less than $20.

b. $15 because the quantity supplied is equal to the quantity demanded at this price.

Ceteris paribus, an increase in the price of cereal leads to: a. a decrease in the demand for cereal. b. a decrease in the quantity demanded of cereal. c. an increase in the supply of cereal. d. both (b) and (c) are correct.

b. a decrease in the quantity demanded of cereal.

Ceteris paribus, an increase in the supply of a product leads to a(n) _ in the equilibrium price of the produce and a(n) _ in the equilibrium quantity of the product. a. increase; decrease b. decrease; increase c. decrease; decrease d. increase; increase

b. decrease; increase

Assume generic goods are inferior goods. A decrease in consumer income (ceteris paribus) will cause the demand for generic goods to _, and the equilibrium price of generic goods will _. a. increase; increase b. increase; decrease c. decrease; decrease d. decrease; increase

a. increase; increase

The equilibrium price of blue jeans is _ and the equilibrium quantity is ____. (view image 4.3-9) a. $30; 8,000 b. $45; 4,000 c. $15; 10,000 d. $30; 4,000

a. $30; 8,000

When the government sets a minimum legal price for a good above the equilibrium price, it is setting a price ___, which tends to result in a ____ of the good. a. floor; surplus b. floor; shortage c. ceiling; shortage d. ceiling; surplus

a. floor; surplus

The supply of organic milk will increase as a result of: a. a decrease in the price of organic feed for organic milk cows. b. an increase in the price of organic milk. c. a decrease in the price of organic milk. d. an increase in the wages paid to organic milk farm workers.

a. a decrease in the price of organic feed for organic milk cows.

Assuming widgets are a normal good, a decrease in consumer income, ceteris paribus, will cause the equilibrium price of widgets to __ and the equilibrium quantity to____. a. decrease; decrease b. increase; increase c. increase; decrease d. decrease; increase

a. decrease; decrease

The law of supply indicates that: a. price and quantity supplied are directly (positively) related. b. price and supply are directly (positively) related. c. supply and demand are directly (positively) related. d. supply and demand are inversely (negatively) related.

a. price and quantity supplied are directly (positively) related.

A market price of $20 per dozen of roses will lead to a: (view image 4.2-3) a. shortage of 200 dozens of red roses. b. surplus of 200 dozens of red roses. c. shortage of 100 dozens of red roses. d. surplus of 100 dozes of red roses.

a. shortage of 200 dozens of red roses.

If cotton clothing becomes more popular at the same time that the supply of cotton decreases, then basic supply and demand analysis predicts that: a. the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given. b. both the equilibrium price and quantity of cotton clothing will increase. c. the equilibrium price of cotton clothing will increase and the equilibrium quantity of cotton clothing will decrease. d. the equilibrium quantity of cotton clothing will increase but the change in the equilibrium price of cotton clothing cannot be determined from the information given.

a. the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given.

If drought conditions in the farm belt result in a decrease in the supply of wheat, what will happen to the equilibrium price and quantity of wheat, other things held constant? a. Price and quantity both increase b. Price increases and quantity decreases c. Price and quantity both decrease d. Price decreases and quantity increases

b. Price increases and quantity decreases

In the market for used cars, a shortage of used cars would, ceteris paribus: a. put downward pressure on the price of used cars. b. put upward pressure on the price of used cars. c. increase the demand for used cars. d. decrease the demand for used cars.

b. put upward pressure on the price of used cars.

Based on the information in the graph, a price of $4 per pumpkin will lead to a: (view image 4.1-4) a. shortage of 200 pumpkins. b. surplus of 200 pumpkins. c. shortage of 100 pumpkins. d. surplus of 100 pumpkins.

b. surplus of 200 pumpkins.

Which of the following would lead to an increase in the supply of coffee, ceteris paribus? a. A decrease in the price of coffee b. An increase in the price of coffee c. An increase in the price of tea, a substitute for coffee d. An increase in the number of firms selling coffee

d. An increase in the number of firms selling coffee

Which of the following would lead to a decrease in the supply of desk top computers, ceteris paribus? a. A decrease in the cost of producing desk top computers b. An increase in the number of desk top computer manufacturers c. A decrease in the price of notebook computers d. An increase in the wages paid to desk top computer factory workers

d. An increase in the wages paid to desk top computer factory workers

The primary difference between a change in supply and a change in the quantity supplied is: a. both a change in quantity supplied and a change in supply are shifts in the supply curve, only in different directions. b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions. c. a change in supply is caused by a change in the price of the good itself, and a change in quantity supplied is caused by a change in a non-price determinant of supply. d. a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply.

d. a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply.

If basketball for recreation becomes more popular at the same time that the cost of producing basketballs falls, supply and demand analysis predicts that the equilibrium: a. price of basketballs will increase but the equilibrium quantity might rise, fall, or stay the same. b. quantity of basketballs will increase but the equilibrium price might rise, fall, or stay the same. c. price of basketballs will increase, but the equilibrium quantity of basketballs will decrease. d. quantity of basketballs will increase, but the equilibrium price of basketballs will decrease.

b. quantity of basketballs will increase but the equilibrium price might rise, fall, or stay the same.

If the demand for chewing gum increases, ceteris paribus: a. the supply of chewing gum must also increase. b. the equilibrium price and quantity of chewing gum will both increase. c. the equilibrium price of chewing gum will increase leading the quantity supplied of chewing gum to decrease. d. the equilibrium price of chewing gum will decrease if chewing gum is an inferior good.

b. the equilibrium price and quantity of chewing gum will both increase.

The equilibrium price of a pumpkin in the market depicted in the graph is: (view image 4.1-4) a. $3 because no pumpkin buyers will pay a price above $3 per pumpkin. b. $3 because no pumpkin sellers will accept a price below $3 dollars per pumpkin. c. $3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins. d. $4 if pumpkin sellers prefer to charge a higher price.

c. $3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins.

The equilibrium price of a dozen red roses in this market is: (view image 4.2-3) a. $30 because no buyers will pay a price above $30 per dozen. b. $30 because no sellers will accept a price below $30 dollars per dozen. c. $30 because the quantity supplied of red roses is equal to the quantity demanded of red roses at $30 per dozen of red roses. d. $40 if sellers of red roses prefer to charge a higher price

c. $30 because the quantity supplied of red roses is equal to the quantity demanded of red roses at $30 per dozen of red roses.

Which of the following will cause a decrease in the demand for batteries? a. An increase in the price of batteries b. An increase in consumer income, assuming batteries are a normal good c. An increase in the price of digital cameras, a complement for batteries d. An increase in number of buyers of batteries

c. An increase in the price of digital cameras, a complement for batteries

For a normal good, a decrease in consumer income leads to: a. a decrease in demand and an increase in equilibrium price. b. an increase in demand and a decrease in equilibrium quantity. c. a decrease in demand and a decrease in both equilibrium price and quantity. d. an increase in demand and an increase in both equilibrium price and quantity.

c. a decrease in demand and a decrease in both equilibrium price and quantity.

Ceteris paribus, the demand for frozen yogurt will decrease in response to: a. a decrease in the price of frozen yogurt. b. an increase in the price of frozen yogurt. c. a decrease in the price of ice cream, a substitute for frozen yogurt. d. an increase in the price of ice cream, a substitute for frozen yogurt.

c. a decrease in the price of ice cream, a substitute for frozen yogurt.

The demand for potato chips will increase in response to all of the following except: a. a decrease in consumer income, if potato chips are inferior goods. b. a decrease in the price of chip dip, a complement for potato chips. c. a decrease in the price of potato chips. d. an increase in the price of corn chips, a substitute for potato chips.

c. a decrease in the price of potato chips.

According to the law of demand, an increase in the price of beef leads to, ceteris paribus: a. a decrease in the demand for beef. b. an increase in the demand for beef. c. a decrease in the quantity demanded of beef. d. an increase in the quantity demanded of beef.

c. a decrease in the quantity demanded of beef.

The law of demand states that a decrease in the price of cell phones will, ceteris paribus: a. increase the demand for cell phones. b. decrease the demand for cell phones. c. increase the quantity demanded of cell phones. d. decrease the quantity demanded of cell phones.

c. increase the quantity demanded of cell phones.

After a price floor is established above the equilibrium price in the market for strawberries: a. the quantity of strawberries farmers would like to sell decreases. b. the quantity of strawberries consumers would like to buy increases. c. the quantity of strawberries actually bought and sold decreases. d. consumer surplus increases and producer surplus decreases.

c. the quantity of strawberries actually bought and sold decreases.

Which of the following events would cause the demand for tennis balls to increase? a. A decrease in the price of tennis balls b. An increase in number of sellers of tennis balls c. A decrease in the popularity of tennis d. A decrease in the price of tennis racquets, a complement for tennis balls

d. A decrease in the price of tennis racquets, a complement for tennis balls

The demand for potato chips will increase in response to all of the following except: a. a decrease in consumer income, if potato chips are inferior goods. b. a decrease in the price of chip dip, a complement for potato chips. c. an increase in the price of corn chips, a substitute for potato chips. d. an increase in the number of firms producing potato chips.

d. an increase in the number of firms producing potato chips.

According to the law of demand, an increase in the price of orange juice will, ceteris paribus: a. increase the demand for orange juice. b. decrease the demand for orange juice. c. increase the quantity demanded of orange juice. d. decrease the quantity demanded of orange juice.

d. decrease the quantity demanded of orange juice.

According to the law of supply, a decrease in the price of binders will, ceteris paribus: a. decrease the supply of binders. b. increase the supply of binders. c. increase the quantity supplied of binders. d. decrease the quantity supplied of binders.

d. decrease the quantity supplied of binders.

If the number of people seeking to purchase new homes in the area increases at the same time that the prices of lumber and other homebuilding materials increase, then supply and demand analysis predicts that the equilibrium: a. price and the equilibrium quantity of new homes will increase. b. quantity of new homes will increase but the change in equilibrium price cannot be determined from the information given. c. price and the equilibrium quantity of new homes will decrease. d. price of new homes will increase but the change in equilibrium quantity cannot be determined from the information given.

d. price of new homes will increase but the change in equilibrium quantity cannot be determined from the information given.