ECON CH3

Refer to Exhibit 3-1. Equilibrium price and quantity are ____________________, respectively.

$4 and 250 units

Refer to Exhibit 3-14. At a price of $11, there is a ____________ unit ____________ of good X.

290; shortage

Which of the following statements is false?

A vertical supply curve represents a direct relationship between price and quantity supplied.

Which of the following pairs of goods would be most likely to be complements?

DVD's and DVD players

Refer to Exhibit 3-16. Which of the following is false?

Graph (3): As demand increases, equilibrium price remains constant.

At a price of $15 each, Marta buys 4 books per month. When the price increases to $20, Marta buys 3 books per month. Luz says that Marta's demand for books has decreased. Is Luz correct?

No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same.

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?

The price will stay the same, but the quantity will decrease.

Which of the following statements is false?

The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price.

If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen?

The supply curve of the product the firm produces shifts leftward.

Refer to Exhibit 3-2. Which of the following would result in a movement from point B on D2 to point A on D1?

There was an increase in income (assuming that good X is an inferior good) and technology remained constant.

Refer to Exhibit 3-2. Suppose equilibrium is at point A. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good)?

There was an increase in income and production technology advanced.

Refer to Exhibit 3-2. Suppose equilibrium is at point A. Something then changes and equilibrium becomes point C. Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good)?

There was an increase in the number of buyers and business taxes decreased.

Refer to Exhibit 3-2. Which of the following would result in a movement from point A on D1 to point B on D2?

There was an increase in the price of a substitute for good X.

Which of the following statements is true?

a and b: a. To an economist, demand is different from quantity demanded. b. A demand schedule is the numerical tabulation of the law of demand.

Which of the following will not shift a supply curve?

a change in the good's own price

In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved down and to the right. What could have caused this?

a fall in the price of peanuts

An advance in technology in the production of good X causes

a rightward shift in the supply curve for good X.

The price of X was $10 in year 1 and $14 in year 2. Which of the following could be the correct reason for the rise in price?

a, b, and c

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are

an inferior good.

If a supply curve shifts rightward, this means

b and c: b. suppliers are willing and able to offer more of the good for sale at every price. c. quantity supplied is greater at every price.

As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are

complements

An increase in the number of sellers of a good will, ceteris paribus, __________________ for that good.

decrease equilibrium price and increase equilibrium quantity

The law of supply states that price and quantity supplied are

directly related, ceteris paribus.

Suppose that for a given good, demand decreases and supply decreases at the same time. If demand decreases by a greater amount than supply decreases, then equilibrium price __________ and equilibrium quantity __________ for that good.

falls; falls

Suppose that for a given good demand increases and supply increases at the same time. If demand increases by a lesser amount than supply increases, then equilibrium price __________ and equilibrium quantity __________ for that good.

falls; rises

Refer to Exhibit 3-17. At a price of $16, the quantity demanded of good X is ____________ than the quantity supplied of good X, and economists would use this information to predict that the price of good X would soon ______________. This would push the price __________ the equilibrium price.

greater; rise; toward

The law of demand states that price and quantity demanded are

inversely related, ceteris paribus.

Which of the following pairs of goods would be most likely to be substitutes?

olive oil and vegetable oil

On a supply-and-demand diagram, quantity demanded equals quantity supplied

only at the single equilibrium price.

One major reason for the law of demand is that

people substitute relatively lower-priced goods for relatively higher-priced goods.

An "increase in the quantity demanded" means that

price has declined and consumers therefore want to purchase more of the good.

One can determine producers' surplus if the minimum selling price and the _____________ are known.

price received

If the demand curve for a good shifts leftward,

quantity demanded is less at each price

An increase in the number of buyers in a particular market for a good will result in a ___________________ for that good.

rightward shift in the demand curve

Suppose that for a given good demand increases and supply decreases at the same time. If demand increases by a lesser amount than supply decreases, then equilibrium price __________ and equilibrium quantity __________ for that good.

rises; falls

Refer to Exhibit 3-1. At a price of $2 there is a

shortage of 200 units.

At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value.

shortage; upward

As the price of good A rises, the demand for good B rises. Therefore, goods A and B are

substitutes.

The government imposes a $2.50 per-unit tax on the production of good X. As a result the

supply curve for good X shifts leftward and the price of good X rises.

Resource X is necessary to the production of good Y. If the price of resource X rises, the _____________ curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price of Y and a(n) ____________ in the equilibrium quantity of Y.

supply; leftward; increase; decrease

There is a technological improvement in the production of good X. As a result, the _____________ curve for good X will shift ____________ resulting in a(n) _____________ in the equilibrium price of X and a(n) ____________ in the equilibrium quantity of X.

supply; rightward; decrease; increase.

At a price above the equilibrium price, there is

surplus

Refer to Exhibit 3-1. At a price of $6 there is a

surplus of 200 units

An "increase in demand" means that

the demand curve has shifted to the right.

Demand refers to

the different quantities of a good people are willing and able to buy at different prices.