econ chapter 4

Fred participates in a supply and demand experiment in his managerial economics course. What can he expect the laboratory experiment to reveal about the supply and demand model?

It successfully predicts real-life behavior.

What did Vernon Smith's laboratory experiments reveal about the supply and demand model?

It successfully predicts real-life behavior.

Which happened in Vernon Smith's test of the market model?

The total surplus was maximized

If the supply of oil decreased then market price would ____

market price would increase

If the supply of oil decreased in the United States, then quantity demanded would _____

quantity demanded would decrease in the United States

A decrease in supply along a fixed demand curve results in a _____ equilibrium price

A higher equilibrium price

If peanuts become cheaper to produce because of new technology, what will happen to their equilibrium price and equilibrium quantity?

Equilibrium price will decrease, and equilibrium quantity will increase.

Jan is a buyer in Vernon Smith's classroom experiment of the market model. Which does she know?

Her own willingness to buy

The financial crisis of 2007-2010 had a huge impact on the U.S. housing market, causing the number of uninhabited houses to be far greater than the number of people able and willing to buy a house. What probably happened in the housing market?

Housing prices fell

If the demand for oil decreased, then quantity supplied would ____

quantity supplied would decrease

By the early 1970s, OPEC countries were able to act together to _____ supply and _____ prices.

reduce; raise

A nationwide strike by workers in the widget industry has decreased the supply of widgets. Because of the decrease in supply, the equilibrium price of widgets _____ and the quantity of widgets demanded ____

increased, and the quantity of widgets demanded decreased.

T/F "According to the supply and demand model, all else equal, if the technology used to produce a good improves, supply will increase, causing the price to fall, which causes the quantity demanded to rise as well." This statement is:

True

Lower production costs result in a(n) ____ equilibrium price

a lower equilibrium price

A decrease in demand along a fixed supply curve results in a _____ equilibrium quantity

a lower equilibrium quantity

Jean is a seller in Vernon Smith's classroom experiment of the market model. Which does she know?

her own willingness to sell

A decrease in the demand for apple juice will result in a(n) ___ in the equilibrium price and quantity of apple juice supplied

decrease in the equilibrium price and quantity of apple juice supplied.

As consumer income decreases, the equilibrium price of a normal good _____ and the equilibrium quantity of a normal good decreases.

decreases