Econ Chapter 4 Questions

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.

Which of the following might cause the supply curve for an inferior good to shift to the right?

an improvement in production technology that makes production of the good more profitable

Refer to Table 4-3. If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded

decreases by 7 units.

Which of the following events must cause equilibrium quantity to rise?

demand and supply both increase

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)

increase in the supply of wine, decreasing price.

The sum of all the individual demand curves for a product is called

market demand.

If the demand for a good falls when income falls, then the good is called a(n)

normal good.

Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is:

$6.00 and 600 cases

Refer to Table 4-4. Suppose the market consists of Adam and Barb only. If the price rises by $2, the quantity demanded in the market falls by

6 units.

Refer to Table 4-5. If the four families listed in the table are the only demanders of Mt. Dew in the market, which of the following is a correct graph of the market demand?

A

Refer to Figure 4-20. At a price of $15,

All of the above are correct.

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Both the equilibrium price and quantity would decrease.

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for doctor's visits of an increase in the number of medical students graduating from medical school and successfully completing their residency programs?

Point A to Point B

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Price will fall.

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Price will rise, and the effect on quantity is ambiguous.

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Quantity will rise, and the effect on price is ambiguous.

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.

What will happen in the gasoline market now if buyers expect higher gasoline prices in the near future?

The demand for gasoline will increase.

Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 600 cases when the price is $5.00, which of the following statements is correct?

The market is in equilibrium at a price of $5.00.

Which of the following events could cause an increase in the supply of ceiling fans?

The number of sellers of ceiling fans increases.

Which of these statements best represents the law of demand?

When the price of a good decreases, buyers purchase more of the good.

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks.

Which of the following would not shift the demand curve for mp3 players?

a decrease in the price of mp3 players

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

A likely example of substitute goods for most people would be

apple juice and orange juice.

A market includes

both buyers and sellers.

Most studies indicate that tobacco and marijuana tend to be

complements.

Refer to Figure 4-10. The movement from Point A to Point B represents a(n)

decrease in the quantity supplied.

Which of the following is not an expression for the sum of all the individual demand curves for a product?

equilibrium demand

Refer to Figure 4-19. If price in this market is currently $14, then there would be a(n)

excess supply of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

fall now.

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises.

The difference between a supply schedule and a supply curve is that a supply schedule

is a table, and a supply curve is drawn on a graph.

The supply curve for a good is a line that relates

price and quantity supplied.

The two words economists use most often are

supply and demand.

Which of the following is not a determinant of demand?

the price of a resource that is used to produce the good

The demand curve for coffee shifts

when a determinant of the demand for coffee other than the price of coffee changes.

Refer to Figure 4-24. All else equal, sellers expecting the price of turkey to rise in the future would cause a current move from

x to y.

Refer to Figure 4-25. All else equal, the return of college students to campus in the fall would cause a move from

x to y.

Refer to Figure 4-25. All else equal, an increase in the use of laptop computers for note-taking would cause a move from

y to x.