Econ Chapters 3 Quiz Review

There is equilibrium in the market when: a. there is no shortage or surplus. b. quantity supplied equals quantity demanded. c. demand equals supply. d. a and b are true.

d. a and b are true

(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S 1 and D) in equilibrium are: a. $2.50 and 300 gallons. b. $1.50 and 400 gallons. c. $2.00 and 200 gallons. d. $2.00 and 450 gallons.

a. $2.50 and 300 gallons.

A decrease in supply is caused by: a. a decrease in the number of sellers in the market. b. a decrease in resource prices. c. an advancement in the technology for producing the good. d. suppliers' expectations of lower prices in the future.

a. a decrease in the number of sellers in the market.

A decrease in supply means: a. a shift to the left of the entire supply curve. b. more will be supplied at every price. c. moving downward (to the left) along the supply curve with lower prices. d. less will be demanded at every price.

a. a shift to the left of the entire supply curve

(Exhibit: Demand and Supply of Gasoline) Given the equilibrium after a change in supply from S 1 to S 2: a. at the old price of $2.50, there will be pressure for the price to fall. b. the new price will be $1.50. c. the new quantity will be 400. d. all of the above are true.

a. at the old price of $2.50, there will be pressure for the price to fall.

Exhibit: Demand and Supply of Gasoline) A factor that may have changed supply from S 1 to S 2 is: a. better technology in the production of gasoline. b. lower labor productivity. c. increased demand. d. increased prices of substitutes for gasoline.

a. better technology in the production of gasoline.

A decrease in the demand for eggs caused by concerns over cholesterol is most likely attributable to which demand shifter? a. consumer preferences and information b. prices of other goods c. income d. prices

a. consumer preferences and information

Supply is best defined as the: a. relationship between the quantity of a good or service sellers are willing to offer for sale and various prices, all other things unchanged. b. relationship between the quantity of a good or service buyers are able to purchase, all other things unchanged. c. quantity of a good or service sellers are willing to offer for sale at a specific price, all other things unchanged. d. relationship between the quantity of a good or service buyers are willing to purchase, all other things unchanged.

a. relationship between the quantity of a good or service sellers are willing to offer for sale and various prices, all other things unchanged.

(Exhibit: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 80 cents, the total market demand is ________ bags per month. a. 105 b. 70 c. 80 d. 280

a. 105

(Exhibit: Demand and Supply of Gasoline) When the supply curve shifted from the initial equilibrium to the new intersection of supply and demand at a price of ________ and quantity of 400, this could have resulted from ________. a. $1.50; an increase in consumers' income b. $1.50; an improvement in refining technology c. $2.00; an increase in the number of buyers d. A and B are true

b. $1.50; an improvement in refining technology

(Exhibit: Demand and Supply of Gasoline) Given the initial equilibrium of S 1 and D, any price lower than _____________ will create pressure for the price to ________. a. $2.00; fall b. $2.50; rise c. $3.00; rise d. none of the above are true

b. $2.50; rise

The price of apples falls. What happens in the market for apple pies? a. The equilibrium price and quantity fall. b. The equilibrium price falls, and the equilibrium quantity rises. c. The equilibrium price and quantity rise. d. The equilibrium price rises, and the equilibrium quantity falls.

b. The equilibrium price falls, and the equilibrium quantity rises.

Which of the following would result in a movement along the demand curve? a. an increase in the number of suppliers b. a change in price c. a decrease in income d. an increase in the number of buyers

b. a change in price

The relationship between the price of a good and the quantity people are willing and able to purchase is: a. equilibrium. b. demand. c. disequilibrium. d. supply.

b. demand.

A market surplus occurs if the: a. price is below the equilibrium price. b. equilibrium price is below the actual price. c. price is equal to the equilibrium price. d. equilibrium price is above the actual price.

b. equilibrium price is below the actual price.

Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts increases from 40 cents to 50 cents, Dan will reduce his quantity demanded from 160 bags to 140 bags due to: a. the law of supply. b. the law of demand. c. a decline in his income. d. a change in his tastes and preferences.

b. the law of demand.

Exhibit: The Supply of Music Downloads) A decrease in the fee charged for music downloads would result in a change illustrated by the move from: a. p to q in Figure (b). b. u to v in Figure (d). c. s to t in Figure (c). d. n to o in Figure (a).

b. u to v in Figure (d).

(Exhibit: The Demand for Chocolate-Covered Peanuts) If George is only able to purchase 30 bags of chocolate-covered peanuts, the maximum price he is willing and able to pay for each bag is ________ cents. a. 80 b. 50 c. 70 d. 60

b. 50

Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is ________ bags per month. a. 20 b. 10 c. 25 d. 15

c. 25

(Exhibit: The Supply of Music downloads) A decrease in the number of websites supplying music downloads would result in a change illustrated by: a. the move from s to t in Figure (c). b. the move from n to o in Figure (a). c. the move from p to q in Figure (b). d. the move from u to v in Figure (d).

c. the move from p to q in Figure (b).

(Exhibit: The Demand for Chocolate-Covered Peanuts) If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is ________ cents. a. 80 b. 60 c. 70 d. 90

c. 70

Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be: a. an increase in the quantity of potatoes demanded. b. a decrease in the demand for potatoes. c. no change in the demand for potatoes. d. an increase in the demand for potatoes.

d. an increase in the demand for potatoes.

The law of demand is illustrated when: a. higher fees for the use of public golf courses force golfers to purchase fewer golf balls. b. an increase in tuition encourages more students to enroll in college because the quality of education has risen. c. higher oil prices cause oil companies to drill for new sources of oil. d. an increase in the purchases of personal computers results from lower prices.

d. an increase in the purchases of personal computers results from lower prices.

If demand and supply both decrease: a. price will fall but quantity will go up. b. both price and quantity will be less. c. both price and quantity will go up. d. quantity will go down but the effect on price is indeterminate.

d. quantity will go down but the effect on price is indeterminate.

In the textbook, the prices of the factors of production, returns from alternative activities, technology, seller expectations regarding future prices, and the number of sellers are called: a. supply prices. b. demand shifters. c. market realities. d. supply shifters.

d. supply shifters.