Econ Exam 1 Study Questions
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? D. The number of sellers in the minivan market increases and incomes rise (minivans are a normal good)
Supply increases, which causes price to decrease and quantity to increase. Demand also increases, which causes price and quantity to increase. Both changes increase quantity so we are sure quantity rises. Since the changes push price in opposite directions, the effect on price is unclear
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? A. The price of steel falls.
Supply increases, so price decreases and quantity increases
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? A. A new technology makes it less costly to produce jeans
Supply increases, so price decreases and quantity increases.
Which of the following might cause the supply curve for a good to shift to the left? A. An increase in input prices B. A decrease in consumer income C. An improvement in production technology that makes production of the good cheaper D. An increase in the number of sellers in the market
A. An increase in input prices.
When economists make normative statements, they are A. speaking as scientists B. speaking as policy advisers C. making claims about how the world is D. making claims that can be either confirmed or refuted
B. speaking as policy advisers
Consider the market for Coca-Cola. Which of the following events will increase the equilibrium quantity of Coca-Cola produced? A. Wages rise for workers at Coca-Cola B. Buyers expect that the price of Coca-Cola will fall in the near future C. The price of Pepsi increases, and Pepsi is a substitute for Coca-Cola D. Incomes rise, and Coca-Cola is an inferior good
C. The price of Pepsi increases, and Pepsi is a substitute for Coca-Cola
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? B. Sport utility vehicles (SUVs) become more expensive
Demand increases, so price increases and quantity increases
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? C. Cable news reports that minivans score higher on crash safety tests than any other vehicle category
Demand increases, so price increases and quantity increases
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? F. The price of khakis increases and the number of sellers in the jean market decreases
Demand increases, which causes price and quantity to increase. Supply also decreases, which causes price to increase and quantity to decrease. Both changes increase price so we are sure price rises. Since the changes push quantity in opposite directions, the effect on quantity is unclear
Which of the following statements is true? A. If there is excess demand at the current price, the price will fall as it moves to equilibrium B. If there is excess supply at the current price, the price will fall as it moves to equilibrium C. When the price is set above equilibrium, there will be excess supply in the market D. Excess supply is the same thing as a shortage, and excess demand is the same thing as a surplus E. Both a. and c. are true F. Both b. and c. are true G. Both b. and d. are true H. b., c., and d. are all true I. a., c., and d. are all true
F. Both b. and c. are true
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? C. The price of denim rises
Supply decreases, so price increases and quantity decreases
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? G. The price of gas rises. Gas is an input in the production of minivans. Gas and minivans are also complements for consumers
Supply decreases, which causes price to increase and quantity to decrease. Demand also decreases, which causes price and quantity to decrease. Both changes decrease quantity so we are sure quantity falls. Since the changes push price in opposite directions, the effect on price is unclear.
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? E. Minivan producers expect that the price of minivans will rise in the near future and minivan buyers also expect that the price of minivans will rise in the near future
Supply decreases, which causes price to increase and quantity to decrease. Demand also increases, which causes price and quantity to increase. Both changes increase price so we are sure price rises. Since the changes push quantity in opposite directions, the effect on quantity is unclear
Consider the market for oranges. If the number of orange sellers increases and the price of apples falls (assuming apples and oranges are substitutes), what will be the change in equilibrium price and quantity? A. Equilibrium price will increase. It is not clear whether equilibrium quantity will increase or decrease B. Equilibrium price will decrease. It is not clear whether equilibrium quantity will increase or decrease C. Equilibrium quantity will increase. It is not clear whether equilibrium price will increase or decrease D. Equilibrium quantity will decrease. It is not clear whether equilibrium price will increase or decrease
B. Equilibrium price will decrease. It is not clear whether equilibrium quantity will increase or decrease
Which of the following will not shift the supply curve for cat food? A. Input prices rise B. The number of sellers in the cat food market increases C. The price of cat food rises D. All of the above will shift the supply curve for cat food
C. The price of cat food rises
Which of the following events would cause an increase in the supply of ceiling fans? A. The number of sellers of ceiling fans decreases B. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes C. There is a decrease in the price of the motor that powers ceiling fans D. All of the above will cause an increase in the supply of ceiling fans
C. There is a decrease in the price of the motor that powers ceiling fans
Which of these statements best represents the law of demand? A. When buyers' tastes for a good increase, they purchase more of the good B. When income levels increase, buyers purchase more of most goods C. When the price of a good increases, buyers purchase less of the good D. When the price of a good increases, buyers purchase more of the good
C. When the price of a good increases, buyers purchase less of the good
Paula loves economics and hates engineering. Stanley loves engineering and hates economics. Consider the following allocations: i: Paula gets a book on economics, Stanley gets a book on engineering ii: Paula gets a book on engineering, Stanley gets a book on economics iii: Paula gets both books, Stanley gets neither book iv: Paula gets neither book, Stanley gets both books How many of the above allocations are Pareto Efficient? A. 0 B. 1 C. 2 D. 3 E. 4
D. 3
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? B. Incomes fall due to a recession, and jeans are a normal good
Demand decreases, so price decreases and quantity decreases
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? E. The New York Times reports that jean makers have been using slave labor to make their products
Demand decreases, so price decreases and quantity decreases
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? G. The price of denim jackets (which, somewhat inexplicably, are a complement of jeans) increases and wages jean makers must pay their workers falls.
Demand decreases, which causes price and quantity to decrease. Supply also increases, which causes price to decrease and quantity to increase. Both changes decrease price so we are sure price falls. Since the changes push quantity in opposite directions, the effect on quantity is unclear
Consider the market for jeans. How would each event or series of events influence equilibrium price and quantity in this market? D. Angelina Jolie and Brad Pitt name their next adopted child Denim, which makes jeans cool for some reason.
Demand increases, so price increases and quantity increases
Consider the market for minivans. How would each event or series of events influence equilibrium price and quantity in this market? F. The number of buyers in the minivan market rises
Demand increases, so price increases and quantity increases