Economics Ch 03

(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the initial equilibrium of S1 and D, any price lower than _____ will exert pressure for the price to _____. $2.00; fall $3.00; rise $2.50; rise $2.50; fall

$2.50; rise

Use the line drawing tool to draw a demand curve for tortilla chips and label it D. Now suppose the price of salsa increases. Use the copy tool to create a new demand curve for tortilla chips after the increase in the price of salsa and label this line D2. You should assume that: 1) tortilla chips and salsa are complementary goods; and 2) all else is held constant.

\\

A decrease in demand and a decrease in supply will lead to _____ in equilibrium quantity and _____ in equilibrium price. a decrease; an indeterminate change an indeterminate change; an increase an indeterminate change; a decrease an increase; an indeterminate change

a decrease; an indeterminate change

For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes _____ in the equilibrium price of a hamburger and _____ in the equilibrium quantity of hamburgers. a rise; an increase a rise; a decrease a fall; an increase a fall; a decrease

a rise; an increase

Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, we can expect: a shift to the left in the supply curve of Hondas and higher prices for Hondas. a shift to the left in the demand curve for Hondas and lower prices for Hondas. a shift to the right in the supply curve of Hondas and lower prices for Hondas. a shift to the right in the demand curve for Hondas and higher prices for Hondas.

a shift to the right in the demand curve for Hondas and higher prices for Hondas

If the supply and demand curves intersect at $47, then any price above that would result in: a surplus. an increase in demand. a shortage. equilibrium.

a surplus

Assuming that desktop computers are normal goods, which of the following will NOT increase demand for desktop computers? an increase in the incomes of computer users cool new computer games that can only be played on desktop computers a very large computer company going out of business the price of notebook computers increasing

a very large computer company going out of business

If the demand for tires goes down when the price of gas goes up, then tires and gas are: substitutes. both inexpensive. complements. both expensive.

complements

If goods A and B are substitutes, a decrease in the price of good B will: increase the demand for good B. increase the demand for good A. decrease the demand for good A. increase the demand for good B and decrease the demand for good A.

decrease the demand for good A

(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II. The figure shows how supply and demand might shift in response to specific events. Suppose the birthrate decreases. Which panel BEST describes how this will affect the market for diapers? panel A panel B panel C panel D

panel B

(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose half of the people in San Diego move to Colorado Springs. Which panel BEST describes how this will affect the market for houses in Colorado Springs? panel B panel D panel C panel A

panel B

If the price of a commodity increases, you can expect the: supply to increase. quantity supplied to increase. quantity supplied to decrease. supply curve to shift to the right.

quantity supplied to increase

(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. A temporary price of $2 in this market would result in a _____ of _____ bushels. surplus; 4,000 shortage; 10,000 surplus; 10,000 shortage; 8,000

shortage; 8,000

Part 1: Use the line drawing tool to draw a supply curve for natural gas. Label this curve S. Part 2: Natural gas producers expect the price of natural gas to fall in the future. Use the copy tool to draw what happens to the supply of natural gas now because of this expectation. Label this new curve S2.

//

(Table: Supply of Lemonade) Look at the table Supply of Lemonade. If the price of lemonade is $1 per cup, the total quantity of lemonade supplied will be: 50 cups. 80 cups. 25 cups. 90 cups.

90 cups

(Figure: Four Markets for DVDs) Look at the figure Four Markets for DVDs. Which of the graphs shows what may happen in the market for DVDs if D1 or S1 is the original curve and D2 or S2 is the new curve and if the cost of producing DVD players increases? C A B D

B

(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts decreased, it would be represented in the figure as a movement from: A to B. C to A. E to B. B to A.

E to B

A leftward shift of a supply curve is caused by: a technological improvement in production. an increase in the number of buyers. an increase in the cost of an input. an increase in the number of sellers.

an increase in the cost of an input

A decrease in the price of a good will result in: A. an increase in demand. B. an increase in the quantity demanded. C. an increase in supply. D. more being supplied.

an increase in the quantity demanded

An increase in supply with no change in demand will lead to _____ in equilibrium quantity and _____ in equilibrium price. an increase; an increase a decrease; a decrease an increase; a decrease a decrease; an increase

an increase; a decrease