Economics Homework 3

Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese? A) The supply of cheese decreases. B) The supply of cheese stays the same, and there is no change in the quantity supplied of cheese. C) The supply of cheese increases. D) The supply of cheese stays the same, and there is a decrease in the quantity supplied of cheese. E) The supply of cheese could increase, decrease, or stay the same depending on what happens to the supply of butter.

A) The supply of cheese decreases

If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are A) a normal good. B) an inferior good. C) a complement to camcorders. D) a substitute for camcorders. E) made using advanced technology.

A) a normal good

Which of the following definitely results in a product's equilibrium price rising? A) an increase in demand combined with a decrease in supply B) a decrease in both demand and supply C) a decrease in demand combined with an increase in supply D) an increase in both demand and supply E) an increase in the supply combined with no change in the demand

A) an increase in demand combined with a decrease in supply

Which of the following leads to an increase in the quantity supplied but not an increase in supply? A) an increase in the product's price B) an increase in the price of another product that the suppliers can produce C) an advance in the technology used to produce the good D) a decrease in the costs of production E) an increase in the number of firms producing the good or service

A) an increase in the product's price

A market is defined as A) any arrangement that brings buyers and sellers together. B) a place where one good is bartered for another. C) a physical place where people buy both goods and services. D) a physical place where people buy only goods. E) a store where people buy physical goods.

A) any arrangement that brings buyers and sellers together

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ so that the price of a computer chip ________. A) decreases; falls B) increases; rises C) decreases; rises D) decreases; does not change E) increases; falls

A) decreases; falls

During 2008 the supply of gasoline decreased while at the same time the demand for gasoline increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, then the equilibrium price of gasoline ________ and the equilibrium quantity ________. A) increased; increased B) increased; did not change C) decreased; did not change D) did not change; increased E) increased; decreased

A) increased; increased

If the number of companies producing memory chips increases, then the A) supply of memory chips increases. B) supply of memory chips does not change. C) demand for memory chips increases. D) supply of memory chips decreases. E) quantity of memory chips supplied increases.

A) supply of memory chips increases

If the price is below the equilibrium price, A) there is a shortage. B) the supply curve will shift rightward. C) there is a surplus. D) the supply curve will shift leftward. E) the demand curve will shift leftward.

A) there is a shortage

Scooters are a normal good and buyers' incomes decrease. Which of the figures above best illustrates how this change affects the demand curve for scooters? A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the decrease in income will affect the supply curve not the demand curve.

B) Figure B

A change in the demand for apples could result from any of the following EXCEPT A) a change in the price of a banana. B) a change in the price of an apple. C) a change in income. D) increased preferences for fresh fruit consumption for health reasons. E) a change in the number of buyers.

B) a change in the price of an apple

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the A) demand for Apple computers increases. B) demand for Apple computers decreases. C) demand for Dell computers increases. D) demand for Dell computers decreases. E) supply of Dell computers increases.

B) demand for Apple computers decreases

Researchers have found a hybrid of corn that is cheaper to grow. This technological breakthrough A) increases the demand for corn. B) increases the supply of corn. C) decreases the supply of corn. D) Both answers A and C are correct. E) Both answers A and B are correct.

B) increases the supply of corn

A competitive market is in equilibrium. Then there is a decrease in demand and a decrease in supply. The equilibrium price ________, and the equilibrium quantity ________. A) rises; decreases B) perhaps changes but we can't say if it rises, falls, or stays the same; decreases C) falls; increases D) rises; increases E) perhaps changes but we can't say if it rises, falls, or stays the same; increases

B) perhaps changes but we can't say if it rises, falls, or stays the same; decreases

The demand for oranges increases while the supply decreases. The equilibrium price of oranges ________, and the equilibrium quantity ________. A) rises; decreases B) rises; perhaps changes but we can't say if it increases, decreases, or stays the same C) does not change; perhaps changes but we can't say if it increases, decreases, or stays the same D) falls; increases E) falls; perhaps changes but we can't say if it increases, decreases, or stays the same

B) rises; perhaps changes but we can't say if it increases, decreases, or stays the same

Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price, a A) surplus exists and the price rises to restore equilibrium. B) surplus exists and the price falls to restore equilibrium. C) shortage exists and the price rises to restore equilibrium. D) shortage exists and the price falls to restore equilibrium. E) surplus exists but nothing happens until either the demand or the supply changes.

B) surplus exists and the price falls to restore equilibrium

The law of supply states that other things remaining the same, a decrease in the price of a kayak leads to A) a decrease in the supply of kayaks. B) an increase in the supply of kayaks. C) a decrease in the quantity of kayaks supplied. D) an increase in the quantity of kayaks supplied. E) an increase in the supply of kayaks and a decrease in the quantity of kayaks supplied.

C) a decrease in the quantity of kayaks supplied

In the above figure, the shift in the supply curve from S to S1 reflects A) an increase in the quantity of pizza supplied. B) an increase in the supply of pizza. C) a decrease in the supply of pizza. D) a decrease in the quantity of pizza supplied. E) None of the above answers is correct.

C) a decrease in the supply of pizza

Which of the following results in a movement upward along the demand curve for movies? A) an increase in income, assuming that movies are a normal good B) a decrease in the price of movie tickets C) an increase in the price of movie tickets D) a decrease in the price of NetFlix, a substitute for movies E) a decrease in income, assuming that movies are a normal good

C) an increase in the price of movie tickets

A surplus of cardboard boxes means that A) at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium. B) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. C) at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. D) the current price of a cardboard box is less than the equilibrium price. E) More information is needed to determine if the price of cardboard boxes is higher than, lower than, or equal to the equilibrium price.

C) at the current price of a cardboard box, the quantity demanded is less than the quantity supplied

Car insurance and cars are complements. If the price of car insurance increases, the A) quantity of cars demanded decreases. B) demand for cars increases. C) demand for cars decreases. D) quantity of cars demanded increases. E) More information is needed to determine if the demand increases or decreases.

C) demand for cars decreases

If good weather conditions result in a larger than normal crop of peaches, then the A) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. B) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases. C) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. D) demand curve for peaches shifts leftward. E) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases.

C) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases

A demand schedule A) is a graph showing a relationship between the quantity demanded and the price of a good. B) shows that demand is on schedule. C) is a list of the quantities demanded at each different price when all other influences on buying plans remain the same. D) shows how the demand changes when the supply changes. E) shows the quantity demanded at one price.

C) is a list of the quantities demanded at each different price when all other influences on buying plans remain the same

Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi coupled with an increase in the number of strawberry growers ________ the equilibrium price of a pound of strawberries and ________ the equilibrium quantity of strawberries. A) raises; probably changes, but more information is needed to determine if it increases or decreases B) lowers; increases C) probably changes, but more information is needed to determine if it rises or falls; increases D) raises; increases E) lowers; probably changes, but more information is needed to determine if it increases or decreases

C) probably changes, but more information is needed to determine if it rises or falls; increases

The quantity supplied of a good or service is the A) list of all quantities at different prices, as illustrated by a supply schedule and a supply curve. B) list of all quantities at different prices, as illustrated by a demand schedule and a demand curve. C) quantity produced at one price. D) one quantity produced at a variety of prices.

C) quantity produced at one price

Market equilibrium occurs when A) all markets become equal. B) demand and supply change so that they are equal at all possible prices. C) the quantity demanded equals the quantity supplied. D) demand and supply move in opposite direction. E) opposing forces pull demand and supply apart.

C) the quantity demanded equals the quantity supplied

When the price of oranges increases, A) the quantity of oranges demanded increases. B) the supply of oranges increases. C) the quantity of oranges supplied increases. D) the supply of oranges decreases. E) none of the above

C) the quantity of oranges supplied increases

The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises, A) the demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded. B) the demand curve shifts rightward. C) there is a movement up along the demand curve to a smaller quantity demanded. D) there is a movement down along the demand curve to a larger quantity demanded. E) the demand curve shifts leftward.

C) there is a movement up along the demand curve to a smaller quantity demanded

Using the data in the table above, the equilibrium quantity and equilibrium price for a stapler is A) 60,000 and $5. B) 100,000 and $5. C) 90,000 and $8. D) 70,000 and $6. E) 10,000 and $8.

D) 70,000 and $6

The number of logging firms increases. Which of the figures above best illustrates this change? A) Figure A B) Figure B C) Figure C D) Figure D E) Figure A and Figure D

D) Figure D

A huge 50 percent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs? A) The demand for and the supply of golf clubs decreases. B) The supply of golf clubs increases. C) The supply of golf clubs decreases. D) The demand for golf clubs decreases. E) The demand for golf clubs increases.

D) The demand for golf clubs decreases

The graph illustrates the supply of soda. If the price of soda rises from $0.50 a can to $1.50 a can, the quantity of soda supplied A) remains unchanged because the supply decreases not the quantity supplied. B) decreases from 4,000 cans to 0 cans a day. C) increases from 0 to 6,000 cans a day. D) increases from 0 cans to 4,000 cans a day. E) remains unchanged because the supply increases not the quantity supplied.

D) increases from 0 cans to 4,000 cans a day

The phrase "a change in demand" most directly implies a A) movement along a demand curve. B) movement along the quantity curve. C) change in the quantity demanded of a good. D) shift of the demand curve. E) movement along the price curve.

D) shift of the demand curve

The "quantity demanded" of any good or service is ________ during a specified time period and at a specified price. A) the amount people are willing to buy B) the amount people are able to buy C) the amount people are willing and able to offer D) the amount people are willing and able to buy E) the amount people are willing to buy because it is the amount sellers are willing to sell

D) the amount people are willing and able to buy

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A) Both the supply and the demand for new houses increased, and the supply increased by more than the demand. B) The supply of new houses increased, and the demand for new houses did not change. C) The supply of new houses decreased, and the demand for new houses did not change. D) Both the supply and demand for new houses decreased. E) The demand for new houses increased, and the supply did not change.

E) The demand for new houses increased, and the supply did not change

Which of the following increases the supply of gasoline? A) a situation where the quantity of gasoline demanded exceeds the quantity supplied B) an increase in income if gas-guzzling, sport utility vehicles are a normal good C) a decrease in the demand for gas-guzzling, sport utility vehicles D) an increase in the price of gasoline E) a decrease in the price of a resource used to produce gasoline, such as crude oil

E) a decrease in the price of a resource used to produce gasoline, such as crude oil

In the above figure, the shift in the demand curve from D to D1 can be the result of A) a decrease in income if pizza is a normal good. B) an increase in the price of soda, a complement to pizza. C) a decrease in the price of a sub sandwich, a substitute for pizza. D) new technology that increases the profit from producing pizza. E) an increase in the number of teenagers, all of whom demand more pizza than do other age groups.

E) an increase in the number of teenagers, all of whom demand more pizza than do other age groups

In the above figure, the shift in the demand curve from D to D1 can be the result of A) an increase in the price of pizza. B) an increase in the price of soda, a complement to pizza. C) a change in quantity demanded. D) a decrease in income if pizza is a normal good. E) an increase in the price of a sub sandwich, a substitute for pizza.

E) an increase in the price of a sub sandwich, a substitute for pizza

If income increases and the demand for bus rides decreases, A) bus rides are a normal good. B) bus rides must be a complement good with some other good. C) consumers are behaving irrationally. D) bus rides are a substitute good. E) bus rides are an inferior good.

E) bus rides are an inferior good

If both the supply and demand curves shift simultaneously, we can always predict what will happen to A) neither the price nor the quantity. B) both the price and the quantity. C) only the price. D) only the quantity. E) either the price or the quantity, but not both.

E) either the price or the quantity, but not both