Jacob's Economics (Chapter 3 and 4)
A market can be described by the equations Qd = 100 - P and Qs = P. What are the equilibrium price and quantity in this market? A) The equilibrium price is $50 and the equilibrium quantity is 50 units. B) The equilibrium price is $100 and the equilibrium quantity is 100 units. C) The equilibrium price is $0 and the equilibrium quantity is 0 units. D) The equilibrium price is $0 and the equilibrium quantity is 100 units
A
An increase in supply and a decrease in demand occur in a market. What happens to the equilibrium price and quantity? A) The equilibrium price decreases; the change in the equilibrium quantity is ambiguous. B) The equilibrium price decreases; the equilibrium quantity increases. C) The equilibrium price increases; the change in the equilibrium quantity is ambiguous. D) The equilibrium price increases; the equilibrium quantity decreases.
A
Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the: A) demand for spaghetti will decrease shifting the demand curve to the left. B) demand for spaghetti will decrease shifting the demand curve to the right. C) demand for spaghetti will increase shifting the demand curve to the left. D) demand for spaghetti will increase shifting the demand curve to the right.
A
Brazilian rosewood is renowned for its tonal qualities and gorgeous figuring on acoustic guitars. However, Brazilian rosewood is now banned from use in the construction of new guitars. What will likely happen to the price of used Brazilian rosewood guitars over time? A) The price for used Brazilian rosewood guitars will increase because there will be a smaller supply of Brazilian rosewood guitars on the used market. B) The price for used Brazilian rosewood guitars will decrease as fewer people decide to sell their guitars. C) The price of used Brazilian rosewood guitars will increase at first and then decrease, since an increase in demand raises prices causing people to buy less of the product. D) The price for used Brazilian rosewood guitars will increase as more people try to cash in by selling their increasingly rare guitars.
A
Economic growth in China has led to more Chinese people owning cars which: A) increased demand for oil, causing oil prices to rise. B) decreased demand for oil, causing oil prices to rise. C) increased demand for oil but decreased supply, causing oil prices to increase rapidly. D) increased demand and supply of oil, causing oil prices to increase rapidly.
A
If the price of shotguns ______, the demand for shotgun shells will _______. A) increases; decrease B) increases; increase C) decreases; decrease D) double; double
A
In 1980 when Iraq attacked Iran, the price of oil _______ because of a(n) ______. A) increased; disruption in the supply of oil B) increased; decrease in the demand for oil C) fell; increased demand for oil D) fell; increased quantity of oil supplied
A
In a market, the equilibrium condition is given by the following: A) quantity demanded = quantity supplied B) quantity demanded × quantity supplied C) quantity demanded/quantity supplied D) price × quantity demanded = quantity supplied
A
Quantity demanded is: A) the amount of a good or service that a buyer is able and willing to purchase at a given price. B) the amount of a good or service that a buyer is able and willing to sell at a given price. C) the amount of a good or service that a seller is able and willing to sell at a given price. D) the amount of a good or service that a buyer is able and willing to purchase at various given prices.
A
The U.S. government limits the importation of Chinese-made bras. What effect does this trade restriction have on the market for bras? A) The equilibrium price will increase and the equilibrium quantity will decrease. B) The demand for bras will increase, leading to a lower equilibrium price. C) The equilibrium price will increase and the equilibrium quantity will increase. D) The equilibrium price will decrease, leading to a higher equilibrium quantity.
A
What does the law of demand state? I. There is a negative relationship between price and quantity demanded. II. There is an inverse relationship between price and quantity that buyers are willing and able to purchase. III. There is an inverse relationship between price and demand. A) I and II only B) II and III only C) I and III only D) I, II, and III
A
Which of the following does NOT shift the demand curve? A) changes in the product's price B) changes in income C) changes in population D) changes in tastes and preferences
A
18. Which of the following are likely to be complements? A) hotdogs and hamburgers B) books and book-lights C) coffee and tea D) cars and vans
B
23. In the oil market, an increase in the wage of oil workers will: A) shift the supply curve of oil to the right. B) shift the supply curve of oil to the left. C) shift the demand curve for oil to the left. D) shift the demand curve for oil to the right.
B
A local university decides to double its enrollment over the next five years in order to increase tuition revenue. Which of the following would most likely occur in the market for rental housing in the surrounding community? A) a decrease in the price of rental housing B) an increase in the demand for rental housing C) a decrease in the supply of rental housing D) a population change leads to a change in quantity demanded, not demand
B
Five new sellers enter a market (that previously had seven) and begin producing a good. Which of the following choices explains what happens to the equilibrium Q and P? A) The demand curve will shift to the right, and the equilibrium P and Q will both rise. B) The supply curve will shift to the right, the equilibrium P will fall, and the equilibrium Q will rise. C) The supply curve will shift to the left, the equilibrium P will fall, and the equilibrium Q will rise. D) The supply curve will shift to the right, the equilibrium P will rise, and the equilibrium Q will fall
B
In free markets, shortages lead to: A) lower prices. B) higher prices. C) surpluses. D) unexploited gains from trade.
B
Nigeria receives $53 of producer surplus from each barrel of oil sold at $60. At that level of production, Nigeria's cost to produce a barrel of oil is: A) $1.13. B) $7. C) $53. D) $113.
B
Suppose that the equilibrium price in the market is $10. If the current market price is $7.50: A) the equilibrium price will fall to $7.50. B) competition among buyers will increase the current price. C) the current price will fall below $7.50 as sellers compete for market share. D) There is not enough information provided to answer the question.
B
The supply curve illustrates: A) that limited resources are available for society to use. B) the relationship between the quantity supplied and the price of a good. C) the total cost of producing a good. D) the willingness to produce a good if the technology to produce it becomes available.
B
Weather forecasters predict that a major winter storm will strike your town within the next few days. Which of the following would NOT occur based upon the expected storm? A) an increase in the demand for groceries B) a decrease in the supply of winter clothing C) an increase in the demand for gasoline and tire chains D) an increase in the supply of electric generators to the area
B
Which of the following would increase the demand for beef? A) lower pork prices B) higher consumer income C) higher prices of feed grains used to feed beef cattle D) an increase in the price of beef
B
For each good produced in a free market economy, demand and supply determine: A) the price of the good, but not the quantity. B) the quantity of the good, but not the price. C) both the price and the quantity of the good. D) neither price nor quantity, sellers determine the price.
C
Mario buys eight units of good X when his income is $2,000 a month. When his income increases to $2,700 per month, he buys only six units of good X. For Mario, good X is: A) a normal good. B) an expensive good. C) an inferior good. D) a useless good.
C
Suppose it is widely believed that the price of flat-screen, high-definition televisions will be lower next year. What will happen as a result of such beliefs? A) The demand for flat-screen TVs will increase now. B) The demand for flat-screen TVs will increase next year when the prices fall. C) The demand for flat-screen TVs will decrease now. D) The demand for flat-screen TVs will not change.
C
The September 11 terrorist attacks turned many people away from flying. The demand and supply model would predict which of the following events in the airline travel market? A) The supply of airline travel would decrease, resulting in a higher equilibrium price and lower equilibrium quantity. B) The supply of airline travel would increase, resulting in a lower equilibrium price and higher equilibrium quantity. C) The demand for airline travel would decrease, resulting in a lower equilibrium price and lower equilibrium quantity. D) The supply and demand for airline travel would decrease, resulting in a higher equilibrium price and higher equilibrium quantity
C
When the price of a good increases, demand for the good will: A) increase. B) decrease. C) be unaffected. D) depend on the corresponding change in supply.
C
When you move along a demand curve: A) only price is held constant. B) income and the price of the good are held constant. C) all non-price determinants of demand are held constant. D) all determinants of quantity demanded are held constant.
C
Which of the following statements correctly defines a demand curve? A) A demand curve is a function that shows the relationship between prices and the quantity available for sale. B) A demand curve is a function that shows the relationship between prices and their associated quantities supplied. C) A demand curve is a function that shows the relationship between prices and their associated quantities demanded. D) A demand curve is a function that shows the relationship between quantity demanded and quantity supplied.
C
Which of the following would cause the current supply of iPods to increase? A) an economic boom, which increases the amount that people are willing to spend on personal electronics B) a decrease in the price of songs on iTunes C) the expectation that the future price of iPods will decrease D) an increase in the wages offered to manufacturers of iPods
C
Which one of the following choices would cause the demand curve for an inferior good to shift to the left? A) a fall in incomes B) a fall in the price of the inferior good C) a rise in incomes D) a rise in the price of the inferior good
C
22. The quantity of cell phones that firms plan to sell this month depends on all of the following EXCEPT the: A) number of producers of cell phones. B) price of a cell phone. C) wages of workers in electronics factories. D) All of these choices affect market conditions.
D
A market can be described by the equations Qd = 50 - 3P and Qs = 2P. What are the equilibrium price and quantity in this market? A) The equilibrium price is $20 and the equilibrium quantity is 10 units. B) The equilibrium price is $50 and the equilibrium quantity is 100 units. C) The equilibrium price is $30 and the equilibrium quantity is 10 units. D) The equilibrium price is $10 and the equilibrium quantity is 20 units.
D
At a free market equilibrium: A) quantity demanded equals quantity supplied. B) consumer surplus and producer surplus are maximized. C) there are no unexploited gains from trade. D) All of the answers are correct.
D
Suppose that a market is characterized as follows: consumers are willing and able to purchase 100 units and sellers are willing and able to sell 70 units. Which of the following statements are true? A) There is a shortage of 30 units. B) The market is not in equilibrium. C) The price in the market will increase. D) All of the answers are correct.
D
Which of the following are factors that shift the demand curve? A) costs of production, price of the product, and subsidies B) income, population, tastes, and input prices C) expectations, opportunity costs, price of the product D) price of substitutes, tastes, price of complements
D
Which of the following statements about consumer surplus is incorrect? A) Consumer surplus is the net benefit to consumers from the exchange that occurs in a market. B) Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction. C) Total consumer surplus is the area beneath the demand curve and above the market price. D) Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price.
D
The key condition for equilibrium to occur in a market is: A) the demand curve equals the supply curve. B) quantity demanded equals quantity supplied. C) price equals quantity. D) demand for one good equals demand for all other goods.
b