Macro Homework 3

Holding everything else constant, an increase in the price of raisins will result in A. an decrease in the quantity of raisins demanded. B. an increase in the demand for raisins. C. a decrease in the supply of raisins. D. an increase in the quantity of raisins demanded.

A. an decrease in the quantity of raisins demanded.

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A. an inferior good. B. a neutral good. C. a necessity. D. a normal good.

A. an inferior good

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. A. income B. substitution C. demographics D. ceteris paribus

A. income

If a firm expects that the price of its product will be lower in the future than it is today A. the firm has an incentive to increase supply now and decrease supply in the future. B. the firm has an incentive to decrease supply now and increase supply in the future. C. the firm has an incentive to increase quantity supplied now and decrease quantity supplied in the future. D. the firm will not change supply until it knows for certain what will happen to its price.

A. the firm has an incentive to increase supply now and decrease supply in the future.

A demand curve shows the relationship between A. the price of a product and the quantity of the product demanded. B. the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. C. the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. D. the price of a produce and the demand for the product.

A. the price of a product and the quantity of the product demanded.

If in the market for bananas the supply curve has shifted to the right, then A. the supply of bananas increased. B. the quantity of bananas supplied has increased. C. the supply of bananas has decreases. D. the quantity of bananas supplied has decreased.

A. the supply of bananas increased.

Refer to Figure #13. If the price is $25, A. there would be a surplus of 300 units. B. there would be a shortage of 300 units. C. there would be a surplus of 200 units D. there would be a shortage of 200 units.

A. there would be a surplus of 300 units.

Refer to Figure #14. At a price of $25, how many units will be sold? A. 400 B. 500 C. 600 D. 800

B. 500

If the United States lifted the embargo on Cuban products, what would happen in the U.S. market for Cuban cigars? A. The supply curve would shift to the left. B. The supply curve would shift to the right. C. The demand curve would shift to the right. D. The demand curve would shift to the left.

B. The supply curve would shift to the right

Which of the following describes a characteristic of a perfectly competitive market? A. There are many buyers but few sellers. B. There are many sellers but few buyers. C. There are many buyers and sellers. D. Equilibrium is achieved when demand for the product sold in the market equals the supply.

C. There are many buyers and sellers.

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A. the cost of producing the good changes. B. supplier expectations about future prices change. C. the price of the good changes. D. prices of substitutes in production change.

C. the price of a good changes

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is A. consumer income. B. consumer tastes and preferences. C. the price of the good. D. the quality of the good.

C. the price of the good

Refer to Figure #6. An increase in the price of a complement would be represented by a movement from A. A to B. B. B to A C. D1 to D2. D. D2 to D1.

D. D2 to D1

Refer to Figure #16 Assume that the graphs in this figure represent the demand and supply curves for blu-ray discs. Which panel best describes what happens in this market if there is a substantial increase in the price of blu-ray players? A. Panel a B. Panel B C. Panel C D. Panel D

D. Panel D

Which of the following would shift the supply curve for smartphones to the right? A. an increase in the price of a substitute in production B. an increase in consumer income (assuming that all smartphones are normal goods) C. a decrease in the number of firms that produce smartphones D. a decrease in the price of an input used to produce smartphones

D. a decrease in the price of an input used to produce smartphones

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in A. an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. B. an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. C. an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease. D. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

D. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

At a product's equilibrium price A. anyone who needs the product will be able to buy the product, regardless of ability to pay. B. the federal government will provide the product to anyone who cannot afford it. C. not all sellers who are willing to accept the price will find buyers for their products. D. any buyer who is willing and able to pay the price will find a seller for the product.

D. any buyer who is willing and able to pay the price will find a seller for the product.

An decrease in supply is caused by a decrease in the price of the product. True or False

False

In response to a shortage the market price of a good will rise; as the price rises, the demand will decrease and supply will increase until equilibrium is reached. True or False

False

If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now. True or False

True