MacroEconomics 1-3

According to the law of demand, which of the following statements are true, all other things being equal?

As price increases, quantity demanded decreases

True or False: A "change in a quantity demanded" is a shift of the entire demand curve to the right or to the left

False

Which statement is consistent with the law of supply? ~ A decrease in market price will lead to an increase in quantity supplied. ~ At a zero price, quantity supplied will be infinite. ~ An increase in market price will lead to a decrease in quantity supplied. ~An increase in market price will lead to an increase in quantity supplied.

An increase in market price will lead to an increase in quantity supplied.

Expectations about _____ caused the stock market to crash near the start of the pandemic

corporate profits

Suppose that Rhonda has a TikTok account. If all of her TikTok friends switch to SnapChat, Rhonda's demand for TikTok will likely_________.

decrease

How is the market supply curve derived from the supply curves of individual producers? ~By adding up the quantities supplied by all individual producers for each price ~By using the largest quantity supplied among all producers for each price ~By calculating the average quantity supplied among all producers ~By adding up the prices paid for each unit supplied by producers

By adding up the quantities supplied by all individual producers for each price

For each stock in the stock market, the number of shares sold daily equals the number of shares purchased. That is, the quantity of each firm's shares demanded equals the quantity supplied. Why, then, do the prices of stock shares change? ~ Prices change in reaction to a mismatch between quantity demanded and quantity supplied. ~ Prices are set at a different level each day by Wall Street traders. ~ Prices change due to the whims of those selling stock shares. ~ Actually, the prices of stock shares seldom change.

Prices change in reaction to a mismatch between quantity demanded and quantity supplied.

Tomatoes are an input in the production of salsa. If the price of tomatoes rises sharply, this will cause: ~ an increase in the supply of salsa -- a rightward shift of the supply curve for salsa ~ a decrease in the supply of salsa -- a leftward shift of the supply curve for salsa ~ an increase in the quantity supplied of salsa -- a movement upward (to the right) along the supply curve for salsa

a decrease in the supply of salsa -- a leftward shift of the supply curve for salsa

Diminishing ____ ____ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.

marginal utility

Fried chicken and grilled chicken are substitutes. If the American Heart Association announces that eating fried chicken increases the risk of stroke, this will cause: ~ the demand for grilled chicken to increase -- a rightward shift of the demand curve for grilled chicken ~ the demand for fried chicken to increase -- a rightward shift of the demand curve for fried chicken ~ the demand for grilled chicken to decrease -- a leftward shift of the demand curve for grilled chicken

the demand for grilled chicken to increase -- a rightward shift of the demand curve for grilled chicken

The market for blue jeans is in equilibrium. Blue jeans are a normal good for consumers. If a recession reduces consumers' incomes at the same time that the price of denim (an input in the making of blue jeans) increases, we can say with certainty that as a result: ~ the equilibrium price of blue jeans will decrease ~ the equilibrium price of blue jeans will increase ~ the equilibrium quantity of blue jeans will increase ~ the equilibrium quantity of blue jeans will decrease

the equilibrium quantity of blue jeans will decrease

The market for new homes is in equilibrium. New homes are a normal good for consumers. If a recession reduces consumers' incomes at the same time that the price of lumber (an input in making new homes) increases, we can say with certainty that: ~ the equilibrium price of new homes will decrease ~ the equilibrium price of new homes will increase ~ the equilibrium quantity of new homes will increase ~ the equilibrium quantity of new homes will decrease

the equilibrium quantity of new homes will decrease

Which of the following are the characteristics of a competitive market? ~ A surplus of a narrow range of products ~ A large number of buyers and sellers ~ A large number of buyers but a small number of sellers ~ Standardized products

~ A large number of buyers and sellers ~ Standardized products

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be:

consumed at various possible prices

Public transportation is an inferior good. If consumers' incomes decrease, this will cause: ~ demand for public transportation to increase -- a rightward shift of the demand curve for public transportation ~ demand for public transportation to decrease -- a leftward shift of the demand curve for public transportation

demand for public transportation to increase -- a rightward shift of the demand curve for public transportation

The government policy of ____ resulted in labor shortages in several industries

extremely generous unemployment benefits

Pizza and sub sandwiches are substitutes. If the price of pizza decreases, this will cause: ~ an increase in demand -- a rightward shift of the demand curve -- for pizza ~ a decrease in demand -- a leftward shift of the demand curve -- for sub sandwiches ~ an upward movement (to the left) along the demand curve for sub sandwiches ~ an upward movement (to the left) along the demand curve for pizza

a decrease in demand -- a leftward shift of the demand curve -- for sub sandwiches

Which statement is consistent with the law of demand? ~ A reduction in market price will lead to a decrease in quantity demanded ~ A reduction in market price will lead to an increase in quantity demanded ~ An increase in market price will lead to an increase in quantity demanded ~ At a zero price, quantity demanded with be equal to zero

a reduction in market price will lead to an increase in quantity demanded

Used car prices fell near the start of the pandemic but then soared over the next two years largely because of _________.

a shortage in the supply of new cars

Which statement is consistent with the law of supply? ~A decrease in market price will lead to an increase in quantity supplied. ~At a zero price, quantity supplied will be infinite. ~ An increase in market price will lead to a decrease in quantity supplied. ~An increase in market price will lead to an increase in quantity supplied.

an increase in market price will lead to an increase in quantity supplied

Automobile firms can use their inputs to make hybrid cars or "regular" (non-hybrid) cars. If the equilibrium price of hybrid cars rises sharply, the resulting shift in the supply curve for "regular" cars will cause: ~ an increase in the equilibrium price of "regular" cars ~ a decrease in the equilibrium price of "regular" cars ~ an increase in the equilibrium quantity of "regular" cars

an increase in the equilibrium price of "regular" cars

The fresh fruit market and frozen dinner market are currently in equilibrium. Fresh fruit is a normal good for consumers and frozen dinners are an inferior good. Given an upward sloping supply curve, if there is an economic boom that increases consumers' incomes, this will lead to: ~ an increase in the equilibrium price of frozen dinners ~ a decrease in the equilibrium quantity of fresh fruit ~ an increase in the equilibrium price of fresh fruit

an increase in the equilibrium price of fresh fruit

Coffee and cream are complements. If the price of coffee increases, this will cause: ~ a decrease in demand -- a leftward shift of the demand curve -- for coffee ~ an increase in demand -- a rightward shift of the demand curve -- for cream ~ an upward movement (decrease in quantity demanded) along the demand curve for coffee ~ a downward movement (increase in quantity demanded) along the demand curve for cream

an upward movement (decrease in quantity demanded) along the demand curve for coffee

If the price of bananas increases from $0.75 a pound to $1.00 per pound, in the market for bananas this will cause: ~ a downward movement (to the right) along the demand curve ~ an increase in demand -- a rightward shift of the demand curve ~ an upward movement (to the left) along the demand curve ~ a decrease in demand -- a leftward shift of the demand curve

an upward movement (to the left) along the demand curve

If the price of chocolate increases, in the market for chocolate this will cause: ~ a downward (to the right) movement along the demand curve ~ an increase in demand -- a rightward shift of the demand curve ~ an upward (to the left) movement along the demand curve ~ a decrease in demand -- a leftward shift of the demand curve

an upward movement (to the left) along the demand curve