Macroeconomics 2301

If the price of chocolate increases, this causes:

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

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 quantity of new homes will decrease

Pizza and sub sandwiches are substitutes. If the price of pizza decreases, this will cause:

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

Tomatoes are an input in the production of salsa. If the price of tomatoes rises sharply, this will cause:

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

Automobile firms can use their inputs to make hybrid cars of "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

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

an increase in the equilibrium price of fresh fruit

If the price of bananas increases from $0.75 a pound to $1.00 per pound, in the market for bananas this will cause:

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

An increase in the price of coffee causes

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

French fries and ketchup are complements. If the American Heart Association announces that eating French Fries increases the risk of stroke, this would cause:

demand for ketchup to decrease - a leftward shift of the demand curve for ketchup

Public transportation is an inferior good. If consumers' incomes decreases, this will cause:

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

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 quantity of blue jeans will decrease