Micro Review Test 1

If people expect the price of packaged coffee to rise next week, coffee demand will

increase now

An increase in the number of producers will:

increase the market supply, because market supply is the sum of all individual supply curves.

When a shortage exists in a market, sellers

raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

If consumer incomes go up and Harley Davidson motorcycles are a normal good, the effect on the demand for motorcycles, ceteris paribus, will be a(n):

rightward shift in the demand curve for motorcycles.

A decrease in the price of coffee, other things being equal, causes a(n):

downward movement along the demand curve for coffee.

If the price of hot dogs increases, what will happen in the market for potato chips, a complementary good?

Demand will decrease.

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

Technology and number of resources.

A price floor would be established in cases where the government believed the market equilibrium price would:

be too low.

A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are

better suited for the production of some goods than others.

A curve that depicts the relationship between price and quantity demanded is the:

demand curve.

nonbinding price floor

is set at a price below the equilibrium price.

A point inside a production possibilities curve reflects:

less than full use of resources and technology.

If market supply decreases and, simultaneously, market demand increases, the new equilibrium will show

market price will increase, and the quantity exchanged could increase, decrease, or remain the same.

The law of increasing costs holds that the opportunity cost:

of a good increases as more of the good is produced

According to the law of demand, if:

product price increases, quantity demanded will decrease.

Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

shift to the left as consumers switch from buying discs to cassettes.

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve

shifts outward to the right.

Assume that the equilibrium price for a good is $5. If the market price is $10, a:

surplus causes the price to decline toward $5.

A change in supply cannot be caused by a change in:

the price of the good itself.