Microeconomics chapter 4

Film streaming services and TV sets

Complements

Show the effect of the following event on the market for minivans: A stock-market crash lowers people's wealth.

Demand Determinant: income-demand shifts to the left supply stays the same

Show the effect of the following event on the market for minivans: People decide to have more children.

Demand Determinant: number of buyers-demand shifts to the right supply stays the same

Show the effect of the following event on the market for minivans: The price of sports utility vehicles rises.

Demand Determinant: price of substitute or complement- demand shifts to the right supply stays the same

Suppose that Jarrod receives a pay increase. We would expect

Jarrod's demand for pizza, a normal good, to shift to the right.

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Price will increase; quantity is ambiguous.

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

Price will increase; quantity is ambiguous.

Film streaming services and movie tickets

Substitutes

TV sets and movie tickets

Substitutes

Which of the following statements is true about the impact of an increase in the price of lettuce?

The equilibrium price and quantity of salad dressing will fall.

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

There is an increase in the demand for apples and an increase in the quantity supplied of apples.

True or False: If the actual price in this market were below the equilibrium price, suppliers could raise the price without losing sales.

True

True or False: If the demand for notebooks is perfectly inelastic, an increase in the supply of notebooks only lowers the price of notebooks and does not affect the quantity produced and sold.

True

True or False: When the demand curve and the supply curve shift in the directions indicated on this graph, the effect on the equilibrium price is clear even without knowing the magnitude of the shifts.

True

Which of the following shifts the demand for watches to the right?

a decrease in the price of watch batteries if watch batteries and watches are complements

The supply curve for yoga mats shifts when

a determinant of the supply of yoga mats other than the price of yoga mats changes.

A decrease (leftward shift) in the supply for a good will tend to cause

an increase in the equilibrium price and a decrease in the equilibrium quantity.

An increase (rightward shift) in the demand for a good will tend to cause

an increase in the equilibrium price and quantity

All of the following shift the supply of watches to the right except

an increase in the price of watches

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

an inferior good.

In competitive markets,

both buyers and sellers are price takers.

An inferior good is one for which an increase in income causes a(n)

decrease in demand.

The law of demand states that an increase in the price of a good

decreases the quantity demanded for that good.

Show the change in the market for Caribbean hotel rooms that is consistent with the following statement: "When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts plummets."

demand shifts to the left, supply stays the same

Suppose the price of raspberries falls. Show the effect this price change of raspberries has on the market for strawberries.

demand shifts to the left, supply stays the same

On the following graph, show the effect of the rise in the price of flour on the market for cream cheese.

demand shifts to the left, supply stays the same Therefore, a rise in the price of flour would cause the equilibrium price of cream cheese to fall and the equilibrium quantity of cream cheese to fall .

Scientists reveal that eating oranges decreases the risk of diabetes, and at the same time, unfavorable weather conditions damage a huge amount of orange crops. Show the effect of these two events on the market for oranges.

demand shifts to the right, supply shifts to the left

Suppose favorable weather conditions result in a huge harvest of strawberries. Show the effect these favorable weather conditions has on the market for strawberries.

demand shifts to the right, supply shifts to the left

Show the change in the market for healthcare that is consistent with the following statement: "When there is an influx of immigrants, the price of healthcare rises."

demand shifts to the right, supply stays the same

Show the change in the market for laptop computers that is consistent with the following statement: When a technological advance improves the features of laptop computers, the price of laptop computers rises, and the price of a used desktop computer falls.

demand shifts to the right, supply stays the same

Suppose recent research shows that strawberry consumption can help prevent cancer. Show the effect this research has on the market for strawberries.

demand shifts to the right, supply stays the same

Show the effect of the following event on the market for minivans: A strike by steelworkers raises steel prices.

demand stays the same Supply Determinant: input prices-supply shifts to the left

Show the effect of the following event on the market for minivans: Engineers develop new automated machinery for the production of minivans.

demand stays the same Supply Determinant: technology-supply shifts to the right

Suppose more people decide to move out of the strawberry farming business into other career paths. Show the effect this switch in career choice has on the market for strawberries.

demand stays the same, supply shifts to the left

show the change in the market for desktop computers that is consistent with the following statement: When a technological advance improves the features of laptop computers, the price of laptop computers rises, and the price of a used desktop computer falls.

demands shifts to the left, supply shifts to the right

Because bagels and cream cheese are often eaten together, they are complements. Consider the effect of a rise in the price of flour, an input to making bagels. On the following graph, show the effect of the rise in the price of flour on the market for bagels.

demands stays the same, supply shifts to the left Therefore, a rise in the price of flour would cause the equilibrium price of bagels to rise and the equilibrium quantity of bagels to fall .

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect the

equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

Suppose there is an increase in both the supply and demand for personal computers. Furthermore, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect the

equilibrium quantity to rise and the equilibrium price to fall.

The law of supply states that an increase in the price of a good

increases the quantity supplied of that good

A perfectly competitive market has

many buyers and sellers.

A monopolistic market has

only one seller

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are

substitutes.

An increase in the number of orange growers causes

the market supply curve for oranges to shift to the right.

If the price of a good is equal to the equilibrium price,

the quantity demanded is equal to the quantity supplied and the price remains unchanged.

In the market for bread, supply is determined by

the sellers of bread.

If the price of a good is below the equilibrium price,

there is a shortage and the price will rise.

If the price of a good is above the equilibrium price,

there is a surplus and the price will fall

Cheese is a complement for hamburgers. If the price of hamburgers rises, the quantity of hamburgers demanded falls , which lowers the demand for cheese. Because of the change in the equilibrium quantity of cheese, the demand for milk by cheese producers falls , causing the equilibrium price of milk to decrease . This means producers of butter face lower input prices, and the supply of butter increases . The resulting fall in the price of butter causes people to substitute away from jam and toward butter , so the demand for jam falls

yes

If the actual price in this market were above the equilibrium price, quantity supplied would be greater than quantity demanded, so there would be downward pressure on prices.

yes

Suppose a technological improvement has lowered the cost of manufacturing cell phone batteries. This would lead to an increase in the supply of cell phones, causing the price of cell phones to fall . Because cell phones and landline telephones are substitutes , this change in price would cause the demand for landline telephones to decrease . However, cell phones and cell phone applications are complements , so the change in the price of cell phones would increase the demand for cell phone applications.

yes