quiz 4 macro

Which of the following situations best demonstrates the law of demand? Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year. Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures. A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween. An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices.

Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year. The correct answer focuses on the relationship between price and quantity demanded so it is the best demonstration of the law of demand.

Suppose that the table shown shows the demand and supply schedules for pork bellies. Which of the following statements is true? Price ($/lb.) Quantity demanded (lbs.) Quantity Supplied (lbs.) .10 30,000 5,000 .25 25,000 10,000 .50 20,000 20,000 .75 15,000 30,000 .95 5,000 40,000 There would be a surplus of pork bellies if the price were $0.50 per pound. There would be a shortage of pork bellies if the price were $0.50 per pound. There would be a shortage of pork bellies if the price were $0.25 per pound. There would be a surplus of pork bellies if the price were $0.25 per pound.

There would be a shortage of pork bellies if the price were $0.25 per pound. At $0.50 per pound, quantity demanded equals quantity supplied. At $0.25 per pound quantity demanded exceeds quantity supplied.

The growing popularity of a commercial weight-loss diet that includes reducing the amount of carbohydrates consumed will cause: an increase in the demand for bread, which is high in carbohydrates. a decrease in the demand for bread, which is high in carbohydrates. a movement down the demand curve for bread (a food high in carbohydrates). a movement up the demand curve for bread (a food high in carbohydrates).

a decrease in the demand for bread, which is high in carbohydrates. Followers of a low-carb diet with little or no bread will decrease the demand for bread.

The law of supply states that, other things constant, there is: an inverse relation between price and the quantity supplied. an inverse relation between price and supply. a direct relation between price and the quantity supplied. a direct relation between price and supply.

a direct relation between price and the quantity supplied. The law of supply states that more of a good will be supplied the higher its price, other things constant, and less of a good will be supplied the lower its price, other things constant. That is, there is a direct relationship between price and quantity supplied. The relationship is between quantities supplied, not supply.

When applied to labor markets, the law of supply suggests that: an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase. a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase. an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase. a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase.

an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase. The law of supply states that as the price of a good rises, the quantity of it supplied will rise. The law of supply does not address the relationship between price and quantity demanded.

According to the law of demand an increase in the price of gasoline will: increase the quantity demanded of gasoline, holding all else constant decrease the quantity demanded of gasoline, holding all else constant. increase the demand for gasoline. decrease the demand for gasoline.

decrease the quantity demanded of gasoline, holding all else constant. The law of demand states that less of a good will be demanded the higher its price, other things constant.

The point at which the supply curve and the demand curve intersect is called: equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus. irrelevant, because real-world prices never reach this point.

equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. Equilibrium price occurs at the intersection of demand and supply. Prices have no tendency to change when quantity demanded equals quantity supplied.

When quantity supplied is greater than quantity demanded, prices tend to: fall. rise. stay the same. remain constant until the next season.

fall. When quantity supplied is greater than quantity demanded, prices tend to fall.

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause: farmers to substitute wheat for the production of corn, i.e., move their land into more wheat/less corn production. farmers to substitute corn for the production of wheat, i.r., move their land into more corn/less wheat production. farmers to lower the production of both corn and wheat. farmers to raise the production of both wheat and corn.

farmers to substitute wheat for the production of corn, i.e., move their land into more wheat/less corn production. The increase in the price of wheat causes a movement along the supply curve for wheat (change in quantity supplied), not a shift.

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to: increase the demand for diesel cars. decrease the demand for gasoline. decrease the demand for diesel cars. increase the demand for gasoline.

increase the demand for diesel cars. The change in the price of gasoline causes a movement along the demand for gasoline curve, not a shift. Higher gasoline prices lead to an increase in the demand for diesel cars as consumers seek to take advantage of better gas mileage.

The effect of higher gasoline prices is most likely to: increase the demand for hybrid cars and increase the demand for the gas guzzler Hummer. decrease the demand for hybrid cars and decrease the demand for the gas guzzler Hummer. increase the demand for hybrid cars and decrease the demand for the gas guzzler Hummer. decrease the demand for hybrid cars and increase the demand for the gas guzzler Hummer.

increase the demand for hybrid cars and decrease the demand for the gas guzzler Hummer. The demand for hybrids likely increases when gas prices rise. Since the short run supply is inelastic, the increased demand causes these cars to sell for markups over sticker price. The demand for Hummers, which are gas-guzzlers, will.

When the drug Vioxx was pulled from the market by pharmaceutical company Merck due to its association with heart problems, the demand for other pain medications: increased, putting upward pressure on their price. increased, putting downward pressure on their price. decreased, putting upward pressure on their price. decreased, putting downward pressure on their price.

increased, putting upward pressure on their price. Since Vioxx was pulled from the market, arthritis sufferers had to turn to other medications, causing the demand for those other medications to increase. There have been problems reported with Celebrex and Bextra since then, but the immediate effect was to increase the demand for these substitutes, putting upward pressure on equilibrium price.

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the: supply of apartment units will shift leftward. supply of apartment units will shift rightward. quantity of apartment units supplied will rise. quantity of apartment units supplied will fall.

quantity of apartment units supplied will fall. The decrease in price resulting from rent controls causes a movement along the supply curve downward and to the left rather than a shift of the supply curve.

If the price of steel rises, the law of supply predicts that, holding all else constant, the: supply of steel will increase. supply of steel will decrease. quantity supplied of steel will increase. quantity supplied of steel will decrease.

quantity supplied of steel will increase. The law of supply states that an increase in price will cause an increase in quantity supplied or a movement along the supply curve, not a shift of the supply curve.

Suppose the given supply and demand tables reflect the supply and demand for milk per week. At a price of $1, there is a: Price (per gal.) Quantity demanded (gallons per week) Quantity Supplied (gallons per week) $1 2000 1000 $2 1500 1500 $3 1000 2000 $4 500 2500 surplus of 500 gallons per week. surplus of 1,000 gallons per week. shortage of 2,500 gallons per week. shortage of 1,000 gallons per week.

shortage of 1,000 gallons per week. At a price of $1, quantity demanded is 2,000 gallons per week and quantity supplied is 1,000 gallons per week. There is a shortage of 1,000 gallons per week.

If the price of movies on DVD (Redbox) rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will: substitute movies on DVD for movies on the Internet, in other words, buy more movies on DVD (Redbox). substitute movies on the Internet for movies on DVD, in other words, buy more movies on the Internet. buy only movies on DVD (like Redbox). buy only movies on the Internet.

substitute movies on the Internet for movies on DVD, in other words, buy more movies on the Internet. The law of demand is based on the principle that consumers will substitute away from products that have become relatively more expensive; this does not mean that they will necessarily stop buying more expensive products.

If the price in a market for a good or service is higher than its equilibrium price, there will be a: surplus and downward pressure on price. surplus and upward pressure on price. shortage and downward pressure on price. shortage and upward pressure on price.

surplus and downward pressure on price. When quantity demanded is greater than quantity supplied, prices tend to rise. When quantity supplied is greater than quantity demanded, prices tend to fall.

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. At a price of $4, there is a: Price (per gal.) Quantity demanded (gallons per week) Quantity Supplied (gallons per week) $1 2000 1000 $2 1500 1500 $3 1000 2000 $4 500 2500 surplus of 1,000 gallons per week. surplus of 2,000 gallons per week. shortage of 1,000 gallons per week. shortage of 2,000 gallons per week.

surplus of 2,000 gallons per week. At a price of $4, quantity demanded is 500 gallons per week and quantity supplied is 2,500 gallons per week. There is a surplus of 2,000 gallons per week.

Suppose when you are offered $7.00 per hour to work in the campus library, you choose not to work, but when you are offered $10.00 per hour, you accept a part-time position. Your behavior can best be explained by the fact that your supply of labor curve is: horizontal. vertical. downward-sloping. upward-sloping.

upward-sloping. When the wage rate rose, the quantity of labor hours supplied rose, so the labor supply curve slopes upward.

The use of the phrase "holding all else constant" in supply and demand analysis indicates that: an equilibrium price has been reached. an equilibrium quantity has been reached. we are considering the changes in just one factor in the market. we are considering all the changes which might take place in actual markets.

we are considering the changes in just one factor in the market. Other things constant means that all other factors that could affect the analysis remain constant whether they actually do or not. It does not indicate when equilibrium has been reached.