Review For ECON Test #1 Supplementary practice #2-3

For Teenagers, a 10 percent increase in the price of cigarettes leads to a...

12 Percent reduction in the quantity demanded of cigarettes.

An increase in the price of a good will...

Decrease quantity demanded.

Equilibrium quantity must decrease when demand...

Decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

Which of the following events must cause equilibrium quantity to rise?

Demand and supply both increase.

Economist normally...

Do not try to explain people's tastes, but they do try to explain what happens when taste change.

The supply curve for stand up paddle boards....

Does not shift when the price of stand up paddle boards changes because the price of stand up paddle boards is measured on the vertical axis of the graph.

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

If textbooks and study guides are complements, then an increase in the price of textbooks will result in....

Fewer study guides being sold.

The Difference between a supply schedule and a supply curve is that a supply schedule....

Is a table, and a supply curve is drawn on a graph.

Assume Diana buys computers in a competitive market. It follows that...

None of the above is correct.

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires...

None of the above is correct.

In a market economy, who or what determines who produces each good and how much is produced?

Prices.

The law of supply states that, other things equal, when the price of a good...

Rises, the quantity supplied of the good rises.

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a....

Shortage to exist and the market price of roses to increase.

In competitive markets, which of the following is NOT correct?...

Some sellers can set prices.

The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high-quality diamonds enters the market, then the....

Supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity

Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises. This relationship between price and quantity demanded is referred to as...

The law of demand.

Two countries would not gain from trade if...

The same opportunity cost.

A university football stadium is never more than half-full during football games. this indicates...

The ticket price is above the equilibrium price.

Which of the following is NOT a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?

There are many buyers and many sellers in all types of markets.

The supply of a good or service is determined by...

Those who sell the good or service.

Which of the following demonstrates the law of supply?

When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts.