ch. 3

The area found __________ the market price and _____________ the demand curve is best known as consumer surplus. above, above above, below below, below below, above

above, below

Suppose that the price of coal falls in the market. According to the law of supply, what will happen? Demand for coal will increase. Coal companies will increase efforts to obtain permits for mining on protected lands. A lower quantity of coal will be supplied in the market. A higher quantity of coal will be supplied in the market.

A lower quantity of coal will be supplied in the market.

Which of the following will increase the demand curve? Discouraged buying based on future expectations. A drop in the price of substitutes. A rise in the price of complements. A rise in income (for a normal good).

A rise in income (for a normal good).

Which of the following is not a true statement about "demand"? Demand is fundamentally based on needs and wants. Demand is the relationship between a range of prices and the quantities demanded at those prices. Demand is based on ability to pay. Demand is the same as quantity demanded.

Demand is the same as quantity demanded.

You survive through grad school by eating a bland diet of rice and lentils, which you view to be inferior to more expensive meals. After graduating, you secure a high-paying job and can now afford much more than rice and lentils. As a result, your demand for rice and lentils is likely to increase. True False

False

____________ is the total number of units of a good or service producers are willing to sell at a given price. This is not to be confused with __________, which is a function representing the relationship between quantity supplied and different prices. Quantity supplied; supply Quantity output; production Quantity produced; output Quantity sold; supply

Quantity supplied; supply

Which of the following characteristics is a fundamental similarity that nearly all demand curves share? They are curved. They slope upward from left to right. They slope downward from left to right. They are straight lines.

They slope downward from left to right.

A demand curve shows the relationship between price and quantity demanded on a graph, with quantity on the horizontal axis and the price on the vertical axis. Great work! That's correct. True False

True

According to the law of demand, changing the price of sweater vests will only affect the quantity demanded of sweater vests, not demand itself. True False

True

Which of these scenarios is true for a normal good? When a person's income falls, he/she will buy more of the good. When a person's income rises, he/she will buy more of the good. A person buys more of the good when its price is higher. When other similar products are available, a person buys less of the good.

When a person's income rises, he/she will buy more of the good.

When considering factors that shift demand curves, all of the following will decrease demand except _______________. a drop in the price of substitutes a rise in income (for an inferior good) a rise in income (for a normal good) all of these factors decrease demand

a rise in income (for a normal good)

In general, improvements in technology that is used to produce a good will result in ___________. a decrease in supply a shortage of the good an increase in supply higher operating costs

an increase in supply

If supply and demand shift simultaneously, the equilibrium price __________________. Please select two correct answers. always shifts in the opposite direction of equilibrium quantity always shifts in the same direction as equilibrium quantity could possibly shift in the opposite direction as equilibrium quantity, but not always could possibly shift in the same direction as equilibrium quantity, but not always

could possibly shift in the opposite direction as equilibrium quantity, but not always could possibly shift in the same direction as equilibrium quantity, but not always

If bacon and eggs are complementary goods, a rise in the price of eggs will _____________ the demand for bacon. increase decrease not affect none of the above

decrease

A rise in the price of a substitute for corn flakes will ________________ demand for corn flakes. decrease increase have no effect none of the above

increase

A(n) _______________ is a good for which demand falls as income rises, and demand rises as income falls. demand schedule normal good ceteris paribus inferior good

inferior good

A decrease in demand for _________________ results from a rise in income. inferior goods irregular goods normal goods

inferior goods

Government intervention of setting price controls can impact the __________________. For example, when a price floor is set above the equilibrium price, a very likely outcome is a ______________ in the market. market equilibrium; surplus market equilibrium; shortage supply schedule; surplus demand schedule; shortage

market equilibrium; surplus

The difference between supply and quantity supplied is that "supply" refers to the _____________ and "quantity supplied" refers to the _____________. curve; point on the curve point on the curve; curve supply schedule; curve curve; supply schedule

point on the curve; curve

Given the chart below, what is the equilibrium price and quantity?

q= 60 thousand p=$4 per gallon

What term describes the total number of units of a good or service consumers are willing to purchase at a given price? equilibrium quantity demand total quantity available quantity demanded

quantity demanded

Equilibrium price occurs when quantity demanded is greater than quantity supplied. quantity demanded is less than quantity supplied. quantity demanded is equal to quantity supplied. none of the above

quantity demanded is equal to quantity supplied.

Market equilibrium is defined as the point where _______________ . (Select all that apply.) supply and demand cross quantity supplied is greater than quantity demanded where consumers want to purchase more from producers than is available quantity supplied equals quantity demanded

supply and demand cross quantity supplied equals quantity demanded

Where supply and demand intersect on a graph, quantity demanded equals quantity supplied. This quantity intersection is referred to as ________________. the equilibrium quantity the equilibrium supply the equilibrium demand the perfect price

the equilibrium quantity

The law of supply states that when there are many sellers of a good, an increase in price results in an increase in quantity supplied. True False

true

By definition, _______________ occurs when quantity supplied is greater than quantity demanded a shortage an equilibrium a surplus a market share

a surplus

John is studying the effects of income on the demand for peppers. Which factors are held constant when using the "ceteris paribus" assumption? income all factors affecting demand, except income all factors affecting demand, including income none of the above

all factors affecting demand, except income

Quantity supplied is a term that refers to _______. the total number of units of a good or service producers are willing to sell at a given price the total number of combinations of goods that someone can afford when all income is spent the total number of units of a good or service consumers are willing to purchase at a given price the relationship between a range of prices and the number of products offered at these prices

the total number of units of a good or service producers are willing to sell at a given price

Given the graph below, what are the equilibrium price and equilibrium quantity?

Equilibrium occurs where supply and demand cross. In this case, the supply and demand curves cross at q=40 thousand and p=$15.

Many American car manufacturers are located in the Southeast. Due to hurricane season, the Southeast has gotten a significant amount of rain, causing vast flooding. How is the supply of cars impacted? The supply of cars does not change. The quantity supplied of cars decreases only at the equilibrium price. The supply of cars decreases. The quantity supplied of cars increases at every price

The supply of cars decreases.

For normal goods, there is a positive relationship between income and demand levels, while there is an inverse relationship for inferior goods. True False

True

What would cause a shift in demand for tiny houses? Please select two correct answers. a commercial about tiny houses on the home-improvement television channel an increase in the price of kitchen sinks tax incentives to make tiny houses more affordable a decrease in the price of Honda Accords (cars)

a commercial about tiny houses on the home-improvement television channel tax incentives to make tiny houses more affordable

Which of the following are not improvements in technology which will result in an increase in supply? the invention of the cotton gin, which quickly separates cotton fibers from their seeds advances in technology that allow producers to make computers at a lower cost and more efficiently a factory worker increasing his/her work hours the ability for machines to be able to assemble toys in a toy factory.

a factory worker increasing his/her work hours

As an economic wizard, you know that a bad recession will strike next year. Which one of the following industries should you choose to invest in to weather out the recession? luxury cars dollar stores amusement parks casinos

dollar stores

Which of the following would lead to a surplus? excess demand a price below equilibrium excess supply a quantity supplied less than the quantity demanded

excess supply

When considering factors that shift supply curves, which of the following will increase supply? favorable natural conditions for production higher product taxes levied on producers decline in technology used for production lower taxes levied on producers

favorable natural conditions for production lower taxes levied on producers

Quantity demanded is different from demand because _________________________. quantity demanded can be expressed graphically while demand cannot demand is a point on a supply-demand graph, and quantity demanded is the entire curve quantity demanded is the number of units consumers demand at a specific price, while demand is a schedule comprised of quantity demanded at different prices it increases with higher prices, whereas demand does not

quantity demanded is the number of units consumers demand at a specific price, while demand is a schedule comprised of quantity demanded at different prices

According to the law of demand, if all else remains equal, as the price of a good becomes lower, then _________________________. the quantity demanded of the good will decrease the quantity demanded of the good will increase the demand for the good will decrease the demand for the good will increase

the demand for the good will increase

Demand is different from quantity demanded because ___________________________________. "quantity demanded" can be expressed graphically while "demand" cannot "demand" is comprised of a series of quantity demanded at different prices, while "quantity demanded" is the number of units consumers demand at a specific price "demand" is a point on a supply-demand graph, and "quantity demanded" is the entire curve they are one and the same; "demand" is just economics shorthand for "quantity demanded"

"demand" is comprised of a series of quantity demanded at different prices, while "quantity demanded" is the number of units consumers demand at a specific price

As adolescents become increasingly interested in electronics - as opposed to books - where would you find the greatest increase in demand? books in used bookstores library books Kindle books for iPads and other tablets comic books

Kindle books for iPads and other tablets

For generations, the Irish were among the poorest in the British Isles and relied almost exclusively on simple potatoes, which were inexpensive but not particularly tasty, for sustenance. Potatoes were an inferior food product favored by the poorer sections of the population. All else being equal, how would you expect the demand for potatoes per person to change after several decades of significant economic development? The demand for potatoes is likely to expand. The demand for potatoes is likely to decline. The demand for potatoes is likely to remain unaffected. The demand for potatoes is likely to fall to zero.

The demand for potatoes is likely to decline.

Assume a market is currently at the equilibrium price and quantity, and a price ceiling is set below equilibrium price. Which of the following statements is true: The quantity demanded will rise and the quantity supplied will fall, causing a shortage. There is nothing causing the price to fall from the equilibrium level. There is nothing preventing the price from rising to its equilibrium level. The quantity supplied will rise and the quantity demanded will fall, causing a surplus.

The quantity demanded will rise and the quantity supplied will fall, causing a shortage.