eco chapter 4
Monopolists are price takers
False
When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.
True
If the four suppliers listed are the only suppliers in this market and the market demand schedule is: The equilibrium price and quantity are
$2.00 and 300 cases.
A movement upward and to the left along a given demand curve is called a decrease in demand.
False
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises.
Pizza is a normal good if the demand
for pizza rises when income rises
Soup is an inferior good if the demand
for soup falls when income rises
. A competitive market is a market in which
no individual buyer or seller has any significant impact on the market price.
The equilibrium price and quantity, respectively, are
$3 and 50 units.
Which of the following changes would not shift the supply curve for a good or service?
. A change in the price of the good or service
Which of the following events would cause a movement upward and to the left along the demand curve for olives?
. The price of olives rises.
If the demand for a good falls when income falls, then the good is called
. a normal good.
Which of the following changes would not shift the demand curve for a good or service?
A change in the price of the good or service.
Which of the following would shift the demand curve for gasoline to the right?
An increase in consumer income, assuming gasoline is a normal good
If consumers often purchase croissants to eat while they drink their cappuccinos at local coffee shops, what would happen to the equilibrium price and quantity of cappuccinos if the price of croissants rises?
Both the equilibrium price and quantity would decrease.
All else equal, an increase in the income of buyers who consider turkey to be an inferior good would cause a move from
Da to Db .
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.
. Individual demand curves are summed vertically to obtain the market demand curve.
False
. Individual supply curves are summed vertically to obtain the market supply curve
False
If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.
False
In a perfectly competitive market, buyers and sellers are price setters
False
Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.
False
When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.
False
Which of the following is not an example of a market?
In the United States, a sick person cannot legally purchase a lung.
Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.
. Which of the following movements would illustrate the effect of an increase in the price of beach towels on the market for bathing suits?
Point A to Point D
Which of the following is not held constant in a demand schedule?
Price
Assume Ren buys coffee beans in a competitive market. It follows that
Ren cannot influence the price of coffee beans even if he buys a large quantity of them.
What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?
The equilibrium price would increase, and the equilibrium quantity would decrease.
Which of the following would shift the supply of umbrellas to the left?
The number of firms making umbrellas decreases.
Which of the following events could cause an increase in the supply of ceiling fans?
The number of sellers of ceiling fans increases
The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result, which of the following statements is not true?
There is a shortage of blue jeans at the $30 price
Which of the following is not a characteristic of a perfectly competitive market?
There is no free entry or exit.
. A decrease in supply shifts the supply curve to the left.
True
A decrease in demand shifts the demand curve to the left
True
Advances in production technology typically reduce firms' costs, which increases the quantity supplied at each price.
True
At the equilibrium price, quantity demanded is equal to quantity supplied.
True
Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.
True
If the producers of canned green beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current production into storage and supply less in the market today.
True
In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.
True
Local cable television companies frequently are monopolists.
True
Most markets in the economy are highly competitive.
True
The law of demand is true for most goods in the economy
True
Who gets scarce resources in a market economy?
Whoever is willing and able to pay the price
The shift from Db to Da in the market for tortilla chips could be caused by
a decrease in income, assuming that tortilla chips are a normal good
The shift from S' to S is called
a decrease in supply.
When we move along a given demand curve,
all nonprice determinants of demand are held constant.
When we move along a given supply curve
all nonprice determinants of supply are held constant.
The shift from Da to Db is called
an increase in demand.
The shift from S' to S could be caused by
an increase in input prices.
The movement from point A to point B on the graph shows
an increase in quantity demanded.
Today, producers changed their expectations about the future. This change
can affect today's supply.
Two goods are substitutes when a decrease in the price of one good
decreases the demand for the other good.
Equilibrium price must decrease when
demand does not change and supply increases
Two goods are complements when a decrease in the price of one good
increases the demand for the other good.
. 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
is unaffected, and the supply of tires could increase, decrease, or stay the same
. A demand schedule is a table that shows the relationship between
price and quantity demanded.
The law of supply states that, other things equal, when the price of a good
rises, the quantity supplied of the good rises
. If Christopher expects to earn a higher income next month, he may choose to
save less now and spend more of his current income on goods and services.
A monopoly is a market with one
seller, and that seller sets the price.
The market supply curve
shows how the total quantity supplied of a good varies as the price of that good varies.
Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are
substitute goods.
Oakley bakes muffins that he sells at the local farmer's market. If he purchases a new convection oven that reduces the costs of baking muffins, the
supply of Oakley's muffins will increase
Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the
supply of bicycles will shift to the left.
When the quantity demanded has increased at every price, it might be because
the price of a complementary good has decreased.
The quantity demanded of a good is the amount that buyers are
willing and able to purchase.
All else equal, the premature deaths of thousands of turkeys would cause a move from
x to y.
Equilibrium quantity must decrease when
. both demand and supply decrease.
If these are the only four sellers in the market, then when the price decreases from $8 to $6, the market quantity supplied
. decreases by 12 units.
A decrease in the price of a good will
. increase quantity demanded.
An increase in the price of a good will
. increase quantity supplied.
If these are the only four buyers in the market, then when the price decreases from $1.50 to $1.00, the market quantity demanded
. increases by 7 units.
The market demand curve
. shows how the total quantity demanded of a good varies as price varies.
If the price were $4, a
. surplus of 25 units would exist, and price would tend to fall.
If the supply of a product increases, then we would expect equilibrium price
. to decrease and equilibrium quantity to increase.
If these are the only four buyers in the market, then the market quantity demanded at a price of $2.00 is
14 units
. If the law of supply applies to this good, then Q1 could be
170
. If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is
21 units.
If these are the only four sellers in the market, then the market quantity supplied at a price of $10 is
66 units.
Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?
Buyers would not be willing to buy as much as before at each relevant price
A decrease in the price of a complement will shift the demand curve for a good to the left.
False
A reduction in an input price will cause a change in quantity supplied but not a change in supply.
False
Which of the following events would cause a movement downward and to the left along the supply curve for kiwis?
The price of kiwis falls.
Which of the following events would cause the price of oranges to fall?
The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.
Which of the following is not held constant in a supply schedule?
The price of the good
The movement from point A to point B on the graph is caused by
a decrease in price.
You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be
a normal good.
If muffins and bagels are substitutes, a higher price for bagels would result in
an increase in the demand for muffins.
The shift from Da to Db in the market for pita chips could be caused by
an increase in the price of a popcorn.
The shift from S' to S in the market for chocolate cake could be caused by
an increase in the price of butter
The movement from point A to point B on the graph is caused by
an increase in the price of the good.
The movement from point A to point B on the graph is called
an increase in the quantity supplied.
If a decrease in income increases the demand for a good, then the good is
an inferior good.
If the demand for a product increases, then we would expect equilibrium price
and equilibrium quantity both to increase.
A likely example of complementary goods for most people would be
coffee and sugar.
The line that relates the price of a good and the quantity supplied of that good is called the supply
curve, and it usually slopes upward.
If the number of buyers in a market decreases, then
demand will decrease.
The quantity supplied of a good is the amount that
sellers are willing and able to sell
A baker recently has come to expect higher prices for bread in the near future. We would expect
the baker to supply less bread now than she was supplying previously
If something happens to alter the quantity demanded at any given price, then
the demand curve shifts.
