Econ 202 ASSES chapter 4 homework
What is meant by holding all else equal and how is this concept used when discussing movements along the demand curve? A. everything else in the economy is held constant, including the price of the good. B. All variables that can affect the demand for the good are held constant. C. All variables in the model are set to equal values. D. All of the above.
all variables that can affect the demand for the good are held constant
If the demand for pinot noir suddenly shifts sharply to the right, we would expect to see ________ (a decrease, an increase, no response) in the demand for land in Sonoma, which would __________ (increase, decrease, remain the same) the equilibrium price of land.
an increase, increase
In a perfectly competitive market, sellers _________ and buyers _________. A. cannot charge more than the market price; cannot pay less than the market price. B. are able to charge more than the market price; are able to pay less than the market price. C. cannot charge more than the market price; are able to pay less than the market price. D. are able to charge more than the market price; cannot pay less than the market price.
cannot charge more than the market price; cannot pay less than the market price
Given the supply and demand curves on the right, when the price of the good is $20, we say that the market is in ___________ (competitive equilibrium, unbalance distort) At this price, we know that the quantity supplied is _________ (more than, less than, equal to) the quantity demanded.
competitive equilibrium, equal to
Market demand is derived by __________. A. fixing the quantity and adding up the prices that each buyer pays. B. fixing the price and adding up the quantities that each buyer demands. C. adding up both the prices each buyer pays and the quantities that each buyer demands. D. dividing each buyer's demand by the total number of consumers in the market.
fixing the price and adding up the quantities that each buyer demands
As a firm produces more of a good, the cost of producing each additional unit ___________ (stays the same, increases, decreases) This implies that the marginal cost of producing a good ______________ (decreases, increases, does not change) as you make more of that good. The supply curve represents ___________. A. the minimum price buyers are willing to pay to buy an extra unit of a good. B. the minimum price sellers are willing to accept to sell an extra unit of a good. C. the maximum price buyers are willing to pay to buy an extra unit of a good. D. the maximum price sellers are willing to accept to sell an extra unit of a good.
increases, increases, the minimum price sellers are willing to accept to sell an extra unit of a good
Given this information, if the price of a book is $25, the quantity demanded of books will be __________ (greater than, equal to, less than) the quantity of books demanded when the price is $10 per book.
less than
Since both pinot noir wine and Gravenstein apples use the same land in Sonoma, California, a sharp increase in demand for pinot noir wine will result in a ________ (higher, lower) price for Gravenstein apples and a ___________ (higher, lower) equilibrium quantity.
lower, lower
Does the shape of the market demand curve differ from the shape of an individual demand curve? A. Yes, individual demand curves tend to be downward-sloping, while market demand curves are upward-sloping. B. Yes, individual demand curves tend to be upward-sloping, while market demand curves are horizontal. C. No, they both tend to be upward-sloping curves. D. No, they both tend to be downward-sloping curves.
no, they both tend to be downward-sloping curves
The relationship that exists between these two variables can be described as ____________ (economically related, negatively related, positively related)
positively related
When one of the five major factors changes, causing an increase in demand, the demand curve shifts _____________ (leftward, rightward, upward and rightward)
rightward
When one of the four major factors changes, causing an increase in supply, the supply curve shifts ____________ (up and to the right, upward, rightward) .
rightward
Suppose the price of apples increases and the demand for bananas increases. You determine that these goods must be _____________ (complements, substitutes, unrelated)
substitutes
Which of the following is not one of the four major factors that shifts the supply curve when it changes? A. The income of consumers B. Sellers' beliefs about the future C. The number of sellers D. Technology used in production
the income of consumers
Which of the following examples best approximates a competitive market? A. The market for Fminus−35 fighter planes B. The market for Jackson Pollock paintings C. The market for Tesla electric cars D. The market for soybeans in the United States
the market for soybeans in the united states
Which of the following is not one of the five major factors that shifts the demand curve when it changes? A. The price of the good itself B. Expectations about the future C. Income and wealth D. The price of complementary goods
the price of the good itself
The Law of Supply states that as the price of a good increases, ceteris paribus, _____________(the quantity supplied, quantity demanded, demand, supply) of that good increases. This can be shown graphically with an ____________ (upward-sloping, downward-sloping, rightward) supply curve or numerically in a table using a __________ (supply schedule, data table) .
the quantity supplied, upward-sloping, supply schedule
The five major factors that shift the demand curve when they change are:
1. Tastes and preferences 2. Income and wealth 3. Availability and prices of related goods 4. Number and scale of buyers 5. Buyers' beliefs about the future
Which of the following is a feature of a perfectly competitive market? A. There is only one seller of a commodity. B. The government rations commodities. C. The product of each seller differs marginally from its rival products. D. Each seller is too small to influence the market price.
each seller is too small to influence the market price
In a perfectly competitive market, if one seller chooses to charge a price for its good that is slightly higher than the market price, then it will _________. A. lose all or almost all of its customers. B. see a small decrease in its number of customers. C. see no change in its number of customers. D. All of the above are equally likely.
lose all or almost all of its customers
We make the assumption of holding all else equal when considering demand curves since we want to focus on the changes in the quantity demanded that result from changes in __________ (the price of a good and incomes, only the price of a good, only the income of consumers) .
only the price of a good
Coffee and tea are likely __________(substitutes, complements) because an increase in the price of coffee ____________ (increases, decreases) the demand for tea.
substitutes, increases
Land in Sonoma, California, can be used to either grow grapes for pinot noir wine or to grow Gravenstein apples. Given this information, what is the relationship between pinot noir wine and Gravenstein apples? A. They are substitutes in consumption. B. They are complements in consumption. C. They share a common input. D. They are completely unrelated.
they share a common input