ECON 202 Module 5 Quizzes

Refer to Figure 3 -4. At a price of $15, how many units will be sold? https://imgur.com/a/8cgpDEo

400

Refer to Figure 3 -5. In a free market such as that depicted above, a surplus is eliminated by https://imgur.com/a/fgtAj1d

a price decrease, decreasing the quantity supplied and increasing the quantity demanded.

Which of the following will cause the price of beer to rise? A shift to the left in the supply curve of beer A shift to the right in the demand curve for beer both A and B none of the above

both A and B

Refer to Figure 3 -4. At a price of $10, how many units will be sold? https://imgur.com/rO4opyP

200

Why aren't imports of roses from South America and Africa high year-round instead of just around Valentine's Day? A) The spike in demand makes it profitable for producers with higher costs (like transportation) to enter the market. B) Flower production in the US is particularly low in February, so US-based supply is shifted leftward that month because of the climate. C) The government limits imported flowers except around Valentine's and Mothers' Day. A&B None of these

A&B

The elasticity of demand for turkeys at Thanksgiving and roses at Valentine's day:

Becomes less elastic.

Both the demand for and supply of cars changes in France. You observe that the quantity of cars does not change but the price rises. Thus, which of the following occurred?

Demand increased and supply decreased by an equal amount.

Refer to Figure 3 -7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? https://imgur.com/a/bueyGAh

Panel (d)

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation? Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price. the shortage will cause an increase in the equilibrium price of digital music players. The supply for digital music players is greater than the demand of digital music players. The price of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease.

Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.

The price of turkeys goes down at Thanksgiving even though demand increases because:

Supply increases by relatively more than demand because frozen turkeys are brought to market.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller? The demand for Booth letters increases. The supply of Lincoln letters increases. The demand for Lincoln letters decreases and the demand for Booth letters increases. The demand for Lincoln letters increases and the supply of Booth letters increases.

The demand for Lincoln letters increases and the supply of Booth letters increases.

Which of the following is evidence of a surplus of bananas? Firms raise the price of bananas. The equilibrium price of bananas rises due to an increase in demand. The price of bananas is lowered in order to increase sales. The quantity of bananas demanded is greater than the quantity supplied.

The price of bananas is lowered in order to increase sales.

Which of the following is evidence of a shortage of walnuts? The equilibrium price of walnuts falls due to a decrease in demand. The quantity demanded of walnuts is greater than the quantity supplied. Firms lower the price of walnuts. The price of cashews is lowered in order to make up for the walnut shortage.

The quantity demanded of walnuts is greater than the quantity supplied.

If both demand and supply increase, what will be the effect on the equilibrium price and quantity?

The quantity will increase but the price could either rise, fall, or remain the same.

"The recent hurricanes in Florida are bringing financial gain to California citrus growers. Due to extensive damage to the Florida citrus crop, California citrus products are commanding their highest prices ever." Which of the following statements best explains the economics of this quotation? The demand for Florida oranges decreased because of the hurricanes, causing a greater demand for California oranges and an increase in the price of California oranges. The supply of Florida oranges decreased, causing the supply of California oranges to increase and the price of California oranges to rise. The supply of Florida oranges decreased, causing their price to increase, which then increased the demand for substitute California oranges. The demand for Florida oranges decreased, causing their prices to rise, therefore increasing the demand for California oranges.

The supply of Florida oranges decreased, causing their price to increase, which then increased the demand for substitute California oranges.

A surplus occurs when the actual selling price is above the market equilibrium price.

True

In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

True

If enforcement is aimed at buyers of an illegal good, the result will be

a decrease in demand for the good.

Refer to Figure 3 -4. If the current market price is $10, the market will achieve equilibrium by https://imgur.com/a/8cgpDEo

a price increase, increasing the quantity supplied and decreasing the quantity demanded.

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. Consider this new, post-hurricane situation under previous, pre-hurricane equilibrium price. We would expect to see:

a shortage of oranges.

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase? a decrease in consumer income a drought that sharply reduces cotton output an increase in consumer income unusually good weather that results in a bumper crop of cotton

an increase in consumer income

When supply increases and at the same time demand decreases, we

cannot predict equilibrium quantity, but know that equilibrium price will decrease.

The equilibrium price will rise and the equilibrium quantity might increase, decrease, or stay the same when the

demand for a good increases and the supply of it decreases.

When a government fines and/or imprisons persons convicted of using illegal drugs, the government is attempting to decrease the illegal drug trade by shifting the ________ curve for illegal drugs ________.

demand; leftward

Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply of candy and demand for candy increase the same amount. As a result, the price of candy ________ and the quantity of candy ________.

does not change; increases

If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will ________ and the equilibrium quantity will ________.

fall; decrease

Refer to Figure 3 -5 . At a price of $5, the quantity sold https://imgur.com/DalfYOL

is 2 units.

Refer to Figure 3 -5 . At a price of $10, the quantity sold https://imgur.com/a/fgtAj1d

is 4 units.

The equilibrium quantity of a good will increase and its equilibrium price might rise, fall, or stay the same when

its demand and supply both increase.

Making the buying and selling of a good illegal shifts the demand curve ________ and shifts the supply curve ________.

leftward; leftward

When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good ________ and the quantity ________.

might rise, fall, or not change; decreases

Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding steers. The equilibrium price of beef will

perhaps rise, fall, or stay the same, but more information is needed to determine which it does.

If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium

price of bottled water definitely increases.

An increase in demand combined with no change in supply

raises the equilibrium price.

After 2009, the price of tablets fell each year and manufacturers of tablets produced and sold more tablets each year. This result is because the

supply curve of tablets shifted rightward.

Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases,

the demand for salsa increases.

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit

the supply curve shifted to the left resulting in an increase in the equilibrium price.

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that

the supply of swimming pool maintenance services has decreased.

Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price https://imgur.com/a/Oc2RcLM

there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.

Refer to Figure 3 -4. If the price is $10, https://imgur.com/a/8cgpDEo

there would be a shortage of 600 units.