ECON Ch. 4

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

prices

If buyers today become more willing and able than before to purchase larger quantities of stand up paddle boards (SUPs) at each price of SUPs, then

the demand curve for SUPs will shift to the right

Which of the following movements would illustrate the effect in the market for bullet-proof vests of an increase in the price of Kevlar?

Point C to Point D

For teenagers, a 10% increase in the price of cigarettes leads to a

12% reduction in the quantity demanded of cigarettes

FIGURE: At a price of $20, which of the following statements is not correct?

Equilibrium price is equal to equilibrium quantity

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

None of the above is correct

In competitive markets, which of the following is not correct?

Some sellers can set prices

What would happen to the equilibrium price and quantity of latte's if coffee shops began using a machine that reduced amount of labor necessary to producde steamed milk, which is used to make latte's, and scientists discovered that latte's cause heart attacks?

The equilibrium price would decrease and the effect on equilibrium quantity would be ambiguous

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.

FIGURE: All else equal, buyers expecting paper to be more expensive in the future would cause a current move from

X to Y

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.

FIGURE: Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: X=2, current price of a sandwich is $3, the market quantity supplied of sandwiches is 5, the slope of the supply curve is 1, then there is currently a,

shortage of 5 sandwiches and the equilibrium price of a sandwic is between $3 and $5

FIGURE: If there is currently a shortage of 20 units of the good, then the law of

supply and demand predicts that the price will rise by $2 to eliminate the shortage

The supply of a good or servie is determined by

those who sell the good or service