Econ chapter 3

A demand shift changes the amount sellers want to supply at various prices;T or F

False

A normal good is one whose demand rises sharply as income increases;T or F

False

For most goods and services, an increase in income will mean the demand curve shifts to the left;T or F

False

If supply is inelastic, then a demand shift will have a bigger effect on quantity than price;T or F

False

With inferior goods, demand will increase with increase in income; T or F

False

If supply increases, equilibrium price; a-falls b-rises c-remains stable d-reaches equilibrium quantity

a-falls

A higher price simultaneously______ the quantity supplied and __________ the quantity demanded, thus reducing the amount of excess ______; a-increases,decreases,demand b-increases, decreases,supply c-decreases, increases, demand d-decreases, decreases, demand

a-increases,decreases,demand

An increase in supply is shown graphically as a______shift of the supply curve, and as a result of an increase in supply, equilibrium price will_______; a-right,decrease b-rightward, increase c-leftward, decrease d-leftward, increase

a-right,decrease

Movies delivered over the internet might have what effect on movie theaters; a-demand shift to the right b-demand shift to the left c-supply shift to the left d-no effect at all

b-demand shift to the left

On the basic supply-demand graph, where the demand curve and supply curve intersect is known as the; a-focal point b-equilibrium balance model c-quantity demanded d-equilibrium price

b-equilibrium balance model

In the short run, the quantity of available hotel rooms is not particularly responsive to changes in price because hotels take time to build and to destroy. This implies that the short-run supply of hotel rooms is; a-elastic b-inelastic c-in equilibrium d-greater than demand

b-inelastic

Inferior goods are characterized by_____demand as a result of increased income; a-higher b-lower c-no change in d-sharp increase in

b-lower

A luxury good is one whose demand_______ as income increases; a-rises slightly b-rises sharply c-decreases d-stays flat

b-rises sharply

Higher interest rates can cause the demand curve for cars to; a-shift to the right b-shift to the left c-remain unchanged d-reach equilibrium price

b-shift to the left

If a town begins requiring builders to build on one acre lots, instead of smaller 1/4 acre lots, the supply curve for new homes will; a-shift to the right b-shift to the left c-reach market equilibrium d-reflect equilibrium pricing

b-shift to the left

After hurricane Katrina, the supply curve for gasoline; a-shifted to the right b-shifted to the left c-reached equilibrium d-hit market price

b-shifted to the left

Demand is inelastic if; a-the quantity demanded changes along with the price b-the quantity demanded does not change very much even if the price changes dramatically c-the demand curves to the left d-the demand curves to the right

b-the quantity demanded does not change very much even if the price changes dramatically

For which pair of goods below would an increase in income have the same effect on both goods; a-a normal good and an inferior good b-an inferior good and a luxury good c-a normal good and a luxury good d-a superior good and a normal good

c-a normal good and a luxury good

Which is not an example of inelastic supply; a-golf courses in a market b-hotel rooms in a market during a convention c-bottled water d-tickets to a sold out concert

c-bottled water

Government action can cause a shift in; a-supply only b-demand only c-either supply or demand d-neither supply nor demand

c-either supply or demand

The price at which the quantity supplied equals quantity demanded is the; a-equilibrium quantity b-equilibrium market c-equilibrium price d-market price

c-equilibrium price

The price at which the quantity supplied equals the quantity demanded is the; a-market price b-equilibrium quantity c-equilibrium price d-satiation price

c-equilibrium price

Higher income usually means; a-a shift to the left on the demand curve b-a static change in the demand curve c-higher demand d-lower demand

c-higher demand

A demand shift to the right generally leads to; a-higher prices and lower quantities b-lower prices and higher quantities c-higher prices and higher output d-lower prices and higher output

c-higher prices and higher output

Movement along the demand curve means that the demand schedule_______, and the price_______; a-stays the same, changes b-changes, stays the same c-increases, decreases d-decreases, increases

c-increases, decreases

The gap between quantity supplied and quantity demanded is usually closed over time by the; a-demand curve b-supply curve c-market mechanism d-invisible face

c-market mechanism

Market equilibrium is the point where quantity supplied and__________ are reasonably in balance; a-quantity demanded b-quantity price c-quantity sold d-market price

d-market price

In a movement along the demand curve, the demand schedule; a-stays the same, as do prices b-increases, as do prices c-decreases and prices decrease d-stays the same

d-stays the same

Which of the following is probably not an example of a normal good; a-routine medical care b-housing c-motor vehicles d-store brand breakfast cereals

d-store brand breakfast cereals(they're generic so inferior)

If a new major oil field is discovered in Africa, the world________ curve for oil would shift to the_________; a-demand,left b-demand,right c-supply,left d-supply,right

d-supply,right

Excess demand generally causes prices to go down; T or F

True

Excess supply occurs when suppliers are prepared to sell more at a market price than buyers are prepared to purchase; T or F

True

Globalization is one important cause of market shifts;T or F

True

Government action can cause a significant market demand shift; T or F

True

Left to themselves, most markets will eventually reach market equilibrium;T or F

True

After hurricane Katrina, the supply curve for oil shifted to the left and as a result; a-gas prices remained at the equilibrium price b-a new equilibrium price was reached c-market balance was achieved d-market price was reached

b-a new equilibrium price was reached

An increase in oil prices may cause; a-demand curve to the right b-a reduction in the quantity of oil demanded c-market equilibrium d-market price reductions

b-a reduction in the quantity of oil demanded

In 2004 the worldwide demand curve for cement moved to the right. What does this mean; a-at any price the quantity demanded was lower b-at any price the quantity demanded was higher c-at a given price the quantity demanded was lower d-at a given price the quantity demanded remained unchanged

b-at any price the quantity demanded was higher

A demand shift affects; a-sellers' willingness to purchase at various prices b-buyers' willingness to purchase at various prices c-businesses only d-government intervention

b-buyers' willingness to purchase at various prices

How might a government cause a demand shift to the right; a-by increasing taxes b-by requiring consumers to purchase certain products c-by regulating supplies d-by causing a shift in consumer tastes

b-by requiring consumers to purchase certain products

If interest rates go up for a given product, quantity demanded will; a-remain unchanged b-decrease c-increase d-be affected by a shift of the demand curve to the right

b-decrease

If a frost suddenly destroyed a big portion of the orange crop, a good with highly elastic demand, what would be the impact on quantity demanded and price; a-quantity demanded would decrease a lot, and price would decrease b-quantity demanded would increase a little, and price would remain stable or rise slightly c-quantity demanded would decrease a little and price would increase sharply d-quantity demanded would decrease a lot and price would remain stable or rise slightly

c-quantity demanded would decrease a little and price would increase sharply

How does a lower price alleviate the problem of excess supply; a-a lower price increases the number of potential sellers and the number of potential buyers b-a lower price increases the number of potential sellers and decreases the number of potential buyers c-a lower price decreases the number of potential sellers and the number of potential buyers d- a lower price decreases the number of potential sellers and increases the number of potential buyers

d- a lower price decreases the number of potential sellers and increases the number of potential buyers

Most markets, if left alone, will tend toward; a-equilibrium price b-market demand c-market price d- equilibrium balance

d- equilibrium balance

If supply is inelastic, then a demand shift will have a ______ effect on _______ than on quantity; a-smaller, demand b-smaller, price c-bigger, demand d-bigger, price

d-bigger, price

Hurricane Katrina caused refineries and oil rigs in New Orleans and in the Gulf of Mexico to close down. In the market for gasoline, hurricane Katrina caused; a-increase in demand b-decrease in demand c-increase in supply d-decrease in supply

d-decrease in supply

To determine whether a particular good is a normal good, a luxury good, or an inferior good, you would want to observe what happens to demand for the good when_______changes; a-supply b-price c-the price of raw materials d-income

d-income