ECON CHP 3 HW
Suppose that the price of a jar of peanut butter is $10 and the price of a T−shirt is $6. What is the relative price of a jar of peanut butter? A. 4.000 B. 1.667 C. 16.000 D. 0.600 What is the relative price of a T−shirt? A. 1.667 B. 16.000 C. 0.600 D. 4.000
B. 1.667 C. 0.600
According to the law of demand, the quantity demanded of any commodity is ________ related to its price, other things being equal. A. positively B. inversely C. proportionately D. directly
B. inversely
Assume that the cost of aluminum used by soft-drink companies increases. Indicate which of the following statements describing the resulting effects in the market for soft drinks distributed in aluminum cans are true or false. a. The demand for soft drinks decreases. b. The quantity of soft drinks demanded decreases. c. The supply of soft drinks decreases. d. The quantity of soft drinks supplied decreases.
A. F B. T C. T D. F
What if the increase in demand were larger than the increase in supply? A. The equilibrium price and quantity increase. B. The equilibrium price and quantity decrease. C. The equilibrium price decreases and the quantity increases. D. The equilibrium price increases and the quantity decreases.
A. The equilibrium price and quantity increase.
A market demand curve is derived by summing (at each price) the individual quantities demanded by all buyers in the market. A. True B. False
A. True
A market supply curve is derived by summing the individual producers' supply curves. A. True B. False
A. True
The price at which quantity demanded equals quantity supplied and at which the demand curve intersects the supply curve is called the market clearing price. A. True B. False
A. True
The relative price of any commodity is its price in terms of A. another commodity. B. gold. C. dollars. D. foreign currencies.
A. another commodity.
The law of demand states that A. as price increases, quantity demanded decreases, all other things equal. B. as price increases, quantity demanded increases, all other things equal. C. supply creates its own demand. D. if supply increases, demand will increase to meet supply. E. if prices, income, and the price of other goods increase, demand will increase.
A. as price increases, quantity demanded decreases, all other things equal.
According to the text, firms encounter rising costs when they attempt to produce more in the same time period. As a consequence, they must be offered a higher price to be willing to incur these higher costs. The resulting relationship between price and quantity supplied is A. direct (or positive) and is called the law of supply. B. direct (or positive) and is called the law of human nature. C. inverse (or negative) and is called the law of supply. D. direct (or positive) and is called the law of demand.
A. direct (or positive) and is called the law of supply.
A shortage occurs when quantity demanded is ________ than quantity supplied at a price ________ the market clearing price. A. greater; below B. greater; above C. less; below D. less; above
A. greater; below
In the market for wireless earbuds (a normal good), indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded." A booming economy increases the income of the typical buyer of wireless earbuds (this is a normal good). A. increase in demand. B. increase in quantity demanded. C. decrease in demand. D. decrease in quantity demanded. Equilibrium quantity would increase. Equilibrium price would increase.
A. increase in demand.
In the market for wireless earbuds (a normal good), indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded." There is an increase in the number of consumers of wireless earbuds. A. increase in demand. B. increase in quantity demanded. C. decrease in demand. D. decrease in quantity demanded. Equilibrium quantity would increase. Equilibrium price would increase.
A. increase in demand.
Indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded" for cable-based Internet access service, which is a normal good. Consumers' tastes shift away from using wireless Internet access in favor of cable-based Internet access services. A. increase in demand. B. increase in quantity demanded. C. decrease in demand. D. decrease in quantity demanded.
A. increase in demand.
Consider the market for economics textbooks. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The number of publishers of economics textbooks increases. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied.
A. increase in supply.
Suppose that the price of a jar of peanut butter is $5 and the price of a jar of jelly is $3. What is the relative price of a jar of peanut butter? A. 0.600 B. 2.000 C. 1.667 D. 8.000 What is the relative price of a jar of jelly? A. 8.000 B. 1.667 C. 0.600 D. 2.000
C. 1.667 C. 0.600
Consider the market for smartphones. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The number of manufacturers of smartphones increases. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied. Equilibrium quantity would increase. Equilibrium price would decrease.
A. increase in supply.
Consider the market for smartphones. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The price of touch screens used in smartphones declines. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied. Equilibrium quantity would increase. Equilibrium price would decrease.
A. increase in supply.
Consider the following cases. Substitutes or complements? a. If the price of bacon rises, and as a result the demand for sausage increases, this implies that these two goods are ______________. b. If the price of tennis racquets falls, and as a result the demand for tennis balls increases, this implies that these two goods are ______________. c. If the price of coffee rises, and as a result the demand for sugar falls, this implies that these two goods are ______________. d. If the price of automobiles falls, and as a result the demand for motorbikes falls, this implies that these two goods are ____________.
A. substitutes B. complements C. complements D. substitutes
Shortages and scarcity are the same thing. A. True B. False
B. False
At a rental rate of $600 per month, there is an excess quantity demanded. What is the amount of the excess quantity demanded? 1500 units. If the present rental rate of one-bedroom apartments is $600 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of $800? A. Since the price is below equilibrium, the surplus of apartments will cause the quantity supplied to fall and the quantity demanded to rise. B. Since the price is below equilibrium, the shortage of apartments will cause the quantity supplied to rise and the quantity demanded to fall. C. Since the price is above equilibrium, the surplus of apartments will cause the quantity supplied to rise and the quantity demanded to fall. D. Since the price is above equilibrium, the shortage of apartments will cause the quantity supplied to fall and the quantity demanded to rise.
B. Since the price is below equilibrium, the shortage of apartments will cause the quantity supplied to rise and the quantity demanded to fall.
At equilibrium, there is neither excess quantity supplied nor excess quantity demanded. A. False B. True
B. True
A supply schedule gives a schedule of ________ quantities supplied per time dimension at ________. A. alternative; the same price B. alternative; different possible prices C. unchanging; the same price D. unchanging; different possible prices
B. alternative; different possible prices
If the demand and supply curves increase (shift outward) by identical proportions then A. equilibrium price and quantity both increase. B. equilibrium price stays the same and quantity rises. C. equilibrium price increases but quantity falls. D. equilibrium price and quantity do not change.
B. equilibrium price stays the same and quantity rises.
In the market for wireless earbuds (a normal good), indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded." There is a decrease in the price of devices used to charge wireless earbuds. A. decrease in quantity demanded. B. increase in demand. C. increase in quantity demanded. D. decrease in demand. Equilibrium quantity would increase. Equilibrium price would increase.
B. increase in demand.
Consider the market for economics textbooks. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The market price of economics textbooks increases. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied.
B. increase in quantity supplied.
If an increase in the price of soft drinks leads to an increase in demand for bottled water, the two goods must be A. unrelated. B. substitutes. C. independent. D. complements.
B. substitutes.
Which of the following would cause an increase in the demand for chicken? A. A decrease in the price of chicken. B. An increase in the number of firms in the market. C. An increase in the price of hamburger, a substitute for chicken. D. A decrease in consumer incomes (chicken is a normal good).
C. An increase in the price of hamburger, a substitute for chicken.
Identify which of the following would generate a decrease in the market demand for e-book readers, which are a normal good. I. An increase in the price of downloadable apps utilized to enhance the e-book reading experience, which are complements. II. An increase in the number of consumers in the market for e-book readers. III. A decrease in the price of tablet devices, which are substitutes. IV. A reduction in the income of consumers of e-book readers. A. Only IV. B. Both III and IV. C. I, III and IV. D. Both I and IV.
C. I, III and IV.
Which of the following is an implication of the law of supply? A. Individuals will purchase fewer units at a higher price and more units at a lower price. B. Changes in the price of a good leads to a shift in the supply curve. C. Producers will offer more units at a higher price and fewer units at a lower price. D. Increases in money prices will lead to an increase in supply while increases in relative prices will lead to a decrease in supply. The law of supply then implies that a _______________________ the supply curve occurs due to a change in market price.
C. Producers will offer more units at a higher price and fewer units at a lower price. movement along
Suppose that at first the price of a pair of shoes is $15 and the price of a t−shirt is $9. Then, the price of a pair of shoes changes to $30 and the price of a t−shirt changes to $21. What has happened the money prices and relative prices of these two goods? A. The money price of a pair of shoes and a t−shirt have fallen and the relative price of a t−shirt and a pair of shoes have risen. B. The money and relative prices of a pair of shoes and a t−shirt have not changed. C. The money price of a pair of shoes and a t−shirt have risen and the relative price of a pair of shoes has fallen while relative price of a t−shirt has risen. D. The money price of a pair of shoes and a t−shirt have risen and the relative prices of a t−shirt and a pair of shoes have fallen.
C. The money price of a pair of shoes and a t−shirt have risen and the relative price of a pair of shoes has fallen while relative price of a t−shirt has risen.
All of the following will decrease the supply of airline flights except A. an increase in the salaries of pilots. B. a rise in the price of jet fuel. C. a technological change that makes airplanes safer and more fuel-efficient. D. a reduction in the number of airline companies offering service.
C. a technological change that makes airplanes safer and more fuel-efficient.
Indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded" for cable-based Internet access service, which is a normal good. a. Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n) A. increase in demand. B. increase in quantity demanded. C. decrease in demand. D. decrease in quantity demanded.
C. decrease in demand
In the market for wireless earbuds (a normal good), indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded." Consumers of wireless earbuds anticipate that the price of this good will decline in the future. A. increase in demand. B. increase in quantity demanded. C. decrease in demand. D. decrease in quantity demanded. Equilibrium quantity would decrease. Equilibrium price would decrease.
C. decrease in demand.
In the market for wireless earbuds (a normal good), indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded." There is an increase in the price of carry cases for wireless earbuds. A. increase in quantity demanded. B. decrease in quantity demanded. C. decrease in demand. D. increase in demand. Equilibrium quantity would decrease. Equilibrium price would decrease.
C. decrease in demand.
Indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded" for cable-based Internet access service, which is a normal good. There is a decrease in the incomes earned by consumers of cable-based Internet access services. This will cause a(n) A. decrease in quantity demanded. B. increase in demand. C. decrease in demand. D. increase in quantity demanded.
C. decrease in demand.
Consider the market for economics textbooks. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. Publishers expect that the market price of economics textbooks will increase next month. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied.
C. decrease in supply.
Consider the market for economics textbooks. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The market price of editorial services increases. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied.
C. decrease in supply.
Consider the market for smartphones. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. The price of machinery used to produce smartphones increases. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied. Equilibrium quantity would decrease. Equilibrium price would increase.
C. decrease in supply.
Indicate whether the following events would cause an "increase or a decrease in demand" or an "increase or a decrease in the quantity demanded" for cable-based Internet access service, which is a normal good. Firms providing cable-based Internet access services reduce their prices. This will cause a(n) A. decrease in demand. B. increase in demand. C. increase in quantity demanded. D. decrease in quantity demanded.
C. increase in quantity demanded.
At the market equilibrium price, A. quantity and price are equal. B. demand equals supply. C. quantity demanded equals quantity supplied. D. everyone can buy the product.
C. quantity demanded equals quantity supplied.
Identify which of the following would generate an increase in the market demand for tablet devices, which are a normal good. I. A decrease in the incomes of consumers of tablet devices. II. An increase in the price of ultrathin computers, which are substitutes. III. An increase in the price of online apps, which are complements. IV. An increase in the number of consumers in the market for tablet devices. A. Only I. B. Only II. C. Both II and III. D. Both II and IV.
D. Both II and IV.
What if the increase in demand were smaller than the increase in supply? A. Equilibrium price and quantity both fall. B. Equilibrium price and quantity both rise. C. Equilibrium price rises and quantity falls. D. Equilibrium price falls and quantity rises.
D. Equilibrium price falls and quantity rises.
Which of the following describes an inferior good? A. When consumer income decreases, the demand for public transit decreases. B. When consumer income decreases, the demand for aspirin is unchanged. C. When consumer income increases, the demand for tea increases. D. When consumer income increases, the demand for eggs decreases.
D. When consumer income increases, the demand for eggs decreases.
A demand schedule gives a schedule of ________ quantities demanded per time dimension at ________. A. unchanging; different possible prices B. unchanging; the same price C. alternative; the same price D. alternative; different possible prices
D. alternative; different possible prices
Consider the market for smartphones. Explain whether the following events would cause an increase or a decrease in supply or an increase or a decrease in the quantity supplied. There is a decrease in the market demand for smartphones. This will cause a(n) A. increase in supply. B. increase in quantity supplied. C. decrease in supply. D. decrease in quantity supplied. Equilibrium quantity would decrease. Equilibrium price would decrease.
D. decrease in quantity supplied.
A demand schedule shows: A. the relation between price and income when all other things remain equal. B. consumer preferences for different combinations of goods and services. C. individual preference for more income rather than less. D. various quantities of a good or service demanded at various prices.
D. various quantities of a good or service demanded at various prices.