Econ RETAKE

State the law of demand.

There is an inverse relationship between price and quantity demanded

Starbucks has the most successful coffee business in the world. Why would they spend $600 million to acquire 300 tea chain stores?

To expand business

Explain the five determinants of demand?

tastes/preferences number of consumers price of related goods income expectations

State the law of supply.

there is a direct relationship between price and quantity supplied

The supply curve is ____________ sloping and is a __________ relationship

upward, direct

An increase in demand is shown on a graph by A. Movement up the same demand curve B. Shifting of the demand curve to the left C. Movement down the same demand curve D. Shifting of the demand curve to the right E. Shifting of the supply curve to the right

C

What causes a change in quantity demanded? A. Income B. The price of other goods in the marketplace C. Price of the good D. Interest rates E. Expectations

C

Suppose The American Heart Association declares that peaches promote good heart health. What changes: D, or Qd?

D

The incomes of the city of Downville have decreased by 20% due to the closing of a large factory. What happens in the peach market in the local grocery store? What changes? D or Qd?

D

The law of demand and downward sloping demand curve tell us which of the following: A. There is a direct relationship between price and quantity supplied B. There is a direct relationship between price and quantity demanded C. There is a direct relationship between price and demand D. There is an inverse relationship between price and quantity demanded E. There is an inverse relationship between price and supply

D

3. A new producer of cookies enters the industry. What happens in the market for cookies? What changes: S or Qs?

S

Brownie producers expect the cost of their raw materials to increase in 4 months. What happens in the market for the supplier today? What changes: S or Qs?

S

The cost of the eggs and milk used to make cakes at the local bakery increases. What happens in the bakery market for cakes? What changes: S or Qs?

S

There is a new invention that makes hot chocolate in an automatic processor that adds marshmallow whipped cream that is extremely efficient and cost effective. What happens in the manufacturers market? What changes: S or Qs?

S

What are the three reasons that the demand curve is downward-sloping?

Substitution effect income effect law of diminishing utility

Explain the difference between a change in the quantity demanded and a change in the demand?

a change in demand is along the demand curve, a change in quantity demanded is a shift to the right or left

Explain the difference between a change in the quantity supplied and a change in the supply?

a change in price affects quantity supplied, not supply itself

Do you think the newly acquired tea stores will affect the demand at Starbucks' coffee stores? If so how?

it could decrease demand for coffee as a substitute

How does the acquisition of Teavana expand the global reach of Starbucks?

more locations, new group of consumers

Explain the five determinants of supply

price of resources number of producers technology taxes and subsidies expectations

A decrease in the price of toothpaste in a tube can lead to a decrease in the purchases of toothpaste in a pump. This means A. Toothpaste in a tube and in a pump are substitute goods and the demand curve for toothpaste in a tube will shift right. B. Toothpaste in a tube and in a pump are complementary goods and the demand curve for toothpaste in a tube will shift right. C. Toothpaste in a tube and in a pump are substitute goods and the demand curve for toothpaste in a pump will shift left. D. Toothpaste in a tube and in a pump are complementary goods and the demand curve for toothpaste in a pump will shift left. E. Toothpaste in a tube and in a pump are complementary goods and the demand curve for both toothpastes will shift left.

A

All of the following would decrease demand for the latest style furry boots except: A. The price of shoes goes down B. People prefer boots without fur C. The price of the furry boots goes up D. People expect the boots to go out of style soon E. The weather forecast is for a very warm winter

A

Suppose that the Food and Drug Administration has written an article stating green tea reduces heart disease and many illnesses. What might be the immediate effect seen in the economy? A. The demand for green tea would increase, forcing the price to go up. B. The quantity demanded for green tea would increase, forcing the price to go up. C. The quantity supplied of green tea would increase, forcing the price to go up. D. The supply of green tea would increase, forcing the price to go down. E. The quantity supplied for green tea would go down, forcing the price to go up

A

Now show the changes that occur in the apple market given the following: Peaches and apples are substitutes. The price of apples increases. What changes: D or Qd?

Qd

The price of peaches is $2.29 per pound on Monday. On Thursday, the price of peaches goes to $2.79 per pound. What changes: D or Qd?

Qd

The price of popcorn goes from $5 a bag to $3 a bag. What changes: D or Qd?

Qd

You and your friends expect that the ability to download songs from the internet for free will end in 3 months, and then downloads will be for purchase only. Show what happens in the market tomorrow! What changes: D or Qd?

Qd

The price of the ice cream cone sold by the ice cream truck goes up 10 cents a cone. What happens in this market from the suppliers' point of view? What changes: S or Qs?

Qs

Which of the following is correct regarding supply? A. An increase in technology will lead to a decrease in supply causing the supply curve to shift left. B. A decrease in the number of sellers in the market will lead to an increase in supply leading to a shift of the supply curve to the right. C. A change in price will lead to a change in quantity supplied and a movement along the existing supply curve. D. An increase in price will lead to a decrease in supply causing a shift of the supply curve to the left. E. A decrease in price of a good will lead to an increase in supply causing a shift of the supply curve to the right.

fdd