Econ test 1 - Chapter 3

29) Refer to Figure 3-4. At a price of $10, how many units will be sold?

200

26) Which of the following is the correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied.

15) Refer to Figure 3-1. An increase in population would be represented by a movement from

D1 to D2.

27) Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans. Which graph most likely represents which market?

Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans.

31) 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.

43) Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

The equilibrium point will move from A to E.

20) Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced

a decrease in supply.

39) A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.

6) If a demand curve shifts to the left, then

demand has decreased.

19) A supply schedule

is a table that shows the relationship between the price of a product and the quantity of the product supplied.

4) By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

price; quantity; price

8) Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be

63 lbs.

16) Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement from

A to B.

2) What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

38) In recent years, the cost of producing organic produce in the United States has decreased largely due technological advancement. At the same time, more and more Americans prefer organic produce over conventional produce. Which of the following best explains the effect of these events in the organic produce market?

Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

37) Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower levels of bad cholesterol?

D increases, S no change, P and Q increase.

17) A decrease in the price of a substitute good would be represented by a movement from

D2 to D1.

42) Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Panel (a)

41) Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

Panel (b)

40) 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?

Panel (d)

44) Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S2 (point B). If there is an decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

The equilibrium point will move from B to C.

33) Which of the following is evidence of a surplus of bananas?

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

23) Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week, the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?

There is a decrease in the supply of pool maintenance services.

34) Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

11) Which of the following will shift the demand curve for a good?

a decrease in the price of a complementary good

13) If the price of grapefruit rises, the substitution effect due to the price change will cause

a decrease in the quantity of grapefruit demanded.

30) Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium through

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

36) Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?

an increase in consumer income

25) Which of the following would cause an increase in the supply of peanut butter?

an increase in the number of firms that produce peanut butter

45) Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?

an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples

14) If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

an inferior good.

9) Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

decrease by 32 lbs.

Table 3-4 represents the supply schedule for surfboards. Assume that the market for surfboards has an upward-sloping supply curve. 22) Refer to Table 3-4. At a quantity supplied of 340 per week, the price of surfboards must be

greater than $600.

Table 3-4 represents the supply schedule for surfboards. Assume that the market for surfboards has an upward-sloping supply curve. 21) Refer to Table 3-4. At a price of $600, the quantity of surfboards supplied per week will be

greater than 175 per week.

32) In a perfectly competitive market, there are ________ buyers and ________ sellers.

many; many

3) The demand by all the consumers of a given good or service is the ________ for the good or service.

market demand

18) Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone

strawberries and whipped cream are complements.

1) The athletic shoe industry is highly competitive. In recent years, companies like Allbirds and Skechers began offering shoes made of different materials or in different styles to better compete with industry giants Nike and Adidas. These new styles of athletic shoes that are being marketed to compete with shoes by Nike and Adidas would be considered

substitutes for shoes by Nike and Adidas.

12) When the price of a normal good falls, consumers buy a larger quantity because of the ________ effect and the ________ effect.

substitution; income

24) If a firm expects that the price of its product will be higher in the future than it is today, then

the firm has an incentive to decrease supply now and increase supply in the future.

10) The income effect of a price change refers to the impact of a change in

the price of a good on a consumer's purchasing power.

7) A change in all of the following variables will change the market demand for a product except

the price of the product.

5) The law of demand implies, holding everything else constant, that as the price of bagels increases

the quantity of bagels demanded will decrease.

35) 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

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

28）Refer to Figure 3-4. If the price is $10,

there would be a shortage of 600 units.