(FINAL Sec. 2) Macroeconomics Chap. 3: Supply and Demand

increase, quantity demanded will decrease, and quantity supplied will increase.

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will:

Graph C.

Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for music CDs sold in stores, if more consumers switch to music-downloads from the Internet, and the cost of making music CDs decreases because of technological improvement in production.

Graph D.

Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: In the market for beef, if a new diet fad favoring beef consumption becomes hugely popular, while cattle producers see steeply rising costs of cattle feed.

shift from D2 to D1.

Refer to the diagram. A decrease in demand is depicted by a:

True.

A government tax per unit of output reduces supply.

B. Interfere with the rationing function of price in a free market

Government-set price floors and price ceilings: A. Do not affect the rationing function of price in a free market B. Interfere with the rationing function of price in a free market C. Result in surpluses of products in markets where they are used D. Result in shortages of products in markets where they are used

demand curve for Z to the left.

If Z is an inferior good, an increase in money income will shift the:

producers will offer more of a product at high prices than at low prices.

The law of supply indicates that, other things equal:

A only.

Which of the diagrams illustrate(s) the effect of a decrease in incomes on the market for secondhand clothing?

A. achieve an equilibrium price.

A competitive market will: A. achieve an equilibrium price. B. produce shortages. C. produce surpluses. D. create disorder.

the quantity that consumers want to purchase and the amount producers choose to sell are the same.

At the point where the demand and supply curves for a product intersect:

the quantity demanded at each price in a set of prices is greater.

By an "increase in demand," economists mean that:

may shift either to the right or left.

If consumer incomes increase, the demand for product X:

shift the demand curve of D to the right.

If products C and D are close substitutes, an increase in the price of C will:

consumer incomes have fallen.

If the demand for steak (a normal good) shifts to the left, the most likely reason is that:

B. A surplus will occur and producers will produce less and lower prices

If the market price is above the equilibrium price: A. A shortage will occur and producers will produce more and lower prices B. A surplus will occur and producers will produce less and lower prices C. A surplus will result and consumers will bid prices up D. Producers will make extremely high profits

False.

Producing a good in the least costly way is known as allocative efficiency.

an increase in incomes if the product is a normal good.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in demand may have been caused by:

the development of more efficient machinery for producing this commodity.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:

an increase in demand has been more than offset by an increase in supply.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

demand has increased and equilibrium price has decreased.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

a surplus of 100 units.

Refer to the diagram. A price of $60 in this market will result in:

An increase in supply.

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

The expectation by consumers that gasoline prices will be higher in the future.

Which of the following would most likely increase the demand for gasoline?

B. A decrease in the demand for computers

Which would cause a decrease in the quantity of computers supplied? A. An increase in the demand for computers B. A decrease in the demand for computers C. An increase in the incomes of consumers D. A decrease in the price of parts for making computers

False.

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

price and quantity demanded.

The demand curve shows the relationship between:

D. Downward sloping

The law of demand is illustrated by a demand curve that is: A. Vertical B. Horizontal C. Upward sloping D. Downward sloping

$8 and 60 units.

Refer to the table. If demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5), equilibrium price and quantity will be:

a decrease in the price of one will increase the demand for the other.

If two goods are complements:

C. Increase in the price of lettuce and decrease in quantity purchased

A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n): A. Increase in the price of lettuce and quantity purchased B. Decrease in the price of lettuce and quantity purchased C. Increase in the price of lettuce and decrease in quantity purchased D. Decrease in the price of lettuce and increase in quantity purchased

D. where the demand and supply curves intersect.

A product market is in equilibrium: A. when there is no surplus of the product. B. when there is no shortage of the product. C. when consumers want to buy more of the product than producers offer for sale. D. where the demand and supply curves intersect.

C. Supply

A schedule which shows the various amounts of a product producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called: A. Quantity supplied B. Quantity demanded C. Supply D. Demand

above equilibrium, with the result that quantity supplied exceeds quantity demanded.

A surplus of a product will arise when price is:

rise, the supply of bread to decrease, and the demand for potatoes to increase.

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:

increase in the price of complementary good Y.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. A shift in the demand curve from D0 to D1 might be caused by a(n):

supply has decreased and equilibrium quantity has decreased.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then:

0F and 0C, respectively.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:

increase in the wage rates paid to laborers employed in the production of X.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Other things equal, a shift of the supply curve from S0 to S1 might be caused by a(n):

$40 and 150, respectively.

Refer to the diagram. If this is a competitive market, price and quantity will move toward:

price of outboard motors.

A decrease in the demand for recreational fishing boats might be caused by an increase in the:

quantity supplied exceeds quantity demanded.

If we say that a price is too high to clear the market, we mean that:

$1.00 and 200.

Refer to the diagram. The equilibrium price and quantity in this market will be:

shift the demand curve for memory cards to the right.

A decrease in the price of digital cameras will:

demand for A will increase and the quantity of B demanded will increase.

If products A and B are complements and the price of B decreases, the:

A. There is a shortage of the product

If the quantity supplied of a product is less than the quantity demanded, then: A. There is a shortage of the product B. There is a surplus of the product C. The product is a normal good D. The product is an inferior good

$9 and 60 units.

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be:

increase in demand.

Refer to the table. In relation to column (3), a change from column (2) to column (1) would indicate a(n):

Graph A.

Refer to the four graphs above. In which graph would the indicated shifts cause equilibrium quantity to definitely rise, but the effect on price is indeterminate?

C. increase in the supply of gasoline.

When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n): A. increase in the demand for gasoline. B. decrease in the demand for gasoline. C. increase in the supply of gasoline. D. decrease in the supply of gasoline.

C only.

Which of the diagrams illustrate(s) the effect of a decline in the price of irrigation equipment on the market for corn?

D only.

Which of the diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles?