HW 3
________ means the supply curve has shifted to the right, while ________ refers to a movement along a given supply curve in response to an increase in price.
An increase in supply; an increase in quantity supplied
An increase in the price of the product would be represented by a movement from
B to A.
If the product represented is a normal good, an increase in income would be represented by a movement from
D1 to D2.
An increase in the price of a complement would be represented by a movement from Correct!
D2 to D1.
Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?
S increases, D no change, P decreases, Q increases
A decrease in the price of inputs would be represented by a movement from
S1 to S2.
A technological advancement would be represented by a movement from
S1 to S2.
Prices of commercial airline tickets (assume that this is a normal good) have fallen in recent months. Over this same period, the price of jet fuel has risen and consumer incomes have fallen. Which of the following best explains the falling prices of airline tickets?
The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left.
Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges?
The demand curve for laser printer ink cartridges shifts to the right.
In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?
The demand curve shifts to the right.
If a decrease in income leads to an increase in the demand for macaroni, then macaroni is
an inferior good.
Assume there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?
The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease.
Which of the following is evidence of a shortage of chocolate?
The quantity of chocolate demanded is greater than the quantity supplied.
If the United States lifted the embargo on Cuban products, what would happen in the U.S. market for Cuban cigars?
The supply curve would shift to the right.
If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal?
The supply of Booth letters would have to be less than the supply of Lincoln letters.
According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana?
The two goods are complements in consumption.
Which of the following describes a characteristic of a perfectly competitive market?
There are many buyers and sellers.
The figure above represents the market for coffee grinders. Assume that the market price is $21. Which of the following statement is true?
There is a shortage that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.
A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in
a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease.
Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase?
a decrease in the price of corn
An increase in the price of MP3 players will result in
a larger quantity of MP3 players supplied.
A supply curve
is a curve that shows the relationship between the price of a product and the quantity of the product supplied.
Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see
a shortage of gasoline.
If, in response to a decrease in the price of coffee, the quantity demanded of coffee increases, economists would describe this as
an increase in quantity demanded.
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced
an increase in supply.
Which of the following would cause an increase in the supply of cheese?
an increase in the number of firms that produce cheese
Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except
an increase in the price of gasoline.
An ________ is represented by a rightward shift of the demand curve while an ________ is represented by a movement along a given demand curve.
increase in demand; increase in quantity demanded
The law of demand implies, holding everything else constant, that as the price of yogurt
increases, the quantity of yogurt demanded will decrease.
At market equilibrium,
quantity demanded equals quantity supplied.
Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that
the demand for personal trainers has increased.
If a firm expects that the price of its product will be lower in the future than it is today
the firm has an incentive to increase supply now and decrease supply in the future.
If you are considering buying either an Apple iPad or a Samsung Galaxy Tab, and you choose the Samsung only because the price is lower, then you consider
the iPad and the Galaxy Tab to be substitutes.
A demand curve shows the relationship between
the price of a product and the quantity of the product demanded.
An increase in the equilibrium price for a product will result
when there is a decrease in supply and an increase in demand for the product.