Intro to MicroEcon 247 Unit 2 (chapter 4)
Because Coke and Pepsi are substitutes, what is likely to happen when the price of Coke decreases?
The demand for Pepsi decreases.
If buyers are expecting higher prices for apples in the near future, what is mostly likely to happen now in the market for apples?
The demand for apples will increase.
Which statement is most relevant in the market for coffee when the price of tea, a substitute for coffee, increases?
The demand for coffee will increase.
Which statement best describes a market that is in equilibrium?
The price has reached the level where quantity supplied equals quantity demanded.
Which statement is most relevant when there is a shortage of a good at the current price?
The price is below the equilibrium price.
If skis and ski boots are complementary goods, what is most relevant when the price of skis decreases?
increased demand for ski boots
A normal good is one for which, other things being equal, an increase in income leads to a decrease in demand.
False
Shortages drive prices down; surpluses drive prices up.
False
What will cause an increase in the price of homes and a decrease in the purchases of homes?
The supply curve for housing has shifted leftward.
Nitrogen is an important input in the production of vegetables. If the price of nitrogen decreases, all else being equal, what will mostly likely happen in the market for vegetables?
The supply of vegetables will increase.
Which statement is most relevant if buyers and/or sellers are price takers?
They have no influence on market price.
A change in the quantity demanded of cigarettes results from a change in the price of cigarettes.
True
An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect upon equilibrium price will be indeterminate.
True
An increase in demand will increase both the price of the product and the quantity sold.
True
An inferior good is one for which, other things being equal, a decrease in income leads to an increase in demand.
True
Which of the following will NOT shift the supply curve?
a change in the price of the good
What happens in the market for wine when an early frost damages vineyards nationwide?
a decrease in the supply of wine and an increase in price
Suppose there is a shortage of parking spaces in downtown Toronto during weekdays. How can the shortage be eliminated?
allowing the price to rise
What is likely to happen when the price of a substitute good increases?
an increase in equilibrium price and an increase in equilibrium quantity
Which event shifts the demand curve for apple jelly to the right?
an increase in income if apple jelly is a normal good
Which of the following causes a change in quantity demanded (a movement along the demand curve)?
the price of the good
