macro ch 6

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

A decrease in consumer income

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

A decrease in the price of wool shirts and a decrease in the price of raw cotton

Which of the following is not correct?

A minimum wage would be binding for workers with high skills and much experience.

If consumers often purchase muffins to eat while they drink their coffee at local coffee shops, what would happen to the equilibrium price and quantity of coffee if the price of muffins rises?

Both the equilibrium price and quantity would decrease.

What would happen to the equilibrium price and quantity of potatoes if consumers' incomes rise and potatoes are an inferior good?

Both the equilibrium price and quantity would decrease.

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

Both the equilibrium price and quantity would increase.

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

Equilibrium quantity must increase when

Equilibrium quantity must increase when

Which of the following is not a result of rent control?

Higher quality housing

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Price would fall, and the effect on quantity would be ambiguous.

Which of the following is correct?

Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor.

Which of the following would shift the supply of umbrellas to the right?

The cost of the fabric used to make umbrellas decreases.

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

The effect of changes in the money supply on the inflation rate

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

The equilibrium price would decrease, and the equilibrium quantity would increase.

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

The equilibrium price would increase, and the equilibrium quantity would decrease.

Suppose the United States had a short-term shortage of farmers. Which market mechanisms would adjust to remove the shortage?

The prices of food and the wages of farmers would adjust.

Which of the following is not a determinant of the demand for a particular good?

The prices of the inputs used to produce the good

Which of the following would not increase in response to a decrease in the price of ironing boards?

The quantity of irons supplied at each possible price of irons

Which of the following is not a characteristic of a perfectly competitive market?

There are few buyers and sellers.

A price ceiling is

a legal maximum on the price at which a good can be sold.

A price floor is

a legal minimum on the price at which a good can be sold.

The minimum wage was instituted to ensure workers

a minimally adequate standard of living.

If the demand for a good falls when income falls, then the good is called

a normal good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

Opponents of the minimum wage point out that the minimum wage

all of the above are correct. Answers:a. encourages teenagers to drop out of school. b. prevents some workers from getting needed on-the-job training. c. contributes to the problem of unemployment.

If an increase in income decreases the demand for a good, then the good is

an inferior good.

If the demand for a product increases, then we would expect equilibrium price

and equilibrium quantity both to increase.

price ceiling set by government below equilibrium is

binding resulting in a shortage

Under rent control, bribery is a potential mechanism to

bring the total price of an apartment (including the bribe) closer to the equilibrium price.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

decrease

Equilibrium price must increase when

demand increases and supply does not change.

If the number of buyers in a market decreases, then

demand will decrease.

Economists sometimes give conflicting advice because

economists have different values and scientific judgments.

Advocates of the minimum wage

emphasize the low annual incomes of those who work for the minimum wage.

The goal of rent control is to

help the poor by making housing more affordable.

Two goods are complements when a decrease in the price of one good

increases the demand for the other good.

As a rationing mechanism, discrimination according to seller bias is

inefficient and potentially unfair.

To say that a price ceiling is binding is to say that the price ceiling

is set below the equilibrium price.

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires

is unaffected, and the supply of tires could increase, decrease, or stay the same.

Suppose there are six bait and tackle shops that sell worms in a lakeside resort town in Minnesota. If we add the respective quantities that each shop would produce and sell at each of the six bait and tackle shops when the price of worms is $2 per bucket, $2.50 per bucket, and $3 per bucket, and so forth, we have found the

market supply curve.

A competitive market is a market in which

no individual buyer or seller has any significant impact on the market price.

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

nonbinding price ceiling on gasoline to become binding.

Rent-control laws dictate

only a maximum rent that landlords may charge tenants.

Minimum-wage laws dictate

only a minimum wage that firms may pay workers.

The presence of a price control in a market for a good or service usually is an indication that

policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers

Normative statements are

prescriptive.

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

price

A legal minimum on the price at which a good can be sold is called a

price floor

nonbinding price ceiling

price set above equilibrium by government

If a nonbinding price floor is imposed on a market, then the

quantity sold in the market will stay the same.

If Christian expects to earn a higher income next month, he may choose to

save less now and spend more of his current income on goods and services.

The quantity supplied of a good is the amount that

sellers are willing and able to sell.

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

substitute goods.

A improvement in production technology will shift the

supply curve to the right.

If the number of sellers in a market increases, then the

supply in that market will increase.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

supply of bicycles will shift to the left.

When OPEC raised the price of crude oil in the 1970s, it caused the

supply of gasoline to decrease.

Suppose roses are currently selling for $50 per dozen, but the equilibrium price of roses is $20 per dozen. We would expect a

surplus to exist and the market price of roses to decrease.

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

the U.S. government maintained a price ceiling on gasoline.

The bowed-outward shape of the production possibilities frontier can be explained by the fact that

the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.

When the quantity demanded has increased at every price, it might be because

the price of a complementary good has decreased.

If something happens to alter the quantity supplied at any given price, then

the supply curve shifts.

in the market for apartments, rent control causes the quantity supplied

to fall and quantity demanded to rise.

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because

with shortages and waiting lists, they have no incentive to maintain and improve their property.