MACRO chap 3
Which of the following events would cause the supply curve to decrease from S₁ to S₂? A. An increase in the price of inputs. B. A decrease in the price of inputs. C. an increase in the number of firms in the market. D. Lower expected future prices.
A. An increase in the price of inputs.
Below are both a demand schedule and a demand curve. Which one is best suited to find the quantity demanded at a price of $4.00?
The demand schedule.
Use the line drawing tool to draw a supply line shifting to the right. Label this line 'S₂'. Carefully follow the instructions above, and only draw the required object. With this shift, equilibrium price will _____ and equilibrium quantity will _____ .
With this shift, equilibrium price will DECREASE and equilibrium quantity will INCREASE .
Refer to the graphs below. Each graph shows the supply curve for smartphones. Figure 1 illustrates ________, and Figure 2 illustrates ________. A. an increase in the expected future price of the product; a decrease in the number of firms in the market B. an increase in productivity; a decrease in the price of an input C. a decrease in the price of an input; an increase in the price of a substitute in production D. an increase in the price of a substitute in production; an increase in the number of firms in the market
C. a decrease in the price of an input; an increase in the price of a substitute in production
Which of the following is the textbook's definition of a supply schedule? A. a curve that shows the relationship between the price of a product and the quantity of the product demanded B. the quantity of a good or service that a firm is willing to supply at a particular price C. a table that shows the relationship between the price of a product and the quantity of the product supplied D. None of the above.
C. a table that shows the relationship between the price of a product and the quantity of the product supplied.
Suppose that the curves in the figure to the right represent two supply curves for traditional wings (basket of six) at Buffalo Wild Wings. The movement from point A to B on S₁ is caused by A. a decrease in the prices of substitutes in production. B. a decrease in the price of baskets of traditional wings. C. an increase in the price of baskets of traditional wings. Indicate which of the following would cause a movement from point A to C. (Check all that apply.) A. A decrease in the prices of substitutes in production. B. An increase in worker productivity. C. An increase in the product's price. D. An increase in the number of buyers.
C. an increase in the price of baskets of traditional wings. A. A decrease in the prices of substitutes in production. AND B. An increase in worker productivity.
On the diagram to the right, a movement from A to C represents a A. change in quantity demanded. B. movement up the demand curve. C. change in demand. D. decrease in demand.
C. change in demand.
On the diagram to the right, a movement from A to B represents a A. decrease in demand. B. change in demand. C. change in quantity demanded. D. movement up the demand curve.
C. change in quantity demanded.
After World War II in 1945, the United States experienced a "baby boom" as birthrates rose and remained high through the early 1960s. In 2011, the first members of the baby boom generation became older than 65. What effect will this have on the market for doctors? As the first baby boomers become older than 65, the A. demand curve for doctors will shift to the left. B. supply curve for doctors will shift to the right. C. demand curve for doctors will shift to the right. D. quantity of doctors demanded will increase. E. demand curve for doctors will become vertical.
C. demand curve for doctors will shift to the right.
Consider the figure to the right and assume that it is the market for health-care services. When the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25%. What is the effect on the price of health-care services over time? A. It increases because demand increased by more than supply. B. It increases because demand increased by less than supply. C. It decreases because demand increased by more than supply. D. It decreases because demand increased by less than supply.
A. It increases because demand increased by more than supply.
Suppose that the table on the right shows the quantity supplied of UGG boots at five different prices in 2016 and in 2017. Refer to the table to the right and note the change in the supply of UGG boots from 2016 to 2017. Which of the following could explain the change in supply observed in 2017? (Check all that apply.) A. An increase in the demand for UGG boots. B. An increase in the price of UGG boots. C. A decrease in the price of a substitute in production. D. An increase in worker productivity.
C. A decrease in the price of a substitute in production. AND D. An increase in worker productivity.
According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why? A. When the price of a good increases, consumers purchase complementary goods that are now relatively less expensive. B. When price increases, quantity demanded increases. C. When the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change. D. A and C only.
C. When the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change.
Which of the following is the textbook's definition of a supply curve? A. a curve that shows the relationship between the price of a product and the quantity of the product supplied B. the quantity of a good or service that a firm is willing to supply at a particular price C. a table that shows the relationship between the price of a product and the quantity of the product supplied D. None of the above.
A. a curve that shows the relationship between the price of a product and the quantity of the product supplied
What do economists mean by market equilibrium? A. A condition where a good is no longer scarce. B. A condition where a good is abundantly available. C. A market outcome where quantity supplied is equal to quantity demanded.
C. A market outcome where quantity supplied is equal to quantity demanded.
A good for which demand increases as income rises is ________, and a good for which demand increases as income falls is ________. A. a complement; a substitute B. a substitute; a complement C. an inferior good; a normal good D. a normal good; an inferior good
D. a normal good; an inferior good
Suppose the price of a substitute to LCD televisions falls. What effect will this have on the market equilibrium for LCD TVs? The equilibrium price of LCD TVs will A. not change and the equilibrium quantity will not change. B. increase and the equilibrium quantity will increase. C. increase and the equilibrium quantity will decrease. D. decrease and the equilibrium quantity will decrease. E. decrease and the equilibrium quantity will increase.
D. decrease and the equilibrium quantity will decrease.
With an annual production of 100,000 metric tons, SteelWorld Inc., is one of the major producers of steel in its country. When the government of this country recently hiked the minimum wage for labor, the media predicted a considerable decline in national production. As one of the core industries in the economy, steel production was expected to be hit particularly badly. Although the supply of steel by SteelWorld did decline, the fall was much lower than anticipated. Which of the following, if true, would explain this phenomenon? A. SteelWorld implemented new technology that automated their process and increased production efficiency. B. SteelWorld exported a substantial portion of its annual production that year. C. High tariffs on most imports have raised the cost of importing raw materials. D. SteelWorld had a low inventory stock. E. The cost of all production inputs used by SteelWorld increased.
A. SteelWorld implemented new technology that automated their process and increased production efficiency.
Suppose that the curves in the figure to the right represent twp supply curves for traditional winds (basket of six) at Buffalo wild Wings. the movement from point A to B on S₁ is caused by A. a decrease in the price of baskets of traditional wings. B. an increase in input prices. C. an increase in the price of baskets of traditional wings. Indicate which of the following would cause a movement from point A to C. (Check all that apply.) A. A decrease in the number of buyers. B. An increase in input prices. C. A decrease in the number of sellers. D. A decrease in the product's price.
A. a decrease in the price of baskets of traditional wings. B. An increase in input prices. AND C. A decrease in the number of sellers.
Imagine that the curves shown in the accompanying figure represent two demand curves for traditional wings (basket of six) at Buffalo Wild Wings. The movement from point A to B on D₁ is caused by A. an increase in the price of baskets of traditional wings. B. a decrease in buyer incomes. C. a decrease in the price of baskets of traditional wings. Indicate which of the following would cause a movement from point A to C. (Check all that apply.) A. A fall in the number of buyers. B. A rise in vegetarianism. C. The expectation of a higher future price for traditional wings. D. A fall in the price of hot sauce.
A. an increase in the price of baskets of traditional wings. A. A fall in the number of buyers. AND B. A rise in vegetarianism.
More than half of homes in the United States are heated by burning natural gas. According to an article in the Wall Street Journal, demand for natural gas decreased during the winter of 2012 because of unusually warm weather. At the same time, "robust production [of natural gas] from U.S. shale fields has created record supplies." Source: Christian Berthelsen, "Natural-Gas Futures Slide," Wall Street Journal, January 11, 2012. Use the line drawing tool to draw new demand and supply curves illustrating the changes described above. Properly label the lines. Carefully follow the instructions above, and only draw the required objects. The equilibrium quantity of natural gas will A. decrease only if demand decreases more than supply increases. B. decrease. C. increase. D. increase only if demand decreases more than supply increases. The equilibrium price of natural gas will A. decrease. B. increase only if demand increases more than supply decreases. C. increase. D. decrease only if demand increases more than supply decreases.
A. decrease only if demand decreases more than supply increases. A. decrease.
the figure to the right illustrates the U.S. market for rugs made in a particular foreign country. Suppose the market price of rugs is $2,250. At a price of $2,250, there will be _____ of rugs. To reach an equilibrium, the price of rugs in this market must _____ .
At a price of $2,250, there will be A SURPLUS of rugs. To reach an equilibrium, the price of rugs in this market must FALL .
From the list below, select the variable that will cause the demand curve to shift: A. The number of firms in the market B. Consumer income C. The cost of raw materials D. Technology and productivity
B. Consumer income
From the list below, select the variable that will cause the supply curve to shift: A. Prices of related goods B. The cost of raw materials C. Population and demographics D. Consumer income
B. The cost of raw materials
Goods and services that can be used for the same purpose are ________, and goods and services that are used together are ________. A. normal goods; inferior goods B. substitutes; complements C. complements; substitutes D. inferior goods; normal goods
B. substitutes; complements
The equilibrium price and quantity of a product was $100 and 1,000 units per month in 2015 and is $150 and 800 units per month in 2016. 1.) Use the line drawing tool to draw new demand and supply curves illustrating the changes described above. Properly label the lines. 2.) Use the point drawing tool to plot the 2016 equilibrium. Properly label the point. Carefully follow the instructions above, and only draw the required objects. From 2015 to 2016, A. supply decreased more than demand decreased. B. supply increased more than demand decreased. C. supply decreased more than demand increased. D. supply increased more than demand increased.
C. supply decreased more than demand increased.
According to the law of supply, A. there is a positive relationship between price and quantity supplied. B. as the price of a product increases, firms will supply less of it to the market. C. as the price of a product increases, firms will supply more of it to the market. D. A and C only
D. A and C only
Which of the following would cause a shift in the demand curve from point A to point B? A. An increase in the price of a substitute good. B. A decrease in income (inferior good). C. An increase in income (normal good). D. All of the above.
D. All of the above.
The distinction between a normal and an inferior good is A. when income increases, demand for a normal good decreases while demand for an inferior good increases. B. normal goods are used for the same purposes while inferior goods are used together. C. normal goods are used together while inferior goods are used for the same purposes. D. when income increases, demand for a normal good increases while demand for an inferior good falls.
D. when income increases, demand for a normal good increases while demand for an inferior good falls.
Consider the supply of crude oil on the world market. In August 2011, the price of oil was roughly $80 per barrel. Which of the following changes would increase the supply of oil? The oil supply curve would shift to the right if A. the cost of transporting oil were to increase. B. the world price of oil were to increase. C. the prices of other petroleum-based products (substitutes) were to increase. D. the number of oil-producing countries were to decrease. E. future oil prices were expected to be lower.
E. future oil prices were expected to be lower.
If the market price 'Pmkt' is above the price 'P₀', then quantity supplied is _____ quantity demanded and the market is in _____ .
If the market price 'Pmkt' is above the price 'P₀', then quantity supplied is GREATER THAN quantity demanded and the market is in SURPLUS .
In the diagram to the right, when demand increases, _____ develops at the original price. Equilibrium price will _____ and equilibrium quantity will _____ as a new equilibrium is established.
In the diagram to the right, when demand increases, A SHORTAGE develops at the original price. Equilibrium price will RISE and equilibrium quantity will RISE as a new equilibrium is established.
Consider the market for LCD TVs, illustrated in the figure to the right. Use the point drawing tool to identify the market equilibrium. Properly label this point. Carefully follow the instructions above, and only draw the required objects. Suppose instead that the price of LCD TVs is $2000.00. This will result in a _____, which will place _____ pressure on the price.
Suppose instead that the price of LCD TVs is $2000.00. This will result in a SURPLUS, which will place DOWNWARD pressure on the price.
Consider the market for gasoline, illustrated in the figure to the right. The equilibrium quantity of gasoline is _____ million gallons (enter a numeric response using a real number rounded to two decimal places) and the equilibrium price is $_____ per gallon. If instead the market price were $1.75, then there would be a _____ of _____million gallons.
The equilibrium quantity of gasoline is 12.50 million gallons (enter a numeric response using a real number rounded to two decimal places) and the equilibrium price is $2.50 per gallon. If instead the market price were $1.75, then there would be a SHORTAGE of 7.5 million gallons.
Consider the market for gasoline, illustrated in the figure to the right. The equilibrium quantity of gasoline is _____ using a real number rounded to two decimal places) and the equilibrium price is $_____ per gallon. If instead the market price were $3.25, then there would be a _____ of _____ million gallons.
The equilibrium quantity of gasoline is 15.00 using a real number rounded to two decimal places) and the equilibrium price is $2.50 per gallon. If instead the market price were $3.25, then there would be a SURPLUS of 9 million gallons.
Refer to the diagram to the right: Use the line drawing tool to draw a demand curve shifting to the right. Label this line 'D₂'. Carefully follow the instructions above, and only draw the required objects. With this shift, equilibrium price will _____ and equilibrium quantity will _____ .
With this shift, equilibrium price will INCREASE and equilibrium quantity will INCREASE.
State whether each of the following events will result in a movement along the demand curve for McDonald's Big Mac hamburgers or whether it will cause the curve to shift. The price of Burger King's Whopper hamburger increases. This will cause A. demand for McDonald's Big Mac hamburgers to increase. B. demand for McDonald's Big Mac hamburgers to decrease. C. a movement along the demand curve for McDonald's Big Mac hamburgers. McDonald's eliminates $1.00 off coupons. This will cause A. demand for McDonald's Big Mac hamburgers to shift to the left. B. demand for McDonald's Big Mac hamburgers to shift to the right. C. a movement along the demand curve for McDonald's Big Mac hamburgers. KFC raises the price of a bucket of fried chicken. This will A. shift the demand for McDonald's Big Mac hamburgers to the right. B. shift the demand for McDonald's Big Mac hamburgers to the left. C. cause a movement along the demand curve for McDonald's Big Mac hamburgers. The U.S. economy enters a period of decline in incomes. This will cause A. demand for McDonald's Big Mac hamburgers to shift to the right if they are inferior goods. B. demand for McDonald's Big Mac hamburgers to shift to the left if they are inferior goods. C. a movement along the demand curve for McDonald's Big Mac hamburgers if they are normal goods.
A. demand for McDonald's Big Mac hamburgers to increase. C. a movement along the demand curve for McDonald's Big Mac hamburgers. A. shift the demand for McDonald's Big Mac hamburgers to the right. A. demand for McDonald's Big Mac hamburgers to shift to the right if they are inferior goods.
The market for corn in country A is highly competitive. At the current market price of $5/bushel there is a shortage of 100,000 bushels of corn in this country. Media reports claim that the price of corn will rise drastically in the near future. According to these reports, the neighboring country B had witnessed a similar situation recently. At the same price, the shortage in country B was also 100,000 bushels and eventually the equilibrium price in B went up to $10/bushel. Both countries are known to have equal number of corn producers and the market supply of corn is identical at all prices. This, combined with the fact that consumers in the two countries also have similar tastes and preferences, led the media to conclude that the price of corn in country A would soon be as high as $10/bushel. This reasoning is flawed because it assumes that A. similar tastes and preferences translate into similar willingness and ability to pay. B. country A has more substitutes of corn than country B. C. identical market supply implies equal productivity of all producers within one country. D. both are open economies. E. corn is the staple diet in both countries.
A. similar tastes and preferences translate into similar willingness and ability to pay.
The distinction between substitutes and complements is A. substitute goods are used for the same purposes while complementary goods are used together. B. substitute goods are used together while complementary goods are used for the same purposes. C. when income increases, demand for a substitute good increases while demand for a complementary good falls. D. when income increases, demand for a complementary good decreases while demand for a substitute good increases.
A. substitute goods are used for the same purposes while complementary goods are used together.
Goods X and Y are perfect substitutes. When the market price of good X is $5/unit, firm F produces 500 units of X. When the price of Y rises, 100 consumers of Y shift to the consumption of good X. This causes industry analysts to believe that firm F has increased quantity supplied of X by 100 units to meet the higher demand for it. To arrive at this conclusion, the industry analysts are assuming that A. the new buyers of good X will, on average, consume one unit each. B. each person will now buy more of X than they did prior to the increase in the price of Y. C. good Y is an inferior good. D. the law of supply does not hold for good Y. E. good X is the only substitute of Y available to them.
A. the new buyers of good X will, on average, consume one unit each.
An increase in the price of a product causes a decrease in quantity demanded because of the income and substitution effects. More specifically, A. the substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the decline in consumers' purchasing power. B. the substitution effect is the decrease in quantity demanded because the consumers' purchasing power is reduced and the income effect is the decrease in quantity demanded owing to the fact that the product is more expensive relative to other goods. C. the substitution effect is the decrease in quantity demanded because consumer tastes have changed and the income effect is the decrease in quantity demanded because consumer incomes have fallen. D. the substitution effect is the decrease in quantity demanded because there are fewer consumers and the income effect is the decrease in quantity demanded because consumer incomes failed to increase.
A. the substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the decline in consumers' purchasing power.
Consider the market for the Nissan Xterra. Suppose the price of metal, which is an input in automobile production, decreases. Use the line drawing tool to show how this affects the supply of Nissan Xterras by drawing a new supply curve. Properly label this line. Carefully follow the instructions above, and only draw the required objects. According to the graph, when the price of metal decreases, the quantity of Nissan Xterras supplied at any particular Xterra price _____ . Instead, consider the future price of Xterras. If Nissan believes the future price of Xterras will be lower, then Nissan may _____ supply today.
According to the graph, when the price of metal decreases, the quantity of Nissan Xterras supplied at any particular Xterra price INCREASES . Instead, consider the future price of Xterras. If Nissan believes the future price of Xterras will be lower, then Nissan may INCREASE supply today.
Consider the market for MP3 players, illustrated in the figure to the right. The market is initially in equilibrium at a price of $70 and at a quantity of 250 (thousand) players. Suppose new firms enter the MP 3 player market. Use the line drawing tool to show how this affects the MP3 market by adding either a new supply curve or a new demand curve. Carefully follow the instructions above, and only draw the required objects. As a result of new firms entering the MP 3 player market, the new equilibrium price will be _____ , and the new equilibrium quantity will be _____ . Suppose instead that the demand curve shifts to the right. Then, relative to the initial market equilibrium, A. the new equilibrium price would be lower and the new equilibrium quantity would be higher. B. the new equilibrium price would be higher and the new equilibrium quantity would be lower. C. the new equilibrium price would be higher and the new equilibrium quantity would be higher. D. the new equilibrium price would be lower and the new equilibrium quantity would be lower.
As a result of new firms entering the MP 3 player market, the new equilibrium price will be LOWER, and the new equilibrium quantity will be HIGHER. C. the new equilibrium price would be higher and the new equilibrium quantity would be higher.
________ is used to describe how changes in price affect a consumer's purchasing power, and ________ is used to describe how a change in price affects the quantity demanded of a good by making it more or less expensive than substitute goods. A. The substitution effect; the income effect B. The income effect; the substitution effect C. The substitution effect; the law of demand D. The law of demand; the income effect
B. The income effect; the substitution effect
Imagine that the curves shown in the accompanying figure represent two demand curves for traditional wings (basket of six) at Buffalo Wild Wings. The movement from point A to B on D₁ is caused by A. an increase in the number of buyers. B. a decrease in the price of baskets of traditional wings. C. an increase in the price of baskets of traditional wings. Indicate which of the following could cause a movement from point A to C. (Check all that apply.) A. A rise in buyer incomes. B. The expectation of a lower future price for traditional wings. C. A rise in the price of hot sauce. D. A decline in vegetarianism.
B. a decrease in the price of baskets of traditional wings. A. A rise in buyer incomes. AND D. A decline in vegetarianism.
Which of the following events would shift the supply of smartphones to the right? A. a decrease in the price of smartphones B. a decrease in the price of inputs used to produce smartphones C. an increase in the expected future price of smartphones D. All of the above.
B. a decrease in the price of inputs used to produce smartphones
Market price is determined by A. supply only. B. both supply and demand. C. demand only. D. neither supply nor demand.
B. both supply and demand.
On the diagram to the right, a movement from A to B represents a A. movement down the supply curve. B. change in quantity supplied. C. decrease in supply. D. change in supply.
B. change in quantity supplied.
Complete the following statement: "When there is a shortage of a good A. as prices increase, producers are driven to produce less. B. consumers compete against one another by bidding the price upward. C. decreasing prices lead to a change in demand. D. producers react to shortages by lowering prices. E. as prices increase, consumer demand more of a particular good. The process continues until the market is finally in equilibrium."
B. consumers compete against one another by bidding the price upward.
In the diagram to the right, point A provides the _____, point B the _____, and point C the _____. A. equilibrium price; surplus or shortage; equilibrium quantity B. equilibrium price; market equilibrium; equilibrium quantity C. equilibrium price; market equilibrium; surplus D. market clearing price; equilibrium point; shortage
B. equilibrium price; market equilibrium; equilibrium quantity
Goods X and Y are perfect substitutes. When the market price of good X is $5/unit, firm F produces 500 units of X. When the price of Y rises, 100 consumers of Y shift to the consumption of good X. This causes industry analysts to think that firm F will increase quantity supplied of X to match this increased demand. This conclusion is flawed because A. it assumes that the supply curve of X will shift to the right in response to the increased demand. B. it assumes that firm F is the only producer of good X. C. it assumes that firm F does not export good X. D. it assumes that firm F does not export good X. E. it assumes that the price of X will not increase in the near future.
B. it assumes that firm F is the only producer of good X.
The difference between a change in supply and a change in the quantity supplied is that the latter is A. shown as a shift in the supply curve while the former is displayed graphically as a movement along a supply curve. B. produced by a change in the product's own price while the former is caused by a variety of variables other than the product's price. C. conditional upon a change in the former, but not vice versa. D. determined by the willingness of producers to sell while the former is set by the ability of firms to produce.
B. produced by a change in the product's own price while the former is caused by a variety of variables other than the product's price.
An article in the Wall Street Journal in 2013 was titled "In India, iPhone Lags Far Behind." According to the article, the difficulty Apple was having selling iPhones in India is "no small matter as Apple's growth slows in the U.S. and other mature markets." Source: Dhanya Ann Thoppil, Amol Sharma, and Jessica E. Lessin, "In India, iPhone Lags Far Behind," Wall Street Journal, February 26, 2013. What does the article mean by "mature markets"? Mature markets are markets where A. there is very little competition. B. products have reached mainstream customers and annual industry revenue growth slows. C. there are a significant number of older adults. D. there is significant innovation and growth. Sales of iPhones would likely be slower in mature markets than in countries such as India because A. India's government policies mandate a more mature market. B. when there is little competition, there is less growth. C. older adults usually already have some type of phone device. D. India's market for smartphones is growing as population and income levels increase. Would it be easier to forecast smartphone sales in mature markets or in countries such as India? A. Easier in countries such as India since the market does not change much. B. Easier in mature markets since the rate of change is more stable. C. Easier in countries such as India since the market is mature. D. Harder in mature markets since their markets experience high volatility.
B. products have reached mainstream customers and annual industry revenue growth slows. D. India's market for smartphones is growing as population and income levels increase. B. Easier in mature markets since the rate of change is more stable.
When the demand curve shifts to the right, A. the equilibrium price will decrease and the equilibrium quantity will increase. B. the equilibrium price and quantity will both increase. C. the equilibrium price and quantity will both decrease. D. the equilibrium price will increase and the equilibrium quantity will decrease.
B. the equilibrium price and quantity will both increase.
The law of demand is the assertion that A. the demand for a product is negatively related to its price. B. the quantity demanded of a product is inversely related to its price. C. changes in price and changes in quantity demanded move in the same direction. D. the quantity demanded of a product is directly related to its price.
B. the quantity demanded of a product is inversely related to its price.
The following statement appeared in an article in the New York Times on the effects of changes in college tuition: "Some private colleges said that applications actually increased when they bolstered prices, apparently because families equated higher prices with quality." Source: Andrew Martin, "College Expect Lower Enrollment," New York Times, January 10, 2013. For the colleges that experienced higher applications concurrent with higher tuition prices, does this indicate that these colleges have upward sloping demand curves? A. Yes, since applications increased along with tuition, the demand curve must be upward sloping. B. No, more applications indicate that demand increased and shifted the demand curve to the right. C. No, more applications indicate that supply increased and shifted the supply curve to the left. D. Yes, because higher-status expensive schools have upward sloping demand curves.
B. No, more applications indicate that demand increased and shifted the demand curve to the right.
Recent medical research revealed that the presence of gluten in oats can cause celiac disease in the elderly. Since the elderly are an important consumer segment in this market, industry experts predicted a fall in the price of commercially-available oats. However, after the publication of the research, the price of oats actually increased. Which of the following, if true, would explain this outcome? A. Suppliers of oats did not react to the news because they believed any change in demand would be temporary. B. The availability of substitutes, such as wheat and barley, increased in the market. C. Another research study noted that the gluten-content in oats, also used as livestock feed, does not affect the animals. D. The supply of oats came down drastically, with some major participants exiting the market. E. All consumers of oats, including the elderly, drastically reduced their consumption.
D. The supply of oats came down drastically, with some major participants exiting the market.
During 2013, an article in the Wall Street Journal stated: "Steel prices have slumped this month, setting off a scramble among steelmakers to maintain prices...despite a nationwide glut." Source: John W. Miller, "Steelmakers Pinched by Price Plunge," Wall Street Journal, April 26, 2013. When there is a "glut," the quantity demanded of steel is relatively A. low compared to the quantity supplied so there is very little steel available. B. high compared to the quantity supplied so there is very little steel available.. C. high compared to the quantity supplied so there is a lot of steel available. D. low compared to the quantity supplied so there is a lot of steel available. Steel prices would slump if there is a glut in the steel market because A. the low level of supply relative to demand will raise the price. B. the low level of supply relative to demand will lower the price. C. the high level of supply relative to demand will lower the price. D. the high level of supply relative to demand will raise the price. In the face of a glut in the market, how likely is it that steel companies would succeed in maintaining steel prices? A. Likely because the can agree on the price they want. B. Not likely because they cannot agree on the price they want. C. Likely because there are few producers. D. Not likely because the market forces are pushing prices down.
D. low compared to the quantity supplied so there is a lot of steel available. C. the high level of supply relative to demand will lower the price. D. Not likely because the market forces are pushing prices down.
Refer to the graph to the right. A change in demand is illustrated by the move from ________, and a change in quantity demanded is illustrated by a movement from ________. A. point A to point B; point A to point C B. point C to point B; point C to point A C. point B to point A; point C to point A D. point C to point A; point A to point B Which of the following would not shift the demand curve for a good or service? A. a change in expectations about the future price of the good or service B. a change in the price of the good or service C. a change in income D. a change in the price of a related good
D. point C to point A; point A to point B B. a change in the price of the good or service
Smart TVs, unlike traditional TVs, can connect directly to the Internet. Smart TVs made up 27 percent of all televisions sold worldwide in 2012. Source: Greg Tarr, "Smart TVs Rise to 27% of TV Shipments," www.twice.com, February 21, 2013. Should smart TVs be considered a substitute good for smartphones? A. Yes, because the features are very similar. B. No, because there are different producers for the products. C. Yes, because there are different producers for the products. D. No, because the features are not similar enough. Assume that smart TVs are a substitute for smartphones. Use the line drawing tool to show how a decline in the price of smart TVs would affect the demand curve for smartphones. Label your curve D'. Carefully follow the instructions above, and only draw the required object.
D. No, because the features are not similar enough.
The market for corn in country A is highly competitive. At the current market price of $5/bushel there is a shortage of 100,000 bushels of corn in this country. Media reports claim that the price of corn will rise drastically in the near future. According to these reports, the neighboring country B had witnessed a similar situation recently. At the same price, the shortage in country B was also 100,000 bushels and eventually the equilibrium price in B went up to $10/bushel. Both countries are known to have equal number of corn producers and the market supply of corn is identical at all prices. This, combined with the fact that consumers in the two countries also have similar tastes and preferences, led the media to conclude that the price of corn in country A would soon be as high as $10/bushel. Which of the following is being assumed by the media while concluding that the price in country A will also rise to $10/bushel? A. There are a number of substitutes available for corn in country A. B. The supply of corn in country A will decline in the near future. C. Price of other agricultural goods will rise. D. Farmers will substitute the production of other agricultural goods (like soybeans) with corn. E. Demand conditions in both countries are identical.
E. Demand conditions in both countries are identical.
Suppose the equilibrium price and equilibrium quantity of gold both increase. Which of the following would produce such a change? A. The market demand curve for gold could have decreased. B. The market supply curve for gold could have increased or the market demand curve for gold could have increased. C. The market supply curve for gold could have increased. D. The market supply curve for gold could have increased or the market demand curve for gold could have decreased. E. The market demand curve for gold could have increased.
E. The market demand curve for gold could have increased.
In the diagram to the right, when demand decreases, _____ develops at the original price. Equilibrium price will _____ and equilibrium quantity will _____ as a new equilibrium is established.
In the diagram to the right, when demand decreases, A SURPLUS develops at the original price. Equilibrium price will FALL and equilibrium quantity will FALL as a new equilibrium is established.
Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that: "the enormous imports of cheap bananas into the United States tend to curtail the domestic consumption of fresh fruits produced in the United States." Source: Quoted in Douglas A. Irwin, Peddling Protectionism: Smoot-Hawley and the Great Depression, Princeton, NJ: Princeton University Press, 2011, p. 22. This producer apparently assumed apples and bananas to be _____ . In a graph (not shown) of the banana market in the United States, the imposition of a tariff on banana imports would A. shift supply leftward, decreasing equilibrium price and increasing equilibrium quantity. B. shift demand leftward, decreasing equilibrium price and equilibrium quantity. C. not shift any curve but raise the equilibrium price because taxes are always passed on to the consumer. D. shift supply leftward, increasing equilibrium price and decreasing equilibrium quantity. In the graph to the right do the following: 1.) Use the line drawing tool to draw and label the apple demand and supply curves before the tariff is imposed on bananas. 2.) Use the point drawing tool to identify and label the initial equilibrium in the apple market. 3.) Use the line drawing tool to draw and label the new curve or curves in the apple market to reflect the impact on the apple market. 4.) Use the point drawing tool to identify and label the new equilibrium point in the apple market. Carefully follow the instructions above, and only draw the required objects.
This producer apparently assumed apples and bananas to be SUBSTITUTES. D. shift supply leftward, increasing equilibrium price and decreasing equilibrium quantity.
