Macro-Economics Chapter 3

An increase in the price of hamburger would probably result in _____ in the demand for hamburger buns.

A decrease

(Figure: Supply of Coconuts) Use Figure: Supply of Coconuts. An improvement in the technology used to harvest coconuts (e.g., a faster, less expensive coconut picker) would be represented in the figure as a movement from:

A to C

If demand is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.

decrease; increase

If suppliers expect prices for their product to rise next year, then one would expect a:

shift to the left in the supply curve for the product this year.

Which factor is MOST likely to shift the supply of milk to the right?

a decrease in the price of feed given to dairy cows

In the market for tacos, the factor that does NOT shift the supply curve to the left is:

a decrease in the price of tacos.

(Figure: Demand and Supply of Gasoline) Use Figure: Demand and Supply of Gasoline. When the supply curve shifted from the initial equilibrium, the new intersection of supply and demand has a price of _____ and quantity of 400. This supply shift could have resulted from _____.

$1.50; an improvement in refining technology

(Figure: The Market for Candy) Use Figure: The Market for Candy. Equilibrium occurs at a price of _____, and the equilibrium quantity is equal to _____.

P2; Q3

If coffee and tea are viewed as substitutes in consumption, then an increase in the price of coffee will increase the demand for tea.

True

If the input costs associated with supplying gasoline increases in Wisconsin, the supply of gasoline in Wisconsin will decrease.

True

Suppose there is an excess supply of chemical engineers in India. Over time, the salaries for chemical engineers will fall in India.

True

A decrease in the price of a good will result in:

an increase in quantity demanded

A newspaper story recently reported that the price of new cars, a normal good, has decreased and the quantity of new cars sold has dropped. The new price and quantity could have been caused by a(n):

decrease in buyers' incomes.

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that, in the market for flights:

supply decreased

You notice that the price of Blu-ray players falls and the quantity of Blu-ray players sold increases. You suspect that _____ Blu-ray players shifts to the _____.

supply of; left.

(Figure: Shifts in Demand and Supply IV) Use Figure: Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel BEST describes how this will affect the market for chocolate?

Panel B

(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose the population increases. Which panel BEST describes how this will affect the market for apples?

Panel C

Suppose that the demand curve for good Z is downward sloping. If the price of good Z decreases because of a shift in supply, this will cause:

a movement along the demand curve of good Z.

Which factor will raise the price of milk?

a shift to the right of the demand curve for milk

_____ illustrates a positive relationship between price and quantity.

a supply curve

If goods A and Z are complements, an increase in the price of good Z will:

decrease the demand for good A.

In the market for canned pinto beans, _____ will increase if income increases and if pinto beans are a(n) _____ good.

demand; normal

If supply is upward sloping, an increase in demand with no change in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.

increase; increase

(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts are a normal good and consumers believe that the price of coconuts will rise significantly in the near future, it will be represented in the figure as a:

shift from D1 to D2

(Figure: The Demand and Supply of Wheat) Use Figure: The Demand and Supply of Wheat. If a price of $8 temporarily exists in this market, a _____ of _____ bushels per period will result.

surplus; 4,000