Macro Exam 1
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises
Pizza is a normal good if the demand
for pizza rises when income rises
Soup is an inferior good if the demand
for soup falls when income rises.
Which of the following changes would not shift the demand curve for a good or service?
A change in the price of the good or service
Which of the following changes would not shift the supply curve for a good or service?
A change in the price of the good or service
Which of the following would shift the demand curve for gasoline to the right?
An increase in consumer income, assuming gasoline is a normal good
If a decrease in income increases the demand for a good, then the good is
An inferior good
Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?
Demand will increase for good B because its a substitute for the first good
Which of the following is not held constant in a demand schedule?
Price
Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?
Similar to the above, think carefully about how it will affect demand. FYI, with fewer buyers, the overall demand for the product decreases because there are fewer potential customers; thus, demand will shift to the left, indicating a decrease in demand for the product.
An improvement in production technology will shift the
Supply curve to the right
What will happen in the market for shotgun-shell ammunition now if buyers expect higher shotgun-shell prices in the near future?
The demand for shotgun-shell ammunition will increase.
Which of the following events would cause a movement downward and to the left along the supply curve for mangos?
The price of mangos falls.
Which of the following events would cause a movement upward and to the left along the demand curve for olives?
The price of olives rises
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 is not a characteristic of a perfectly competitive market?
There are few buyers and sellers
If income rises in the market for an inferior good, will the demand curve for the inferior good shift to the right or to the left?
When income rises, consumers are more likely to switch to superior or higher-quality goods and reduce their consumption of inferior goods; thus, the demand curve shifts to the left.
Which of the following demonstrates the law of supply?
When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.
If the demand for a good rises when income rises, then the good is called
a normal good
If the demand for a product increases then we would expect equilibrium price
and equilibrium quantity both to decrease
Today, producers changed their expectations about the future. This change
can affect todays supply
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.
A demand schedule is a table that shows the relationship between
price and quantity demanded.
The quantity supplied of a good is the amount that
sellers are willing and able to sell.
The market supply curve
shows the total quantity supplied at all possible prices.
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 baker recently has come to expect higher prices for bread in the near future. We would expect
the baker to supply less bread now than she was supplying previously.
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.