Macro Quiz 3

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Which of the following statements is correct?

An increase in the price of C will decrease the demand for complementary product D.

Professor Bloodworth decreased his consumption of grape jelly when the price of peanut butter increased. For Professor Bloodworth, peanut butter and grape jelly are

Complements

Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower levels of bad cholesterol?

D increases, S no change, P and Q increase.

Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to

Increase the demand for tacos and decrease the demand for sod

The law of demand states that, other things equal

Price and quantity demanded are inversely relate

Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

S decreases, D no change, P increases, Q decreases.

Assume that California Merlot is a normal good. Prices of California Merlot have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots?

The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right.

The Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books?

The demand curve for new books shifts to the left.

In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?

The demand curve shifts to the right.

Which of the following has occurred as the millennial generation has come of age?

The demand for golf equipment has decreased in the U.S. market.

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?

The demand for wheat would decrease and the equilibrium price of wheat would decrease.

The decline in the popularity of clothing made from animal fur has enticed large department stores like J. C. Penney and Sears to discontinue sales of animal-fur products. How does discontinuing sales of these products by J.C. Penney and Sears affect the animal-fur clothing market?

The supply curve for animal-fur clothing shifts to the left.

Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

The supply curve shifts to the right.

Competition means that

There are independently acting buyers and sellers in each market.

Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers.

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, then economists would describe this as

a decrease in quantity demanded.

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced

a decrease in supply.

Which of the following would shift the supply curve for smartphones to the right?

a decrease in the price of an input used to produce smartphones

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

a decrease in the price of flour

If the price of beef jerky rises, then the substitution effect due to the price change will cause

a decrease in the quantity of beef jerky demanded.

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

a shortage of oranges.

Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?

an increase in consumer income

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease?

an increase in the price of ostriches

Which of the following would cause a decrease in the supply of milk?

an increase the price of a product that producers sell instead of milk

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

decrease in demand; increase in quantity demanded

The law of demand implies, holding everything else constant, that as the price of gelato

decreases, the quantity of gelato demanded will increase.

If a demand curve shifts to the right, then

demand has increased.

If the amount of carbonated sodas consumed continues to decline as consumers continue to choose to buy healthier products, this will likely

increase the demand for premium water, because premium water and carbonated sodas are considered substitutes.

The demand by all the consumers of a given good or service is the ________ for the good or service.

market demand

The income effect of a price change refers to the impact of a change in

the price of a good on a consumer's purchasing power.

A firm has an incentive to decrease supply now and increase supply in the future if it expects that

the price of its product will be higher in the future than it is today.

At a product's equilibrium price

the product's demand curve crosses the product's supply curve.

If in the market for apples the supply has decreased, then

the supply curve for apples has shifted to the left.