Micro101- Chapter 3

In moving along a supply curve, which of the following is not held constant?

the price of the product itself

Refer to the diagram. A shortage of 160 units would be encountered if price was:

$0.50

Refer to the diagram. The equilibrium price and quantity in this market will be

$1.00 and 200

The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium price for X is

$6

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be

$9 and 60 units

If the price of product L increases, the demand curve for close-substitute product J will

shift to the right

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by

a change in buyer tastes

What would not shift the demand curve for beef?

a reduction in the price of cattle feed

If two goods are complements,

an increase in the price of one will increase the demand for the other

A firm's supply curve is upsloping because

beyond some point the production costs of additional units of output will rise.

An increase in the price of a product will reduce the amount of it purchased because

consumers will substitute other products for the one whose price has risen

If X is a normal good, a rise in money income will shift the

demand curve for X to the right

If Z is an inferior good, an increase in money income will shift the:

demand curve for Z to the left

Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with which explanation for the law of demand?

diminishing marginal utility

Suppose that at prices of $1, $2, $3, $4, and $5 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. What would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

improved technology for producing Z

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the

income effect

If government set a maximum price of $45 in the market

it would create neither a shortage or a surplus

If consumer incomes increase, the demand for product X:

may shift either to the right or left

The law of demand states that, other things equal,

price and quantity demanded are inversely related

The law of supply indicates that, other things equal,

producers will offer more of a product at high prices than at low prices