Microeconomics Chapter 3
Supply Curve
A curve that shows the relationship between the price of a product and the quantity of the product supplied.
What would cause the supply curve for HP printers to shift to the right?
A decrease in the price of an input A decrease in the price of a substitute in production
What do economists mean by market equilibrium?
A market outcome where quantity supplied is equal to quantity demanded
shortage
A situation in which the quantity demanded is greater than the quantity supplied.
Supply Schedule
A table that shows the relationship between the price of a product and the quantity of the product supplied
Which of the following illustrates the law of supply?
An increase in price causes an increase in the quantity supplied, and a decrease in price causes a decrease in the quantity supplied.
An increase in demand causes an increase in the equilibrium price. The increase in equilibrium price will then cause an increase in supply.
False
According to a news story about the International Energy Agency, the agency forecast that "the current slide in [oil] prices won't [reduce] global supply." Would a decline in oil prices ever cause a reduction in the supply of oil?
No, a decline in oil prices would reduce the quantity of oil supplied, not the supply of oil.
The difference between a change in supply and a change in the quantity supplied is that the latter is
Produced by a change in the products's own price while the former is caused by a variety of variables other than the product's price
A news story from 2015 about the oil market stated, "the global glut of crude that has hit [oil] prices is starting to shrink."In referring to a "global glut of crude," the article describes the result of a significant
increase in supply of, relative to the demand for, crude oil.
The glut will start to shrink when crude oil producers
reduce the amount that they offer for sale, and buyers increase the amount they buy.
When the demand curve shifts to the right,
the equilibrium price and quantity will both increase.
When economists speak of a surplus, they mean a situation in which
the market price is above the equilibrium price., the quantity supplied exceeds quantity demanded, firms have unsold have unsold goods piling up.goods piling up. nothing
According to the law of supply,
there is a positive relationship between price and quantity supplied as the price of a product increases, firms will supply more of it to the market.
If a shortage exists in a market, we know that the actual price is
below the equilibrium price, and the quantity demanded is greater than the quantity supplied
Market price is determined by
both supply and demand
"When there is a shortage of a good
consumers compete against one another by bidding the price upward.
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
decrease and the equilibrium quantity will decrease
In late 2014, oil prices were falling but some energy traders were convinced that oil prices would begin to rise within a few months. According to a news story, these expectations were causing some "traders to put oil in storage while they wait for prices to rise."Holding some oil in storage rather than selling it would
decrease the supply of oil, shifting it to the left.
Consider the following statement: "An increase in supply decreases the equilibrium price. The decrease in price increases demand." The statement is
false: decreases in price affect the quantity demanded, not demand.
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
future oil prices were expected to be lower.
From the list below, select the variable that will cause the supply curve to shift:
The cost of raw materials
If demand decreases and supply increases, which of the following will definitely occur?
The equilibrium price will decrease.
If demand and supply both increase, which of the following will definitely occur?
The equilibrium quantity will increase.
Suppose the equilibrium price and equilibrium quantity of gold both increase Which of the following would produce such a change?
The market demand curve for gold could have increased.
It is possible for the price of water to be much lower than the price of diamonds if which of the following is true?
The supply of water is greater than the supply of diamonds
To take advantage of high prices for snow shovels during a very snowy winter, Alexander Shovels, Inc., decides to increase output.
a change in quantity supplied
In the six months following Hurricane Katrina, production of oil in the Gulf of Mexico declined by 25 percent.
a change in supply
The success of Apple's iPod leads more firms to begin producing digital music players.
a change in supply
Which of the following is the textbook's definition of a supply curve?
a curve that shows the relationship between the price of a product and the quantity of the product supplied
Which of the following events would shift the supply of smartphones to the right?
a decrease in the price of inputs used to produce smartphones
In many cities, firms that own office buildings can renovate them for use as residential apartments. According to a news story, in many cities "residential rents are surpassing office rents." The response to an increase in residential rents would be
a decrease in the supply of office space, shifting it to the left.
An unexpected frost in the orange groves of California would cause
a decrease in the supply of orange juice, increasing the equilibrium price.
This change resulted in a
a surplus of oil such that there is a greater quantity supplied than quantity demanded for crude oil.
Which of the following is the textbook's definition of a supply schedule?
a table that shows the relationship between the price of a product and the quantity of the product supplied
If a surplus exists in a market, we know that the actual price is
above the equilibrium price, and the quantity supplied is greater than the quantity demanded.
In response to the global glut of oil, the market price will
all to a new, lower equilibrium price at which the quantity demanded would equal the quantity supplied.
A student writes the following: "Increased production leads to a lower price, which in turn increases demand." This student must be referring to
an increase in quantity demanded.