Microeconomics Quiz 2

(picture question) Exhibit 3-1 Refer to Exhibit 3-1. Equilibrium price and quantity are ____________________, respectively. $2 and 250 units $4 and 250 units $2 and 150 units $6 and 250 units none of the above

$4 and 250 units

(picture question)Exhibit 3-13 Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market. Refer to Exhibit 3-13. Fill in blanks (C) and (D) respectively with the market quantity demanded at each given price. 18.5; 15.5 74; 62 75; 64 50; 43 none of the above

74; 62

(picture question) Exhibit 3-13 Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market. Refer to Exhibit 3-13. Fill in blanks (A) and (B) respectively with the market quantity demanded at each given price. 96; 86 24; 21.5 75; 64 82; 72 none of the above

96; 86

If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen? The supply curve of the product the firm produces shifts leftward. The demand curve for the product the firm produces shifts leftward. The supply curve of the product the firm produces shifts rightward. The demand curve for the product the firm produces shifts rightward.

The supply curve of the product the firm produces shifts leftward.

Which of the following will not shift a supply curve? a change in the number of sellers a change in the price of relevant resources a change in per-unit costs brought about by a change in taxes a change in the good's own price

a change in the good's own price

A rightward shift in the demand curve for tennis balls could be caused by: a fall in the price of tennis rackets. a fall in the price of tennis balls. a fall in income, assuming tennis balls are a normal good. a rise in the price of tennis lessons.

a fall in the price of tennis rackets.

(picture question) Exhibit 3-3 Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of: an increase in taxes paid by the producers of good Y. an increase in the number of buyers of good Y. a reduction in the price of good Y. a decline in technology in the production of good Y.

a reduction in the price of good Y.

An advance in technology in the production of good X causes: a leftward shift in the supply curve for good X. the supply curve for good X to change from upward sloping to vertical. the supply curve for good X to change from vertical to upward sloping. a rightward shift in the supply curve for good X.

a rightward shift in the supply curve for good X.

An advance in technology in the production of good X causes: a rightward shift in the supply curve for good X. the supply curve for good X to change from upward sloping to vertical. the supply curve for good X to change from vertical to upward sloping. a leftward shift in the supply curve for good X.

a rightward shift in the supply curve for good X.

(picture question) Exhibit 3-10 Refer to Exhibit 3-10. $20 is the: equilibrium price. market-clearing price. price at which there is neither a surplus nor a shortage. all of the above

all of the above

If a demand curve shifts rightward, this means: quantity demanded is greater only at one particular price. quantity demanded is greater at every price. buyers are willing and able to purchase more of the good at every price. buyers are willing and able to purchase less of the good at every price. b and c

b and c

As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are: substitutes. normal goods. complements. inferior goods. none of the above

complements

As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are: substitutes. normal goods. complements. inferior goods. none of the above

complements

As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are: substitutes. normal goods. complements. inferior goods. none of the above

complements

The law of supply states that price and quantity supplied are: fixed. inversely related, ceteris paribus. not related. directly related, ceteris paribus.

directly related, ceteris paribus.

T/F: A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X

false

T/F: A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

false

T/F: An increase in supply is graphically represented by a leftward shift of the supply curve.

false

T/F: Demand takes into account goods, but not services.

false

T/F: The law of diminishing marginal utility helps to explain the direct relationship between price and quantity supplied.

false

T/F: To an economist, an increase in demand means the same thing as an increase in quantity demanded.

false

T/F: When a market is in disequilibrium, such as when the quantity supplied of a good is greater than the quantity demanded of that good, the price of the good will rise, ceteris paribus.

false

Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of yogurt would be predicted to do all of the following EXCEPT: increase the supply of ice cream. increase the demand for frozen yogurt. raise the equilibrium price of frozen yogurt. increase the quantity supplied of frozen yogurt.

increase the supply of ice cream.

Which of the following pairs of goods would be most likely to be substitutes? pasta and pasta sauce olive oil and vegetable oil chips and salsa tires and automobiles all of the above

olive oil and vegetable oil

(picture question) Exhibit 3-7 Refer to Exhibit 3-7. If S1 is the relevant supply curve, a decline in technology in the production of good X causes: a movement along S1 perhaps from point A to point B. no change in the supply of good X. the supply of good X to shift from S1 to S3. a movement along S1 perhaps from point A to point C. the supply of good X to shift from S1 to S2

the supply of good X to shift from S1 to S3.

T/F: A demand curve is the graphical representation of the law of demand.

true

T/F: A surplus will occur in a market when the price of the product is above the equilibrium price.

true

T/F: If hot dogs are an inferior good, a decrease in income will cause the equilibrium price of hot dogs to rise.

true

T/F: If the government increased licensing requirements for beauty salons, the supply curve for salon services would shift to the left.

true

T/F: If the quantity demanded of good X is greater than the quantity supplied of good X, then the market for good X is in disequilibrium.

true

T/F: Mutually beneficial trade between buyers and sellers drives a market to equilibrium

true

T/F: When the price of Toyota Corollas rises, ceteris paribus, the demand for Corollas falls

true

T/F: supply curves are usually upward sloping

true

(picture question) Assume that Aline, Bentley, Calvin, and Daniel are the only sellers in this market. Refer to Exhibit 3-12. Each individual seller's supply curve is ________________ sloping and the market supply curve is _________________ sloping. downward; also downward upward; also upward upward; downward downward; upward

upward; also upward

Which of the following statements represents a correct and sequentially accurate economic explanation? Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the quantity demanded of Y rises. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y falls. Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the demand for Y rises. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y rises. Goods X and Y are complements. The price of X falls, the quantity demanded of X rises, and the demand for Y falls.

Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y falls

At a price of $9.99, Danielle buys 3 digital books per month. When the price decreases to $7.99, Danielle buys 4 digital books per month. Jason says that Danielle's demand for digital books has increased. Is Jason correct? No, Jason is incorrect. Danielle's quantity demanded has increased and her demand has decreased. Yes, Jason is correct. No, Jason is incorrect. Danielle's quantity demanded has decreased, but her demand has stayed the same. No, Jason is incorrect. Danielle's demand has decreased. No, Jason is incorrect. Danielle's quantity demanded has increased, but her demand has stayed the same.

No, Jason is incorrect. Danielle's quantity demanded has increased, but her demand has stayed the same.

At a price of $15 each, Marta buys 4 books per month. When the price increases to $20, Marta buys 3 books per month. Luz says that Marta's demand for books has decreased. Is Luz correct? No, Luz is incorrect. Marta's demand has increased. No, Luz is incorrect. Marta's quantity demanded has decreased and her demand has increased. No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same. No, Luz is incorrect. Marta's quantity demanded has increased, but her demand has stayed the same. Yes, Luz is correct.

No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same.

Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car? Yes, since Jerry can afford a new car. Not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car. Yes, since Jerry's savings is more than double the average new car price. none of the above

Not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car.

(picture question) Exhibit 3-9 Refer to Exhibit 3-9. The production of X is more profitable than it used to be. A number of producers enter the business of producing X. An economist would expect a movement in the market for X from: D2 to D1. S1 to S2. S2 to S1. D1 to D2.

S1 to S2.

Oil producers expect that oil prices next year will be lower than oil prices this year. As a result, oil producers are most likely to: hold some oil off the market this year, thus shifting the present supply curve of oil leftward. place more oil on the market this year, thus shifting the present supply curve of oil rightward. place more oil on the market this year, thus increasing the quantity supplied of oil at lower but not higher prices. hold some oil off the market this year, thus decreasing the quantity supplied of oil at lower but not higher prices.

place more oil on the market this year, thus shifting the present supply curve of oil rightward.

A "decrease in the quantity demanded" means that: price has declined and consumers therefore want to purchase more of the good. the demand curve has shifted to the right. the supply curve has shifted to the left. price has increased and consumers therefore want to purchase less of the good.

price has increased and consumers therefore want to purchase less of the good.

If the demand curve for a good shifts leftward: quantity demanded is less at each price. demand is greater at each price. quantity demanded is greater at each price. quantity demanded remains constant at each price.

quantity demanded is less at each price.

An increase in the number of buyers in a particular market for a good will result in a ___________________ for that good. leftward shift in the demand curve movement down along the demand curve movement up along the demand curve rightward shift in the demand curve

rightward shift in the demand curve

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels: stays constant. shifts rightward. can shift either rightward or leftward. shifts leftward.

shifts rightward

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels: can shift either rightward or leftward. shifts rightward. shifts leftward. stays constant.

shifts rightward.

Resource X is necessary to the production of good Y. If the price of resource X rises: there is a movement down the supply curve of Y. the supply curve of Y shifts leftward. there is a movement up the supply curve of Y. the supply curve of Y is unaffected. the supply curve of Y shifts rightward.

the supply curve of Y shifts leftward.

One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that: the supply of child care services will increase, thus lowering the price of child care services. the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child care services will not change. the demand for child care services will fall because people who buy child care services do not want stiffer requirements placed on child care providers. the supply of child care services will decrease, thus raising the price of child care services. none of the above

the supply of child care services will decrease, thus raising the price of child care services.

(picture question) Exhibit 3-7 Refer to Exhibit 3-7. If S1 is the relevant supply curve, a decrease in the price of a resource that is necessary for the production of good X causes: a movement along S1 perhaps from point A to point B. the supply of good X to shift from S1 to S2 the supply of good X to shift from S1 to S3. a movement along S1 perhaps from point A to point C. no change in the supply of good X.

the supply of good X to shift from S1 to S2

(picture question) Refer to Exhibit 3-7. If S1 is the relevant supply curve, a decrease in the price of a resource that is necessary for the production of good X cause: no change in the supply of good X. the supply of good X to shift from S1 to S3. a movement along S1 perhaps from point A to point C. a movement along S1 perhaps from point A to point B. the supply of good X to shift from S1 to S2

the supply of good X to shift from S1 to S2