Quiz 3 - Ch. 3

(Exhibit: Demand and Supply of Wheat) What are the equilibrium price and quantity in this wheat market? A) $6 and 6,000 bushels B) $4 and 2,000 bushels C) $4 and 10,000 bushels D) $8 and 12,000 bushels

A) $6 and 6,000 bushels

(Exhibit: Simultaneous Shifts in Demand and Supply) D1 and S1 are original supply and demand curves, and S2 and D2 are new curves. In this market, the original equilibrium changed from point ________ to point ________. A) J; L B) L; J C) J; M D) J; K

A) J; L

(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating asparagus slows down the aging process. Which panel best describes how this will affect the market for asparagus? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

A) Panel (a)

(Exhibit: Demand and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose a wet and sunny year increases the nation's sweet pea crop by 20 percent. Which panel best describes how this will affect the market for frozen sweet corn, a substitute for sweet peas? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

A) Panel (a)

(Exhibit: Demand and Supply—Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's grapefruit crop. Which panel best describes how this will affect the market for Vitamin B-12 tablets, which are a substitute for grapefruit? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

A) Panel (a)

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a new machine is developed that allows restaurants and fast-food outlets to produce French fries at a lower cost. Which panel best describes how this will affect the market for French fries? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

A) Panel (a)

Consumer preferences are a demand shifter. A) True B) False

A) True

If two goods are substitutes, a decrease in the price of one will result in an increase in demand for the other. A) True B) False

A) True

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in: A) an increase in price and quantity. B) a decrease in price and an increase in quantity. C) a decrease in both price and quantity. D) an increase in price and a decrease in quantity.

A) an increase in price and quantity.

A decrease in demand and a decrease in supply, will lead to a(n) ________ in equilibrium quantity and a(n) ________ in equilibrium price. A) decrease; indeterminate change B) indeterminate change; increase C) indeterminate change; decrease D) increase; indeterminate change

A) decrease; indeterminate change

A negative relationship between the quantity demanded and price is called the law of ______. A) demand B) diminishing marginal returns C) market clearing D) supply

A) demand

A shift of a demand curve to the right, all other things unchanged, will: A) increase equilibrium price and quantity. B) decrease equilibrium price and quantity. C) decrease quantity and increase price. D) increase quantity and decrease price.

A) increase equilibrium price and quantity.

(Exhibit: The Demand for Music Downloads) A decrease in the price of CDs (a substitute) would result in a change illustrated by: A) the move from f to g in Figure (a). B) the move from h to i in Figure (b). C) the move from j to k in Figure (c). D) the move from l to m in Figure (d).

A) the move from f to g in Figure (a).

Plastic and steel are substitutes in the production of automobiles. If steel prices go up, all other things unchanged: A) the equilibrium price of plastic will fall. B) the demand curve for plastic will shift to the left. C) the demand curve for plastic will shift to the right. D) the equilibrium quantity of plastic demanded will increase and the equilibrium price will fall.

C) the demand curve for plastic will shift to the right.

If the current price is less than the market clearing or equilibrium price, we would expect: A) a surplus. B) downward pressure on price. C) upward pressure on price. D) no change in the market price.

C) upward pressure on price.

(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S1 and D) in equilibrium are: A) $2.00 and 450 gallons. B) $1.50 and 400 gallons. C) $2.00 and 200 gallons. D) $2.50 and 300 gallons.

D) $2.50 and 300 gallons.

(Exhibit: Demand and Supply Schedules for a Good) If there were a decrease in supply by 100 units at each price, the equilibrium price and quantity would be ________ and ________ units, respectively. A) $2.00; 100 B) $3.00; 140 C) $3.50; 175 D) $4.00; 160

D) $4.00; 160

(Exhibit: Demand and Supply of Wheat) If a price of $10 temporarily exists in this market, a: A) shortage of 10,000 bushels will result. B) shortage of 8,000 bushels will result. C) surplus of 8,000 bushels will result. D) surplus of 6,000 bushels will result.

C) surplus of 8,000 bushels will result.

(Exhibit: Simultaneous Shifts in Demand and Supply) D1 and S1 are original supply and demand curves, and S2 and D2 are new curves. In this market, the change in supply may have resulted from: A) wage increases for the workers. B) Answer an improvement in technology. C) You Answered a decrease in the number of sellers. D) all of the above.

B) Answer an improvement in technology.

A current price below the equilibrium price will result in a surplus. A) True B) False

B) False

An increase in both supply and demand must increase both equilibrium price and quantity. A) True B) False

B) False

An increase in price will result in a decrease in the quantity supplied. A) True B) False

B) False

The same factors that lead to a change in quantity demanded also cause a change in demand. A) True B) False

B) False

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel best describes how this will affect the market for oranges? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

B) Panel (b)

Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for cookies? A) The equilibrium price and quantity rise. B) The equilibrium price rises, and the equilibrium quantity falls. C) The equilibrium price and quantity fall. D) The equilibrium price falls, and the equilibrium quantity rises.

B) The equilibrium price rises, and the equilibrium quantity falls.

Which of the following would not change the demand for automobiles? A) a change in the price of gasoline B) a change in the cost of steel C) a change in the price of motorcycles D) a change in tastes

B) a change in the cost of steel

A decrease in supply is caused by: A) a decrease in resource prices. B) a decrease in the number of sellers in the market. C) suppliers' expectations of lower prices in the future. D) an advancement in the technology for producing the good.

B) a decrease in the number of sellers in the market.

(Exhibit: Demand and Supply of Wheat) A temporary price of $2 in this market would result in: A) a surplus of 8,000 bushels. B) a shortage of 8,000 bushels. C) a shortage of 10,000 bushels. D) a surplus of 10,000 bushels.

B) a shortage of 8,000 bushels.

The Case in Point on campus parking suggested that giving students lower fares for taking public transportation was what kind of factor in the demand for parking spaces? A) supply shifter B) demand shifter C) false prophet D) spoiler

B) demand shifter

The law of demand is illustrated by a demand curve that is: A) horizontal. B) downward-sloping. C) vertical. D) upward-sloping.

B) downward-sloping.

(Exhibit: Shifts in Demand and Supply) Which diagram best illustrates what would happen in the handheld calculator industry if elementary schools encouraged their use? A) the movement from M to N in panel (a) B) the movement from P to O in panel (b) C) the movement from O to P in panel (b) D) the movement from N to M in panel (a)

B) the movement from P to O in panel (b)

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose the population increases. Which panel best describes how this will affect the market for apples? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

C) Panel (c)

Assume a market initially exhibits a shortage. Assuming that both prices and quantities are flexible, which of the following will be true after the market adjusts to equilibrium? A) Price is lower. B) Quantity demanded is greater. C) Quantity supplied is more. D) Quantity supplied will be reduced.

C) Quantity supplied is more.

If the demand for housing increases and the supply of housing decreases: A) price will go up and quantity will go down. B) price and quantity will both go up. C) price will increase, but the quantity change is indeterminate. D) the quantity will be higher, but the change in price is indeterminate.

C) price will increase, but the quantity change is indeterminate.

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to: A) fall. B) stay the same. C) rise. D) change only if demand and/or supply change.

C) rise.

Every day for the past two years you've had ham and cheese on a whole wheat bagel for lunch at Bungalow Bob's Bagel Boutique. However, the price of whole wheat bagels has risen by 10 cents so today you decide to have ham and cheese on a rye bagel. In this case, whole wheat and rye bagels are best considered: A) superior goods. B) normal goods. C) substitute goods. D) complementary goods.

C) substitute goods.

The demand curve for on-demand videos has shifted to the right. What could have caused it? A) A fall in the price of on-demand videos. B) An increase in the price of on-demand videos. C) An increase in the supply of on-demand videos. D) An increase in the income of buyers.

D) An increase in the income of buyers.

(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose a spring frost destroys one-third of the nation's artichoke crop. Which panel best describes how this will affect the market for mayonnaise, which is a complement to artichokes? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

D) Panel (d)

An increase in the demand for medical services caused by an increase in the number of people over 65 is most likely attributable to which demand shifter? A) income B) consumer preferences C) prices of other goods D) demographic characteristics

D) demographic characteristics

If demand and supply both decrease: A) both price and quantity will be less. B) both price and quantity will go up. C) price will fall but quantity will go up. D) quantity will go down but the effect on price is indeterminate.

D) quantity will go down but the effect on price is indeterminate.