Ch 3
Which of the following factors will lead to an increase in supply? Multiple select question. A decrease in the cost of inputs to the production process. A technological advance that lowers production costs. An expectation of higher prices in the future. A decrease in the number of suppliers.
A decrease in the cost of inputs to the production process. A technological advance that lowers production costs.
Which of the following factors will lead to a decrease in demand? Multiple select question. An increase in consumers' income if the good is a normal good. A decrease in the price of a substitute. A decrease in the population of potential buyers. An expectation of higher prices in the future.
A decrease in the price of a substitute. A decrease in the population of potential buyers.
The most John is willing to pay for a slice of pizza is $2.56. Thus, $2.56 is Multiple choice question. John's demand for pizza. John's reservation price for pizza. the market price of pizza.
John's reservation price for pizza.
If hot dogs and ketchup are complements, then an increase in the price of ketchup will lead to: Multiple select question. an increase in the price of hot dogs. a decrease in the number of hot dogs bought and sold in the market. an increase in the number of hot dogs bought and sold in the market. a decrease in the price of hot dogs.
a decrease in the number of hot dogs bought and sold in the market. a decrease in the price of hot dogs.
A supply curve is ______. Multiple choice question. a schedule or graph showing the quantity of a good that sellers wish to sell at each price a schedule or graph showing the quantity of a good that buyers wish to buy at each price
a schedule or graph showing the quantity of a good that sellers wish to sell at each price
Economic efficiency occurs when Multiple choice question. all goods and services are produced and consumed at their socially optimal levels. the market is in equilibrium so that there is neither excess supply nor excess demand.
all goods and services are produced and consumed at their socially optimal levels.
If bread and peanut butter are complements, then a decrease in the price of peanut butter will lead to: Multiple select question. a decrease in the amount of bread that people buy. an increase in the amount of bread that people buy. a decrease in the price of bread. an increase the price of bread.
an increase in the amount of bread that people buy. an increase the price of bread.
Given that hops are an important input to the production of beer, a sharp increase in the price of hops should lead to: an increase in the price of beer. a decrease in the price of beer. an increase in the amount of beer bought and sold in the market. a decrease in the amount of beer bought and sold in the market.
an increase in the price of beer. a decrease in the amount of beer bought and sold in the market.
Given that flour is an important input to bread, an increase in the price of flour should lead to: an increase in the price of bread. a decrease in the price of bread. an increase in the quantity of bread bought and sold in the market. a decrease in the quantity of bread bought and sold in the market.
an increase in the price of bread. a decrease in the quantity of bread bought and sold in the market.
Two goods are complements if Multiple choice question. an increase in the price of one good, leads to a decrease (leftward shift) in the demand for the other. an increase in the price of one good, leads to an increase (rightward shift) in the demand for the other.
an increase in the price of one good, leads to a decrease (leftward shift) in the demand for the other.
If an increase in the price of one good, causes a decrease (leftward shift) in the demand for another good, then the two goods are _____. Multiple choice question. normal inferior complements substitutes
complements
If the demand for ketchup decreases when the price of hot dogs increases, then this suggests that ketchup and hot dogs are _____. Multiple choice question. inferior substitutes complements normal
complements
An increase in the supply of corn (a rightward shift in the supply curve) could be the result of _____ in the price of an input to the production of corn. increase decrease
decrease
If butter and popcorn are complements, then an increase in the price of butter will lead to _____ in the demand for popcorn. Multiple choice question. an increase a decrease
decrease
If the price of cheese increases, then this should lead to _____ in the supply of pizza. Multiple choice question. a decrease no change an increase
decrease
If torrential rains wipe out this year's corn crop, this should lead to _____ in the supply of corn. Multiple choice question. a decrease an increase
decrease
The numbers in the table below likely capture the daily _______ tennis balls. Price ($/ball) Quantity (balls/day) 0.50 300 1.00 200 1.50 100 Supply of Demand for
demand for
You observe that the price of books has gone down at the same time that the number of books bought and sold in the market has decreased. The best explanation for this is that the: Multiple choice question. supply of books has increased. demand for books has increased. supply of books has decreased. demand for books has decreased.
demand for books has decreased.
Suppose that as the price of movie tickets increases, people stop going to the movies as often because they can no longer afford to do so. This reduction in the quantity of movie tickets demanded is known as the _____ of a price change. Multiple choice question. income effect substitution effect
income effect
The change in the quantity demanded of a good that results because a change in the price of a good changes the buyer's purchasing power is known as the _____ of a price change. Multiple choice question. income effect substitution effect
income effect
A medical breakthrough that decreases the cost of treating cancer should lead to ____ in the supply of cancer treatments. Multiple choice question. a decrease an increase
increase
If Ramen Noodles are an inferior good, then a fall in income should lead to _____ in the demand for Ramen Noodles. Multiple choice question. a decrease an increase no change
increase
If the price of sugar falls, this is like to lead to _____ in the supply of candy. Multiple choice question. a decrease an increase no change
increase
Given that college professors are an important input to the production of a college education, a decrease in the salaries of college professors should: Multiple select question. increase college tuition. increase the number of students attending college. decrease college tuition.
increase the number of students attending college. decrease college tuition.
Suppose your roommate recently lost his part-time job, and you notice that afterward his consumption of Ramen Noodles increases. This suggests that for your roommate Ramen Noodles are _____. Multiple choice question. a normal good an inferior good
inferior good
If the demand for apartments decreases when house prices falls, then this suggests that apartments and houses are _____. Multiple choice question. inferior substitutes normal complements
substitutes
If the demand for tea increases when the price of coffee goes up, then this suggests that coffee and tea are _____. Multiple choice question. inferior substitutes normal complements
substitutes
Suppose that as the price of movie tickets increases, people go to the movies less often and instead rent movies at home. The resulting reduction in the quantity of movies demanded is known as the _____ of a price change. Multiple choice question. substitution effect income effect
substitution effect
The change in the quantity demanded of a good that results because buyers switch to or from substitutes when the price of the good changes is known as the _____ of a price change. Multiple choice question. income effect substitution effect
substitution effect
A schedule or graph showing the quantity of a good that sellers wish to sell at each price is known as a _____. Multiple choice question. supply curve demand curve
supply curve
A buyer's reservation price is the Multiple choice question. the actual dollar amount the buyer pays for a good. largest dollar amount the buyer would be willing to pay for a good. the minimum amount the buyer would be willing to pay for a good.
the largest dollar amount the buyer would be willing to pay for a good
The socially optimal quantity is Multiple choice question. determined by democratically elected governments in most countries. the quantity of a good that maximizes the total economic surplus that results from producing and consuming the good. the equilibrium quantity.
the quantity of a good that maximizes the total economic surplus that results from producing and consuming the good.
True or false: The socially optimal quantity is that level for which the marginal cost and marginal benefit of the good are the same. True false question. True False
true
If Hulu Plus and Netflix are substitutes, then an increase in the price of Netflix should lead to _____. a decrease in the number of people who subscribe to Hulu Plus a decrease in the price of hulu plus an increase in the number of people who subscribe to Hulu Plus an increase in the price of hulu plus
an increase in the number of people who subscribe to Hulu Plus an increase in the price of hulu plus
Along a supply curve, if the price of butter increases, the quantity of butter supplied will _____. Multiple choice question. increase decrease
increase
An increase in the price of cotton is likely to shift the supply curve for clothing (that uses cotton as an input) to left right
left
A change in quantity demanded is represented by Multiple choice question. a shift in the entire demand curve. a movement along the demand curve.
movement along the demand curve
If the demand for wine increases as people's incomes go up, then wine is _____. Multiple choice question. a normal good an inferior good
normal good
A maximum allowable price specified by law is a _______. Multiple choice question. price ceiling price floor
price ceiling
A change in demand is represented by a ______. Multiple choice question. movement along the demand curve shift in the entire demand curve
shift in the entire demand curve
A change in supply is represented by ______. Multiple choice question. a shift in the entire supply curve a movement along the supply curve
shift in the entire supply curve
Total surplus is Multiple choice question. the difference between the buyer's reservation price and the seller's reservation price. the difference between the price the seller receives and the seller's reservation price. the sum of the buyer's reservation price and the seller's reservation price. the difference between a buyer's reservation price and the price the buyer actually pays.
the difference between the buyer's reservation price and the seller's reservation price.
When a new technology reduces the cost of production, supply ______. Multiple choice question. will shift to the right (increase) will shift to the left (decrease) will remain unchanged
will shift to the right (increase)
The numbers in the table below likely capture the daily _______ tennis balls. Price ($/ball) Quantity (balls/day) 0.50 100 1.00 200 1.50 300 Multiple choice question. supply of demand for
supply of
Two goods are substitutes if Multiple choice question. an increase in the price of one good, leads to an increase (rightward shift) in the demand for the other. an increase in the price of one good, leads to a decrease (leftward shift) in the demand for the other.
an increase in the price of one good, leads to an increase (rightward shift) in the demand for the other.
You observe that the price of ice cream has gone up and that less ice cream is being bought and sold. The best explanation for this is that the Multiple choice question. demand for ice cream has increased. demand for ice cream has decreased. supply of ice cream has decreased. supply of ice cream has increased.
supply of ice cream has decreased.
Seller's surplus is Multiple choice question. the same as the seller's reservation price. the difference between the price the seller receives and the seller's reservation price. the difference between the buyer's reservation price and the seller's reservation price. the difference between a buyer's reservation price and the price the buyer actually pays.
the difference between the price the seller receives and the seller's reservation price.
If Red Bull and Coke are substitutes, then a decrease in the price of Red Bull should lead to: Multiple select question. a decrease in the amount of Coke bought and sold in the market. a decrease in the price of Coke. an increase in the amount of Coke bought and sold in the market. an increase in the price of Coke.
a decrease in the amount of Coke bought and sold in the market. a decrease in the price of Coke.
If butter and popcorn are complements, then an increase in the price of popcorn will lead to: Multiple select question. a decrease in the equilibrium price of butter. an increase in the equilibrium quantity of butter. a decrease in the equilibrium quantity of butter. an increase in the equilibrium price of butter.
a decrease in the equilibrium price of butter. a decrease in the equilibrium quantity of butter.
