Chapter 3.
The equilibrium price and quantity in the above diagram for a good/service, under perfect competition, occur at a price of:
$150 and a quantity of 300 units. (where the Supply and Demand Lines cross on the graph)
Assuming the demand curve remains the same, an increase in the number of sellers of running shoes causes equilibrium price to:
Decrease and equilibrium quantity to increase.
A rightward shift of the market supply curve causes equilibrium price to:
Decrease and quantity to increase.
Assume peanut butter and jelly are complements. An increase in the price of peanut butter will cause the equilibrium price for jelly to:
Decrease and the equilibrium quantity of jelly to decrease.
In most markets, the equilibrium price is achieved:
Through trial and error.
As one moves down the demand curve for carrots, the quantity demanded for carrots increases and the price of carrots decreases.
True
If buyers expect the price of baseballs to fall in the future, then right now (currently) there should be:
A decrease in the demand for baseballs.
Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of candles?
A decrease in the price of candles
Ceteris paribus, if the price of a digital camera rises, then we can expect:
A decrease in the quantity demanded of digital cameras (movement along the same curve).
Ceteris paribus, if the price of basketballs rises, then we will see:
A movement to the left along the demand curve for basketballs.
If a price ceiling of $100 was in effect in the above figure (chapter 4!):
A shortage of 200 units would occur. (Draw lines through graph to see)
Which of the following events would cause a rightward shift in the market supply curve for automobiles?
A technological improvement which reduces the cost of production.
Suppose a hurricane hits Florida causing widespread damage to houses and businesses. The governor of Florida places a price ceiling on all building materials to keep the prices reasonable. Which of the following is the most likely result?
All of the above would probably result.
Which of the following would generally cause an increase in the demand for automobiles (outward shift in the demand curve or a shift to the right in the demand curve)?
An increase in consumers' income.
Assume Pepsi and Coke are substitutes. An increase in the price of one will result in:
An increase in the demand for the other.
Peanut butter and jelly are complements. A decrease in the price of one will result in:
An increase in the demand for the other.
Which of the following is most likely to cause an increase in the quantity supplied of candles (movement along the same curve)?
An increase in the price of candles.
Ceteris paribus, if the price of Swiss cheese falls, then we will see:
An increase in the quantity demanded of Swiss cheese.
If corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when:
Consumers want to buy more corn at the same price
A decrease in the price of personal computers would shift the demand curve for personal computers to the right (increase in demand).
False
After a major snowstorm last winter, some college students earned extra money by clearing driveways of snow for $25. Town officials determined that $25 was too high and set a price ceiling of $15 for this service. Which of the following was the most likely result?
Fewer driveways were cleared.
According to the law of demand, the quantity of a good demanded in a given time period:
Increases as its price falls, ceteris paribus.
An increase in the price of a good causes a:
Movement up along the same supply curve.
If the quantity demanded of a good is greater than the quantity supplied of the good at the current price, then, in the long run (remember! without govt. intervention/interference in this market),
Price will increase until it reaches the equilibrium price.
If there is a surplus at a given price, then:
That price is greater than the equilibrium price.
If there are only two airlines that fly between Dallas and New Orleans, what will happen in the market for one airline if the other one goes out of business?
The demand curve will shift to the right.
Which of the following can change without shifting either demand or supply curves,
The price of the good itself.
Given a downward-sloping market demand curve for web design services, if the price of web design services is decreased from $12 per hour to $9 per hour, then:
The quantity demanded of web design services will increase.
Using the above diagram, at a price of $50:
The quantity supplied is 100 units. (Draw line on graph)
In the above graph for a commodity, say, corn, under a perfectly competitive market structure, at a price of $250:
The quantity supplied is greater than the quantity demanded.
There are never shortages or surpluses when the price in a market is equal to the equilibrium price for the market.
True
When the number of buyers in a market changes, the market-demand curve for goods and services shifts.
True
