Chapter 3 homework
c
Refer to the diagram. A decrease in demand is depicted by a GRAPH (D1 = Left line, D2 = Right Line)(XY on D1, X above Y) a. move from point x to point y. b. shift from D1 to D2. c. shift from D2 to D1. d. move from point y to point x.
demand increases
What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500? c. Income declines and small cars are an inferior good:
demand decreases
What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500? d. Consumers anticipate that the price of small cars will decrease substantially in the near future:
cannot be determined
What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500? e. The price of gasoline substantially drops:
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in the price of other goods:
demand increases
What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500? a. Small cars become more fashionable:
b, c, e, f
What are the determinants of supply? (all that apply) a. Income b. Prices of other goods c. Technology d. Tastes and preferences e. Resource prices f. Number of producers
demand increases
What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500? b. The price of large cars rises (with the price of small cars remaining the same):
c
A market a. reflects upsloping demand and downsloping supply curves. b. entails the exchange of goods, but not services. c. is an institution that brings together buyers and sellers. d. always requires face-to-face contact between buyer and seller.
c
Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the a. demand for oranges will necessarily rise. b. equilibrium quantity of oranges will rise. c. amount of oranges that will be available at various prices has declined. d. price of oranges will fall.
change in the quantity supplied
Given the following diagram, indicate whether the specified changes below represent a change in supply or a change in the quantity supplied. change from point A to point B Point A (rectangle corner farthest to right and up) Point B (same line as point A but down)
change in supply
Given the following diagram, indicate whether the specified changes below represent a change in supply or a change in the quantity supplied. change from point A to point C Point A (rectangle corner farthest to right and up) Point C (horizontal to A to the left)
a
If the demand for steak (a normal good) shifts to the left, the most likely reason is that a. consumer incomes have fallen. b. cattle production has declined. c. the price of steak has risen. d. the price of cattle feed has gone up.
a
Suppose that in the market for computer memory chips, the equilibrium price is $50 per chip. If the current price is $55 per chip, then there will be ___________ of the above of memory chips. a. a surplus b. a shortage c. an equilibrium quantity d. none of the above
supply line will move to left (up)
The figure depicts the market for cars. Suppose there is an increase in the price of steel, a resource used in the production of cars. a. What effect will this event have on supply and demand in the market for cars? Demonstrate your answer graphically.
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in factor productivity:
movement
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in market price:
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in producer expectations:
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in resource prices:
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in taxes:
shift
What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve. Change in technology:
b
Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect of this price floor? a. It will establish the equilibrium quantity. b. It will create a surplus. c. It will eliminate the market for wheat. d. It will create a shortage.
add horizontal line at $3.70
Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the following table. TABLE (price per bushel ~ $3.40-$4.90) (higher demand than supply) Suppose that the government establishes a price ceiling of $3.70 for wheat. In the diagram below, demonstrate a price ceiling of $3.70. Instructions: Use the tool provided 'Ceiling' to demonstrate a price ceiling of $3.70 for wheat. Plot only the endpoints of the line (2 points total).
a
Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the following table. TABLE (price per bushel ~ $3.40-$4.90) (higher demand than supply) Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to establish this price ceiling? a. To control food prices b. To use it as a form of trade barrier c. To encourage production d. To use it as income support for farmers
a, b, a, b
The figure depicts the market for cars. Suppose there is an increase in the price of steel, a resource used in the production of cars. If the price of steel increases, the _________(A)_________ will _________(B)_________. This will cause the equilibrium price to _________(C)_________ and the equilibrium quantity to _________(D)_________. A. a. supply of cars b. demand of car B. a. increase b. decrease C. a. increase b. decrease c. not change D. a. increase b. decrease c. not change
Demand line will move to the left
The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. a. What effect will this event have on supply and demand in the gasoline market? Demonstrate your answer graphically.
a. decrease, b. decrease
The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. b. This change in consumer expectations will cause the equilibrium price to ______a______ the equilibrium quantity to _____b______ a. increase, decrease, no change b. increase, decrease, no change
a
The two market diagrams below show the market for public and private colleges How will an increase in state subsidies to public colleges affect the market for public and private colleges? GRAPH (price = tuition, quantity = enrollment) a. In the market for public colleges: a. supply will shift to the right. b. demand will shift to the right. c. demand will shift to the left. d. supply will shift to the left.
c
The two market diagrams below show the market for public and private colleges How will an increase in state subsidies to public colleges affect the market for public and private colleges? GRAPH (price = tuition, quantity = enrollment) b. In the market for private colleges: a. supply will shift to the right. b. demand will shift to the right. c. demand will shift to the left. d. supply will shift to the left.
