Chapter 3 quiz

Figure 3-19 Refer to Figure 3-19. Sellers whose costs are less than price are represented by which line segment?

BC

Figure 3-17 Refer to Figure 3-17. When the price is P1, consumer surplus is

A + B + C

Figure 3-18 Refer to Figure 3-18. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

BCED

Use the figure below to answer the following question(s).Figure 3-13 Refer to Figure 3-13. The market for margarine was initially in equilibrium at point e. Other things constant, a decrease in the price of butter, a close substitute for margarine, would likely move the equilibrium in this market toward point

R

Which of the following would be most likely to cause the demand for Miller beer to increase? a. an increase in the price of Budweiser beer b. a decrease in consumer income c. a decrease in the price of barley used to make Miller beer d. a decrease in the price of Miller beer

a. an increase in the price of Budweiser beer

Which one of the following factors would increase the demand for oranges? a. an increase in the price of grapefruit, a substitute product b. a reduction in the price of bananas, a substitute product c. development of a line of high-yield orange trees that are also more freeze resistant d. a decrease in consumer income

a. an increase in the price of grapefruit, a substitute product

During a major war between two oil producing nations, there would likely be a. an increase in the price of oil because the supply of oil would decrease. b. an increase in the price of oil because the supply of oil would increase. c. a decrease in the price of oil because the supply of oil would decrease. d. a decrease in the price of oil because the supply of oil would increase.

a. an increase in the price of oil because the supply of oil would decrease.

In San Francisco, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will a. increase the demand for college football tickets. b. decrease the demand for college football tickets. c. not change the demand for college football tickets. d. decrease the demand for professional football games.

a. increase the demand for college football tickets.

Which of the following will decrease the demand for coffee? a. the discovery that caffeine can cause heart problems b. an increase in the price of coffee c. an increase in the price of tea, a substitute for coffee d. a decrease in the prices of coffee makers and coffee cups, complements to coffee

a. the discovery that caffeine can cause heart problems

If price rises, what happens to the quantity demanded for a product? a. It increases. b. It decreases. c. It does not change. d. Uncertain--economic theory has no answer to this question.

b. It decreases.

Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation? a. Supply and demand simultaneously increased and the shift in supply was greater than the shift in demand. b. Supply and demand simultaneously increased and the shift in supply was less than the shift in demand. c. Supply and demand simultaneously decreased and the shift in supply was greater than the shift in demand. d. Supply and demand simultaneously decreased and the shift in supply was less than the shift in demand.

b. Supply and demand simultaneously increased and the shift in supply was less than the shift in demand.

Which of the following would most likely increase the demand for peanut butter? a. an increase in the price of jelly, a good that is often used with peanut butter b. a decrease in the price of jelly, a good that is often used with peanut butter c. a decrease in the price of peanut butter d. an increase in the price of peanut butter

b. a decrease in the price of jelly, a good that is often used with peanut butter

Figure 3-17 Refer to Figure 3-17. Area C represents a. the decrease in consumer surplus that results from a downward-sloping demand curve. b. consumer surplus to new consumers who enter the market when the price falls from P2 to P1. c. the increase in producer surplus when quantity sold increases from Q2 to Q1. d. the decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

b. consumer surplus to new consumers who enter the market when the price falls from P2 to P1.

If the quantity of a good supplied is highly sensitive to the price of the good, economists say the supply of the good is relatively a. inelastic. b. elastic. c. robust. d. inverse.

b. elastic.

The invisible hand principle indicates that competitive markets can help promote the efficient use of resources a. only if buyers and sellers really care, personally, about economic efficiency. b. even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use. c. even if business firms fail to produce goods efficiently. d. if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely.

b. even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use.

Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant raises its prices, a. the demand for food at Lucy Ho's will decrease. b. the quantity demanded for food at Lucy Ho's will decrease. c. the demand facing the nearby Bahn Thai restaurant will decrease. d. both a and c will happen.

b. the quantity demanded for food at Lucy Ho's will decrease.

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take? a. Take milk from government storage and sell it. b. Encourage farmers to produce more milk. c. Subsidize purchases of dairy equipment. d. Encourage farmers to produce less milk.

d. Encourage farmers to produce less milk.

If the supply of a good increased, what would be the effect on the equilibrium price and quantity? a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would decrease, and quantity would increase.

d. Price would decrease, and quantity would increase.

An increase in the price of milk will a. increase the demand for milk. b. reduce the demand for milk. c. reduce the demand for orange juice, a substitute for milk. d. increase the demand for orange juice, a substitute for milk.

d. increase the demand for orange juice, a substitute for milk.

When economists say the quantity demanded of a product has decreased, they mean the a. demand curve has shifted to the left. b. demand curve has shifted to the right. c. price of the product has fallen, and consequently, consumers are buying more of it. d. price of the product has risen, and consequently, consumers are buying less of it.

d. price of the product has risen, and consequently, consumers are buying less of it.

Which of the following would most likely cause the current demand for DVD players to fall? a. an increase in consumer income b. an increase in the price of DVD players c. an increase in the price of Blu-ray players, a substitute good d. the expectation that the price of DVD players will decrease sharply during the next six months

d. the expectation that the price of DVD players will decrease sharply during the next six months

The law of demand indicates that a. every physical good has a use. b. when people want a good badly enough, they will find a way to pay for it. c. the desire for a good is unrelated to its price. d. the quantity of a good that people will buy is inversely related to the price of the good.

d. the quantity of a good that people will buy is inversely related to the price of the good.

Figure 3-21 Refer to Figure 3-21. At the quantity Q3, a. the market is in equilibrium. b. consumer surplus is maximized. c. the sum of consumer surplus and producer surplus is maximized. d. the value to buyers is less than the cost to sellers.

d. the value to buyers is less than the cost to sellers.