Chpt 4

Refer to the above diagram. A surplus of 160 units would be encountered if price was:

$1.60

In presenting the idea of a demand curve, economists presume that the most important variable in determining the quantity demanded is:

the price of the product itself.

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect:

the supply to increase as farmers plant more corn.

Productive efficiency refers to:

the use of the least-cost method of production.

Increasing marginal cost of production explains:

why the supply curve is upsloping.

The demand for most products varies directly with changes in consumer incomes. Such products are known as:

Normal goods

If two goods are complements:

a decrease in the price of one will increase the demand for the other.

If consumers are willing to pay a higher price than previously for each level of output, we can say that, the following has occurred

an increase in demand.

Answer the next question(s) on the basis of the given supply and demand data for wheat:Refer to the above data. If the price in this market was $4:

farmers would not be able to sell all their wheat.

A market is in equilibrium:

if the amount producers want to sell is equal to the amount consumers want to buy.

An effective ceiling price will:

result in a product shortage.

A price floor in a competitive market will result in persistent shortages of a product

False

An increase in quantity supplied might be caused by an increase in production costs.

False

A surplus of a product will arise when price is:

above equilibrium with the result that quantity supplied exceeds quantity demanded.

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

direct, inverse

An improvement in production technology will:

shift the supply curve to the right.

If the price of product L increases, the demand curve for close-substitute product J will:

shift to the right.

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

supply curve for cigarettes leftward.

Refer to the above diagram. A decrease in quantity demanded is depicted by a:

move from point y to point x.

Refer to the above diagram. An increase in quantity supplied is depicted by a:

move from point y to point x.

Refer to the above diagram. An increase in quantity supplied is depicted by a:

producers will offer more of a product at high prices than they will at low prices.

The law of supply indicates that:

producers will offer more of a product at high prices than they will at low prices.

An effective price floor on wheat will:

result in a surplus of wheat.

Answer the next question(s) on the basis of the given supply and demand data for wheat:Refer to the above data. Equilibrium price will be:

$2.

Refer to the above table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be:

$9 and 60 units.

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:

0F and 0C respectively.

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

0F represents a price that would result in a shortage of AC.

Refer to the above diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is

60

Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?

D only

In the above market, economists would call a government-set minimum price of $50 a:

Suppose that in each of four successive years producers sell more of their product and at lower prices. This could be explained:

In a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that price can sell it

True

Which of the following would not shift the demand curve for beef?

a reduction in the price of cattle feed

Refer to the above diagram. A price of $20 in this market will result in:

a shortage of 100 units.

Refer to the above diagram. A price of $60 in this market will result in:

a surplus of 100 units.

If X is a normal good, a rise in money income will shift the:

demand curve for X to the right.

If Z is an inferior good, an increase in money income will shift the:

demand curve for Z to the left.

In the following question(s) you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X. Refer to the above. An increase in the price of a product that is a close substitute for X will:

increase D, increase P, and increase Q

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will:

increase equilibrium price and decrease equilibrium quantity.

An increase in consumer incomes will:

increase the demand for a normal good.

Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to

increase the supply of B and increase the demand for C.

The equilibrium price and quantity in a market usually produces allocative efficiency because

marginal benefit and marginal cost are equal at that point.

Refer to the above diagram. Rent controls are best illustrated by:

price A

Refer to the above diagram. A government price support program to aid farmers is best illustrated by:

price C.

Refer to the above diagram. A government-set price floor is best illustrated by:

price C.

Refer to the above diagram. A decrease in demand is depicted by a:

shift from D2 to D1.

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls, and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

substitution effect

Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement:

suggests that the supply of DVD players has increased.

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in demand may have been caused by:

an increase in incomes if the product is a normal good.

Which of the following will cause the demand curve for product A to shift to the left?

an increase in money income if A is an inferior good.

Markets explained on the basis of supply and demand:

assume many buyers and many sellers of a standardized product.