EC 2113 Chapter 3 Study Questions

$60

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

The price of the good itself

which of the following is NOT held constant while moving along a supply curve?

used in conjunction with another good

A complement is a good?

price of outboard motors

A decrease in the demand for recreational fishing boats might be caused by an increase in the:

shift the demand curve for memory cards to the right.

A decrease in the price of digital cameras will:

indicates the quantity demanded at each price in a series of prices.

A demand curve..

the law of supply

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates

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

A market is in equilibrium:

price floor

A policy of minimum wage is an example of?

results in a surplus if the floor price is greater than the equilibrium price.

A price floor...

consumer preferences have changed in favor of A so that they now want to buy more at each possible price.

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

is a graph and the supply schedule is a table

A supply curve differs from a supply schedule because a supply curve

the price of the good. Usually a supply curve has positive slope.

A supply curve shows the relation between the quantity of a good supplied and

above the equilibrium price

A surplus occurs when the price is?

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

A surplus of a product will arise when price is..

True

An increase in the price of C will decrease the demand for complementary product D.

rise, the supply of bread to decrease, and the demand for potatoes to increase.

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:

decrease, quantity demanded will increase, and quantity supplied will decrease.

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will:

increase, quantity demanded will decrease, and quantity supplied will increase.

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will:

A shortage of 40 DVD rentals

At a rental price of $3, there will be?

the quantity demanded at each price in a set of prices is greater.

By an "increase in demand," economists mean that:

the highest price consumers are willing and able to pay for that particular unit of a good

Each point on the demand curve reflects?

demand curve for Z to the left.

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

The price will adjust to bring the market to equilibrium

If a market is NOT in equilibrium, then which of the following is likely to occur?

substitutes in production

If a producer can use resources to produce either good A or good B, then A and B are

may shift either to the right or left

If consumer incomes increase, the demand for product X:

demand for A will increase and the quantity of B demanded will increase.

If products A and B are complements and the price of B decreases, the:

consumer incomes have fallen

If the demand for steak (a normal good) shifts to the left, the most likely reason is that:

the demand for butter has decreased

If the price of butter has decreased at the same time that the quantity sold has decreased we can be sure that?

equilibrium price decreases and equilibrium quantity decreases

If tortilla chips are an inferior good, what happens to equilibrium price and quantity when there is an increase in income?

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

If two goods are complements:

a change in buyer tastes

In the past fews years, the demand for donuts increased. This increase in demand might best be explained by?

income decreases

Inferior goods are those for which demand increases as

$1.00 and 200

Refer to the diagram. The equilibrium price and quantity in this market will be:

Graph D

Refer to graphs above. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: In the market for beef, if a new diet fad favoring beef consumption becomes hugely popular, while cattle producers see steeply rising costs of cattle feed.

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

Refer to the 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 demand has been more than offset by an increase in supply.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

demand has increased and equilibrium price has decreased.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

supply has decreased and equilibrium quantity has decreased

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Given D0, if the supply curve moved from S0 to S1, then:

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

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

0F and 0C, respectively.

Refer to the 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:

move from point y to point x.

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

$0.50

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

move from point y to point x.

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

Graph A

Refer to the graphs. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: In the market for corn, if gasoline producers use more ethanol from corn, and good weather during the growing season yields a bumper harvest.

$8 and 60 units.

Refer to the table. If demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5), equilibrium price and quantity will be:

price and quantity demanded

The demand curve shows the relationship between:

rises; falls

The demand for a good increases when the price of a substitute ____ and also increases when the price of a complement ____.

a shortage

The implementation of a price ceiling in a market, typically will create

inversely with its price

The law of demand states that the quantity of a good demanded varies

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

The law of supply indicates that, other things equal:

the amount of a good that consumers plan to purchase at a particular price

The quantity demanded is?

the price of Pepsi has increased

The quantity demanded of Pepsi has decreased. The best explanation for this is that?

A change in the expected future price of gasoline

Today's demand curve for gasoline could shift in response to?

Air travel is a normal good and vacation travel by car is inferior good

When the economy suffers. a downturn - people lose jobs/income decreases, vacationers are more likely to take car trips than to fly. Which of the following provides the most reasonable explanation for the phenomenon?

the income statement

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of a product. This statement describes?

the market is in equilibrium

When the quantity demanded equals quantity supplied..

B only

Which of the diagrams illustrate(s) the effect of a decrease in incomes on the market for secondhand clothing?

C only

Which of the diagrams illustrates the effect of a governmental subsidy on the market for AIDS research?

A decrease in the price of the resources used to produce the good

Which of the following shifts the supply curve rightward?

An increase in the price of C. will decrease the demand for the complementary product D.

Which of the following statements is correct?

An increase in supply

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

An increase in money income if A is an inferior good

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

The expectation by consumers that gasoline prices will be higher in the future.

Which of the following would most likely increase the demand for gasoline?

If the marginal benefit of the movie exceeds its marginal cost

You should decide to go to a movie: