ECN: Practice Problems unit 3

C. Change in demand; shift of the demand curve

A change in income, preferences, or prices of other goods or services leads to a __________ which leads to a __________. A. Change in demand; movement along the demand curve B. Change in quantity demanded; movement along the demand curve C. Change in demand; shift of the demand curve D. Change in quantity demanded; shift of the demand curve

C. Quantity demanded decreases

According to the law of demand: As prices rise, ceteris paribus, A. Demand increases. B. Demand decreases. C. Quantity demanded decreases. D. Quantity demanded increases.

B. Ramen noodles are an inferior good for you

An increase in your income causes your demand for ramen noodles to decrease. It must be true that: A. Ramen noodles are a normal good for you B. Ramen noodles are an inferior good for you C. The law of demand does not apply to Ramen noodles D. Your demand for Ramen noodles is perfectly elastic

A. The equilibrium price of firewood will fall, and equilibrium quantity will rise

During the recent hurricanes many large trees fell that would not have otherwise been cut down. Because of this, there will be a larger than usual supply of firewood this winter. Given this change, we would expect to see: A. The equilibrium price of firewood will fall, and equilibrium quantity will rise. B. The equilibrium price of firewood will rise, and equilibrium quantity will fall. C. The equilibrium quantity of firewood will rise, but we can't be sure what will happen to equilibrium price. D. The equilibrium price of firewood will fall, but we can't be sure what will happen to equilibrium quantity.

A. This market is not in equilibrium, and the price of the good will fall to eliminate surplus

Suppose a firm enters a market for the first time, and sets the price of their good above the true equilibrium price, so that the quantity demanded is less than the quantity supplied. Which of the following is true? A. This market is not in equilibrium, and the price of the good will fall to eliminate the surplus. B. This market is not in equilibrium, and the price of the good will rise to eliminate the surplus. C. This market is not in equilibrium, and the demand for the good will fall, causing the price of the good to decrease. D. This market is not in equilibrium, and the supply of the good will fall, causing the price of the good to increase. E. This market is in equilibrium, and there will be no changes until the firm goes out of business.

C. The supply of pizza would decrease and the price of pizza would increase

The price of pizza dough increases. In the market for pizza you would expect that A. The demand for pizza would increase and the price of pizza would increase. B. The demand for pizza would decrease and the price of pizza would fall. C. The supply of pizza would decrease and the price of pizza would increase. D. The supply of pizza would increase and the price of pizza would decrease.

C. The price of Pepsi increased

The quantity demanded of Pepsi has decreased. The best explanation for this is that A. The price of Coca Cola has increased. B. Pepsi's advertising is not as effective as in the past. C. The price of Pepsi increased. D. Pepsi consumers had an increase in income.

A. Income, tastes, and the price of the good

Which of the following is NOT held constant along the demand curve? A. Income, tastes, and the price of the good. B. Income and tastes. C. Income, tastes, and the price of other goods. D. Tastes and the price of other goods.

G. A, C and D

Which of the following will not cause the demand for bagels to increase? A. A decrease in the price of bagels B. A decrease in the price of cream cheese (a complement to bagels) C. A decrease in the price of doughnuts (a substitute for bagels) D. A decrease in the price of flour (an input into bagels) E. All of the above F. A and B only G. A, C and D

F. Both C and D

Which of the following will not cause the demand for coffee to shift to the right? A. An increase in the income or wealth of coffee consumers. B. A decrease in the price of cream (cream and coffee are complements). C. An announcement that the price of coffee will decrease in the near future. D. A decrease in the price of coffee. E. Both A and B. F. Both C and D.