ECO2023 Markets Review Quizzes 1

A friend tells you how great his new cell phone is and suggests that you get one, too.

NOT expectations; The demand will increase

Consider the following events: You get a 25 percent raise at your job. This event would cause

a shift of the demand curve.

This graph depicts the demand for a normal good. A movement from A to B in the graph shown might be caused by:

an increase in income.

If rising incomes cause the demand for beer to decrease, beer is

an inferior good

The law of demand describes the:

inverse relationship between price and quantity demanded.

When a non-price factor changes--such as technology, expectations, prices of related goods, prices of inputs, or the number of sellers, there is a change in:

supply and the entire curve shifts.

Suppose an economic boom drives up wages for the sales representatives who work for cell phone companies. This will cause the:

supply of cell phones to decrease; the price of cell phones would increase and the quantity of cell phones traded would fall.

A cellular network announces a holiday sale on a text-messaging package that includes the purchase of a new phone.

price of a related good; The demand will increase

Ceteris paribus is:

All of these statements are true.

A baby boom occurred 16 years ago:

Number of buyers

An oil shortage causes the price of gasoline to soar:

Prices of related goods

Which of the following statements is true?

A change in price will mean a movement along an existing demand curve.

For each of the following events, indicate where the new point will be after the event occurs. There is a shortage of wool:

B

For each of the following events, indicate where the new point will be after the event occurs. Sweater vendors offer a sale:

C

For each of the following events, indicate where the new point will be after the event occurs. Sweaters fall out of fashion:

D

For each of the following events, indicate where the new point will be after the event occurs. The winter is particularly long and cold this year:

E

The government announces a massive plan to bail out the auto industry and subsidize production costs:

Expectations

Layoffs increase as the economy sheds millions of jobs:

Incomes

An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:

Rightward shift of demand

The government announces a new subsidy for biofuels made from corn:

Rightward shift of demand

A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good):

Leftward shift of demand

Consider the market for corn. Indicate whether each of the following events will cause a shift in the supply curve or a movement along the curve. If it will cause a shift, specify the direction. A drought hits corn-growing regions:

Leftward shift of supply

A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre:

Movement along the demand curve

Consider the market for corn. Indicate whether each of the following events will cause a shift in the demand curve or a movement along the curve. If it will cause a shift, specify the direction. A drought hits corn-growing regions, cutting the supply of corn:

Movement along the demand curve

A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good):

Movement along the supply curve

An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:

Movement along the supply curve

The government announces a new subsidy for biofuels made from corn:

Movement along the supply curve

For each of the following events, indicate where the new point will be after the event occurs. Demand for sweaters increases:

NOT B

For each of the following events, indicate where the new point will be after the event occurs. Demand for sweaters decreases:

NOT C

The government offers tax rebates in return for the purchase of commuter rail tickets:

NOT Consumer preferences

For each of the following events, indicate where the new point will be after the event occurs. A particularly cold winter is expected to begin next month:

NOT D

For each of the following events, indicate where the new point will be after the event occurs. The price of wool increases:

NOT E

Consider the market for cars. Which determinant of demand is affected by each of the following events? Environmentalists launch a successful One Family, One Car campaign:

NOT Number of buyers

You hear a rumor that a new and improved model of the phone you want is coming out next year.

NOT consumer preferences; The demand will decrease.

A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre:

Rightward shift of supply

Consider the market for ride-on lawn mowers and the recent increases in the price of oil. The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers. An increase in the price of oil also makes it more expensive to run a ride-on mower. What is likely to happen to equilibrium price and quantity of lawn mowers as a result in the changing price of oil?

Supply and demand will both decrease, decreasing equilibrium quantity and having an indeterminate effect on price.

Consider a market that is in equilibrium. If it experiences both an increase in demand and a decrease in supply, what can be said of the new equilibrium?

The equilibrium price will definitely rise, while the equilibrium quantity cannot be predicted.

When there is a change in the specific numerical quantity demanded due to a change in price this is referred to as a change in:

quantity demanded and the demand curve does not shift.

Consider a market that is in equilibrium. If it experiences both a decrease in demand and a decrease in supply, what can be said of the new equilibrium?

The equilibrium quantity will definitely fall, while the equilibrium price cannot be predicted.

Consider a market that is in equilibrium. If it experiences both an increase in demand and an increase in supply, what can be said of the new equilibrium?

The equilibrium quantity will definitely rise, while the equilibrium price cannot be predicted.

Consider a market that is in equilibrium. If it experiences a decrease in supply, what will happen?

The supply curve will shift to the left and the equilibrium price will increase and the equilibrium quantity will decrease.

A decrease in the price of spaghetti noodles is likely to cause:

a decrease in the demand for penne pasta due to a change in the price of a substitute good.

A decrease in the price of spaghetti is likely to cause:

a movement along the demand curve.

When a non-price factor changes--such as income, expectations, prices of related goods, consumer preferences, or the number of buyers, there is a change in:

demand and the entire curve shifts.

Suppose an economic boom causes incomes to increase. This will cause the:

demand for smart phones to increase, and both the price of smart phones and the quantity of smart phones traded would rise.

Economic forecasts suggest that the demand for cell phones will increase in the future.

expectations; the supply will decrease

The price of plastic goes up.

prices of inputs; The supply will decrease

Your work gives you a pay raise that increases your monthly earnings by $500.

income; The demand will increase

For almost all goods, the:

lower the price goes, the higher the quantity demanded.

Consider the following events: The price of cell phones goes down by 25 percent during a sale. This event would cause a

movement along the demand curve.

The price of cell phones goes down by 25 percent during a sale. This event would cause a

movement along the demand curve.

When there is a change in the amount firms produce due to a change in price, this is referred to as a change in:

quantity supplied and the supply curve does not shift.

You get a 25 percent raise at your job. This event would cause a

shift of the demand curve.

A new screen technology reduces the cost of making cell phones.

technology; The supply will increase

Demand for Shell gasoline will increase if:

the price of BP gasoline increases.