Econ 2 chapter 4 study plan

What is meant by holding all else equal and how is this concept used when discussing movements along the demand​ curve? A. All variables that can affect the demand for the good are held constant. B. everything else in the economy is held​ constant, including the price of the good. C. All variables in the model are set to equal values. D. All of the above. __________________________________ We make the assumption of holding all else equal when considering demand curves since we want to focus on the changes in the quantity demanded that result from changes in ▼ .

A. All variables that can affect the demand for the good are held constant. _________________ only the price of a good

For a trade to take​ place, a​ buyer's willingness to pay must be​ ____________. A. higher than the​ seller's willingness to accept. B. equal to the​ seller's willingness to accept. C. lower than the​ seller's willingness to accept. D. A and B only. E. All of the above.

A and B only

The lowest price that a seller is willing to receive to sell an extra unit of a good is called ▼ willingness to accept willingness to pay willingness to exchange ​, while the highest price that a buyer is willing to pay for an extra unit of a good is called ▼ willingness to exchange willingness to accept willingness to pay .

willingness to accept: willingness to pay

Which of the following ways of distributing the laptops would be more​ efficient? ​(Check all that apply.​) A. Using flexible​ prices, so those who value the laptop more would pay more for it. B. Auctioning off the laptops to the highest bidders. C. Using a​ first-come, first-served rule. D. Using a random lottery to decide who gets the laptops.

a,b,d

if new irrigation technology improves the average yield of a vineyard then the supply curve for sparkling wine would _______

increase

How would the equilibrium price in a market be affected if there were a smallsmall increase in demanddemand and a largelarge increase in supplysupply​? A. The equilibrium price would remain the same. B. The equilibrium price decreasesdecreases. C. The equilibrium price increasesincreases. D. More information is needed. It may​ increase, decrease, or remain the same.

B. The equilibrium price decreasesdecreases.

how would a decrease in demand affect the equilibrium price in a market? The equilibrium price would remain the same. B. The equilibrium price decreasesdecreases. C. The equilibrium price increasesincreases. D. More information is needed. It may​ increase, decrease, or remain the same

B. The equilibrium price decreasesdecreases.

What does it mean to say that we are running out of​ "cheap oil"? A. That world demand for oil is​ declining, which will raise the price of oil in the future. B. That there are declining reserves of​ low-quality oil, but there is still plenty of​ high-quality oil remaining. C. That oil reserves are becoming more expensive to find and extract over time. D. That we will soon deplete all the​ world's oil​ reserves, which will cause the price of oil to increase significantly.

C. That oil reserves are becoming more expensive to find and extract over time.

Lobsters are plentiful and easy to catch in August but scarce and difficult to catch in November. In​ addition, vacationers shift the demand for lobsters further to the right in August than in any other month. Given this​ information, we know that​ _________ is/are higher in August than in other months. A. only supply. B. neither supply nor demand. C. both supply and demand. D. only demand.

C. both supply and demand.

if people expect the price of SUVs to decrease in the future, then the demand for the Toyota Rav4 SUV would __________. a. decrease (shift left) b. increase (shift right) c. remain unchanged

Decrease (shift left)

if the number of people over the aft of 16 int eh country increased significantly, then the demand for the Toyota RAv4 SUV would ______. a. remain unchanged b. increase (shift right) c. decrease (shift left)

increase (shift right)

if sparkling wine producers expect the price of wine to decrease int eh future, then the supply curve for sparking wine would _________

increase

In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________. A. lose all or almost all of its customers. B. see no change in its number of customers. C. see a small decrease in its number of customers. D. All of the above are equally likely.

A. lose all or almost all of its customers.

Suppose conditions arise in the sugar market that would lead to a competitive equilibrium price that is below 18.75 cents per pound. In this​ situation, sugar mills will​ __________. A. not sell to private buyers at this lower price and will sell to the government​ instead, which will drive up the domestic price until it reaches 18.75 cents per pound. B. sell only to private​ buyers, since they do not need to take advantage of the government subsidy when the equilibrium price is low. C. sell some to private buyers at the lower price and sell some to the government at the higher subsidized price.

A. not sell to private buyers at this lower price and will sell to the government​ instead, which will drive up the domestic price until it reaches 18.75 cents per pound.

The Law of Supply states​ that, in most​ cases, the quantity supplied of a good​ ___________ when the price of the good rises. This means we would expect a typical supply curve to​ be___________. A. ​rises; upward-sloping. B. ​falls; upward-sloping. C. ​falls; downward-sloping. D. ​rises; downward-sloping.

A. ​rises; upward-sloping.

How would the equilibrium price in a market be affected if there were a smallsmall decrease in demanddemand and a largelarge decrease in supplysupply​? A. The equilibrium price would remain the same. B. The equilibrium price increasesincreases. C. The equilibrium price decreasesdecreases. D.

B. The equilibrium price increasesincreases.

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. A. are able to charge more than the market​ price; are able to pay less than the market price. B. cannot charge more than the market​ price; cannot pay less than the market price. Your answer is correct.C. cannot charge more than the market​ price; are able to pay less than the market price. D. are able to charge more than the market​ price; cannot pay less than the market price.

B. cannot charge more than the market​ price; cannot pay less than the market price. Your answer is correct.

Suppose people who are thinking about buying a home​ (demanders in the housing​ market) and current home owners who are thinking about selling their homes​ (suppliers in the housing​ market) suddenly believe that home prices are likely to be significantly lowerlower next year than this year. Consider the market for housing this​ year, as illustrated in the figure on the right. The change in the expected price of housing will​ ___________. A. shift the demand curve to the rightright​, as home prices decreasedecrease. B. shift the demand curve to the leftleft​, as buyers postponepostpone their home purchases. C. not affect the demand curve for​ housing, as consumers are not sensitive to future prices. D. shift the demand curve to the leftleft​, as fewerfewer homes are put on the market for sale by owners.

B. shift the demand curve to the leftleft​, as buyers postponepostpone their home purchases.

When graphing the new total market supply and demand​ curves, these curves will be​ _________ the individual​ countries' demand​ curves, since these curves are derived by​ _________. A. above and to the right​ of; summing both prices and quantities simultaneously. B. to the right​ of; summing quantities at a given price. C. directly​ above; summing prices for a given quantity.

B. to the right​ of; summing quantities at a given price.

Suppose one of your friends offered the following​ argument: A rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply​ curve, which will lead to an offsetting decrease in price.​ Therefore, it is impossible to tell what effect an increase in demand will have on price. Do you agree with your​ friend? A. ​No, the offsetting supply shift caused by the higher price will not be as large as the demand​ shift, so we know the price will rise some. B. ​No, the increase in price will not cause a shift of the supply curve. C. ​Yes, any time both the supply and demand curves​ shift, it becomes impossible to accurately determine the impact on the price of a good. D. ​Yes, since the shift in demand that raises the price must cause an offsetting shift in​ supply, we cannot know the impact on price.

B. ​No, the increase in price will not cause a shift of the supply curve.

Read the story to the​ right, and then answer the following​ questions: Based on what happened at the Richmond​ event, it is apparent that at a price of​ $50, the quantity​ _________ of laptops exceeded the quantity​ _________. This resulted in an excess​ _________ for laptops. A. ​supplied; demanded; demand B. ​demanded; supplied; demand C. ​supplied; demanded; supply D. ​demanded; supplied; supply

B. ​demanded; supplied; demand

When comparing the equilibriums in the lobster market for August and​ November, the equilibrium quantity is​ ______ in November than in​ August, while the equilibrium price is​ ______. A. ​higher; higher. B. ​lower; higher,​ lower, or unchanged. C. ​lower; lower. D. ​lower; unchanged.

B. ​lower; higher,​ lower, or unchanged.

The Thai government bought rice from its farmers at a price that was 40 percent higher than the prevailing market price in the country. How is this likely to affect other buyers in the domestic market for​ rice? A. Since the government is willing to buy any​ amount, firms will increase the quantity they​ supply, which will drive down the price of rice for everyone. B. Other buyers in the domestic market will not be​ affected, since the government will be buying the excess supply that exists at equilibrium. C. It will drive the price above the market​ price, resulting in a higher price for domestic consumers and therefore a smaller quantity demanded. D. Firms will charge domestic consumers a price below the market​ price, since they are charging the government a higher price.

C. It will drive the price above the market​ price, resulting in a higher price for domestic consumers and therefore a smaller quantity demanded.

Consider whether the Law of Demand holds in the following situations. The price of anti minus venom serumanti−venom serum​, sold to those with snake bitessold to those with snake bites​, increased from​ $45 to​ $52, but consumption has still remained the same. In this​ situation, the Law of Demand​ __________. A. does not​ hold, since the product is not sold in normal​ markets, so it cannot follow the Law of Demand. B. ​holds, since the Law of Demand must hold for all goods in all instances. C. does not​ hold, since the product sold is required for​ survival, so increasing the price did not affect consumption. D. ​holds, since a change in the price of the product resulted in a change in the quantity demanded of the product.

C. does not​ hold, since the product sold is required for​ survival, so increasing the price did not affect consumption.

The demand curve for anti minus venom serumanti−venom serum is​ __________. A. ​downward-sloping, since the demand for anti minus venom serumanti−venom serum reacts the same to changes in price as any other good. B. near​ horizontal, since even a small rise in the price will result in bite victimsbite victims cutting back on the quantity they demand. C. near​ vertical, since even if the price rises bite victimsbite victims will be willing to buy the same quantity.

C. near​ vertical, since even if the price rises bite victimsbite victims will be willing to buy the same quantity.

A pest attack on the tomato croppest attack on the tomato crop increases the cost of producing ketchupketchup. At the same​ time, we see the price of hamburgershamburgers falls. Suppose that after both of these events the consumption of ketchupketchup is left unchanged. In this​ situation, the Law of Demand​ __________. A. does not​ hold, since the product sold is a​ necessity, so increasing the price will not likely affect consumption. B. ​holds, since the Law of Demand must hold for all goods in all instances. C. ​holds, since the demand curves for both ketchupketchup and hamburgers are​ downward-sloping; it is their shifts that are determining the impact on the quantity consumed. D. does not​ hold, since there was no change in the quantity of ketchupketchup demanded.

C. ​holds, since the demand curves for both ketchupketchup and hamburgershamburgers are​ downward-sloping; it is their shifts that are determining the impact on the quantity consumed.

What does this imply for the price of oil in the​ future? A. The demand for oil will​ decrease, which will lead to higher prices in the future. B. The demand for oil will​ increase, which will lead to lower prices in the future. C. The supply of oil will​ increase, which will lead to lower prices in the future. D. The supply of oil will​ decrease, which will lead to higher prices in the future.

D. The supply of oil will​ decrease, which will lead to higher prices in the future.

The concept of diminishing marginal benefits means that​ __________. A. each additional unit consumed is worth more to you than the previous​ one, but the additional benefit grows at a diminishing rate. B. the more of a good that you​ consume, the lower is your overall benefit from that good. C. as you consume more of a​ good, your willingness to pay for that good increases faster than the benefit you receive. D. each additional unit consumed is worth less to you than the previous one. ________________________ The concept of diminishing marginal benefits ( ) for goods that you like a lot. _______________________________ Suppose you have a flashlight that takes three batteries to power it. If you buy the batteries one at a​ time, for which purchase will diminishing benefits set​ in? A. When you buy the first battery. B. When you buy the second battery. C. When you buy the third battery. D. When you buy the fourth battery.

D. each additional unit consumed is worth less to you than the previous one. ___________________________ Holds true _________________________ D. when you buy the fourth battery

Market demand is derived by​ __________. A. adding up both the prices each buyer pays and the quantities that each buyer demands. B. dividing each​ buyer's demand by the total number of consumers in the market. C. fixing the quantity and adding up the prices that each buyer pays. D. fixing the price and adding up the quantities that each buyer demands. _________________________ Does the shape of the market demand curve differ from the shape of an individual demand​ curve? A. ​No, they both tend to be​ upward-sloping curves. B. ​Yes, individual demand curves tend to be​ upward-sloping, while market demand curves are horizontal. C. ​Yes, individual demand curves tend to be​ downward-sloping, while market demand curves are​ upward-sloping. D. ​No, they both tend to be​ downward-sloping curves.

D. fixing the price and adding up the quantities that each buyer demands. __________________________ D. ​No, they both tend to be​ downward-sloping curves.