Econ 205 Exam 1 Chapters 4-5
Refer to the Figure. At a price of
$10, there is neither a shortage nor a surplus.
ABC Photography Co. purchases new computer software that reduces the costs of editing and distributing photos. As a result, the
supply curve for ABC's photos will increase.
Refer to the Table. The equilibrium price and quantity, respectively, are
$70 and 40 units.
Refer to the Figure. If these are the only two sellers in the market, then the market quantity supplied at a price of $3 is
.11 units.
Refer to the table. The table contains a supply schedule for a good.If the law of supply applies to this good, then Q1 could be:
0.
Refer to the table. If the law of demand applies to this good, then Q1 could be
1,500
Refer to the Figure. If Consumer A and Consumer B are the only consumers in the market, then the market quantity demanded when the price is $6 is
12 units.
Refer to the Table. If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is
14 units.
Refer to the Table. If these are the only four sellers in the market, then when the price increases by $4, the market quantity supplied increases by
14 units.
Refer to the Figure. If Consumer A and Consumer B are the only consumers in the market, then the market quantity demanded when the price is $4 is
16 units.
Refer to the Figure. There is a shortage of
20 units when the price is $8.
If these are the only two sellers in the market, then the market quantity supplied at a price of $6 is
22 units.
Refer to the table. The table contains a supply schedule for a good.If the law of supply applies to this good, then Q1 could be
260.
Refer to the Table. If the market consists of John and Albert only and the price decreases by $2, the quantity demanded in the market increases by
3 units.
Refer to the Figure. If these are the only two sellers in the market, then the market quantity supplied at a price of $9 is
33 units.
Refer to the Table. If these are the only three buyers in the market, then the market quantity demanded at a price of $14 is
33 units.
Refer to the Table. If the market consists of John and Phillip only and the price decreases by $2, the quantity demanded in the market increases by
4 units.
Refer to the Table. If the market consists of Albert and Phillip only and the price falls by $2, the quantity demanded in the market increases by
5 units.
Refer to the table. If the law of demand applies to this good, then Q1 could be
500.
Refer to the Table. If these are the only four sellers in the market, then the market quantity supplied at a price of $16 is
56 units.
Refer to the Figure. If Consumer A and Consumer B are the only consumers in the market, then the market quantity demanded when the price is $10 is
6 units.
Refer to the Table. If the market consists of John, Albert, and Phillip and the price decreases by $2, the quantity demanded in the market increases by
6 units.
Refer to the Figure. If Consumer A and Consumer B are the only consumers in the market, then the market quantity demanded when the price is $8 is
8 units.
When a new study reveals that eating pretzels can increase the likelihood of developing lung cancer, which of the following outcomes is expected?
Both the price and quantity of pretzels will fall.
Furniture is a normal good if the demand
for furniture increases when income increases.
Suppose that Jarrod receives a pay increase. We would expect
Jarrod's demand for pizza, a normal good, to shift to the right.
Which of the following demonstrates the law of demand?
Jenna buys fewer pairs of shoes at $50.00 per pair than at $30.00 per pair, other things equal.
Refer to the Figure. Which of the following movements would illustrate the effect in the market for cars of a decrease in the price of gas?
Point A to Point D
Refer to the Figure. Which of the following movements would illustrate the effect in the market for paper of an increase in the price of pulp, used in the production of paper?
Point C to Point D
What will happen to the equilibrium price and quantity of iPhones if the price of other smart phones falls, Apple develops new technology to produce iPhones, wireless phone contracts become more expensive, and Apple expects the price of iPhones to decrease in the near future?
Price will fall, and the effect on quantity is ambiguous.
Cookies are normal goods. What will happen to the equilibrium price and quantity of cookies if the price of sugar falls, the price of milk falls, more firms start producing cookies, and cookie lovers experience an increase in income?
Quantity will rise, and the effect on price is ambiguous.
Which of the following is not an example of a competitive market?
Residents of Middleton have one cable television provider.
Which of the following Scenarios would cause a shortage in a market?
The actual price is $10, the equilibrium price is $12, the quantity demanded is 1,250 and the quantity supplied is 800.
Which of the following Scenarios would cause a surplus in a market?
The actual price is $25, the equilibrium price is $20, the quantity supplied is 100 and the quantity demanded is 75.
What would happen to the equilibrium price and quantity of sunscreen if a new formula is developed that makes production cheaper, and scientists discovered that sunscreen causes more cancer than sun damage?
The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.
If a drought affects the harvest of coffee beans and coffee and tea are considered to be substitutes, what changes occur in the markets for coffee and tea?
The price of coffee rises and the quantity of coffee falls; both the price and quantity of tea rise.
Which of the following events would cause a movement upward and to the left along the demand curve for flannel sheets?
The price of flannel sheets increases.
Which of the following changes would not shift the demand curve for gas?
The price of gas decreases due to increased production.
Which of the following events must cause the equilibrium quantity to rise in the market for burritos?
The price of pizza increases and the price of tortillas decreases.
Washing machines and dryers are complementary goods. When the technology used to produce washing machines improves, what changes occur in the markets for washing machines and dryers?
The price of washing machines falls and the quantity of washing machines rises; both the price and quantity of dryers rise.
Which of the following events must cause equilibrium price to fall in the market for gas-powered snow blowers?
The weather forecasters predict a drier than normal winter and producers of gas-powered snow blowers find a faster method of production.
Which of the following demonstrates the law of supply?
When camera prices rose, camera sellers increased their quantity supplied of cameras.
Refer to the Figure. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for pickup trucks?
a change in consumer tastes toward public transit and environmentally conscious travel modes
If generic medicine is an inferior good, then an increase in
a consumer's income will cause the demand curve for generic medicine to shift to the left.
If candles and candlesticks are complements, then which of the following would increase the demand for candles?
a decrease in the price of candlesticks
The supply curve for yoga mats shifts when
a determinant of the supply of yoga mats other than the price of yoga mats changes.
Which of the following is not required for a market to exist?
a meeting location and time
Which of the following would most likely serve as an example of a monopoly?
an electricity provider
Refer to the Figure. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for sweatshirts, a normal good?
an expectation by buyers that their incomes will increase in the very near future
Refer to the Figure. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for replacement windows?
an expectation by firms that the price of replacement windows will increase in the very near future
Refer to the Figure. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for treadmills?
an improvement in the production technology to make treadmills
Refer to the Figure. The movement from S1 to S2 could be caused by
an increase in input prices.
Refer to the Figure. In the market for beer, a movement from point A to point B could be caused by
an increase in the price of beer.
Refer to the Figure. Which of the following would cause the supply curve to shift from Supply C to Supply A in the market for tables?
an increase in the price of wood
In competitive markets,
both buyers and sellers are price takers.
An increase in the price of a good would
decrease the quantity demanded of the good.
A(n) ___________ in the price of a good will ____________.
decrease; decrease quantity supplied
Refer to the Table. If these are the only four sellers in the market, when the price decreases by $4, the market quantity supplied
decreases by 14 units.
When the price of lumber changes, the demand curve for lumber
does not shift because the quantity demanded of lumber does not change at every possible price.
Suppose a study from a major university reports that consuming chocolate reduces the likelihood of dying from cancer. We could expect the current demand for
hot cocoa to increase.
A movement upward and to the right along the supply curve for mobile phones is caused by a(n)
increase in the price of mobile phones.
Refer to the Figure. The movement from Point B to Point A represents a(n)
increase in the quantity supplied.
If gum and breath mints are substitutes, a higher price for gum would
increase the demand for breath mints.
Refer to the Table. If the market consists of John, Albert, and Phillip and the price decreases by $2, the quantity demanded in the market
increases by 6 units.
If Betty experiences an increase in her income, then we would expect Betty's demand for
inferior goods to decrease.
A decrease in quantity supplied is different from shifting the supply curve to the left because a decrease in quantity supplied
is caused by a price decrease while a shift to the left is caused by a change in a nonprice determinant of supply.
An increase in quantity supplied is different from shifting the supply curve to the right because an increase in quantity supplied
is caused by a price decrease while a shift to the right is caused by a change in a nonprice determinant of supply.
If the price of umbrellas rose to $15 per umbrella, consumers would purchase fewer umbrellas than if the price were $10 per umbrella. If the price of rain boots fell to $20 per pair, consumers would purchase more rain boots than if the price were $25 per pair. These relationships illustrate the
law of demand.
The millennials are the largest generation in US history and, according to a recent study, 80% of them use mobile phone as their primary form of communication. As a result of millennials entering the market for mobile phones, the market demand for
mobile phones shifts to the right.
The highest form of competition is called
perfect competition.
Refer the figure. In the market for pizza in a college, which of the following movements would illustrate the effect of an increase in wages paid to pizza makers and a return of college students after the summer break?
point B to point D
Refer the figure. Which of the following movements would illustrate the effect in the market for restaurant meals of a decrease in consumer incomes if restaurant meals are a normal good?
point D to point A
Consider the market for jelly beans. If the price of jelly beans decreases, the
quantity demanded of jelly beans increases.
When the price of pizza increases, the
quantity supplied of pizza increases.
Consider the market for coffee makers. If coffee becomes cheaper, consumption of coffee is found to reduce heart disease, the wages of workers in coffee maker manufacturing plants increases, and the price of plastic (an input for coffee makers) increases, the equilibrium price will
rise.
Refer to the Figure. An increase in demand is represented by a
shift from Demand A to Demand B.
Refer to the Figure. A decrease in demand is represented by a
shift from Demand C to Demand A.
Refer to the Figure. Consider the market for winter sweaters. A decrease in the price of wool could be shown in the market for winter sweaters by a
shift from S2 to S1.
If Alice expects to earn a higher income next month, she may choose to
shift her demand for clothes to the right.
The US government announces that next month it will offer tax rebates on new energy efficient windows. As a result of this information, today's demand curve for energy efficient windows
shifts to the left.
Refer to the Table. If the price were $60, a
shortage of 35 units would exist, and price would tend to rise.
Suppose milk is currently selling for $2.50 per gallon, but the equilibrium price of milk is $3.00 per gallon. We would expect a
shortage to exist and the market price of milk to increase.
Workers in a union at an automobile assembly plant negotiate a higher wage. It is likely th
supply of autos will shift to the left
If sellers expect lower prices in the near future, the current
supply will increase.
Refer to the Table. If the price were $80, a(n)
surplus of 35 units would exist, and price would tend to fall.
Suppose tickets to a baseball game are currently selling for $60 each, but the equilibrium price of tickets is $50 each. We would expect a
surplus to exist and the market price of tickets to decrease.
Cotton is an important input in the production of t-shirts. If the price of cotton increases, then we would expect the supply of
t-shirts to decrease.
In the market for haircuts, demand is determined by:
the buyers of haircuts.
A very snowy winter in Boston will cause
the demand curve for snow blowers to shift to the right.
If consumers want to buy more apples at every possible price,
the demand curve is shifted to the right.
Today's supply curve for corn could shift in response to a change in
the expected future price of corn.
In the market for bread, supply is determined by
the government.
If the price of cheeseburgers rose to $12 per cheeseburger, producers would produce more cheeseburgers than if the price were $10 per cheeseburger. If the price of hotdogs fell to $3 per hotdog, producers would produce fewer hotdogs than if the price were $5 per hotdog. These relationships illustrate
the law of supply.
Suppose there are five suppliers of ice cream in the town of Summerville. When the price of ice cream is $2 per scoop, Firm A is willing to sell 20 scoops, Firm B is willing to sell 50 scoops, Firm C is willing to sell 35 scoops, Firm D is willing to sell 100 scoops, and Firm E is willing to sell 40 scoops. From this information we can conclude that
the market quantity supplied is less than 250 scoops when the price is $2 per scoop.
Suppose there are five suppliers of ice cream in the town of Summerville. If the price of ice cream is $2.50 per scoop, Firm A is not willing to sell any scoops, Firm B is willing to sell 25 scoops, Firm C is willing to sell 5 scoops, Firm D is willing to sell 10 scoops, and Firm E is not willing to sell any scoops. When the price of ice cream is $3 per scoop, Firm A is willing to sell 20 scoops, Firm B is willing to sell 50 scoops, Firm C is willing to sell 35 scoops, Firm D is willing to sell 100 scoops, and Firm E is willing to sell 40 scoops. From this information we can conclude that
the market supply curve between the prices of $2.50 and $3.00 is upward sloping.
An increase in the number of orange growers causes
the market supply curve for oranges to shift to the right.
Assume the market for wheat is perfectly competitive. When one wheat buyer exits the market,
the price of wheat does not change; when one wheat seller exits the market, the price of wheat does not change.
If buyers and sellers in a certain market are price takers, then individually
they must accept the price the market determines.
Which of the following is the most likely to be a perfectly competitive market?
wheat