ECON 2301 MACRO
A maximum allowable price specified by law is a _______.
price ceiling
Given that paper is made from wood, a decrease in the price of wood should:
decrease the price of paper & increase the quantity of paper bought and sold in the market
Seller's surplus is
the difference bw the price the seller receives and the seller's reservation price
in the figure to the right, if the market price for milk is 2$ per gallon then
the excess demand for milk will be 4,000 gallons per day
In the figure to the right, if the market price for milk is $4 per gallon, then:
the excess supply of milk will be 4,000 gallons per day.
buyer's reservation price
the largest dollar amount the buyer would be willing to pay for a good
If ppl tend to go swimming more in the summer than in the winter, then we would except:
the price of swimsuits to be higher in the summer & the demand for swimsuits to be higher in the summer & the quantity of swimsuits bought and sold to be higher in the summer
If an increase in the price of one good, causes a decrease (Leftward shift) in the demand for another good, then the two goods are ______.
complements
Given the figure on the right, if the gov't of Pleasantville make it unlawful to charge more than $500 per month for a one-bedroom apartment, how many apartments would tenants demands?
$35,000 units per month
Refer to the figure above. The equilibrium price and quantity for this market are:
$6; 4.
Given the figure on the right, if the gov't of Pleasantville makes t unlawful to charge more than $500 per month for a one-bedroom apartment, how many apartments would landlords be willing to supply?
15,000 units per month
Suppose Martin just bought a guitar from Jackson off Craigslist for $110. Martin's reservation price was $140, and Jackson's reservation price was $100. The buyer's surplus from this transaction was _______ dollars.
30
Refer to the figure above. In the original market equilibrium:
40 cups of coffee are sold for $2.00 each.
Given the picture on the right, if the price of milk is $3 per gallon, how many gallons per day are consumers willing to purchase? (enter a number only)
5,000
In the figure to the right, what is the equilibrium quantity?
5,000 gallons per day
Given the picture on the right, if the price of milk is $2 per gallon, how many gallons per day are consumers are willing to purchase? (enter a number only)
7,000
Which of the following factors will lead to an increase in demand for normal goods?
An expectation of higher prices in the future & A decrease in the price of a complement
What will happen to the equilibrium price and quantity of beef, if the price of chicken feed increases (assume that chicken and beef are substitutes)?
Both will increase.
How will a new law mandating an increase in required levels of automobile insurance affect the equilibrium price and equilibrium quantity in the market for new automobiles?
Equilibrium price will fall; equilibrium quantity will fall.
What will happen to the equilibrium price and quantity of beef if stricter FDA inspections reduce the number of cattle ranches?
Equilibrium price will increase and equilibrium quantity will decrease.
Suppose the current issue of the New York Times reports an outbreak of mad cow disease in Nebraska, as well as the discovery of a new breed of chicken that gains more weight than existing breeds that consume the same amount of food. How will these developments affect the equilibrium price and quantity of chickens sold in the United States?
Equilibrium quantity will increase, but the effect on equilibrium price is unknown.
In the figure on the right, the movement from point A to point B represents a(n):
Increase in quantity supplied
Assume the supply of land is fixed. How will an increase in the birth rate affect the equilibrium price of land?
The equilibrium price of land will (INCREASE) because (DEMAND) for land shifts to the (RIGHT).
Refer to the figure above. Now suppose that the government imposes a price ceiling of $40. What is the most likely result?
There would be no change in the price.
Which of the following is likely to lead to an increase in the demand for cell phones?
an increase in income & a decrease in the price of cell phone apps
A movement along a demand curve from one price-quantity combination to another is called:
a change in quantity demanded.
An increase in the supply of corn (a rightward shift in the supply curve) could be the result of _____ in the price of an input to the production of corn.
a decrease
If torrential rain wipes out this year's corn crop, this should lead to ______ in supply of corn.
a decrease
Given the picture on the right, if the price of milk is $4 per gallon, how many gallons per day do sellers wish to sale? ______ gallons
7,000
Suppose that the equilibrium price of rice falls and the equilibrium quantity falls. Which of the following best fits the observed data?
A decrease in demand with supply constant.
Which of the following factors will lead to a decrease in demand?
A decrease in the price of a substitute & An increase in income (for inferior goods).
In which of the following situations is the market equilibrium likely to be economically INEFFICIENT?
A market for an inferior good when income increases or for entails a significant benefit to others (like vaccinations) & A market in which the production of the good entails a significant cost to others (like pollution from the production process)
Which of the following factors will lead to an increase in supply?
A technological advance that lowers production costs & A decrease in the cost of inputs to the production prices
Use the graphs provided to predict what will happen to the equilibrium price and quantity of oranges if the following events take place. Instruction: Depict how this event will affect the market of oranges by dragging the appropriate curve in the graph. a. A study finds that a daily glass of orange juice reduces the risk of heart disease. b. The price of grapefruit falls drastically. c. Suppose the wage paid to orange pickers rises. d. Suppose exceptionally good weather provides a much bigger than expected orange harvest.
A) Equilibrium price will increase and equilibrium quantity will increase. correct B) Equilibrium price will decrease and equilibrium quantity will decrease. correct C) What will happen to the equilibrium price and quantity of oranges? Equilibrium price will increase and equilibrium quantity will decrease. D) What will happen to the equilibrium price and quantity of oranges? Equilibrium price will decrease and equilibrium quantity will increase.
In the figure to the right, when the market price is $4, there is.....
An incentive for sellers to lower their prices & Excess supply
A medical breakthrough that decreases the cost of treating cancer should lead to _____ in the supply of cancer treatments.
An increase
Suppose that the equilibrium price of DVD players increases and the equilibrium quantity increases. Which of the following best fits the observed data?
An increase in demand with supply constant.
In a free market, if the price of a good is below the equilibrium price, then;
demanders, to acquire the good, will bid the price higher.
Twenty-five years ago, tofu was available only from small businesses operating in predominantly Asian sections of large cities. Today tofu has become popular as a high-protein health food and is widely available in supermarkets throughout the United States. At the same time, tofu production has evolved to become factory-based using modern food-processing technologies. Using the graph below, show how the tofu market has changed over the last 25 years.
For the graph: Move "D" line up one Move "S" line down one Given the information above, what does the demand-supply model predict about the change in the quantity of tofu sold in the United States over the last 25 years? The equilibrium quantity of tofu will be higher now than 25 years ago. What does it predict about the change in the price of tofu in the United States? The equilibrium price could be higher, lower or the same as 25 years ago.
a. A new and improved crop rotation technique is discovered. The supply curve (shifts to the right.) b. The price of fertilizer falls. The supply curve (shifts to the right) c. The government offers new tax breaks to farmers. The supply curve (shifts to the right) d. A tornado sweeps through Iowa. The supply curve (shift to the left)
How would each of the following affect the U.S. market supply curve for corn?
A technological innovation that reduces the cost of extracting natural gas from the earth's surface should:
Increase the quantity of natural gas bought and sold in the market & decrease the price of natural gas
A market in disequilibrium would feature:
either excess supply or excess demand.
a. The income of buyers in the market for Adirondack vacations increase. The demand curve (shifts to the right). b. Buyers in the market for pizza read a study linking pepperoni consumption to heart disease. The demand curve (shifts to the left). c. Buyers in the market for CDs learn of an increase in the price of downloadable MP3s (a substitute for CDs). The demand curve (shift to the right). d. Buyers in the market for CDs learn of an increase in the price of CDs. The demand curve (remains unchanged).
Indicate how you think each of the following would shift demand in the indicated market:
The most John is willing to pay for a slice of pizza is 2.56. Thus, $2.56 is:
John's reservation price for pizza.
The introduction of rent controls could lead to which of the following?
Lower rent for those who live in rent-controlled apartments. & An decrease in the quantity of apartments available for rent.
Refer to the figure above. What might cause Supply to shift from the Original Supply to the New Supply?
New technology reduces the amount of coffee beans necessary to make a good-tasting pot of coffee.
??????
Refer to the figure above. Suppose that only demand has suddenly shifted to the left. To restore equilibrium, this market will have an immediate:
An Arizona student claims to have spotted a UFO over the desert outside of Tucson. How will this claim affect the supply (not the quantity supplied) of binoculars in Tucson stores?
Supply will not change. The demand for binoculars is likely to increase, leading to an increase in price and quantity supplied (but no change in supply).
Which of the following will a seller's reservation price generally be equal to?
The marginal cost of producing another unit of the good & The smallest dollar amount for which a seller would be willing to sell an additional unit.
Given that hops are an important input to the production of beer, a harp increase in the price of hops should lead to":
a decrease in the amount of beer bought and sold in the market & an increase in the price of beer
If butter and popcorn are complements, then an increase in the price of popcorn will lead to:
a decrease in the equilibrium price of butter & a decrease in the equilibrium quantity of butter
If Red Bull and Coke are substitutes, then a decrease in the price of Red Bull should lea to:
a decrease in the price of coke & a decrease in he amount of Coke bought and sold in the market.
The entire group of buyers and sellers of a particular good or service makes up:
a market.
A change in quantity demanded is represented by ______
a movement along the demand curve.
A change in the quantity supplied is represented by...
a movement along the supply curve
A change in demand is represented by a _____.
a shift in the entire demand curve
A change in supply is represented by ....
a shift in the entire supply curve
State whether the following pairs of goods are complements, substitutes, or both
a. Washing machines and dryers are (complements). b. Tennis rackets and tennis balls are (complements). c. Ice cream and chocolate are (both). d. Cloth diapers and disposable diapers are (substitutes).
Economic efficiency occurs when:
all goods and services are produced and consumed at their socially optimal levels.
If the price of sugar falls, this is likely to lead to ______ in the supply of candy.
an increase
If several new coffee shops open in your town, this should lead to:
an increase in the amount of coffee bought and sold in your town. & a decrease in the price of coffee
Prozac and Wellbutrin re both prescription medications to treat depression. If the price of Prozac increases, then this should lead to:
an increase in the price of Wellbutrin & an increase in the number of ppl who use Wellbutrin
Suppose your roommate recently lost his part-time job, and you notice that afterward his consumption of Ramen Noodle increases. This suggests that for your roommate Ramen Noodles are _______.
an inferior good
The equilibrium price and quantity of any good or service is established by:
both demanders and suppliers.
If the demand for bread increases when the price of peanut butter fails, then this suggests that bread and peanut butter are ______.
complement
Refer to the figure above. A decrease in demand is represented by shifting from:
curve D to curve C.
If the price of blueberries increases, then this should lead to the supply of blueberry muffins to:
decrease
If the price of butter increases, the quantity of butter demanded will ______.
decrease
In the figure on the right, the movement from point A to point B represents a(n): read the answers if answers have all demanded; then this answer:THERE R 2 QUESTION LIKE THIS
decrease in quantity demanded
All else equals, the introduction of tractors into farming in the early 1900s is likely to have:
decrease the price of agricultural products & increase the quantity of agricultural products bought and sold in the markets.
A schedule or graph showing the quantity of a good that buyers wish to buy at each price is known as a _______
demand curve
The numbers in the table below likely capture the daily _____ tennis balls.
demand for
Given the figure on the right, if the gov't of Pleasantville make it unlawful to charge more than $500 per month for a one-bedroom apartment, then this would result in an excess:
demand of 20,000 apartments per month.
Given the figure on the right, if the gov't imposes a price ceiling of $2 per gallon on milk, the this will lead to an excess:
demand of 4,000 gallons per day
Refer to the figure above. Demand for coffee last Monday is shown in bold and labeled D(Monday). On Tuesday, the news featured a story explaining that the coffee crop has been contaminated with disease-causing bacteria. The following week:
demand shifted to D(A) because some people decided to stop drinking coffee in light of the health hazard.
Suppose that both supply and demand for iPads decrease. One can predict that the:
equilibrium quantity will fall but the equilibrium price can rise or fall.
In the figure to the right, when the market price is $2, there is:
excess demand & an incentive for sellers to lower their price.
Refer to the figure above. At a price of $9, the market will experience ______________ in the amount of __________ units.
excess supply; 5 units
Refer to the figure above. If the price is $4 today, and if there are no other changes in this market, one would expect the price in the future to be:
greater than $4.
Suppose that as the price of movie tickets increases, people stop going to the movies as often because they can no longer afford to do so. This reduction in the quantity of movie tickets demanded is known as the _______ of a price change.
income effect
The change in the quantity demanded of a good that results because a change in the price of a good changes the buyer's purchasing power is known as the _____ of a price change.
income effect
If the price of butter increases, the quantity of butter supplies will ______.
increase
In the figure on the right, the movement from S to S1 represents a(n):
increase in supply
Buyer's surplus is
the difference between the buyer's reservation price and the price he or she actually pays
As the price of a good rises:
more firms can cover their opportunity costs of producing the good.
Sellers tend to offer _______ for sale as price increases, and so the supply curve is ______ sloping.
more; upward
If the demand for a good decreases as income decreases, it is a(n):
normal good.
In order to understand how the price of a good is determined in the free market, one must account for the desires of:
purchasers and sellers.
If the demand for tea increases when the price of coffee goes up, then this suggest that coffee and tea are ______.
substitues
If an increase in the price of one good, causes a increase (rightward shift) in the demand for another good, then the two goods are ______.
substitutes
Suppose that as the price of pencils increases, people buy fewer pencils and instead use pens. The resulting reduction in the quantity of pencils demanded is known as the ______ of a price change.
substitution effect
In a free market, if the price of a good is above the equilibrium price, then;
suppliers, dissatisfied with growing inventories, will lower the price.
A schedule or graph showing the quantity of a good that sellers wish to sell at each price is known as a ______.
supply curve
"Holding all other relevant factors constant, consumers will purchase more of a good as the price falls." This statement reflects the behavior underlying:
the demand curve.
The socially optimal quantity
the quantity of a good that results in the maximum possible economic surplus from producing and consuming the good
In the figure to the right, when the price of milk is $3 per gallon:
the quantity supplied equals the quantity demands & the market is in equilibrium
As coffee becomes more expensive, Joe starts drinking tea, and therefore quantity demanded for coffee decreases. This is called:
the substitution effect.
Failure to achieve economic efficiency means that:
the total economic surplus is not maximized & Everyone in the economy could be made better off
If Zach's reservation price for a gallon of milk is $5.53, and the market price for milk is $4.90, then Zach:
will buy a gallon of milk
