Econ Exam 1 Ch 4

What would not shift the supply curve for a good or service?

A change in the price of the good or service

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

A decrease in the price of wool shirts and a decrease in the price of raw cotton

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Both the equilibrium price and quantity would decrease.

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

Which of the following is not an example of a market? -A small town has only one seller of electricity. -In the United States, a sick person cannot legally purchase a kidney. -In Florida, there are many buyers and sellers of key lime pie. -The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities.

In the United States, a sick person cannot legally purchase a kidney.

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Price would fall, and the effect on quantity would be ambiguous.

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

Quantity will fall, and the effect on price is ambiguous.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

The equilibrium price would decrease, and the equilibrium quantity would increase.

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

The price of olives rises.

Which of the following is not a determinant of the demand for a particular good? -The prices of related goods -Income -Tastes -The prices of the inputs used to produce the good

The prices of the inputs used to produce the good

Which of the following demonstrates the law of supply? -When leather became more expensive, belt producers decreased their supply of belts. -When car production technology improved, car producers increased their supply of cars. -When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. -When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks.

If muffins and bagels are substitutes, a higher price for bagels would result in

an increase in the demand for muffins.

Today, producers changed their expectations about the future. This change

can affect today's supply.

A likely example of complementary goods for most people would be

chips and salsa

If the number of buyers in a market decreases, then

demand will decrease.

A likely example of substitute goods for most people would be

pencils and pens.

T/F A decrease in the price of a complement will shift the demand curve for a good to the left

false

T/F A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied.

false

T/F A surplus is the same as an excess demand.

false

T/F If the demand for movies increases at the same time as the movie industry adopts labor-saving technology for producing movies, the equilibrium price for movies will increase, but the effect on the equilibrium quantity of movies is ambiguous.

false

T/F Price will rise to eliminate a surplus.

false

T/F Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

false

T/F The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls.

false

T/F When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.

false

Pizza is a normal good if the demand

for pizza rises when income rises.

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

market

The market demand curve

represents the sum of the quantities demanded by all the buyers at each price of the good.

The market supply curve

represents the sum of the quantities supplied by all the sellers at each price of the good.

The law of demand states that, other things equal, when the price of a good

rises, the demand for the good falls.

T/F A decrease in income will shift the demand curve for an inferior good to the right.

true

T/F A shortage is the same as an excess demand.

true

T/F A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

true

T/F An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

true

T/F Price will rise to eliminate a shortage.

true

T/F The actions of buyers and sellers naturally move markets toward equilibrium.

true

T/F Whenever a determinant of supply other than price changes, the supply curve shifts.

true