Econ Lesson 3-d
Inputs are:
resources that firms use in the production of final goods and services.
According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
decrease; increase.
Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:
decreased and the equilibrium quantity increased.
When firms in a market expect the price of their product to rise, the supply curve of their good:
decreases, causing the equilibrium price to rise.
When supply shifts right and demand shifts left, the:
equilibrium price always falls
When supply shifts left and demand shifts right, the:
equilibrium price always rises
If the price of Gatorade increases, the:
equilibrium price of Powerade will increase because of a shift in demand.
When both supply and demand shift to the left, the:
equilibrium quantity always falls.
When both supply and demand shift to the right:
equilibrium quantity always rises
According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:
equilibrium quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.
Question Text: Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the
equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.
A monopoly:
exists when a single company supplies the entire market for a particular good or service.
When the demand curve shifts to the right and the supply curve is held constant,
the equilibrium price and quantity increase.
Taxes cause the equilibrium price of a good to:
increase
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
$10 and 8 units
he price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
$10 and 8 units
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
$6 and 4 units
Assume there are 100 suppliers of widgets in the widget market. Half of these suppliers supply 35 widgets to the market each, a quarter of these suppliers supply 40 widgets to the market each, and a quarter of these suppliers supply 50 widgets to the market each. What is the market supply for widgets?
4,000
When Katy went to buy Kylie Jenner's Lip Kit, she discovered that the product that was normally $29.95 was selling for $200.00! Which of the following best explains this phenomenon?
An increase in the number of teenage girls with a desire to have fat lips increased demand driving the price higher.
Suppose the cost of shipping fish drops. How will this affect the equilibrium price and equilibrium quantity of fish?
Equilibrium price decreases but equilibrium quantity increases.
What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?
Equilibrium price will be indeterminate and equilibrium quantity will go down.
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
Equilibrium price will be indeterminate and equilibrium quantity will go up.
Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
Equilibrium price will go up and equilibrium quantity will be indeterminate.
Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish with using the same number of crew members. At the same time a new study shows that eating fish at least three times a week helps prevent heart attacks. How will the market for fish respond?
Equilibrium quantity will increase but the effect on the price is unknown without more information.
Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
The equilibrium price will go up and equilibrium quantity will be indeterminate.
Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish with using the same number of crewmembers. At the same time a new study shows that eating fish at least three times a week helps prevent heart attacks. How will the market for fish respond?
Equilibrium quantity will increase but the effect on the price is unknown without more information.
Wine and cheese are complement goods because they are consumed together. What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?
It would decrease because of a demand shift.
Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?
Overall supply will decrease
In the market for breakfast cereal, the market is currently in equilibrium. Suddenly there is a storm that destroys the wheat that farmers had been growing for the cereal manufacturer.
Supply will decrease.
In March 2012, the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning. Because of this, both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient. If Pepsi and Coke did NOT change their formula, holding all else constant, what do you think would have happened to the demand for these goods, assuming Pepsi and Coke were in a competitive market?
The demand curve for Pepsi and Coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.
Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?
The equilibrium price is indeterminate and equilibrium quantity goes down.
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
The equilibrium price of bagels will be indeterminate and the equilibrium quantity will go up.
When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens?
The equilibrium price will be indeterminate and equilibrium quantity will go up
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
The equilibrium price will be indeterminate and the equilibrium quantity will go up.
In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
The equilibrium price will go down and equilibrium quantity will be indeterminate.
Top Ramen is a brand of noodles that is widely considered to be an inferior good with a high salt content. What would happen to the equilibrium price and equilibrium quantity of Top Ramen if income went up and the price of salt decreased?
The equilibrium price will go down and equilibrium quantity will be indeterminate.
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
The equilibrium price will go down and equilibrium quantity will be indeterminate.
Kim attends the farmer's market in her hometown of Bakersfield every Sunday. She notices that all of the oranges sold by the many different farmers at the market have roughly the same price, as do most other products that are alike. Which statement best explains why the prices are so similar?
The farmer's market in Bakersfield is a competitive market so neither the consumer nor the producer has a large influence on the price, allowing for the market to set the price.
When the government places a tax on a good and all else is held constant, which of the following would most likely happen?
The overall consumption of the good decreases, assuming the good does not have a vertical demand curve.
What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant?
The price falls and the quantity rises.
A change in which of the following will cause a change in the quantity supplied of coffee?
The price of coffee
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut butter is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
The price of peanut butter increases to $7 because of a demand shift.
if the price of rubber were to increase by 20% over the fiscal year and if all else were held constant, what would you expect to happen to the supply curve of tires that are sold separately from automobiles?
The supply curve would shift to the left.
On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?
The supply for coffee will increase in India.
During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
They would both decrease.
If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?
They would both decrease.
An improvement in technology:
allows a producer to increase output with the same amount of input
Assume that the market for baseballs is in equilibrium. There is a sudden decrease in income throughout the economy. If all else is held constant, we would expect that:
if baseballs are a normal good, then the demand curve will shift to the left, causing the equilibrium price and quantity to fall.
If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.
increase; increase.
The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.
increases; decreases; decreases; increases
A change in quantity supplied:
is represented by a movement along the supply curve.
Imperfect markets:
occur when the buyer or seller has an influence on the price
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
price expectations.
The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
rise and the equilibrium price would fall.
A decrease in demand is represented by a:
shift of the demand curve to the left.
Changes in population can:
shift the demand curve of a good or service in an area.
When a hurricane rips through Florida, the price of oranges rises because the:
supply curve shifts to the left.
James specializes in college-level economics tutoring. He knows that, during the two weeks before finals, he can charge more for an hour of private tutoring. Expecting this price increase, James will:
supply less tutoring now, shifting supply to the left.
A technological advancement for Good A will shift the _________ curve of Good A to the _________, making the equilibrium price _________.
supply; right; decrease.
The government offers numerous educational subsidies through grants and low-cost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that:
the equilibrium price of education will be indeterminate and the equilibrium quantity of students will go up.
The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?
the price of teddy bears decreases to $4 because of a demand shift.
The law of supply states that, all other things being equal,
the quantity supplied falls when the price falls, and the quantity supplied rises when the price rises.
A shortage occurs whenever:
the quantity supplied is less than the quantity demanded.
