Econ Test 2

If in the market for peaches the supply curve has shifted to the left,

The supply of peaches has decreased

The Baby Steps can best be described as

All of the above

Refer to Figure 3-5. At a price of $5, the quantity sold

Is 2 units

Which is not a key to saving money

your income

A sinking fund approach means:

Saving and paying cash

Excess demand causes a shortage

True

Rent control is an example of

price ceiling

How much money should a couple who makes $54,000 a year have in their beginner emergency fund if they have a credit card bill of $3,000 and a mortgage

$1,000

Using the sinking fund approach, how much do you have to save each month to buy a $5,000 car one year from now?

$416.66 a month into savings

How much money should you have in your beginner emergency fund by the time you hit Baby Step 2

$500 or $1,000 depending on your current income

A movement along the demand curve for toothpaste would be caused by

A change in the price of toothpaste

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as

A decrease in quantity demanded

Which of the following will shift the demand curve for a good

A decrease in the price of a complementary good

Holding everything else constant, an increase in the price of MP3 players will result in

A decrease in the quantity of MP3 players demanded

If an increase in income leads to an increase in the demand for peanut butter, then peanut butter is

A normal good

Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by

A price decrease, decreasing the quantity supplied and increasing the quantity demanded

Refer to Figure 3-4. If the curren market price is $10, the market will achieve equilibrium by

A price increase, increasing the quantity supplied, and decreasing the quantity demanded

In the economic sense, almost everything is scarce. ________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

A shortage

A decrease in the price of GPS systems will result in

A smaller quantity of GPS systems supplied

Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement from

A to B

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

An inferior good

The saving habits of Ben and Arthur best illustrate which principle of saving?

All of the above

To build discipline and get into the habit of saving, you should

All of the above

Which is not a factor that shifts the demand cuve

Altered price for inputs

What is the difference between an "increase in demand" and an "increase in quantity demanded"

An increase in demand is represented by a rightward shift of the demand curve while an increase in quantity demanded is represented by a movement along a given demand curve

The law of supply states that, holding everything else constant, that

An increase in price causes an increase in quantity supplied

What is the difference between an increase in supply and an increase in quantity supplied

An increase in supply means the supply curve has shifted to the right while an increase in quantity supplied refers to a movement along a given supply curve in response to an increase in price

The law of demand implies, holding everything else constant, that

As the price of bagels increases, the quantity of bagels demanded will decrease

Which of the following is the correct way to describe equilibrium in a market

At equilibrium, quantity demanded equals quantity supplied

Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from

B to A

Which is not a factor that shifts the demand curve

Change in price

Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

Complements in consumption

Refer to Figure 3-1. An increase in population would be represented by a movement from

D1 to D2

Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from

D2 to D1

Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from

D2 to D1

A normal good is a good for which the demanded increases as income decreases, holding all else constant

False

The minimum wage is an exmaple of a price ceiling

False

The ____ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power

Income

A successful marketing campaign will increase the demand for Red Bull. This will ____ the equilibrium price and ___ the equilibrium quantity of Red Bull.

Increase, increase

Which of the followin is not one of the three reasons to save

Pay off debt

If the demand curve for a good shifts letfward

Quantity demanded is less at each price

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?

Quantity demanded will decrease, quantity supplied will increase, and surplus will result

Suppose that when the price of raspberries increases, Lonnie increases his purchases of payayas. To Lonnie,

Raspberries and payayas are substitutes

Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from

S1 to S2

Refer to Figure 3-2. An increase in the price of inputs would be represented by a movement from

S2 to S1

Refer to Figure 3-2. An increase in the price of substitutes in production would be represented by a movement from

S2 to S1

Which is the correct order of priorities for your money

Save for emergencies, invest in retirement, pay off the house

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant

The demand curve shifts to the right

If a firm expects that the price will be higher in the future than it is today

The firm has an incentive to decrease supply now and increase supply in the future

A change in all of the following variables will change the market demand for a product except

The price of a product

At a product's equilibrium price,

The product's demand curve crosses the product's supply curve

Which of the following is true about the relationship between price and quantity supplied

There is usually a direct relationship

A change in supply is represented by a shift of the supply curve

True

An increase in the quantity of a product supplied is caused by an increase in the price of the product

True

Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.

True

What is the most sensible way to buy a $4,000 car

Use the sinking fund approach and save $400 a month for ten months

Which statement is true

When you pay with cash, you have a higher chance of negotiating a better deal

Which of the following is true about the concept of saving

You must pay yourself first

Savings is about

contentment and emotion

If a demand curve shifts to the right, then

demand has increased

To affect the market outcome, a price ceiling

must be set below the equilibrium price

What does ceteris paribus mean?

other things being equal

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

price; quantity; price

Refer to Figure 3-4. If the price is $10

there would be a shortage of 600 units.

Refer to Figure 3-5. At a price of $15

there would be a surplus of 4 units.