Econ Unit 2 Study Guide Answers

the product above is subject to a per unit excise tax

ABCD A BCE

The supply curve for automobiles will shift to the left in response to

An increase in wages in the automobile industry

During the 1990s, the price of VCRs fell by about 30 percent ... The demand for VCRs

Have shifted to the left

Which of the following statements about price control is true?

Price ceilings and price floors result in a misallocation of resources

During a football game, it starts to rain and temperature drops.

The demand for coffee increased

Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?

The equilibrium price will ration the good

Assume that people like sauerkraut with their bratwurst. If the supply of bratwurst increases, the demand for sauerkraut will most likely

increase because bratwurst and sauerkraut are complements

citing the epidemic of obesity

increase decrease

law of diminishing utility- marshmallows

the additional satisfaction received from consuming extra marshmallows decreases as the consumption of goods increases

Which of the following will NOT change the demand for oranges?

A change in the price of oranges

If hot dogs are an inferior good, what will most likely happen to the price and quantity of the good exchanged?

A decrease in the demand for hot dogs

Assume that the demand for apples is downward sloping

A larger quantity of apples will be demanded

Producer surplus is the

Amount the seller is paid less the cost of production

Which of the following is correct

An increase in the price of X will decrease the demand for complementary product Y

Which of the following events will cause the demand curve for hamburgers to shift to the right?

An increase in the price of pizza

Which of the following events will cause the demand curve for hamburgers to shift to the right

An increase in the price of pizza, a substitute for hamburgers

Which is true of the following is true in the elastic range of a firms demand curve?

Decrease in price will likely lead to an increase in total revenue

If the price of a good decreased by 3 percent and the total revenue increases, the demand for the product would be

Elastic

The demand curve for a normal good slopes down for which of the following reasons?

I and II

Which of the following situations best illustrates the law of demand?

In the past several months

If the cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways

Increase Decrease Decrease

if the cost of producing automobiles increases the price equilibrium quantity and consumer surplus will

Increase Decrease Decrease

If there is an increase in demand for a good, what will most likely happen to the price and the quantity of the good exchanged?

Increase Increase

In a perfectly competitive market which of the following shifts in the supply and demand curves will definitely cause both of the equilibrium price and quantity to increase

No shift Shifts to the Left

The substitution effect causes a consumer to buy less of a product when the price increases because the

Product is now more expensive compared to similar products

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?

To the left because gasoline and tires are complements

A country can consume beyond its present can consume beyond its present production possibilities curve when it

Trades with other countries, thus taking advantage of different opportunity costs

Which of the following will NOT cause the demand for video games to change?

a change in the price of video games

the graph above shows the domestic supply and demand for a produt assuming this country can import the product at a world price of 5

a shortage will develop

which of the following will cause the supply curve for doughnuts to shift to the right

an increase in the number of firms producing doughnuts

product x had an income elasticity

an increase in the price of product y will decrease the demand for product x

a leftward shift in the supply curve for pianos could be caused by

an increase in the wages of workers that make pianos

assume that jacob spends his entire income on the purchase of two goods almonds and cheezy poofs

buy the same amounts of goods almonds and cheezy poofs

An economist for a computer company predicts that a rise in consumer incomes will increase the demand for computers

computers are normal goods

the difference between the price a person is willing to pay for a taco

consumer surplus

assume the demand for a product is relatively inelastic and the supply is relatively elastic

consumers to pay a larger portion of the tax burden

An increase in the price of a product will reduce the quantity demanded for that product because

consumers will substitute other products for the one whose price has risen

following a severe drought the price of bottled water normally increases significantly

create a shortage of bottled water

a decrease in the price of a substitute product will change the equilibrium price and quantity in a market in which of the following ways

decrease decrease

assume a market is currently at equilibrium if a govt provides a per unit subsidy

decrease increase increase

assume that consumers consider tea and coffee to be substitutes

decreasing the demand for coffee and therefore the price of coffee

Assuming Ramen noodles are an inferior good, a decrease in income will shift the

demand curve for ramen to the right

The relationship between quantity supplied and price is ...

direct, inverse

which of the following statements is correct

if demand decreases and supply increases equilibrium price will rise

suppose that the market supply curve for milk

increase increase increase

which of the following will tend to make the demand for suspenders more elastic

new firms will produce similar products (such as belts) enter the industry

avocados- a normal good

new studies suggest that avocados contain traces of cancer fighting substances

if the demand for a product increased at the same time that technological improvements lowered production costs what would happen to the price and quantity

price would be indeterminate and quantity would increase

Other things equal, if the price of a key resource at X fails

product supply curve of x will shift to the right

which of the following would most likely occur if the government imposed a binding price ceiling

quantity demanded will increase

promoters of a traveling circus

relatively elastic

a decrease in the effective minimum wage will have less of an impact on employment if the demand for labor is

relatively inelastic

an economist for a skateboard company predicts that a rise in consumer incomes will increase the demand for skateboards

skateboards are a normal good

A leftward shift of a supply curve for avocados (a normal good)

some avocado farmers leaving the market

price floor at 60

surplus of 100

Refer to A. At price 20, which would occur

surplus of 50

assume the price of a specific good decreases from 12 to 10

the demand for this good is relatively elastic in this price range

which of the following will not change the demand for corn

the price of corn

if buyers max is 300 and sellers min is 150

there would be no exchange

considering chimichangas

when the price of chimichangas decreases the quantity of chimichangas demanded increases