ECON101 Quiz 4

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.

What does the Invisible Hand adjust?

price and supply

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

____________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

Demand curve is a line that shows the relationship between price and quantity demanded of a certain good or service on a graph, with quantity on the horizontal axis and the price on the vertical axis. A. True B. False

True

Price ceiling is a law that prevents a price from rising above a certain level. A. True B. False

True

The term ceteris paribus describes other things being equal. A. True B. False

True

A change in price of a good or service typically causes ____________ for that specific good or service.

a change along the supply curve

The term "ceteris paribus" means that:

all variables except those specified are constant.

Which of the following is a likely result of the federal government fixing the price of a good above the equilibrium level?

an excess of the good

When the price of a product falls, it normally ____________

decreases production

Which of the following describes a "force" through which the government may correct a failing market?

regulating the sale of alcohol

The term complements describes goods that can replace each other to some extent, so that a rise in the price of one good leads to a lower quantity consumed of another good, and vice versa. A. True B. False

False

The term equilibrium describes the sum of consumer surplus and producer surplus. A. True B. False

False

See Chart A above. Line De represents ranchers' demand for hay last year. This year, winter is extremely mild and ranchers are consequently leaving their cattle in the pasture to graze for a longer period of time than they did last year. Which line represents this year's demand for hay?

D1

See Chart A above. Suppose line De represents the current demand for Ford F150 pickup trucks. If petroleum fell from $80 to $50 per barrel, which line would represent the demand for Ford F150 pickup trucks?

D2

Inferior goods is a law that prevents a price from falling below a certain level. A. True B. False

False

Substitutes means when a change in some economic factor related to supply causes a different quantity to be supplied at every price. A. True B. False

False

In a market system, the opportunity to make a profit is the usual (economic term) to provide a good or ____________ service.

incentive

Which of the following typically spurs production?

incentives

Refer to Figure 3-3. A change from Point A to Point B represents a(n):

increase in quantity supplied.

Which of the following describes a price mechanism through which the government may correct a failing market?

increasing the price of negative products via taxation

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

The quantity of a good or service that a firm is willing to sell to the public is referred to as what?

the supply

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

If the state you live in sets a minimum wage higher than the federal minimum a probable outcome would be what?

there will be surplus of labor.

In the chart above, which bracket best represents the buyers and sellers that WILL participate in the market?

A

The term law of supply describes a line that shows the relationship between price and quantity demanded of a certain good or service on a graph, with quantity on the horizontal axis and the price on the vertical axis. A. True B. False

False

Some economists believe one of the causes of a market failure is when minimum wages are set above the going market rate. When this happens Which of the following is most likely to occur?

More minimum wage earners are unemployed.

If the state of Georgia had an exceptionally large crop of peanuts, what would happen to the demand for jelly?

The demand for jelly would increase.

If a drought significantly reduced the supply of wheat, what would happen to the demand for peanut butter?

The demand for peanut butter would decrease.

A government can fix prices, such as a minimum or maximum price for a good or service which can create aberrancy. When the government fixes a price below the market rate, what would be the most probable aberration?

The market would suffer shortages.

Supply curve is a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis. A. True B. False

True

Supply is a relationship between price and the quantity supplied of a certain good or service. A. True B. False

True

The US agricultural sector experienced a severe drought in 2012. A drought decreases the supply of agricultural products, which means that at any given price, a lower quantity will be supplied; conversely, exceptionally good weather would shift the supply curve to the right. A. True B. False

True

The term supply schedule refers to a table that shows a range of prices for a good or service and the quantity supplied at each price. A. True B. False

True

In which of the following will equilibrium prices will spontaneously establish themselves, persisting until the forces of supply and demand change?

a competitive market

Demand and supply refer to various goods that people are willing to buy and/or sell at various prices at ____________.

a given time

Cigarette manufacturers have maintained extremely high profit margins despite health warnings because consumers ____________.

are addicted.

Governments may subsidize companies to keep them in business. Why could this be problematic?

both of the above are correct

The government may tax a good to reduce demand, but this could result in government failure. How is this possible? Select the best Answer:

both of the above are correct

Refer to Figure 3-2. A change from Point A to Point B represents a(n):

decrease in quantity demanded.

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

A ____________ is a motivation to engage in an action in the market?

incentive

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the ____________

law of demand

A demand curve shows the relationship between price and ____________ on a graph.

quantity demanded

____________ refers to the total number of units that are purchased at that price.

quantity demanded

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

But nearly all supply curves share a basic similarity: they slope ____________.

up from left to right