Hw2 macro

The primary difference between a change in supply and a change in the quantity supplied is

a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.

Demand is defined as

a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.

A decrease in supply means

a shift to the left of the entire supply curve.

The equilibrium price in a market is established subject to the all other things unchanged condition (ceterius paribus) and, therefore, very well may change due to

change in the price of resource inputs used to produce the good.

According to the concept of the invisible hand

competitive free market systems are efficient under certain conditions

The bulk of the nation's output is produced by

corporations.

A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

decrease; a decrease

Those who make economic policy concerning price controls often do so in order to

establish a more equitable result based on normative judgements.

A maximum price set below the equilibrium price is a

price ceiling.

In he 'standard' supply and demand graph, which of the following is correct

quantity goes on the horizontal axis while price goes on the vertical

If economists say, "the price is too high," they mean that

quantity supplied is greater than quantity demanded.

If demand and supply both shift to the right, then

quantity will go up, but price could go up, down, or stay the same

Which of the following always results in an increase in price and quantity?

an increase in demand with no change in supply

A decrease in the price of a good will, all other things unchanged, result in

an increase in the quantity demanded.

It is true that the equilibrium quantity will always go up if supply

and demand both increase.

It's certain that the equilibrium price will fall when

the supply curve shifts to the right and the demand curve shifts to the left.

The concept of the invisible hand is important because

-it underlies belief in free markets -is suggests that market systems are efficient -is leads to laissez faire

The relationship between the value and price of a stock suggests that

-the equilibrium price of a stock strikes a balance between those who think the stock is worth more and those who think it's worth less at the current price -it is the market's best guess regarding the expected value of the company's future profits.

There is equilibrium in the market when

-there is no shortage -there is no surplus -price is established where the supply curve and the demand curve intersect.

Price ceilings which lead to shortages will impose costs on society because they

-will lead to long waiting lines -may result in black market prices which are higher than the market-determined price would be -lead to a smaller quantity offered on the market.

If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is ________ bags per month. (see hw2 picture)

25

If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is ________ cents. (see hw2 picture)

70

Which of the following would shift the demand curve for new textbooks to the right?

An increase in college enrollments.

The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing handheld calculators improves. Which panel best describes how this will affect the market for handheld calculators? (see hw2 picture)

Panel (a)

The exhibit shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel best describes how this will affect the market for chocolate? (see hw2 picture)

Panel (c)

Without rent controls, the equilibrium rent is _______ and the equilibrium quantity is _______ . (see hw2 picture)

Rent2; Q2

Which of the following would result in a MOVEMENT ALONG the demand curve?

a change in costs of production

The primary difference between a change in demand and a change in the quantity demanded is

a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.

Which of the following would not change the demand for automobiles?

a change in the cost of steel

If the government sets out to help low-income people by establishing a maximum amount for rent

a price ceiling has been set and a shortage of rental units may occur.

If a demand curve shifts to the left, then

a lower equilibrium price and quantity would result.

The U.S. economy can be characterized as

mixed economy

A market is a set of arrangements where

buyers and sellers can get together and buy and sell.

Price controls

can result in inequitable outcomes.

A negative relationship between the quantity demanded and price is called the law of ______.

demand

A market shortage occurs if the quantity

demanded is greater than the quantity supplied.

According the idea of Laissez Faire

governments should not intervene in markets without a good economic reason

A decrease in the price of eggs, all other things unchanged, will result in a(n)

greater quantity of eggs demanded.

A shift of a demand curve to the right, all other things unchanged, will

increase equilibrium price and quantity.

An increase in demand, all other things unchanged, will result in a(n) ________ in the equilibrium price and a(n) ________ in the equilibrium quantity.

increase; increase

Dramatic reductions in costs of producing computers in the 1980's and equally dramatic increases in demand for computers resulted in

increases in quantity of computers and reductions in the price of computers.

A price ceiling will have no effect if

it is set above the equilibrium price.

A ceiling price set in the policy of rent controls

may result in some people who rent out units to leave the business because they cannot cover costs.

Supply is best defined as the

relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity.

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to

rise.

Which of the following will result in an increased price of milk?

shift to the right of the demand curve for milk.

A supply curve that is upward sloping means that

suppliers will want to sell more at higher prices.

The intersection of the supply and demand curves indicates

the equilibrium solution in the market.

A persistent shortage may occur if

the government imposes a price ceiling.

In sketching market supply and demand curves, which of the following is true?

the vertical axis is Price, the horizontal axis Quantity, the upward sloping curve is Supply and the downward sloping curve is Demand