Macro Assign #1

Refer to Table 3-1. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. At a price of $4, the quantity demanded in the market would be

150 lbs.

Refer to Figure 3-4. At a price of $25, how many units will be sold?

500

Refer to Figure 3-4. At a price of $20, how many units will be sold?

600

Assume that in recent years the cost of producing microbrew beer in the U.S. has decreased largely due to technological improvements. At the same time, more and more Americans prefer microbrew beer over wine. Which of the following best explains the effect of these events in the microbrew beer market?

Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

Refer to Figure 3-1. An increase in the price of a substitute would be represented by a movement from

D1 to D2.

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery, and fewer doctors decide to enter the field of joint replacement surgery?

Demand and supply will both decrease.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Panel (a)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for blu-ray discs. Which panel best describes what happens in this market if there is a substantial increase in the price of blu-ray players?

Panel (d)

If the price of gasoline increases, what will be the impact in the market for public transportation?

The demand curve for public transportation shifts to the right.

Factory incentives on cell phones have encouraged consumers to upgrade their phones. How does this affect the market for bluetooth headsets?

The demand for bluetooth headsets increases.

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D 1 and S 1 (point A). If the price of motorcycle engines increases, and the wages of motorcycle workers increase, how will the equilibrium point change?

The equilibrium point will move from A to B.

Which of the following would cause a decrease in the equilibrium price and decrease in the equilibrium quantity of papayas?

a decrease in demand

Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase?

a decrease in the price of apples

Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except

an increase in the price of gasoline.

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

an inferior good.

The market for smartwatches is becoming very competitive. The increase in competition in this market is an example of how the market responds to

changes in consumer tastes.

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

income

Refer to Figure 3-5. At a price of $15, the quantity sold

is 2 units.

At market equilibrium,

quantity demanded equals quantity supplied.

When the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the ________ effect.

substitution; income

The substitution effect of a price change refers to

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

Because new plastic and recycled plastic are substitutes, as the price of newly produced plastic increases,

the demand curve for recycled plastic shifts to the right.

A firm has an incentive to decrease supply now and increase supply in the future if it expects that

the price of its product will be higher in the future than it is today.

Apple's decision in 2002 to focus on developing a smartphone rather than a tablet computer exemplifies the

trade-off that firms face due to limited resources.