Macro chapter 3

In the market shown in the graph, the equilibrium price is:

$10.

Which of the following describes one reason the supply of cell phones has increased?

Better technology allows cell phones to be produced for less money.

For almost all goods, the _____ the price goes, the _____.

higher; higher the quantity supplied

Assume the graph shown represents the market for button-up shirts and was originally in equilibrium where demand (D) and supply (S) intersect. What type of shock might cause the demand curve to shift to D2?

An increase in consumers' incomes

Jan heads to the store to buy burgers for dinner. Seeing a sale on hot dogs, she buys those instead. The change in her demand for burgers is due to which factor?

Prices of related goods

The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S1) intersect. Something changes in the market, and the supply curve shifts to S2. Which of the following statements is true?

The equilibrium price will decrease by $5.

The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S2) intersect. Something changes in the market, and the supply curve shifts to S1. What could have caused this shift?

The price of pizza sauce increased.

When does a surplus occur?

When the quantity demanded is less than the quantity supplied

Consider a market that is in equilibrium. If the market experiences a decrease in demand:

the equilibrium price and quantity will fall.

The graph shown depicts the market for a good. Suppose the government sets the price of this good at $36. At this price, there is:

a surplus (excess supply) of 7,000 units.

If a producer incorrectly sets the price of its product too high:

a surplus (excess supply) will result.

Which of the following is not a non-price determinant of demand?

The number of sellers in the market

A change in a non-price factor of demand will cause:

a shift of the demand curve.

We say that goods are complements when they:

are consumed together, so that purchasing one will make a consumer more likely to purchase the other.

Suppose the graph shown depicts the demand for a normal good. Pasua was originally consuming at point A, but after receiving a raise at work her demand may:

increase to point B.

An increase in the price of Heinz ketchup is likely to cause a(n) _____ in the demand for Hunt's ketchup, due to a change in _____.

increase; the price of a substitute good

Suppose a factory recently removed robots from its production line, decreasing productivity. This will likely cause a:

leftward shift of the supply curve.

For almost all goods, the:

lower the price goes, the higher the quantity demanded.

Suppose the price of dog collars has decreased and all other variables have remained constant. This change can be shown graphically as a:

movement along the demand curve to the right.

The graph shown depicts the market for a good. At a price of $5, there is:

a shortage (excess demand) of 20 units.

After getting a raise at work, Tiana now regularly buys steak instead of hamburger. Based on this behavior, what can we assume about these goods for Tiana?

Steak is a normal good and hamburger is an inferior good.

Consider the market for pecans, which is currently in equilibrium. Now, suppose a hurricane destroys a large number of pecan trees. How will the market for pecans change as a result of the hurricane?

The equilibrium price will increase and the equilibrium quantity will decrease due to a decrease in supply.

The graph shown depicts the market for a good. At a price of $18, there is:

a shortage (excess demand) of 5,000 units.

Suppose the graph shown depicts the demand for a normal good. A shift from A to B might be caused by: a-b moves to the right

an increase in income.

The "Made in the USA" campaign was popularized by unions in an effort to influence which determinant of demand?

Consumer preferences

Which of the following is not a non-price determinant of supply?

Consumer preferences

Suppose the graph shown depicts the demand for a normal good. A movement from A to C might be caused by

a decrease in price.

Upon Apple's announcement that the newest iPhone model will be released in the next six months, we could reasonably expect that demand for the current iPhone model will _____ due to a change in _____.

decrease; expectations of future prices

The law of supply is described as the:

direct relationship between price and quantity supplied.

The demand curve is a(n) _____ line that reflects the _____ relationship between price and quantity.

downward-sloping; inverse

An increase in the price of butter is likely to cause the demand for:

olive oil to increase.

The demand curve represents the relationship between _____, with everything else held constant.

price and quantity demanded

A demand schedule is a _____ that shows the quantities of a particular good or service that consumers are willing to purchase at various _____.

table; prices

The supply curve is a(n) _____ line that reflects the _____ relationship between price and quantity supplied.

upward-sloping; direct

Equilibrium takes place where:

supply and demand intersect.

The table shows individual demand schedules for a market. What can be said of Betty and Barney's demands for this good?

Both of their demands follow the law of demand.

Consider the market for roses, which is currently in equilibrium. However, Valentine's Day is coming up, and the rose is the most popular flower to gift to a significant other on this holiday. How will the market for roses change on Valentine's Day?

The equilibrium price and quantity will increase due to an increase in demand.

The law of demand describes the:

inverse relationship between price and quantity demanded.

The most likely complementary good for hot dogs would be:

ketchup.

In a _____ economy, private individuals (as opposed to a central planner) make decisions.

market

The equilibrium price is sometimes called the:

market-clearing price.

We say that goods are substitutes when they:

serve similar-enough purposes that a consumer might purchase one in place of the other.

Suppose the demand for socks has decreased. This change can be shown graphically as a:

shift in the demand curve to the left.

The demand for Snickers candy bars will decrease if:

the price of Milky Way candy bars (a substitute) decreases.

The table shows individual demand schedules for a market. If the price of the good is $0.50, total demand by Betty and Barney will be:

36 units.

Ren loves to go to the movie theater, and he just learned that he can buy a ticket at a discounted price using his student ID. Ren now sees movies at the theater even more frequently. Which of the following factors of demand caused the change in Ren's behavior?

Price

Suppose a lawn care company adopts a new scheduling software to replace its old system of filling out paper calendars. Which factor of supply does this scenario exemplify?

Technology

Suppose the price of gasoline has recently increased. How will this affect the market for hybrid cars?

The demand for hybrid cars will increase, increasing the equilibrium price and quantity of hybrid cars.

Consider the market for cupcakes, which is currently in equilibrium. Now, suppose that two events happen simultaneously: (1) the price of sugar, used in the production of cupcakes, decreases and (2) the American Heart Association announces that consumption of excess sugar is extremely dangerous to one's health, reducing the popularity of cupcakes. What effect might these events have on the market for cupcakes?

The equilibrium price will fall, but the change in the equilibrium quantity cannot be determined.

When does a shortage occur?

When the quantity supplied is less than the quantity demanded

Suppose the graph shown depicts the demand for a normal good. A shift from B to A might be caused by:

a decrease in the price of a substitute.

A decrease in the price of spaghetti is likely to cause:

a movement to the right along the demand curve for spaghetti.

The table shown depicts the demand and supply schedules of a good. Equilibrium in this market will occur at:

a price of $1.50 and a quantity of 31.

If a producer incorrectly sets the price of its product too low:

a shortage (excess demand) will result.

Supply describes how much of something producers:

are willing and able to offer for sale at various prices under given circumstances.

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. When the price of oil increases, the demand for ride-on mowers _____ and the supply of ride-on mowers _____.

decreases; decreases

Suppose the price of chocolate chips increases. The producers of chocolate chip cookies will now supply _____ at each price because _____.

less; the price of a main input has gone up

The amount of a particular good that sellers in a market will sell at a given price during a specified period is called:

quantity supplied.

Ceteris paribus is:

the Latin term for "all other things being the same."

The term market refers to:

the buyers and sellers who trade a particular good or service, not to a physical location

Consider a market that is in equilibrium. If the market experiences an increase in supply:

the equilibrium price will fall and the equilibrium quantity will rise.

Suppose John just won the Mega Millions lottery jackpot. What can we assume about his demand?

His demand for normal goods will increase.

The most likely substitute good for hot dogs would be:

burgers.

Demand describes how much of something people:

are willing and able to buy under certain circumstances

The law of demand states that, all else held equal:

quantity demanded rises as price falls.

The amount of a particular good or service that buyers in a market will purchase at a given price during a specified period is called:

quantity demanded.

Equilibrium exists at the point where:

quantity supplied equals quantity demanded.