Macro chapter 4

What is meant by holding all else equal and how is this concept used when discussing movements along the demand​ curve? A. All variables that can affect the demand for the good are held constant. B. All variables in the model are set to equal values. C. everything else in the economy is held​ constant, including the price of the good. D. All of the above. We make the assumption of holding all else equal when considering demand curves since we want to focus on the changes in the quantity demanded that result from changes in only ______________________.

A. All variables that can affect the demand for the good are held constant. the price of a good

Which of the following is not a characteristic of a​ market? A. Markets are physical locations where trading occurs B. There are rules and arrangements for trading C. Flexible prices D. Voluntary exchanges between economic agents

A. Markets are physical locations where trading occurs

Are all markets perfectly​ competitive? A. ​No, there are other market types where firms have considerable power to control the price. B. ​No, in other types of​ markets, sellers offer identical goods and simply accept the market price. C. ​Yes, any economic system with a market structure is by definition perfectly competitive. D. ​No, there are also command and control markets that are run by a central government.

A. ​No, there are other market types where firms have considerable power to control the price.

What does it mean to say that we are running out of​ "cheap oil"? A. That there are declining reserves of​ low-quality oil, but there is still plenty of​ high-quality oil remaining. B. That oil reserves are becoming more expensive to find and extract over time. C. That we will soon deplete all the​ world's oil​ reserves, which will cause the price of oil to increase significantly. D. That world demand for oil is​ declining, which will raise the price of oil in the future. What does this imply for the price of oil in the​ future? A. The demand for oil will​ decrease, which will lead to higher prices in the future. B. The demand for oil will​ increase, which will lead to lower prices in the future. C. The supply of oil will​ decrease, which will lead to higher prices in the future. D. The supply of oil will​ increase, which will lead to lower prices in the future.

B. That oil reserves are becoming more expensive to find and extract over time. C. The supply of oil will​ decrease, which will lead to higher prices in the future.

If the number of people over the age of 16 in the country increased significantly​, then the demand for the Toyota Rav4 SUV would​ __________. A. remain unchanged. B. increase (shift right). C. decrease (shift left). If people began to believe that SUVs were causing global warming​, then the demand for the Toyota Rav4 SUV would​ __________. A. remain unchanged. B. increase (shift right). C. decrease (shift left).

B. increase (shift right). C. decrease (shift left).

The competitive equilibrium price equates A. supply to demand. B. quantity supplied to quantity demanded. C. price to quantity demanded. D. price to quantity supplied.

B. quantity supplied to quantity demanded.

Holding all else​ constant, if the number of cell phone manufacturers suddenly decreased due to increased​ regulations, then A. supply would shift​ rightwards, equilibrium price would​ increase, and equilibrium quantity would decrease. B. supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease. C. supply would shift​ rightwards, equilibrium price would​ decrease, and equilibrium quantity would increase. D. supply would shift​ leftwards, equilibrium price would​ decrease, and equilibrium quantity would decrease.

B. supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease.

In response to a​ region-wide power outage cause by a​ hurricane, a retailer increases the price of generator from ​$350 to ​$2,900. The most likely purchaser would be A. the first person in​ line, who has ​$300 of worth of refrigerated food to save. B. no​ one, as consumers would boycott such price gouging. C. a restaurant​ owner, who has ​$3,500 worth of refrigerated food to save. D. a wealthy​ individual, who has ​$700 worth of refrigerated food to save.

C. a restaurant​ owner, who has ​$3,500 worth of refrigerated food to save.

If the number of sellers of sparkling wine decreases significantly​, then the supply curve for sparkling wine would​ __________. A. remain unchanged. B. increase (shift right). C. decrease (shift left). If an increase in the immigration of unskilled labor leads to a fall in the wages of wine−grape pickers​, then the supply curve for sparkling wine would​ __________. A. remain unchanged. B. increase (shift right). C. decrease (shift left).

C. decrease (shift left). B. increase (shift right).

The concept of diminishing marginal benefits means that​ __________. A. as you consume more of a​ good, your willingness to pay for that good increases faster than the benefit you receive. B. the more of a good that you​ consume, the lower is your overall benefit from that good. C. each additional unit consumed is worth less to you than the previous one. D. each additional unit consumed is worth more to you than the previous​ one, but the additional benefit grows at a diminishing rate. The concept of diminishing marginal benefits ______________ for goods that you like a lot. Suppose you have a flashlight that takes three batteries to power it. If you buy the batteries one at a​ time, for which purchase will diminishing benefits set​ in? A. When you buy the first battery. B. When you buy the second battery. C. When you buy the third battery. D. When you buy the fourth battery.

C. each additional unit consumed is worth less to you than the previous one. holds true D. When you buy the fourth battery.

The Law of Supply states​ that, in most​ cases, the quantity supplied of a good​ ___________ when the price of the good rises. This means we would expect a typical supply curve to​ be___________. A. ​rises; downward-sloping. B. ​falls; downward-sloping. C. ​rises; upward-sloping. D. ​falls; upward-sloping.

C. ​rises; upward-sloping.

The lowest price that a seller is willing to receive to sell an extra unit of a good is called willingness to accept​, while the highest price that a buyer is willing to pay for an extra unit of a good is called willingness to pay. For a trade to take​ place, a​ buyer's willingness to pay must be​ ____________. A. higher than the​ seller's willingness to accept. B. equal to the​ seller's willingness to accept. C. lower than the​ seller's willingness to accept. D. A and B only. E. All of the above.

D. A and B only.

Which of the following would not be considered a market by an​ economist? A. A dating website B. Your corner gas station C. An online auction site such as ebay D. All of the above are examples of a market.

D. All of the above are examples of a market.

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. A. are able to charge more than the market​ price; cannot pay less than the market price. B. are able to charge more than the market​ price; are able to pay less than the market price. C. cannot charge more than the market​ price; are able to pay less than the market price. D. cannot charge more than the market​ price; cannot pay less than the market price. In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________. A. see no change in its number of customers. B. see a small decrease in its number of customers. C. lose all or almost all of its customers. D. All of the above are equally likely.

D. cannot charge more than the market​ price; cannot pay less than the market price. C. lose all or almost all of its customers.

Suppose a new​ off-campus university apartment complex could rent its rooms on the open market for​ $900 a month. ​If, instead, the university chooses to cap the price of rooms to​ $500 a month for​ students, the result would be that​ ____________. A. quantity demanded would exceed the quantity​ supplied, resulting in a surplus. B. quantity supplied would exceed the quantity​ demanded, resulting in a surplus. C. quantity supplied would exceed the quantity​ demanded, resulting in a shortage. D. quantity demanded would exceed the quantity​ supplied, resulting in a shortage. Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most​ efficient? A. Allocating rooms based on seniority. Seniors get first​ choice, then​ juniors, and so on. B. Auctioning the rooms to the highest bidders. C. Allocating rooms based on​ grades, with students with the highest GPAs getting first choice. D. Using a random lottery to allocate​ rooms, with each student having equal odds of receiving a room.

D. quantity demanded would exceed the quantity​ supplied, resulting in a shortage. B. Auctioning the rooms to the highest bidders.

A price ceiling set below the natural equilibrium price would cause the quantity _____________ to exceed quantity _____________.

demanded; supplied

As a firm produces more of a​ good, the cost of producing each additional unit ____________. This implies that the marginal cost of producing a good ____________ as you make more of that good. The supply curve represents​ ___________. A. the maximum price sellers are willing to accept to sell an extra unit of a good. B. the maximum price buyers are willing to pay to buy an extra unit of a good. C. the minimum price buyers are willing to pay to buy an extra unit of a good. D. the minimum price sellers are willing to accept to sell an extra unit of a good.

increases; increases D. the minimum price sellers are willing to accept to sell an extra unit of a good.

A group of economic agents who are trading a good or service would define a ___________. Price takers exist throughout _____________markets.

market competitive

The Law of Demand states that as the price of a good​ increases, ceteris paribus​, the ___________________ decreases. This can be shown graphically with ____________________ demand curve or numerically in a table using a ____________________. The relationship that exists between these two variables can be described as _____________________.

quantity demanded a downward-sloping; demand schedule negatively related

How would a decrease in supply affect the equilibrium price in a​ market? A. The equilibrium price increases. B. The equilibrium price would remain the same. C. The equilibrium price decreases. D. More information is needed. It may​ increase, decrease, or remain the same. How would the equilibrium price in a market be affected if there were a large increase in supply and a small increase in demand​? A. The equilibrium price increases. B. The equilibrium price would remain the same. C. The equilibrium price decreases. D. More information is needed. It may​ increase, decrease, or remain the same. How would the equilibrium price in a market be affected if there were a large decrease in supply and a small decrease in demand​? A. The equilibrium price increases. B. The equilibrium price decreases. C. The equilibrium price would remain the same. D. More information is needed. It may​ increase, decrease, or remain the same.

A. The equilibrium price increases. C. The equilibrium price decreases. A. The equilibrium price increases.

17 Hurt as Computer Sale Turns Into Stampede​ 'Pandemonium' As​ 5,000 Show Up At Richmond Event Presented with a rare chance to get a used laptop computer for​ $50, a crowd of more than​ 5,000 showed up hours early yesterday at the Richmond International Raceway andlong dash—when the gates finally were flung open at 7 a.m.long dash—turned into an unruly​ stampede, as people​ pushed, shoved and beat each other to get to the Apple iBooks. Elderly men and women were trampled and a​ girl's stroller was crushed. Four years​ ago, Henrico County purchased​ 18,000 of the computers for about​ $1,100 each for its public school students and teachers. The county decided to sponsor​ yesterday's event to sell​ 1,000 surplus iBooks to residents. Read the story to the​ right, and then answer the following​ questions: Based on what happened at the Richmond​ event, it is apparent that at a price of​ $50, the quantity​ _________ of laptops exceeded the quantity​ _________. This resulted in an excess​ _________ for laptops. A. ​demanded; supplied; supply B. ​demanded; supplied; demand C. ​supplied; demanded; supply D. ​supplied; demanded; demand Which of the following ways of distributing the laptops would be more​ efficient? ​(Check all that apply.​) A. Using a random lottery to decide who gets the laptops. B. Auctioning off the laptops to the highest bidders. C. Using flexible​ prices, so those who value the laptop more would pay more for it. D. Using a​ first-come, first-served rule.

B. ​demanded; supplied; demand A. Using a random lottery to decide who gets the laptops. B. Auctioning off the laptops to the highest bidders. C. Using flexible​ prices, so those who value the laptop more would pay more for it.

Market demand is derived by​ __________. A. adding up both the prices each buyer pays and the quantities that each buyer demands. B. dividing each​ buyer's demand by the total number of consumers in the market. C. fixing the price and adding up the quantities that each buyer demands. D. fixing the quantity and adding up the prices that each buyer pays. Does the shape of the market demand curve differ from the shape of an individual demand​ curve? A. ​Yes, individual demand curves tend to be​ downward-sloping, while market demand curves are​ upward-sloping. B. ​Yes, individual demand curves tend to be​ upward-sloping, while market demand curves are horizontal. C. ​No, they both tend to be​ downward-sloping curves. D. ​No, they both tend to be​ upward-sloping curves.

C. fixing the price and adding up the quantities that each buyer demands. C. ​No, they both tend to be​ downward-sloping curves.