Macro HW 4

The equilibrium price and quantity are

$6 and 600 cases

A improvement in production technology will shift the

supply curve to the right

Pizza is a normal good if the demand

for pizza rises when income rises

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

supply of Ashely's bread will increase

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

substitute goods

Refer to Figure 4-7. At what price would there be an excess supply of 200 units of the good?

$30

Refer to Figure 4-5. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units

Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is Table 4-2 Price (Dollars per unit)

31 units

A likely example of substitute goods for most people would be

pencils and pens

A monopoly is a market with one

. seller, and that seller sets the price.

If the supply of a product increases, then we would expect equilibrium price

. to decrease and equilibrium quantity to increase.

Refer to Table 4-1. If the law of demand applies to this good, then Q1 could be

0

Refer to Table 4-3. If the law of supply applies to this good, then Q1 could be

150

Refer to Table 4-4. If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is Table 4-4 Price (Dollars per unit) Quantity Supplied (Units)

28 units

If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?

Both the equilibrium price and quantity would increase.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Individual demand curves are summed vertically to obtain the market demand curve.

false

A group of buyers and sellers of a particular good or service is called

a market

If the demand for a good falls when income falls, then the good is called

a normal good

If a surplus exists in a market, then we know that the actual price is

above the equilibrium price, and quantity supplied is greater than quantity demanded.

Price will rise to eliminate a surplus.

false

Refer to Figure 4-3 . The shift from Da to Db is called

an increase in demand

If muffins and bagels are substitutes, a higher price for bagels would result in

an increase in the demand for muffins.

Refer to Figure 4-3. The shift from Da to Db in the market for potato chips could be caused by

an increase in the price of pretzels

Refer to Figure 4-4. The movement from point A to point B on the graph is called

an increase in the quantity supplied

If a decrease in income increases the demand for a good, then the good is

an inferior good

Sellers respond to a shortage by cutting their prices.

false

If a seller in a competitive market chooses to charge more than the going price, then

buyers will make purchases from other sellers.

A decrease in the price of a good will

decrease in quantity supplied

Refer to Table 4-2. If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded

decreases by 7 units

Refer to Figure 4-1. It is apparent from the figure that the

demand for the good conforms to the law of demand

If the number of buyers in a market decreases, then

demand will decrease

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that sellers are willing and able to sell.

A surplus is the same as an excess demand.

false

Refer to Figure 4-6. The shift from S to S' could be caused by an

improvement in the production technology

Refer to Table 4-4. If these are the only four sellers in the market, then when the price increases from $6 to $8, the market quantity supplied

increases by 12 units

A demand schedule is a table that shows the relationship between

price and quantity demanded

An example of a perfectly competitive market would be the

soybean market

Refer to Figure 4-7. At a price of $35, there would be a

surplus of 400 units

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease

If something happens to alter the quantity supplied at any given price, then

the supply curve shifts

A decrease in demand shifts the demand curve to the left.

true

A decrease in income will shift the demand curve for an inferior good to the right.

true

A decrease in supply shifts the supply curve to the left.

true

Advances in production technology typically reduce firms' costs, which increases the quantity supplied at each price

true

An increase in the price of ink will shift the supply curve for pens to the left.

true

If a good or service has only one seller, then the seller is called a monopoly.

true

Most markets in the economy are highly competitive.

true

Price will rise to eliminate a shortage.

true