Macroeconomics Chapter 3

If the demand for iPhones rises as incomes increase, them the iPhone is a(n) ____ good. A. inferior B. abnormal C. supply D. normal

D. normal

What are the five determinate of demand?

1. tastes and preferences 2. income 3. prices of related goods 4. the number of buyers 5. expectation about future prices, incomes, and product avaliability

The equilibrium price and quantity in this market are: A.$5 and 1k units B. $5 and 6k units C. $15 and 3k units D. $15 and 6k units

C. $15 and 3k units

Institutions that bring buyers and sellers together so they can interact and transact with each other are called: A. networking sites. B. interactive modes C. markets D. arenas

C. markets

Suppose there are three massage therapists, with a supply schedule that indicates their willingness to supply massages at various prices. What is the market quantity of massages supplied at $60, and does this supply schedule follow the law of supply? A. 47; no B. 29; no C. 47; yes D. 29; yes

D. 29; yes

In the market for Chinese take-out, suppose that the price of Sushi take-out, a substitute, decreases in price. What will happen to the demand for Chinese take-out? A. Demand for Chinese take-out will be eliminated B. Demand for Chinese take-out will not change C. Demand for Chinese take-out will increase D. Demand for Chinese take-out will decrease

D. Demand for Chinese take-out will decrease

Which factor would shift the supply of skateboards to the right? A. a new rule banning all skateboards on college campus B. an increase in incomes among skateboards enthusiasts C. a decrease in the price of skateboards D. a large reduction in the price of skateboards

D. a large reduction in the price of skateboards

If the prices were $20, then there would be a ____ units and the price would ____. A. shortage of 4k; fall B. shortage of 2k; rise C. surplus of 4k; fall D. surplus of 2k; fall

D. surplus of 2k; fall

A shift to the right of the supply curve could be caused by a(n): A. improvement in production technology B. increase in the costs of resources C. increase in the price of a complement D. decrease in the number of sellers

A. improvement in production technology

Which circumstance will NOT decrease the supply of commercial air travel? A. a technology change that makes aircrafts more fuel efficient B. a increase in jet fuel prices C. an increase in the wages of airline pilots D. a decrease in the number of companies that offer commercial air travel

A. a technology change that makes aircrafts more fuel efficient

Which favor would shift the demand curve for gasoline to the right? A. an increase in national income B. a decrease in the price of alternative forms of energy C. an increase in the price of gasoline D. decrease in the number of consumers

A. an increase in national income

When a large factory closed in the town of Greenville, income fell for many residents. As a result, demand for normal goods would _____ and demand for inferior goods would _____ A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease

A. decrease; increase

When quantity demanded in a market equals quantity supplied, then the: A. market is in equilibrium B. equilibrium price is less than expected by buyers C. market will not clear without further price adjustments D. market is in temporary disequilibrium

A. market is in equilibrium

The supply curve represents the _____ price at which a firm is willing to_____ A. minimum; sell various quantities of a good B. maximum; sell various quantities of a good C. minimum; pay for inputs D. maximum; pay for inputs

A. minimum; sell various quantities of a good

Ceteris paribus, an improvement in production technology: A. shifts the supply curve to the left, increasing the equilibrium price reducing equilibrium output. B. shifts the supply curve to the right, reducing the equilibrium price and increasing equilibrium output C. shifts the demand curve to the left reducing both equilibrium price and output D. shifts the demand curve to the right, increasing both equilibrium price and output.

A. shifts the supply curve to the left, increasing the equilibrium price reducing equilibrium output.

When the supply shifts from S0 to S1, the equilibrium price changes from: A. $60 to $40 B. $40 to $60 C. 20 units to 15 units D. 15 units to 20 units

B. $40 to $60

Which statement is a CORRECT description of the law of demand? A. As prices of a good rise, the quantity supplied of that good rises B. As prices of a good fall, the quantity demanded of that good rises C. As prices of a good rise, the demand curve shifts to the left D. There is a positive relationship between the price of a good and the quantity demanded.

B. As prices of a good fall, the quantity demanded of that good rises

Which factor would NOT cause the demand curve for green tea to shift to the right? A. a decrease in the price of lemons, a complement to green tea B. a decrease in the price of green tea C. new research showing that drinking green tea reduces the risk of illness D. all of these will shift the demand for green tea to the right.

B. a decrease in the price of green tea

A shift to the right of the demand curve could be caused by a(n): A. decrease in tastes or preferences B. increase in income if the good is a normal good. C. increase in the price of a complement D. decrease in the price of a substitute

B. increase in income if the good is a normal good.

If the price of gasoline increase from $4 to $4.50, ceteris paribus: A. people will buy more gasoline B. people will buy less gasoline C. the demand curve for gasoline will shift to the left D. the demand curve for gasoline will shift to the right

B. people will buy less gasoline

The market economy is often called the price system because: A. prices are often not known until after the transaction is completed B. prices provide information for both buyers and sellers C. all prices must be publicized, by law D. prices become less important over time

B. prices provide information for both buyers and sellers

In the market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even large increase in the demand for online tutors. These events will cause equilibrium price of tutoring to ____ and the equilibrium quantity to ____. A. fall; rise B. rise; rise C. rise; fall D. fall; fall

B. rise; rise

If the price were $10, then there would be a ____ units and the price would ___. A. shortage of 4k; fall B. shortage of 2k; rise C. surplus of 4k; fall D. surplus of 2k; fall

B. shortage of 2k; rise

Suppose that a major drought causes a 30% reduction in the peanut harvest. Of there is no change in demand, this event would cause a _____ at the original equilibrium price, and the equilibrium price will therefore ____ and the equilibrium quantity will ____. A. shortage; rise; fall B. shortage; rise; rise C. surplus; fall;fall D. surplus; fall; rise

B. shortage; rise; rise

Demand refers to: A. consumers wanting a product so much that they insist on the product being produced B. the goods and services buyers are willing and able to purchase at various prices in a given period of time. C. the amount consumers wish they could consume D. the relationship between price and quantity that sellers bring to the market

B. the goods and services buyers are willing and able to purchase at various prices in a given period of time.

The law of demand states that: A. the lower a product's price, the less of that product consumer will purchase during a given period. B. the lower a product's price, the more of that product consumer will purchase during a given period. C. the higher prices will lead producers to offer less of their products for sale during a period D. higher prices will lead producers to offer more of their products for sale during a given period

B. the lower a product's price, the more of that product consumer will purchase during a given period.

Supply is defined as: A. the maximum amount of a product that buyers are willing and able to purchase over a particular time, period at various prices, holding all other relevant factors constant. B. the maximum amount of a product that sellers are willing and able to provide for sale over a particular time period at various prices, holding all other things constant. C. the minimum amount of a product that buyers are willing and able to purchase over a particular time period at various prices, holding all other factors constant. D. The minimum amount of a product that sellers are willing and to provide for sale over a particular time period at various prices, holding all other things constant.

B. the maximum amount of a product that sellers are willing and able to provide for sale over a particular time period at various prices, holding all other things constant.

(table) According to the table, in a two-person market that includes person A and person B, the willingness to pay for the second doughnut is: A.$3 B. $5 C. $6 D. $8

C. $6

When the supply shifts from S0 to S1, the equilibrium quantity changes from: A. $60 to $40 B. $40 to $60 C. 20 units to 15 units D. 15 units to 20 units

C. 20 units to 15 units

(table) According to the table, the equilibrium output is ____ units. A. $12; 70 B. $15; 40 C. $10; 60 D. $12; 60

C. $10; 60

Which circumstance would increase the supply of pork sausage? A. a news release that provides details about the ingredients in pork sausage B. an increase in the number of chicken sausage buyers C. a decrease in the price of ingredients used to produce sausage D. an increase in the number of pork sausage buyers

C. a decrease in the price of ingredients used to produce sausage

What would cause a shift from D1 to D2? A. decrease in the price of honey B. a new virus that reduces the bee population C. a new study that shows that honey cures cancer D. a decrease in population

C. a new study that shows that honey cures cancer

Ceteris paribus, the effect of a decrease in income on a normal good is to shift the: A. supply curve to the left, increasing the equilibrium price and reducing equilibrium output. B. supply curve to the right, reducing the equilibrium price and increasing equilibrium output C. demand curve to the left, reducing both equilibrium price and output D. demand curve to the right, increasing both equilibrium price and output

C. demand curve to the left, reducing both equilibrium price and output

If both the supply and the demand curves shift to the right (assume that the shifts are of equal magnitude): A. equilibrium price and equilibrium quantity both increase B. equilibrium price increases and the effect on the equilibrium quantity is indeterminate C. equilibrium quantity increase and the effect on equilibrium price is indeterminate D. the effect on both equilibrium price and equilibrium quantity in indeterminate

C. equilibrium quantity increase and the effect on equilibrium price is indeterminate

Willingness to pay is the: A. price a consumer pays for a good or service B. price that all consumers in a market pay for a good or a service C. highest value that a consumer believes a good or service is worth D. highest value that a producer believes consumers will pay for his products

C. highest value that a consumer believes a good or service is worth

There is a(n) _____ relationship between price and quantity demanded A. indeterminate B. positive C. negative D. indeterminate, positive, and negative

C. negative

When production technology improves, supply increases and the equilibrium: A. price and quantity increase B. price and quantity decrease C. quantity rises and the equilibrium price falls D. quantity falls and the equilibrium price rise

C. quantity rises and the equilibrium price falls

When the supply of coffee decreases and the demand for coffee increases simultaneously, the price of coffee will (assume that the shifts are of equal magnitude) A. indeterminate B. fall initially and then rise as demand increases to meet the increased supply C. rise D. fall

C. rise

Which item is NOT an example of a market? A. eBay B. a neighborhood yard sale C. the Internal Revenue Service D. New York Stock Exchange

C. the Internal Revenue Service

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal? A. the supply of bubble tea will increase dramatically B. the supply of bubble tea will increase modestly C. the supply of bubble tea will decrease D. the supply of bubble tea will not change

C. the supply of bubble tea will decrease

Suppose that a person discovers that, ceteris paribus, when the price of tomatoes increases, the demand for blue cheese decreases. From this he concludes: A. tomatoes and blue cheese are substitutes B. tomatoes are inferior goods and blue cheese is a normal good C. tomatoes anf blue cheese are complements D. the demand curve for tomatoes has shifted to the left

C. tomatoes anf blue cheese are complements

Another way of referring to a market economy is as a: A. Demand economy B. Command economy C. ceteris paribus D. price systems

D. price systems

Prices: A. allow sellers to determine what goods to sell B. help buyers find possible substitute goods C. contain information useful for all people involved in a transaction D. allow sellers to determine what goods to sell, help buyers find possible substitute goods, and contain information useful for all people involved in a transaction

D. allow sellers to determine what goods to sell, help buyers find possible substitute goods, and contain information useful for all people involved in a transaction

Which circumstance will NOT cause an increase in demand? A. an increase in the price of a substitute good B. a decrease in the price of a complementary good C. a decrease in the product's price D. an increase in the number of buyers in the market

D. an increase in the number of buyers in the market

In the graph, increase in quantity demanded would be represented by a change from point A to point______, while a decrease in a demand would be represented by a change from point D to point ______ A. b;b B. b;c C. c;b D. c;c

D. c;c

If the price of used plug-in electric cars is expected to rise in six months, the reaction the supply of those cars in the market today would likely be a(n) A. upward movement along the supply curve B. downward movement along the supply curve C. shift of supply curve to the right D. shift of the supply curve to the left

D. shift of the supply curve to the left

The graph represents the market for water park admissions. If the price of admissions is set at $50, this would result in a ___ of ____ units. A. shortage; 400 B. shortage; 200 C. surplus; 400 D. surplus; 200

D. surplus; 200

When quantity supplied exceeds quantity demanded, a _____ occurs and prices are pushed ____ toward equilibrium A. shortage; up B. shortage; down C. surplus; up D. surplus; down

D. surplus; down