Macroeconomics Homework 3

Consider the market for the Nissan Xterra. Suppose the price of metal, which is an input in automobile production, decreases What happens on the graph? According to the graph, when the price of metal decreases, the quantity of Nissan Xterras supplied at any particular Xterra price _______. Instead, consider the future price of Xterras. If Nissan believes the future price of Xterras will be lower, then Nissan may ______ supply today

Shift the supply curve to the right; increases; increase

Consider the market for gasoline, illustrated in the figure to the right The equilibrium quantity of gasoline is ______ million gallons and the equilibrium price is $______ per gallon If instead the market price were $3.25, then there would be a _____ of _____ million gallons

5; 2.50; surplus; 3

the diagram in panel b (graph) is an example of A. a demand curve B. the substitution effect C. the income effect D. a demand schedule

A. a demand curve

In general, the term "ceteris paribus" means A. all else equal B. holding everything else variable C. unsettled mathematical paradigms D. Both A and B

A. all else equal

Market price is determined by A. both supply and demand B. supply only C. demand only D. neither supply nor demand

A. both supply and demand

Consider the figure to the right and assume that it is the market for health-care services. when the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25% What is the effect on the price of health care services over time? A. it increases because demand increases by more than supply B. it decreases because demand increased by less than supply C. it increases because demand increased by less than supply D. it decreases because demand increased by more than supply

A. it increases because demand increased by more than supply

According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why? A. when the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change B. when price increases, quantity demanded increases C. when the price of a good increases, consumers purchases complementary goods that are now relatively less expensive D. A and C only

A. when the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change

Which of the following events would cause the supply curve to decrease from S1 to S2? A. lower expected future prices B. an increase in the price of inputs C. an increase in the number of firms in the market D. a decrease in the price of inputs

B. an increase in the price of inputs

According to the law of demand A. when the price of a product falls, quantity demanded will decrease B. there is an inverse relationship between price and quantity demanded C. when the price of a product increases, quantity demanded will increase D. all of the above

B. there is an inverse relationship between price and quantity demanded

On the diagram to the right a movement from A to B (downward movement on the demand curve) represents a A. decrease in demand B. change in demand C. change in quantity demanded D. movement up the demand curve

C. change in quantity demanded

in the diagram to the right, point A provides the ______, point B the ______, and point C the ______. A. market clearing price; equilibrium point; shortage B. equilibrium price; market equilibrium' surplus C. equilibrium price; market equilibrium; equilibrium quantity D. equilibrium price; surplus or shortage; equilibrium quantity

C. equilibrium price; market equilibrium; equilibrium quantity

the distinction between a normal and an inferior good is A. when income increases, demand for a normal good decreases while demand for an inferior good increases B. normal goods are used for the same purposes while inferior goods are used together C. when income increases, demand for a normal good increases while demand for an inferior good falls D. normal goods are used together while inferior good are used for the same purposes

C. when income increases, demand for a normal good increases while demand for an inferior good falls

According to the law of supply, A. there is a positive relationship between price and quantity supplied B. as the price of a product increases, firms will supply less of it to the market C. as the price of a product increases, firms will supply more of it to the market D. A and C only

D. A and C only

Consider the market for Hewlett-Packard printers, depicted in the figure to the right, where the supply of HP printers has increased from S1 to S2. What would cause the supply curve for HP printers to shift to the right? A. a decrease in the price of a substitute in production B. a decrease in the price of an input C. a higher expected future price for HP printers D. both A and B E. all of the above

D. Both A and B

Which of the following would cause a shift in the demand curve from point A to point B? A. a decrease in income (inferior good) B. an increase in the price of a substitute good C. an increase in income (normal good) D. all of the above

D. all of the above

On the diagram to the right, a movement from A to B ( upward movement on the supply curve) represents a A. movement down the supply curve B. Change in supply C. decrease in supply D. change in quantity supplied

D. change in quantity supplied

A perfectly competitive market is a market that meets the conditions of A. few buyers and sellers, all firms selling identical products, and no barriers to new firms entering the market B. many buyers and sellers, all firms selling differentiated products, and no barriers to new firms entering the market C. many buyers and sellers, all firms selling identical products, and significant barriers to new firms entering the market D. many buyers and sellers, all firms selling identical products, and no barriers to new firms entering the market

D. many buyers and sellers, all firms selling identical products, and no barriers to new firms entering the market

Consider the market for LCD TVs, illustrated in the figure to the right. Find the equilibrium point and label Suppose instead that the price of the LCD tvs is $2000.00. This will result in a ______, which will place ______ pressure on the price

Equilibrium point 5000, 1400 surplus; downward

In the diagram to the right, when demand increases, ______ develops at the original price Equilibrium price will _____ and the equilibrium quantity will ______ as a new equilibrium is established

a shortage rise; rise

in the diagram to the right, when supply increases, ______ develops at the original price Equilibrium price will ______ and equilibrium quantity will _____ as a new equilibrium is established

a surplus fall; rise

Consider the market for chicken, illustrated in the figure to the right. the market is initially in equilibrium at a price of P1 and at a quantity of Q1 Suppose the supply curve shifts to the right from S1 to S2 and the demand curve shifts to the right from D1 to D2. Note that in the figure the shift in demand is larger than the shift in supply. As a result of these changes, the new equilibrium will be ______, and the new equilibrium quantity will be ______

higher; higher

In the Diagram to the right, when the price is $45 per player, the amount of the ______ is ______ million players per month

shortage; 14

Consider the market for MP3 players, illustrated in the figure to the right. The market is initially in equilibrium at a price of $70 and at a quantity of 250 (thousand) players Suppose there is a positive change in technology What happens on the graph? As a result of the positive change in technology, the new equilibrium price will be ______, and the new equilibrium quantity will be ______.

the supply curve shifts to the right lower; higher