Micro Chap 3
Which of the following illustrates an inferior good?
Cassie eats less macaroni and cheese because she received a large year-end bonus at work.
Suppose that the supply of oil and the demand for oil both increase next year and that the increase in supply is equal to the increase in demand. What will happen to the equilibrium price?
It will stay the same.
According to the following figure, how would the supply and demand curves need to shift in order to move from market equilibrium (E) to point A?
Supply and demand shift to the left, demand shifting farther than supply.
Suppose that the local food store lowers the price of hot dogs. Which of the following would likely occur as a result?
The quantity demanded of hot dogs will increase and the demand for hot dog buns will shift to the right
In 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) cut off oil supplied to the West in response to the United States resupplying the Israeli military. The oil embargo caused oil prices to rise. According to the law of demand, what will happen in the oil market based on this price change?
The quantity demanded will decrease
According to the law of demand, an increase in the price of a product will lead to which result?
The quantity demanded will decrease.
Over the past few decades, the cost of producing computers has decreased. This has caused computer prices to fall as well. According to the law of demand, what will happen in the market for computers based on this price change?
The quantity demanded will increase
According to the law of supply, if the price of cars increases, what will happen to the quantity of cars supplied?
The quantity supplied will increase.
In February 2011, unrest in the Ivory Coast and other African countries threatened to reduce the supply of cocoa beans used to make chocolate. If the price of chocolate increased, the result would be:
a movement along the same demand curve from one point to a higher point on the curve.
The quantity supplied of spoons has decreased due to a change in price. How would this change in quantity supplied be represented on the supply curve?
a movement from one point on the curve to a lower point on the curve
All markets have the same basic component, which is:
a transaction
According to the law of supply, if the price of wheat decreases, the quantity supplied of wheat will:
decrease
If an increase in income causes a decrease in the demand for a good, then the good is called a(n) _____ good.
inferior
Because Shannon just got a significant raise at work, she has started to eat less macaroni and cheese. In this example, macaroni and cheese is what type of good?
inferior good
Prices are used to provide __________ between buyers and sellers.
information
An institution that enables buyers and sellers to interact and transact with one another is called:
market
The increased demand for corn for ethanol production has resulted in record high corn prices. As a result, more farmers have planted acreage in corn. The effect on the supply of corn would be shown as:
new curve to the right
The market economy is also called the __________ system.
price
Market equilibrium quantity exists where
quantity supplied and quantity demanded are equal
If an increase in the price of Levi's jeans causes demand for Wrangler jeans to increase, what type of goods are Levi's jeans and Wrangler jeans?
substitute goods
Because prices contain useful information for buyers and sellers, the market economy is sometimes called
the price system
Prices provide information
to buyers and sellers
A decrease in subsidies on the production of a good would cause the supply curve for that good to shift:
to the left
An increase in subsidies on the production of a good will cause the supply curve for that good to shift:
to the right.
The quantity demanded for bread has increased due to a decrease in price. How would this change in quantity demanded be represented on the demand curve?
a movement from one point on the demand curve to a lower point on the demand curve
An increase in the price of oil can make it more costly to produce a good or service that is dependent on oil. How would this be illustrated on a supply and demand graph of a product dependent on oil?
a new supply curve to the left of the original curve
To find the market supply of a good or service, economists
add together the quantities each producer would produce at each price.
The supply curve for potato chips in the potato chip market is:
an upward-sloping line.
Starting from point E, which point is the most likely outcome of an increase in the number of sellers of a good, holding all else constant?
c
If an increase in the price of one good causes a decrease in demand for another, the two goods are called _____ goods
complementary
The quantity demanded of mattresses increased due to a decrease in price. Because of this the demand for bed frames increased. In this example, mattresses and bed frames are _____ goods.
complementary
