Unit 3 Quiz

What is the effect on the quantity of video games demanded if the price of video game consoles increases?

It decreases Answer: It decreases. Feedback: Quantity of video games demanded decreases. Video game consoles are a complement to video games. When the price of video game consoles increases fewer people will buy video game consoles, so fewer people will buy video games.

What is the effect on the quantity of orange juice demanded if the price of apple juice increases?

It increases Answer: It increases. Feedback: Quantity of orange juice demanded increases. Orange juice is a substitute for apple juice. If the price of apple juice goes up, more people are likely to buy orange juice instead of apple juice, so the quantity of orange juice demanded goes up.

What is the effect on the quantity of video games demanded if overall consumer income increases?

It increases Answer: It increases. Feedback: Quantity of video games demanded increases. Since video games are normal goods, when income increases, demand for video games increases.

In this graph both the x and y axis represent the Quantity of Product Y Demanded. There is a black line that starts on the upper left-hand side and decreases diagonally across the graph towards the bottom right. There is an arrow pointing left from this line towards a new green line. The green line is parallel to the black line and is to the left of it. Which of the following choices could cause the movement shown in this graph above?

a decrease in income This shows a demand curve shifting to the left. This means that demand is decreasing, which could possibly indicate a decrease in income because people are buying less of that particular item

If there is a surplus of a good, its price will ___________________.

decrease Answer: decrease. Feedback: A surplus means that there is more supplied than demanded. Everyone who demands the good is able to buy it, and suppliers either cut prices or reduce supply.

A shift to the left in the demand curve indicates

decrease in demand. Any curve that shifts to the left is a decrease of that curve. Any curve that shifts to the right is an increase of that curve.

A rise in the price of a game of bowling will

decrease the demand for bowling balls This question refers to complementary goods. If two goods are complementary, then the rise in price for one will result in a decrease in demand for the other.

A rise in the price of a racquetball game will

decrease the demand for racquetballs This question refers to complementary goods. If two goods are complementary , then the rise in price for one will result in a decrease in demand for the other.

The law of demand states that as the price of a good increases, the quantity demanded

decreases Answer: It decreases. Feedback: Quantity demanded varies inversely with price. When a price increases, consumers will demand less. When a price decreases, consumers will demand more.

The law of supply states that as the price of a good rises, the quantity supplied decreases. true or false

false

If there is a shortage of a good, its price will ___________________.

increase Answer: Increase. Feedback: A shortage means that there is more demanded than supplied. This means there are many people demanding a good who cannot acquire it. Suppliers notice this and raise prices.

Since prices don't favor producers or consumers, they are described as

neutral

According to the substitution effect, if two items satisfy the same need and the price of one rises,

people will buy the lower priced item. A substitute is a good that can be used in place of another good or service. Naturally if the price of one good rises that has a substitute, the demand for the substitute will increase because it has a lower, unchanged price.

The only factor that can cause a change in quantity demanded for a product is a change in

price for that product

Once a market is at its equilibrium price, unless something changes, the ___________________ and ___________________ will not change.

price; quantity Answer: price; quantity. Feedback: Once at equilibrium, the price and quantity will not change unless there is a shift in the supply or demand curve.

When a product becomes a fad, the demand curve for that product

shifts to the right. A fad is an intense and widely shared enthusiasm for something. When a product becomes a fad, demand increases. When demand increases, the demand curve shifts to the right.

In order to demand a good, a consumer must be both willing and able to buy it. true or false

true

Marginal cost is the cost of producing one more unit of output. true or false

true

The law of demand states that, as the price of a good rises, the quantity demanded decreases. true or false

true

Equilibrium is defined as...

where supply meets demand

In order to demand a good, a consumer must be both __________ and __________ to buy the good.

willing; able willing and able

It costs Balls-R-Us, a supplier of soccer balls, $3.00 to produce each soccer ball and $300.00 to make one hundred soccer balls. It is able to sell these soccer balls for $10.00 each. What is the marginal cost of producing soccer balls?

$3.00

What is a possible cause of the shift in demand from D1 to D2 in the graph below? In this graph the x axis represents Quantity of Baseballs, and the y axis represents Price of Baseballs. There is a black line titled Demand for Baseballs that starts on the upper left-hand side and decreases diagonally across the graph towards the bottom right. There is an arrow pointing left from this line towards a new red line. This red line is parallel to the black Demand for Baseballs line and is to the left of it. There is also a second black line titled Supply of Baseballs that starts at the bottom left and increases diagonally towards the upper right-hand corner, crossing the other two lines.

The price of baseball bats (a complementary good) increased If the price of a complementary good increases, this would result in a decrease in demand for baseballs.

Toy businesses take advantage of procrastinating consumers by racking up the price of their products right before the year-end holidays when most children get presents. Wise consumers have noted this strategy and have adjusted to it accordingly. Which one of the graphs below depict their economic behavior during the beginning of November just prior to the holiday buying season?

The x axis on this graph represents Quantity of Toys, and the y axis represents Price of Toys. There are two solid black lines that cross in the center at a marked point, making an 'X' on the graph; the Supply of Toys line starts in the bottom left and increases diagonally, while the Demand for Toys line starts in the upper left and decreases diagonally. There is an arrow pointing right from the Demand for Toys line to a new red line. This red line is parallel to the Demand for Toys line and is to the right of it.

The government sets a price ceiling on pizza that is below the equilibrium price of pizza, causing

a shortage of pizza