chap 2

(Table: The Demand for Potato Chips) Use Table: The Demand for Potato Chips. Blair demands 30 bags of potato chips per month when the price of each bag is:

$0.70.

Maria's Pizza offers one slice for $2, two slices for $3.50, three slices for $4.50, and four slices for $5.00. Gil orders two slices. From this information, we know that the marginal benefit to Gil of a second slice is at least _____, and the marginal benefit to Gil of a third slice is less than _____.

$1.50; $1.00

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe. (ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work. (iv) The cost per gallon of gasoline.

(i), (ii) and (iii)

Janelle loves sashimi. Her first piece of sashimi normally gives her a marginal benefit of $5. Each additional piece yields a marginal benefit that declines by $0.25 per piece. If her favorite sushi bar charges $2.75 per piece of sashimi, how many pieces should she eat?

10

(Figure: Mia's Demand Curve for Ice Cream) The accompanying graph shows Mia's demand curve for ice cream, how many cones would Mia be willing to buy at $5 per cone?

3 cones

(Figure: Leonard's Demand for Pecan Pie) Look at Leonard's weekly demand curve for slices of pie. How many slices of pie is Leonard willing to buy at $3 per slice?

5 slices

(Figure: Leonard's Demand for Pecan Pie) Look at Leonard's weekly demand curve for slices of pie. How many slices of pie is Leonard willing to buy at $2 per slice?

7 slices

Which statement is CORRECT?

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve.

Which of the following lists only factors that would cause a decrease in the demand for a good?

A decrease in popularity of a good; a rise in income (if the good is an inferior good); a fall in the price of a substitute good.

Which statement BEST explains the law of demand?

As the price of computers rises, fewer computers are purchased.

The demand curve for meals at a local Chick-fil-A will shift to the left if:

Chick-fil-A offers a free sandwich to people who sign up for their new rewards app.

Which of the following businesses do you think will do well during a recession?

Discount clothing stores

(Figure: Market for High-End Meals) What will happen to the demand for upscale restaurants, if an economy goes into recession and unemployment rises?

Graph A

(Figure: Market for Luxury Vehicles) Which graph shows what will happen in the market for luxury vehicles if a recession is imminent?

Graph A

(Figure: Market for Oral Health Care) A recent article published in the Journal of the American Dental Association talked about the impact of the Great Recession of 2007-2009 on the demand for oral health care in the United States. Which of the graphs illustrates what this impact might have been?

Graph A

(Figure: Market for Tourism) A hotel in Cape Cod, Massachusetts, is completely booked during August. However, in September, tourism drops significantly and some hotel rooms remain empty. Which of the graphs depicts this scenario?

Graph A

(Figure: Market for Bread) Bread and cheese are often considered to be complementary foods. Which graph shows what will happen in the market for bread if the price of bread rises?

Graph C

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of pricing paper rises?

Graph C

(Figure: Market for Stevia) Stevia is a natural sweetener that is used a sugar substitute. Which of the following graphs illustrates the impact of a rise in the price of Stevia on the demand for sugar?

Graph D

Which of the following lists only factors that would cause an increase in the demand for an item?

Information on possible side effects of using an item; a rise in income (if the good is a normal good); a fall in the price of a substitute good

Jane goes to an all-you-can-eat restaurant and makes three trips to the buffet. After finishing food from her third trip, she felt sick and throws up. Which of the following economic explanations best matches Jane's situation?

Jane's marginal benefit from eating the third plate was negative.

Which of the following items is an inferior good?

Low-quality frozen meals

Air Canada announces a 15% off sale on its flights, so fans can watch Toronto Raptors play against the Golden State Warriors in the NBA Finals. What effect will this sale have on Air Canada's flights to destinations other than Canada?

The demand for Air Canada tickets will shift to the right.

If Canadian consumers expect the value of the Canadian dollar to depreciate against the US dollar (the Canadian dollar becomes weaker against the dollar), what impact would we expect this to have on Canadians' demand for American made products?

The demand for American-made items would fall.

If Canadian consumers expect the value of the Canadian dollar to rise against the US dollar, what impact would we expect this to have on Canadians' demand for American made products?

The demand for American-made items would rise.

Due to uncertainty around Brexit, the value of the British pound has been falling against the Euro. How will this affect the demand for German goods in the UK?

The demand for German goods would fall

Recent evidence suggests exercise promotes longevity and reverses aging. Based on this information, what might happen in the market for exercise-related goods and services?

The demand for exercise machines and/or gyms will increase.

In March 2019, airlines around the world grounded their Boeing 737 Max aircraft after two of them crashed. What would we expect to happen in the market for this aircraft?

The demand for the Boeing 737 Max would decrease due to concerns about the safety of the aircraft.

As a part of a market research project, you survey six random people to see how much gas per week they would buy at various prices. The data you collect is in the accompanying table. What is the change in the total demand for gasoline in your survey when the price changes from $2 per gallon to $2.50 per gallon? (table has marty, zain, doc, etc)

The total quantity demanded in the market falls by 14 gallons.

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the change in the total monthly market demand for soda when the price changes from $3 per can to $2.50 per can?

The total quantity demanded in the market rises by 36 cans.

An increase in the price of shoes would probably result in _____ in the demand for shoelaces.

a decrease

Which factor will NOT cause an increase in the demand for shoes?

a decrease in the price of shoes

A normal good is:

a good for which higher income causes an increase in demand.

An inferior good is

a good whose demand decreases when income rises.

Antonio has a cell phone, and his service provider is AT&T. When he calls his wife, Erika, who is also an AT&T customer, he does not have to pay for those minutes. The more AT&T customers there are in the market, the great the benefit Antonio receives. This is:

a network effect.

In May of 2019, the U.S. raised tariffs (import taxes) on a large variety of Chinese imports. In the U.S. market for these Chinese imports, we would see:

a rise in price.

For normal goods

a tax cut on consumer income will lead to a rise in their demand.

(Figure: Graph) Refer to the graph to answer the question. The movement from point V to point W is caused by

an increase in the price of the item.

Fast food is a good example of

an inferior good.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the:

amount of a good that a person is willing to buy at each price.

Suppose the demand curve for monthly subscriptions to Netflix has shifted to the right. What could have caused this?

an increase in the incomes of consumers

Tamara notices that studying for one hour after class increases her statistics grade by 16 points. The second hour yields a 9-point gain, the third hour yields a 4-point gain, and the fourth hour yields only a 1-point gain. This means that the marginal _____ of studying decreases with study hours.

benefit

The Rational Rule for Buyers

compares the benefit of buying an additional unit of the item to the cost of that item.

If the demand for electric cars falls when the price of electricity rises, then electric cars and electricity are:

complements

As Massimo ate cheesecake during one recent outing, he found that he enjoyed each additional slice less and less. This implies that his marginal benefit was:

decreasing.

A _______ illustrates a downward sloping relationship between price and quantity.

demand curve

As consumers consume more units of an item, the marginal benefit of each additional unit decreases at an increasing rate. This can be seen through:

demand curves that are steeper at lower quantities and flatter at higher quantities.

If yoghurt and smoothies are substitutes in consumption, then a rise in the price of yoghurt will cause the:

demand for smoothies to increase

The market price of cruise ship vacations has increased recently. Some economists suggest that the price increased because of an increase in the number of retirees. In other words, they believe that:

demand increased

If a product has a large network effect, it will lead to

greater marginal benefits from using the product and increased demand for the product.

The interdependence principle:

implies that buyers decisions are affected by many factors other than the price of an item.

Stores that are expected to perform better during recessions are those that sell

inferior goods.

A rational buyer will:

keep buying a product until marginal benefit equals price.

Spaghetti and lasagna are substitutes. Holding all other things constant, this means that if the price of spaghetti increases, the demand for:

lasagna will increase.

If ramen noodles are are inferior good, then an increase in income will lead to a:

leftward shift of the demand curve for ramen noodles.

When Coca Cola consumption recently decreased, the Coca Cola Company hired a survey firm to determine what was going on. The firm interviewed consumers, who said that rising Coke prices were discouraging them from purchasing Coke. This implies a:

movement along the demand curve for Coca Cola.

Paint and paintbrushes are complements. A decrease in the price of paintbrushes will cause the demand for:

paint to increase.

The relationship between price expectations and demand is

positive; when future prices are expected to rise, current demand will rise.

Avery goes to the local supermarket to purchase one package of collard greens. She often pays $2.50 for a package, but she finds they are on sale for $1.50 each. According to the law of demand, shoppers like Avery will:

purchase more collard greens than they normally would.

When plotting a demand curve,

quantity demanded is on the horizontal axis.

(Figure: Demand for Bananas) Use Figure: Demand for Bananas. Expectations among consumers that the price of bananas will rise significantly in the near future could be represented as a:

shift from D1 to D2

Steak is a normal good if:

the demand for steak increases when income rises.

Recent research suggests that certain refillable plastic water bottles may leech cancer-causing particles into the containers with repeated usage. As a result of this research being made public, one would expect:

the demand for such containers to decrease.

On a hot sweltering day, you feel thirsty and buy an ice-cold soft drink, which you gulp down. Whether you buy the second drink or not, will depend on

the marginal benefit from the second soft drink and if it will outweigh the price of the soft drink.

You find that the marginal benefit of eating one more yogurt is greater than the price of the yogurt. You conclude that:

you will be better off it you eat one more yogurt.