Chapter 3 and 4 Study Guide

Which of the following will lead to an decrease in demand for water skis?

A decrease in the price of knee boards, if knee boards and water skis are substitute goods

An increase in the number of sellers that occurs at the same time that there is an decrease in the number of buyers in a market will cause:

Equilibrium price to decrease, while equilibrium quantity cannot be determined without further information

__________ is the number of units that individuals are __________ to buy at a particular price during some time period.

Quantity demanded; willing and able

The equilibrium price in market A is $24. The current price in market A is $21. At this price, a(n) ________________________ exists in market A

Shortage and Excess demand

An decrease in the cost of production, ceteris paribus, will cause:

Supply to shift rightward, equilibrium price to fall, and equilibrium quantity to rise

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?

The price will stay the same, but the quantity will decrease.

Assume supply and demand in the market for good X intersect at a price of $10. If government imposes a price ceiling of $8, then:

The quantity demanded will exceed the quantity supplied, resulting in a shortage.

Which of the following is true about the relationship between price and quantity supplied?

There is always a direct relationship between price and quantity supplied.

Which of the following will not shift a supply curve?

a change in the good's own price

An increase in the number of sellers will, ceteris paribus,

decrease equilibrium price and increase equilibrium quantity.

According to the law of supply, an increase in the price of pens will, ceteris paribus:

increase the quantity supplied of pens.

If the demand for ramen noodles increases following a decrease in income, then:

ramen noodles are inferior goods.

Ceteris paribus, if pizza and submarine sandwiches are substitutes and the price of pizza increases, then:

the demand for submarine sandwiches will shift to the right

Assume teenagers in a town can either baby sit or rake leaves to earn money on the weekends. Ceteris paribus, if the price paid for an hour of babysitting decreases relative to the price paid for an hour of leaf raking, then:

the supply of teens available to rake leaves is likely to increase.