Chapter 3 Quiz Econ

If a demand curve is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price.

decrease; increase

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

The graph shows how supply and demand might shift in response to specific events. Suppose excessive rainfall destroys one-third of the nation's radish crop. Which panel BEST illustrates how this will affect the market for radishes?

C

A rise in the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport bananas could be represented in the figure as a movement from:

C to A

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.

The market is in equilibrium at point C. Suppose most people drink peach juice in the afternoon with champagne. What will be the new equilibrium point in the peach juice market if a law banning alcohol passes?

D

The price of good X falls and the demand for good Y decreases. We can conclude that:

X and Y are substitutes

The law of demand states that, other things equal, as the price:

decreases, the quantity demanded will increase

An increase in the price of strawberries causes strawberry jam producers and consumers to expect that the price of strawberry jam will rise in the future. In the market for strawberry jam, both the equilibrium price and the equilibrium quantity increase. It must be the case that:

the demand for strawberry jam increased by more than the supply of strawberry jam decreased.

A market where no single buyer or seller can influence the price is a:

competitive market

There is an excess demand of 210 bags of salt and vinegar chips per month if the price is _____ per bag.

$0.30

Demand and Supply of Sugar. Given the initial equilibrium of S1 and D, any price below _____ will exert pressure for the price to _____.

$25, rise

The Demand for Potato Chips. If Blair, Serena, and Dan are the only three buyers in the market, and the price of a bag of potato chips is $0.50, the total market quantity demanded is _____ bags per month.

240

The figure shows how supply and demand might shift in response to specific events. Suppose a wet and sunny year increases the nation's strawberry crop by 20%. Which panel BEST illustrates how this event will affect the market for strawberries?

Ans is last option graph B represent the above situation Due to wet and sunny year increases the supply by 20% which will shift the supply curve to the right leading to a decrease in equilibrium price and an increase in equilibrium quantity

An increase in price and an ambiguous change in quantity are MOST likely caused by:

a shift to the left of the supply curve and a shift to the right of the demand curve

Which factor is MOST likely to shift the supply curve for milk to the left

a tax on each gallon of milk produced

An increase in the price of online movie rentals would result in the change illustrated by the move from:

s to t in panel C

If bananas are a normal good, an increase in the incomes of consumers could be represented as a:

shift from D1 to D2

A shift of the demand curve for fried chicken would NOT be caused by a change in

the price of fried chicken

Market equilibrium occurs when:

there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears.