Ec202 Chapter 4

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good? Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises? The equilibrium price would decrease, and the equilibrium quantity would increase. Both the equilibrium price and quantity would decrease. Both the equilibrium price and quantity would increase. The equilibrium price would increase, and the equilibrium quantity would decrease.

The equilibrium price would increase, and the equilibrium quantity would decrease.

Which of the following is not a determinant of the demand for a particular good? Income The prices of related goods Tastes The prices of the inputs used to produce the good

The prices of the inputs used to produce the good

Refer to the three demand curves shown for electric cars. Which of the following would shift the demand for electric cars from D1 to D3? a) a decrease in the price of electric guitars. b) a decrease in the price of gasoline. c) an increase in the price of electric cars. d) an increase in the price of gasoline.

a decrease in the price of gasoline.

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a) a movement down along the supply curve. b) a movement up along the supply curve. c) a shift of the supply curve to the left. d) a shift of the supply curve to the right.

a shift of the supply curve to the right.

Refer to the three demand curves for coffee and assume that coffee is a normal good. Which of the following would shift the demand for coffee from D1 to D2? a) an increase in the price of coffee. b) an increase in consumer incomes. c) a decrease in consumer incomes. d) a decrease in the price of coffee.

b) an increase in consumer incomes.

If a seller in a competitive market chooses to charge more than the going price, then a. the sellers' profits must increase. b. the owners of the raw materials used in production would raise the prices for the raw materials. c. other sellers would also raise their prices. d. buyers will make purchases from other sellers

buyers will make purchases from other selle

Refer to the three demand curves in the figure above. An "increase in quantity demanded" caused by a change in price would be illustrated by a change from a) point 5 to point 1. b) point 2 to point 5. c) point 4 to point 6. d) point 4 to point 1.

d) point 4 to point 1.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would change but you don't know how without more information. be unaffected. decrease. increase.

decrease

It is apparent from the figure that the a. demand for the good decreases as income increases. b. good is a normal good. c. demand for the good conforms to the law of demand. d. good is inferior.

demand for the good conforms to the law of demand.

The shift from S to S' could be caused by an increase in input prices. increase in income. improvement in production technology. increase in the price of the good

improvement in production technology.

A decrease in the price of a good will increase demand. increase quantity demanded. decrease quantity demanded. decrease demand.

increase quantity demanded.

Refer to Table 4-2. If these are the only four buyers in the market, then when the price decreases from $1.50 to $1.00, the market quantity demanded increases by 24 units. increases by 7 units. increases by 1.75 units. decreases by 2 units.

increases by 7 units.

Two goods are complements when a decrease in the price of one good decreases the quantity demanded of the other good. increases the quantity demanded of the other good. decreases the demand for the other good. increases the demand for the other good.

increases the demand for the other good.

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires is unaffected, and the supply of tires increases. is unaffected, and the supply of tires decreases. decreases, and the supply of tires increases. is unaffected, and the supply of tires could increase, decrease, or stay the same.

is unaffected, and the supply of tires could increase, decrease, or stay the same.

A competitive market is a market in which an auctioneer helps set prices and arrange sales. there are only a few sellers. the forces of supply and demand do not apply. no individual buyer or seller has any significant impact on the market price.

no individual buyer or seller has any significant impact on the market price.

The signals that guide the allocation of resources in a market economy are surpluses and shortages. quantities. government policies. prices.

prices.

A improvement in production technology will shift the demand curve to the left. demand curve to the right. supply curve to the left. supply curve to the right.

supply curve to the right.

If buyers and sellers in a certain market are price takers, then individually buyers will be able to find prices lower than those determined in the market. they have no influence on market price. sellers will find it difficult to sell all they want to sell at the market price. they have some influence on market price but that influence is limited

they have no influence on market price