ECO Chapter 3 Homework

Which statement is consistent with the law of supply?

An increase in market price will lead to an increase in quantity supplied.

Which of the following characteristics lead to a downward-sloping demand curve?

-Diminishing marginal utility-An increase in purchasing power as market price decreases

A change from point A to point C =

A change in demand

A change from point A to point B =

A change in quantity demanded

A change from point A to point C:

A change in supply

A change from point A to point B:

A change in the quantity supplied

Which statement is consistent with the law of demand?

A reduction in market price will lead to an increase in quantity demanded.

How is a market demand curve derived from individual demand curves?

Add up quantities demanded by all individual consumers for each price.

Given the following diagram, indicate whether a change in the value of each of the following determinants of demand leads to a movement along the demand curve or a shift in the demand curve.

Change in market price: Movement along demand curve Correct Change in income: Shift in demand curve Correct Change in consumer expectations: Shift in demand curve Correct Change in the price of a related good: Shift in demand curve Correct Change in the price of an unrelated good: No change Correct Change in preferences for this good: Shift in demand curve

What are the determinants of demand?

Income, Price of related goods, Tastes and preferences, and Resource prices

Yogi Berra was once asked about a popular New York restaurant. He said, "Nobody ever goes there anymore—it's too crowded." All joking aside, was he referring to:

a congestion effect.

Suppose that in the market for computer memory chips, the equilibrium price is $50 per chip. If the current price is $55 per chip, then there will be ------ of memory chips.

a surplus

Which buyer demands the least at a price of $5? The most at a price of $7? Which buyer's quantity demanded increases the most when the price decreases from $7 to $6? In which direction would the market demand curve shift if Tex withdrew from the market? What would happen to the market demand curve if Dex doubled his purchases at each possible price? Suppose that at a price of $6, the total quantity demanded increases from 19 to 38. Is this a "change in the quantity demanded" or a "change in demand"?

b.Dex tex c. tex d. Shift to the left Shift to the right e.Change in demand

Suppose that Rhonda has a TikTok account. If all of her TikTok friends switch to SnapChat, Rhonda's demand for TikTok will likely_________

decrease

A price ceiling will result in a shortage only if the ceiling price is------ the equilibrium price.

less than

What are the determinants of supply?

prices of other goods, technology, resource prices, number of producers

What effect will each of the following have on the supply of auto tires?

A technological advance in the methods of producing tires: Supply increases Correct A decline in the number of firms in the tire industry: Supply decreases Correct An increase in the price of rubber used in the production of tires: Supply decreases Correct The expectation that the equilibrium price of auto tires will be lower in the future than it is now: Supply increases Correct A decline in the price of large tires used for semi trucks and earth-hauling rigs (with no change in the price of auto tires): Supply increases Correct The levying of a per-unit tax on each auto tire sold: Supply decreases Correct The granting of a 50-cent-per-unit subsidy for each auto tire produced: Supply increases

How is the market supply curve derived from the supply curves of individual producers?

By adding up the quantities supplied by all individual producers for each price

What happens to the supply curve when any of the following determinants change? Indicate whether each of these determinants causes a shift of the supply curve or a movement along the curve.

Change in market price: Movement along the supply curve Correct Change in factor productivity: A shift of the supply curve Correct Change in producer expectations: A shift of the supply curve Correct Change in the price of other goods: A shift of the supply curve Correct Change in technology: A shift of the supply curve Correct Change in resource prices: A shift of the supply curve Correct Change in taxes: A shift of the supply curve

True or False: A "change in quantity demanded" is a shift of the entire demand curve to the right or to the left.

False

For each stock in the stock market, the number of shares sold daily equals the number of shares purchased. That is, the quantity of each firm's shares demanded equals the quantity supplied. Why, then, do the prices of stock shares change?

Prices change in reaction to a mismatch between quantity demanded and quantity supplied.

Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex are shown in the following table.

Row 1:4 Row 2:2 Row 3:12 Row 4: 4 Row 5: 36

Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex are shown in the following table.

Row 1:8 Row 2" 7 Row3: 8 Row 4: 4 Row 5: 36 b. Dex Rex c.Rex d. Shift to the left Shift to the right e. Change in demand

What effect will each of the following have on the demand for small cars such as the Mini Cooper and Fiat 500?

Small cars become more fashionable: Demand increases Correct The price of large cars rises (with the price of small cars remaining the same): Demand increases Correct Income declines and small cars are an inferior good: Demand increases Correct Consumers anticipate that the price of small cars will decrease substantially in the near future: Demand decreases Correct The price of gasoline substantially drops: Cannot be determined

In which of these two statements are the terms "supply" and "demand" used correctly? A: "In the corn market, demand often exceeds supply, and supply sometimes exceeds demand. B: "The price of corn rises and falls in response to changes in supply and demand."

Statement B

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market? That is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts?

a)Supply decreases and demand is constant. Price increases Incorrect and quantity decreases b)Demand decreases and supply is constant. Price decreases Incorrect and quantity decreases c)Supply increases and demand is constant. Price decreases and quantity increases d)Demand increases and supply increases. Price is indeterminate Correctand quantity increases e)Demand increases and supply is constant. Price increases and quantity increases f)Supply increases and demand decreases. Price decreases Correctand quantity is indeterminate g)Demand increases and supply decreases. Price increases and quantity is indeterminate h)Demand increases and supply decreases. Price is indeterminate and quantity decreases

Between 2018 and 2021, an outbreak of African Swine Fever that spread to dozens of countries led to the slaughter of nearly one-quarter of all the world's domesticated pigs. We would expect that this outbreak would cause the supply of pig leather as well as other pork byproducts such as drumheads, violin strings, and pig-bristle paint brushes to_________

decrease

Rhonda's demand for SnapChat will likely_________

increase