Econ 201 Macro Chapter 3

Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. The initial equilibrium price and quantity (at the intersection of S1 and D) of sugar are: a) $20 and 2,000 pounds. b) $25 and 3,000 pounds. c) $20 and 4,500 pounds. d) $15 and 4,000 pounds.

b) $25 and 3,000 pounds.

In the market for potato chips, what would cause a price increase? a) Doctors tell their patients that potato chips are unhealthy. b) A fungus kills much of the potato crop in Idaho. c) The price of chip dip triples. d) There is a technological advance in potato chip production.

b) A fungus kills much of the potato crop in Idaho.

Suppose that the demand curve for thneeds is downward sloping. If the price of thneeds decreases because of a change in supply, there will be: a) an increase in the demand for thneeds. b) a movement along the demand curve for thneeds. c) fewer people purchasing thneeds. d) no effect on the quantity demanded of thneeds.

b) a movement along the demand curve for thneeds.

An increase in price and an ambiguous change in quantity are MOST likely caused by: a) a shift to the left of the demand curve and no shift of the supply curve. b) a shift to the left of the supply curve and a shift to the right of the demand curve. c) a shift to the left of the supply curve and no shift of the demand curve. d) a shift to the right of the supply curve and a shift to the left in demand.

b) a shift to the left of the supply curve and a shift to the right of the demand curve.

Which of the following would shift the supply curve for NFL jerseys rightward? a) an increase in the wages of workers employed to produce NFL jerseys b) a technological change that increases the production of NFL jerseys c) an increase in the cost of machinery used to produce NFL jerseys d) an excess of NFL jerseys demanded over NFL jerseys supplied

b) a technological change that increases the production of NFL jerseys

Which factor would shift the demand curve for new computers to the right? a) a fall in the price of new computers b) an increase in student enrollment in college c) a fall in the price of used computers d) a decrease in the price of tablets (such as an iPad)

b) an increase in student enrollment in college

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. a) decrease; decrease b) decrease; increase c) increase; increase d) increase; decrease

b) decrease; increase

An increase in demand and an increase in supply will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. a) decrease; indeterminate change b) increase; indeterminate change c) indeterminate change; decrease d) indeterminate change; increase

b) increase; indeterminate change

Over the past few years, the technology associated with producing flat-screen televisions has improved. This has led to a(n) _____ in the _____ flat-screen televisions. a) decrease; supply of b) increase; supply of c) decrease; quantity supplied of d) decrease; demand for

b) increase; supply of

Spaghetti and lasagna are substitutes. Holding all other things constant, this means that if the price of spaghetti increases, the demand for: a) lasagna will decrease. b) lasagna will increase. c) spaghetti will increase. d) both spaghetti and lasagna will increase.

b) lasagna will increase.

(Figure: Demand for Bananas) Use Figure: Demand for Bananas. If pears are a substitute for bananas, an increase in the price of pears could be represented as a: a) shift from D1 to D3. b) shift from D1 to D2. c) movement from point A to point B. d) movement from point B to point E. ​

b) shift from D1 to D2.

The equilibrium quantity will decrease if: a) supply increases, and demand decreases. b) supply and demand both decrease. c) supply and demand both increase. d) supply increases, and demand remains unchanged. ​

b) supply and demand both decrease.

In the market for barley, if the price of ethanol (which is made from corn, a crop that competes with barley for farmland) increases dramatically, the _____ barley would _____. a) demand for; increase b) supply of; decrease c) demand for; decrease d) supply of; increase

b) supply of; decrease

It is certain that the equilibrium quantity will fall when: a) the supply curve and the demand curve both shift to the right b) the supply curve and the demand curve both shift to the left. c) the supply curve shifts to the left, and the demand curve shifts to the right. d) the supply curve shifts to the right, and the demand curve shifts to the left.

b) the supply curve and the demand curve both shift to the left.

The demand curve for door stoppers is given by P = 45 - 0.5QD, and the supply curve is given by P = 0.25QS. What are the equilibrium price and equilibrium quantity of door stoppers? a) $15 and 60 units b) $5 and 80 units c) $10 and 70 units d) $20 and 80 units

a) $15 and 60 units

(Table: Supply of Matcha Tea) Use Table: Supply of Matcha Tea. When the price of matcha tea is $0.75 per cup, the quantity of matcha tea supplied by Kelly will be _____ cups per day. a) 25 b) 10 c) 40 d) 90

a) 25

The price of good X falls and the demand for good Y decreases. We can conclude that: a) X and Y are substitutes. b) X is a normal good. c) X and Y are complements. d) X and Y are substitutes in production.

a) X and Y are substitutes.

Suppose the New York City housing market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a series of new apartment buildings has just been completed. Given these two changes, and assuming that apartment housing is a normal good, we can predict that the price of apartments will _____, and the quantity of apartments bought and sold will _____. a) fall; rise or fall b) fall; rise c) rise; fall or rise d) fall; fall

a) fall; rise or fall

(Table: Competitive Market for Hats) Use Table: Competitive Market for Hats. A surplus of the good will occur at a price of: a) $5. b) $15. c) $20. d) $10.

c) $20.

(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose there is a freak snowstorm in Florida that destroys one-quarter of the orange crop. Which panel BEST illustrates how this event will affect the market for oranges? a) D​ b) A c) B d) C

c) B

(Figure: The Market for Chocolate) Use Figure: The Market for Chocolate. A surplus of the good will exist at a price of: a) P2 b) P3 c) P1 d) There are no surpluses in this market.​

c) P1

If ramen noodles are an inferior good, then an increase in income will lead to: a) a rightward shift of the demand curve for ramen noodles. b) a movement down along the demand curve for ramen noodles. c) a leftward shift of the demand curve for ramen noodles. d) a movement up along the demand curve for ramen noodles.

c) a leftward shift of the demand curve for ramen noodles.

Which factor would cause an INCREASE in the supply of a good? a) a decrease in the number of firms offering the good. b) an increase in the price of the good c) an advance in the technology of producing the good d) expectations that the price of the good will rise

c) an advance in the technology of producing the good

If the supply and demand curves intersect at a price of $25, then any price below that price would result in: a) equilibrium at a price of $60. b) an increase in demand. c) an excess demand. d) an excess supply.

c) an excess demand.

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to increase the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the combined effect of these two events on the market for gasoline? a) an unpredictable change in the price and a decrease in the quantity b) an unpredictable change in both the price and the quantity c) an increase in the quantity and an unpredictable change in the price d) an increase in the quantity and the price

c) an increase in the quantity and an unpredictable change in the price

Suppose that apples and pomegranates are substitutes in consumption. The _____ pomegranates will increase when apple prices rise. a) quantity demanded of b) supply of c) demand for d) quantity supplied of

c) demand for

(Figure: The Supply of Apple TV Rentals) Use Figure: The Supply of Apple TV Rentals. An increase in the price of online movies sold by movie producers to rental outlets like Amazon and Apple TV would result in the change illustrated by the move from: a) s to t in panel C. b) u to v in panel D. c) p to q in panel B. d) n to o in panel A.

c) p to q in panel B.

If the price in the market is such that the quantity supplied exceeds the quantity demanded, then: a) the price is below the equilibrium price. b) the market is in equilibrium. c) the price is above the equilibrium price. d) the market will not adjust to equilibrium.

c) the price is above the equilibrium price.

If the price of pepperoni (an ingredient in pizza) increases: a) the supply of pizza will rise. b) the supply of pizza will not change. c) the supply of pizza will fall. d) the quantity of pizza supplied will fall.

c) the supply of pizza will fall.

The demand for a good will increase if: a) the prices of inputs needed to produce the good decrease. b) the price of a complementary good increases. c) there is an increase in the number of consumers in this market. d) there is a decrease in the price of the good.

c) there is an increase in the number of consumers in this market.

(Figure: Shifts in Demand and Supply III) Use Figure: Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose the technology used to produce surfboards improves. Which panel BEST illustrates how this innovation will affect the market for sunscreen, a complement in consumption of surfboards? a) D b) B c) C d) A

d) A

Which of the following is NOT a key element of the supply and demand model? a) The market equilibrium, which includes the equilibrium price and equilibrium quantity. b) The way the market equilibrium changes when the supply curve or demand curve shifts. c) The set of factors that cause the demand curve to shift and the set of factors that cause the supply curve to shift. d) The way in which disequilibrium of supply and demand causes the supply curve or demand curve to shift to restore equilibrium.

d) The way in which disequilibrium of supply and demand causes the supply curve or demand curve to shift to restore equilibrium.

The demand curve for Adidas shoes has shifted to the right. What could have caused this? a) a fall in the price of Adidas b) an increase in the supply of Adidas c) an increase in the price of Adidas d) an increase in enthusiasm among consumers for Adidas as an exercise shoe

d) an increase in enthusiasm among consumers for Adidas as an exercise shoe

The Chicago Tribune recently reported that the price of new cars, a normal good, has increased and that the quantity of new cars sold has risen. The new price and quantity could have been caused by a(n): a) decrease in production costs. b) decrease in buyers' incomes. c) increase in production costs. d) increase in buyers' incomes.

d) increase in buyers' incomes.

The market for wheat in North Dakota is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in North Dakota. a) few; few b) many; few c) few; many d) many; many

d) many; many

Good X is a normal good if: a) income and the demand for good X are negatively related. b) a rise in the price of a complement causes the demand for good X to decrease. c) a rise in the price of a substitute causes the demand for good X to increase. d) the demand for good X increases when income rises.

d) the demand for good X increases when income rises.