Econ ch 3

When a non-price factor changes--such as technology, expectations, prices of related goods, prices of inputs, or the number of sellers, there is a change in:

supply and the entire curve shifts

The equilibrium price is often called the market-clearing price because:

there is neither excess demand nor excess supply.

Consider the market for cars. Which determinant of supply is affected by each of the following events? A: A steel tariff increases the price of steel. B:Improvements in robotics increase efficiency and reduce costs.

A: prices of inputs B: technology

Suppose an economic boom causes incomes to increase. This will cause the:

demand for smart phones to increase, and both the price of smart phones and the quantity of smart phones traded would rise.

when supply decreases and demand remains constant equilibrium price: Equilibrium quantity:

increases decreases

When there is a change in the specific numerical quantity demanded due to a change in price this is referred to as a change in:

quantity demanded and the demand curve does not shift

Suppose two artists are selling paintings for the same price in adjacent booths at an art fair. By the end of the day, one artist has nearly sold out of her paintings while the other artist has sold nothing. Which characteristic of competitive markets has not been met and best explains this outcome?

standardized good

The market for cell phones reaches equilibrium because cell phone sellers have an incentive:

for prices to rise and some cell phone consumers will not buy at higher prices, driving the price to equilibrium

Suppose an economic boom causes incomes to increase and, at the same time, drives up wages for the sales representatives who work for cell phone companies. This will cause the:

price of cell phones to rise, but the change in the equilibrium quantity is unclear and depends on whether the shift in demand is larger or smaller than the shift in supply

Consider the market for corn. Indicate whether each of the following events will cause a shift in the demand curve or a movement along the curve. If it will cause a shift, specify the direction. A: A drought hits corn-growing regions, cutting the supply of corn: B: The government announces a new subsidy for biofuels made from corn: C: A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good): D: A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre: E: An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:

A: movement along the demand curve B: rightward shift of demand C: leftward shift of demand D: movement along the demand curve E: rightward shift of demand

Consider the following events: A: The price of cell phones goes down by 25 percent during a sale. This event would cause a _________ B: You get a 25 percent raise at your job. This event would cause a _________ C: Which of the following statements is true?

A: movement along the demand curve B: shift of the demand curve C: A change in price will mean a movement along an existing demand curve. Correct

when demand increases and supply remains constant equilibrium price: Equilibrium quantity:

increases increases

A supply curve slopes upward because sellers are willing to sell:

more at higher prices, because they have more revenue than they had when they offered lower prices.

Suppose an economic boom drives up wages for the sales representatives who work for cell phone companies. This will cause the:

supply of cell phones to decrease; the price of cell phones would increase and the quantity of cell phones traded would fall

Consider the market for cars. Which determinant of demand is affected by each of the following events? A: Environmentalists launch a successful One Family, One Car campaign: B: A baby boom occurred 16 years ago: C: Layoffs increase as the economy sheds millions of jobs: D: An oil shortage causes the price of gasoline to soar: E: The government offers tax rebates in return for the purchase of commuter rail tickets: F: The government announces a massive plan to bail out the auto industry and subsidize production costs

A: consumer preferences B: number of buyers C: incomes D: prices of related goods E: prices of related goods F: expectations

Consider the following events: A: A fruit worm infestation ruins a large number of apple orchards in the state of Washington. This event would cause a ________ in the market for apples. B: Demand for apples goes down, causing the price to fall. This event would cause a _________ C: Considering the events described above, which of the following statements is true?

A: shift of the supply curve B: movement along the supply curve C: A change in price will mean a movement along an existing supply curve

Refer to the demand and supply schedule shown in the table below. Price Quantity demanded (slices) Quantity supplied 0.00 350 0 0.50 300 100 1.00 250 150 1.50 200 200 2.00 150 250 2.50 100 300 3.00 50 350 3.50 0 400 A: If pizza parlors charge $3.50 per slice, there will be an excess: B: If pizza parlors charge $3.50 per slice, there will be an excess: C: The equilibrium price is _______ per slice, and the equilibrium quantity is ________ slices of pizza.

A: supply of 400 units B: demand of 100 units C: 1.50, 200

When a market is in equilibrium, the:

quantity demanded equals the quantity supplied at the market price.

In each of the following examples, name the factor that affects supply and describe its impact on the supply of cell phones. A: Economic forecasts suggest that the demand for cell phones will increase in the future. B: The price of plastic goes up. C: A new screen technology reduces the cost of making cell phones.

A: expectations, the supply will decrease B: price of inputs, the supply will decrease C: technology, the supply will increase

In each of the following examples, name the factor that affects demand and describe its impact on your demand for a new cell phone. A: You hear a rumor that a new and improved model of the phone you want is coming out next year. B: your grandparents give you $500 C: A cellular network announces a holiday sale on a data package that includes the purchase of a new smartphone. D: A friend tells you how great his new phone is and suggests that you get one, too.

A: expectations, your demand will decrease B: income, your demand will increase C: price of related good, your demand will increase D: consumer preferences, your demand will increase

Consider shopping for cucumbers in a farmers' market. For each statement below, note which characteristic of competitive markets the statement describes. A: All of the farmers have their prices posted prominently in front of their stalls. B: Cucumbers are the same price at each stall. C: There is no difficulty moving around between stalls as you shop and choosing between farmers. D: You and the other customers all seem indifferent about which cucumbers to buy.

A: full information B: participants are price takers C: no transaction costs D: standardized good

Consider the market for corn. Indicate whether each of the following events will cause a shift in the supply curve or a movement along the curve. If it will cause a shift, specify the direction. A: A drought hits corn-growing regions: B: The government announces a new subsidy for biofuels made from corn: C: A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good): D: A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre: E: An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:

A: leftward shift of supply B: movement along the supply curve C: movement along the supply curve D: rightward shift of supply E: movement along the supply curve

when demand and supply decrease equilibrium price: Equilibrium quantity:

cannot be predicted decreases

when demand and supply increase equilibrium price: Equilibrium quantity:

cannot be predicted increases

If a decrease in the price of laptops causes the demand for tablets to increase, laptops and tablets are

complements

when demand decreases and supply increases equilibrium price: Equilibrium quantity:

decreases cannot be predicted

when demand decreases and supply remains constant equilibrium price: Equilibrium quantity:

decreases decreases

when supply increases and demand remains constant equilibrium price: Equilibrium quantity:

decreases increases

When a non-price factor changes--such as income, expectations, prices of related goods, consumer preferences, or the number of buyers, there is a change in:

demand and the entire curve shifts

when demand increases and supply decreases equilibrium price: Equilibrium quantity:

increases cannot be predicted

When there is a change in the amount firms produce due to a change in price, this is referred to as a change in:

quantity supplied and the supply curve does not shift

A demand curve slopes downward because:

when prices are lower, people think the good is inferior