ECON CHAPTER 3

A decrease in the number of sellers in the market causes a. the supply curve to shift to the left. b. the supply curve to shift to the right. c. a movement up and to the right along a stationary supply curve. d. a movement downward and to the left along a stationary supply curve.

a

An increase in quantity demanded a. illustrated by a movement downward and to the right along a demand curve. b. illustrated by a movement upward and to the left along a demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right.

a

At the equilibrium price for gasoline: a. everyone with the desire and the income to buy gasoline at that price can do so. b. surpluses are inevitable. c. quantity demanded exceeds the quantity supplied. d. none of the above

a

If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____. a. indeterminate; decrease b. indeterminate; increase c. decrease; indeterminate d. increase; indeterminate

a

In markets, prices move toward equilibrium because of a. the actions of buyers and sellers. b. government regulations placed on market participants. c. increased competition among sellers. d. buyers' ability to affect market outcomes.

a

Other things constant, a decrease in the price of fertilizer will: a. increase the supply of wheat. b. decrease the supply of wheat. c. increase the demand for wheat. d. decrease the demand for wheat.

a

At an equilibrium price: a. quantity demanded exceeds quantity supplied. b. quantity demanded equals quantity supplied. c. quantity demanded is less than quantity supplied. d. there is no scarcity.

b

If the price of music downloads decreases, which of the following is most likely to occur? a. Quantity demanded will decrease. b. Quantity demanded will increase. c. Demand will increase. d. Demand will decrease.

b

Suppose the price of gasoline and other petroleum products decline sharply. Which of the following will most likely occur as a result of the lower petroleum prices? a. an increase in demand for solar heating systems b. an increase in demand for larger, more powerful automobiles c. an increase in demand for home insulation products d. an increase in demand for gasoline

b

The law of demand illustrates a(n) ____ relationship between price and ____. a. direct; quantity demanded b. inverse; quantity demanded c. inverse; demand d. direct; demand

b

The law of demand states that, ceteris paribus, an increase in a. price causes quantity demanded to increase. b. price causes quantity demanded to decrease. c. quantity demanded causes price to increase. d. quantity demanded causes price to decrease.

b

When quantity demanded increases at every possible price, the demand curve a. shifts to the left. b. shifts to the right. c. there is a movement along the given demand curve. d. none of the above.

b

When the price of a good is lower than the equilibrium price, a. a surplus will exist. b. buyers desire to purchase more than is produced. c. sellers desire to produce and sell more than buyers wish to purchase. d. quantity supplied exceeds quantity demanded.

b

Whenever the price of Good A increases, the demand for Good B increases as well. Good A and B appear to be: a. complements. b. substitutes. c. inferior goods. d. normal goods.

b

Which of the following is not held constant along a given demand curve? a. income b. price c. tastes d. expectations

b

Which of the following is the correct way to describe equilibrium in a market? a. At equilibrium, demand equals supply. b. At equilibrium, quantity demanded equals quantity supplied. c. At equilibrium, market forces no longer apply. d. At equilibrium, the "fairest" price for output is achieved.

b

Which of the following is true of a competitive market? a. The rules of supply and demand do not apply to it. b. Buyers and sellers have little market power. c. Each buyer's or seller's effect on market price is substantial. d. Few sellers offer similar products.

b

Which of the following relationships reflect the law of demand? a. a decrease in quantity demanded leads to the decrease in the quantity supplied b. an increase in price decreases the quantity demanded c. a change in price leads to a change in demand d.an increase in price leads to an increase in quantity demanded

b

Which of the following would not cause a change in the supply of milk? a. an increase in government subsidies to dairy farmers b. an increase in the price of milk c. the discovery of growth hormones to stimulate the milk production of cows d. an increase in the cost of feed for cows

b

A leftward shift in supply could be caused by: a. an improvement in productive technology. b. a decrease in income. c. some firms leaving the industry. d. a fall in the price of inputs to the industry.

c

A supply curve slopes upward because a. as more is produced, total cost of production falls. b. an increase in input prices increases supply. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity.

c

Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel? a. an increase in equilibrium price and an increase in equilibrium quantity b. an increase in equilibrium price and a decrease in equilibrium quantity c. a decrease in equilibrium price and an increase in equilibrium quantity d. a decrease in equilibrium price and a decrease in equilibrium quantity

c

If consumers are less willing and able to pay for each level of output than they were previously, then apparently: a. demand has increased. b. supply has increased. c. demand has decreased. d. there has been a movement down along the demand curve.

c

The law of demand refers to the: a. decrease in price that results as more units of a product are demanded. b. increase in price that results from an increase in demand for a good of limited supply. c. inverse relationship between the price of a good and the quantity demanded. d. increase in the quantity of a good made available when its price increases.

c

Which of the following relationships reflect the law of supply? a. increase QS => increase P b. decrease P => decrease S c. increase P => increase QS d. decrease P => increase QS

c

A downward-sloping demand curve shows: a. the direct relationship between price and quantity supplied; as price increases, the quantity supplied increases. b. the inverse relationship between price and quantity supplied; as price increases, the quantity supplied decreases. c. the direct relationship between price and quantity demanded; as price increases, the quantity demanded increases. d. the inverse relationship between price and quantity demanded; as price increases, the quantity demanded decreases.

d

A movement along the supply curve might be caused by a change in a. technology. b. supplier's input prices. c. expectations about future prices. d. the price of the good or service that is being supplied.

d

Along a supply curve: a. supply changes as price changes. b. quantity supplied changes as price changes. c. supply changes as technology changes. d. quantity supplied changes as technology changes.

d

Antonio's makes the greatest pizza and delivers it hot to all the dorms around campus. Last week Antonio's supplier of pepperoni informed him of a 25% increase in price. Which variable determining the position of the supply curve has changed and what effect does it have on supply? a. future expectations; supply decreases b. future expectations; supply increases c. input prices; supply decreases d. input prices; supply increases

d

Ceteris paribus, if the market demand for a product increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____. a. increase; indeterminate b. decrease; decrease c. indeterminate; decrease d. increase; increase

d

Suppose roses are currently selling for $30 per dozen, but the equilibrium price of roses is $20 per dozen. We would expect a a. shortage to exist and the market price of roses to increase. b. shortage to exist and the market price of roses to decrease. c. surplus to exist and the market price of roses to increase. d. surplus to exist and the market price of roses to decrease.

d

When quantity demanded decreases in response to a change in price: a. the demand curve shifts to the right. b. the demand curve shifts to the left. c. there is a movement down along the demand curve. d. there is a movement up along the demand curve.

d

Which of the following is not true of a competitive market? a. The rules of supply and demand do not apply to it. b. Buyers and sellers have little market power. c. Each buyer's or seller's effect on market price is substantial. d. Many sellers offer a wide variety of differing products.

d

Which of the following will cause a change in the supply of a product? a. a change in the price of suppliers' inputs b. a change in the price of alternative goods that could be produced with the same resources c. a change in the expected future price of the product d. all of the above

d

Which of the following would not cause an increase in the demand for cheese? a. a decrease in the price of crackers, which are consumed with cheese b. an increase in the income of cheese consumers, assuming that cheese is a normal good c. an increase in the population d. a technological advance that makes it cheaper to produce cheese

d