Econ Micro Ch.3

D

Which of the following events would cause the supply curve to decrease decrease from Upper S 1 S1 to Upper S 2 S2​? A. Upper A decrease A decrease in the price of inputs. B. Lower Lower expected future prices. C. An increase An increase in the number of firms in the market. D. An increase An increase in the price of inputs.

D

The cost of producing cigarettes in the United States has increased and at the same​ time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette​ market? A. Both the supply and demand curves have shifted to the right. As a​ result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. B. The supply curve has shifted to the right and the demand curve has shifted to the left. As a​ result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. C. The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. D. Both the supply and demand curves have shifted to the left. As a​ result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

D

The distinction between a normal and an inferior good is A. normal goods are used together while inferior goods are used for the same purposes. B. when income​ increases, demand for a normal good decreases while demand for an inferior good increases. C. normal goods are used for the same purposes while inferior goods are used together. D. when income​ increases, demand for a normal good increases while demand for an inferior good falls.

D

The distinction between substitutes and complements is A. substitute goods are used together while complementary goods are used for the same purposes. B. when income​ increases, demand for a complementary good decreases while demand for a substitute good increases. C. when income​ increases, demand for a substitute good increases while demand for a complementary good falls. D. substitute goods are used for the same purposes while complementary goods are used together.

B

"Because chips and salsa are​ complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in demand for chips results in a higher price for​ chips; this higher price will cause the demand curve for chips to shift to the​ right." Which of the following correctly comments on this​ statement? A. The statement is false because salsa is an inferior​ good; chips are normal goods. B. The statement is false because a change in the price of chips would not change the demand for chips. C. The statement will be true if consumer tastes for chips and salsa do not change. D. The statement is false because one cannot assume that chips and salsa are complements for all consumers.

D

According to the law of​ supply, A. there is a positive relationship between price and quantity supplied. B. as the price of a product​ increases, firms will supply less of it to the market. C. as the price of a product​ increases, firms will supply more of it to the market. D. A and C only

C

Consider the figure to the right and assume that it is the market for​ health-care services. When the​ "baby boomer" generation​ retires, the number of people who require health care increases by​ 30%, and, as a​ result, the number of​ health-care providers also​ increases, but by only​ 25%. What is the effect on the price of​ health-care services over​ time? A. It decreases because demand increased by less than supply. B. It decreases because demand increased by more than supply. C. It increases because demand increased by more than supply. D. It increases because demand increased by less than supply.

A

Consider the following​ statement: ​"An increase in supply decreases the equilibrium price. The decrease in price increases​ demand." The statement is A. ​false: decreases in price affect the quantity​ demanded, not demand. B. ​true: increases in supply decrease price. Decreases in price increase demand. C. ​false: increases in supply increase price. Decreases in price increase demand. D. ​false: increases in supply decrease price.

B

In recent years the cost of producing organic produce in the United States has decreased largely due technological advancement. At the same​ time, more and more Americans prefer organic produce over conventional produce. Which of the following best explains the effect of these events in the organic produce​ market? A. Both the supply and demand curves have shifted to the right. As a​ result, there has been an increase in both the equilibrium price and the equilibrium quantity. B. Both the supply and demand curves have shifted to the right. As a​ result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. C. The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. D. The supply curve has shifted to the left and the demand curve has shifted to the right. As a​ result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

C

In the diagram to the​ right, point A provides the​ _____, point B the​ _____, and point C the​ _____. A. equilibrium​ price; surplus or​ shortage; equilibrium quantity B. market clearing​ price; equilibrium​ point; shortage C. equilibrium​ price; market​ equilibrium; equilibrium quantity D. equilibrium​ price; market​ equilibrium; surplus

surplus fall fall

In the diagram to the​ right, when demand decreases​, a ______ develops at the original price. Equilibrium price will ______ and equilibrium quantity will _____ as a new equilibrium is established

surplus 16

In the diagram to the​ right, when the price is ​$56 per​ player, the amount of the __________ surplus _____ million players per month.

D

Prices of California Merlot wine​ (assume that this is a normal​ good) have risen steadily in recent years. Over this same​ period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California​ Merlots? A. The demand curve and the supply curve for Merlot have both shifted to the left. B. The supply curve for Merlot has shifted to the right faster than the demand curve has shifted to the right. C. The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left. D. The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right.

B

The figure above represents the market for canvas tote bags. Assume that the market price is​ $35. Which of the following statements is true​? A. There is a surplus that will cause the price to​ increase; quantity demanded will then decrease and quantity supplied will increase until the price equals​ $25. B. There is a surplus that will cause the price to​ decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals​ $25. C. There will be a surplus that will cause the price to​ decrease; demand will then increase and supply will decrease until the price equals​ $25. D. There is a surplus that will cause the price to​ decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals​ $25.

surplus fall

The figure to the right illustrates the U.S. market for rugs made in a particular foreign country. Suppose the market price of rugs is ​$ 2 comma 250 2,250. At a price of ​$ 2 comma 250 2,250​, there will be a ______ of rugs. To reach an​ equilibrium, the price of rugs in this market must ______