Econ practice quiz Ch.3

In the market for desk lamps, which of the following will increase demand? Select all the answer options that apply.

-An increase in income if the good is a normal good -If the price of floor lamps increases and floor lamps are a substitute good

As the owner of a hotel, you have decided to lower the price for all rooms in the month of October. What should you expect to happen?

As the price is lowered, the quantity demanded of rooms will increase

According to the law of supply, what is the relationship between price and quantity supplied?

Direct

A change in which of the following will cause a change in the quantity demanded of coffee?

The price of coffee

If the price of rubber were to increase by 20% over the fiscal year and if all else were held constant, what would you expect to happen to the supply curve of tires that are sold separately from automobiles?

The supply curve would shift to the left.

On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?

The supply for coffee will increase in India.

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

a decrease in the number of buyers in a market

In module 3 on supply & demand, we saw a clip from the film, The Hudsucker Proxy, where children who saw a boy playing with a hula-hoop, all rushed at once to the toy store to buy hula-hoops because they wanted to play with one too. When he saw more & more children come to buy his hula-hoops, the toy store owner started posting higher prices. This occurrence is an example of:

an increase in demand for hula-hoops.

Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):

decrease in quantity supplied from Q1 to Q2.

For a market to be competitive:

each buyer and seller is small, relative to the whole market; no single decision-maker has any influence over the market price.

Which of the following is both a shift in supply and a shift in demand?

expectations of future prices

Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?

firms leaving the market

Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would:

increase and the quantity would decrease.

Something is an inferior good if the demand for the good:

increases as the consumer's income decreases

The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.

increases; decreases; decreases; increases

Refer to the above diagram. A decrease in quantity demanded is depicted by a:

move from point y to point x.

Imperfect markets:

occur when the buyer or seller has an influence on the price.

Refer to the accompanying graph. If consumers expect the price of a good to decrease in the future and all else is held constant, we would assume that the demand curve would:

shift from D1 to D3.

Refer to above graph. If the price is $10, then there would be a

shortage of 600 units, and price would rise.

When the price of an hour of tutoring increases,

the quantity demanded for tutoring decreases.

When the number of firms in a market decreases,

the supply curve shifts to the left.