Economics: 1-3b
After a recent study showed significant benefits to the use of public transportation, government officials have hired your consulting firm to increase the use of public transportation. In the initial meeting between the government officials and your consulting firm, some ideas for increasing demand were discussed. Three of those suggestions are listed below. Suggestion 1 Reduce the price of public transportation Suggestion 2 Increase the price of private transportation by increasing tools Suggestion 3 Offer monthly and yearly passes that reduce the price paid per ride Based on your knowledge of the law of demand, which suggestions would you recommend?
2
Which of the following will cause the demand curve for burgers to shift the right?
A study is published by the National Association for Burger Research that says eating burgers can reduce the risk for bad acne.
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
Refer to the following graph. The demand slopes downward because
Price and quantity move in opposite directions
SPAM meat product is an example of
an inferior good.
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:
complements.
Imperfect markets:
occur when the buyer or seller has an influence on the price.
Suppose that burgers and fries are complements in consumption. If the price of fries increases
overall demand for burgers will decrease.
In the market for desk lamps, which of the following will increase demand If the price of desks decreases and desks are a complementary good
An increase in income if the good is a normal good
Which of the following would cause a normal good's demand curve to shift to the left?
Income decreases.
Snickers and Reese's Peanut Butter Cups are substitutes. Which of the following would cause an increase in demand (a whole new curve) for Reese's?
Increase in income
According to the law of demand, what is the relationship between price and quantity demanded?
Inverse
There are a number goods that over time, for a variety of reasons, transition from being a normal good to an inferior good or from being an inferior good to a normal good. One such example of a good that experienced this transition is a CRT television, also known as a tube television. In the 1980s, more income for a household usually resulted in more CRT TVs being purchased. Today, more CRT TVs are purchased by households that have experienced a reduction in income. Why does this happen?
The CRT TV becomes an inferior good because the good becomes perceived as being of a lower quality than a flat-screen TV
In March 2012, the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning. Because of this, both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient. If Pepsi and Coke did NOT change their formula, holding all else constant, what do you think would have happened to the demand for these goods, assuming Pepsi and Coke were in a competitive market?
The demand curve for Pepsi and Coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.
As more people migrated West during the gold rush, what do you think happened to the demand curve in most Western markets, holding all else constant?
The demand curve shifted to the right.
Kim attends the farmer's market in her hometown of Bakersfield every Sunday. She notices that all of the oranges sold by the many different farmers at the market have roughly the same price, as do most other products that are alike. Which statement best explains why the prices are so similar?
The farmer's market in Bakersfield is a competitive market so neither the consumer nor the producer has a large influence on the price, allowing for the market to set the price.
A change in which of the following will cause a change in the quantity demanded of coffee?
The price of coffee
A change in which of the following will cause a change in the quantity supplied of coffee? Hint: just like with demand, price changes only affect quantity supplied.
The price of coffee
When the price of an hour of tutoring increases,
The quantity demanded for tutoring decreases
As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?
There would be an increase because there will be more buyers in these markets.
A good whose demand varies inversely with the price of another good is considered to be:
a complement good.
Every cell phone now has a high quality digital camera built in. How does this fact affect the demand for regular point-and-shoot cameras? There was __________________ in _____________________ resulting in __________________________ the demand curve.
a decrease / demand / a shift
The legal driving age is increased to 25. Draw a demand graph for gasoline and illustrate the change that will take place. There was __________________ in _____________________ resulting in __________________________ the demand curve.
a decrease / demand / a shift
A good whose demand varies directly with income is considered to be:
a normal good.
The North Face jackets is an example of:
a normal good.
A good whose demand varies directly with the price of another good is considered to be:
a substitute good.
Dr. Pepper and Coca-Cola are:
a substitute good.
A good whose demand varies inversely with income is considered to be:
an inferior good.
Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?
changes in tastes and preferences
The demand curve for a good will shift to the right if, holding all else constant,
consumers expect future prices to increase.
Mr. Waldon happens to be the largest consumer of Reese's in the world. If he were to go on a diet, how would you describe the change in Reese's demand?
decrease in D, shifting to the left
Snickers and Reese's Peanut Butter Cups are substitutes. Which of the following would cause an increase in the quantity demanded (movement along the demand curve) for Reese's?
decrease in price of Reese's
Snickers and Reese's Peanut Butter Cups are substitutes. Which of the following would cause a decrease in demand (a whole new curve) for Reese's?
decrease in price of Snickers.
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.
Question Text: Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the
equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.
A monopoly:
exists when a single company supplies the entire market for a particular good or service.
Changes in population can:
shift the demand curve of a good or service in an area.
Which of the following would cause the demand curve to shift to the right?
Income decreases for an inferior good.
When people buy peanut butter, they often also buy jelly. Jelly must be:
a complement good.
Americans experience a decrease in incomes. Draw a demand graph for SPAM meat product and illustrate the change that will take place. There was __________________ in _____________________ resulting in __________________________ the demand curve.
an increase / demand / a shift
The price of gasoline goes up to $10 per gallon. How does that affect the demand for electric cars? There was __________________ in _____________________ resulting in __________________________ the demand curve.
an increase / demand / a shift
General Motors is offering a 20% discount on their cars through the end of the year. The change in price results in changes in demand as follows: There was __________________ in _____________________ resulting in __________________________ the demand curve.
an increase / quantity demanded / movement along
As peoples' incomes rise, they use public transportation less frequently. Bus rides must be:
an inferior good.
The intersection of supply and demand determine the equilibrium price and quantity in the market. Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then (draw a graph with a down sloping demand curve and an up sloping supply curve. Then, make the change that would occur and see how the equilibrium changes.)
both the equilibrium price and the quantity of Pepsi demanded will decrease.
Something is an inferior good if the demand for the good:
increases as the consumer's income decreases.
A demand schedule:
is a table representing the relationship between the price of a good or service and the quantity demanded.
Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
the demand curve for Coke shift to the right.
According to the law of demand, all other things being equal,
the quantity demanded falls when the price rises, and the quantity demanded rises when the price falls.