Exam 1 Review: Quiz 3 Questions
The graph illustrates the market for tea. The market equilibrium is at point A. After one or more changes, the market equilibrium moves to point B. You predict that the market for tea was most likely influenced by _______.
A rise in household income and a rise in the number of plantations
Johnny graduates from college and his income increases by $30,000 a year. Nothing else changes. Johnny decreases the quantity of ramen noodles and french fries that he buys and increases the quantity of winter vacations that he buys. For Johnny, _______. A) ramen noodles and french fries are inferior goods B) ramen noodles and winter vacations are inferior goods C) winter vacations and french fries have become substitutes D) ramen noodles and french fries are normal goods
A) ramen noodles and french fries are inferior goods
If the price of a printer rises, with all other influences on buying plans remaining the same, in the market for printers, _____. A. the demand for printers increases B. the demand for printers decreases C. the quantity of printers demanded increases D. the quantity of printers demanded decreases
D) The quantity of printers demanded decreases
The graph (on the other side) shows the market for bottled water. Draw a point at the market equilibrium. Label it 1. Draw a demand curve that shows what happens if the price of a gym membership falls. Label the curve D1. Draw a supply curve that shows the effect of a technological advance that cuts the cost of producing bottled water. Label it S1. Draw a point at the new market equilibrium. Label it 2.
If demand and supply change in the same direction, we CAN PREDICT the direction of change of the equilibrium quantity and we CANNOT PREDICT the direction of change of the equilibrium price.
Choose the correct statements about competitive markets. 1. A single seller in a competitive market cannot influence the price. 2. Competitive markets exist for goods, services, money, factors of production, and inputs. 3. A competitive market is a market for services but not for goods. 4. In a competitive market, prices are eventually driven down to zero.
Statements 1 and 2 are correct
The table (on the other side) gives the demand and supply schedules for DVD rentals. What is the equilibrium price of a DVD rental?
The equilibrium price is $5 a DVD rental
The table (on the other side) gives the demand and supply schedules for DVD rentals. What is the equilibrium quantity of DVD rentals per day?
The equilibrium quantity of DVD rentals is 500 a day
We observed a fall in the price of running shoes and in increase in the quantity of running shoes that producers sell. The most likely explanation is that _____.
The law of supply applies to running shoes, but some other influence on selling plans has increased the supply of running shoes
The table (on the other side) gives the demand and supply schedules for movie downloads. Suppose that demand increases by 50 downloads a day and supply decreases by 100 downloads a day. What is the new equilibrium price of a movie download and what is the new equilibrium quantity of movie downloads?
The new equilibrium price is $6.00 per download The new equilibrium quantity is 650 downloads per day
The graph (on the other side) illustrates the market for cell phones. Suppose the current price of a cell phone is $60 and 4 million cell phones a year are bought. What do you predict will happen to the price of a cell phone?
The surplus of cell phones forces the price down
Golf clubs and golf lessons are complements. If the price of a golf club increases, the demand for golf lessons will _______.
decrease, and the demand curve for golf lessons will shift leftward
In increase in the price of rubber matting, a complement in the production of paint, will _____ the equilibrium price of paint and _____ the equilibrium quantity of paint
decrease; increase
The figure shows the supply curve of sundaes. Draw an arrow to show what happens to firms' plans if the price of a sundae rises but all other influences on selling plans remain the same. If the price of a sundae rises, a _____ the supply curve occurs. If any factor that influences selling plans other than the price changes, then a _____ the supply curve occurs
movement up along; shift of
In increase in the demand for pizza brings a _____ in the price of pizza and _____ in the quantity of pizza supplied
rise; an increase
If the price of a calculator is $10, 24 million calculators a year are supplied. Draw a point at this combination of price and quantity. If the price of a calculator falls to $2, 6 million calculators are supplied. Draw a point at this combination of price and quantity. Draw a supply curve for calculators that is consistent with this information. Label the curve. Along the supply curve, _____.
the price changes but all other influences on producers' planned sales remain the same
A printer is a normal good if the population increases, you predict that the demand for printers _____.
will increase