Macro Economics Quiz 3
If the current price of a good is less than the equilibrium price, there will be
a shortage of the good and its price will increase
a decrease in the number of pizza producers or an increase in the cost of mozzarella cheese is used to make pizza will shift the
supply curve for pizza inward
At the market price of $8, the quantity demanded is 20; units, and quantity supplied is 60 units. At this price, a surplus exists. At a market price of $4, a shortage now exists. The market equilibrium exists at a price of $6. In equilibrium, the quantity demanded by consumers is equal to to the quantity supplied by producers.
(graph)
identify which of the following would generate a decrease in the market demand for e-book readers, which are a normal good
ALL EXCEPT an increase in the number of consumers in the market
a change in which of the following will result in a shift of the supply curve
All of the above
Which of the following will cause an outward (rightward) shift in supply?
A technological improvement.
The price of machinery used to produce smartphones increases. This will cause a(n)
Decrease in supply Equilibrium quantity would decrease. Equilibrium price would increase
The price of touch screens used in smartphones declines. This will cause a(n)
Increase in supply Equilibrium quantity would increase. Equilibrium price would decrease.
What if the increase in demand were larger than the increase in supply?
The equilibrium price and quantity increase.
Suppose that at first the price of a pair of shoes is $10 and the price of a t-shirt is $6. Then the price of the shoes changes to $20 and the price of a t-shirt changes to $14.
The money price of shoes and a t-shirt have risen and the relative price of shoes has fallen while t-shirt has risen.
Based on the table above, which of the following is true? (Hospital Room and Hotel Suite)
The money prices of both increased, the relative price of the hospital room increased, and the relative price of the hotel decreased
A change in a good's own price leads to a change in quantity demanded for any given demand curve.
True
According to the law of supply, as the price of the good decreases it causes
a movement downward along the supply curve
all of the following will decrease supply of airline flights except
a technological change that makes airplanes safer and more fuel efficient
a leftward shift in the supply curve for a good may be caused by any of the following except
consumer expectation of an increase in their future income
A rise in demand is represented by a leftward shift in the demand curve, and a fall in demand is represented by a rightward shift in the demand curve.
true
At equilibrium, there is neither excess quantity supplied nor excess quantity demanded.
true
The price at which quantity demanded equals quantity supplied and at which the demand curve intersects the supply curve is called the market clearing price.
true
a market supply curve is derived by summing the individual producers' supply curve
true
All of the following pairs are substitutes except
we observe the price of bacon increases and the demand for eggs decreases
All of the following pairs are compliments except
we observe the price of coffee decreases and the demand for tea decreases
If the per-person quantity of bottled water consumed increases considerably while during that same period, the per-person quantity of soft drinks consumed decreases, it must necessarily be the case that consumers' tastes and preferences have changed.
False, while this may be true, it is possible that consumers view bottled water and soft drinks as substitutes.
For substitutes, a change in the price of a product will cause a change in the demand in the SAME direction for the other good. For compliments, a change in the price of a product will cause a change in demand for the OPPOSITE direction of the other good.
same; opposite
The law of supply states that there is a positive relationship between the price and the quantity supplied. Thus, as the price decreases
the quantity produced by firms decreases
which of the following is consistent with the law of supply
an increase in the market price of MP3 players causes an increase in the production of MP3 players.
Suppose that steel is necessary to produce automobiles. if the price of steel falls, the supply curve of
automobiles shifts to the right
If the demand and supply curves increase (shift outward) by identical proportions then
equilibrium price stays the same and quantity rises.
If the number of firms in an industry decreases, the supply curve will shift to the right.
false
Shortages and scarcity are the same thing.
false
a change in a good's own price leads to a change in supply, which shifts the supply curve
false
A surplus occurs when quantity supplied is ________ than quantity demanded at a price ________ the market clearing price.
greater; above
A shortage occurs when quantity demanded is ________ than quantity supplied at a price ________ the market clearing price.
greater; below
A booming economy increases incomes of the typical buyer of wireless earbuds (this is a normal good)
increase in demand increase, increase
there is a decrease in the price of devices used to charge wireless earbuds Equilibrium quantity would (increase). Equilibrium price would (increase)
increase in demand increase, increase
there is an increase in consumers of wireless earbuds Equilibrium quantity would (increase). Equilibrium price would (increase)
increase in demand increase, increase
Whenever price is less than than the equilibrium price, there is an excess in quantity demanded
shortage
Whenever the price is less than the equilibrium price, there is an excess quantity demanded
shortage
For substitutes, a change in the price of a product will cause a change in demand in the ________ direction for the other good. For complements, a change in the price of a product will cause a change in demand in the ________ direction for the other good.
same; opposite
a supply schedule of ALTERNATIVE quantities supplied per time dimension at DIFFERENT POSSIBLE PRICES
alternative; different possible prices
The law of supply then implies that a movement along the supply curve occurs due to a change in market price.
movement along
According to the law of supply, as the price of the good increases, it causes a
movement upward along the supply curve
The higher anticipated future price of wireless earbuds induces suppliers to (reduce) their current supply to the market, which causes a (leftward) shift in the supply curve for wireless earbuds, from Upper S 1 to Upper S 2. At the price of $4 per wireless earbud, the quantity of wireless earbuds supplied (falls).
reduce; leftward; falls
if the price of bacon rises, and as a result the demand for sausage increases this implies that these are ___________
substitutes
What if the increase in demand were smaller than the increase in supply?
Equilibrium price falls and quantity rises.
A rise in demand is represented by a leftward shift in the demand curve, and a fall in demand is represented by a rightward shift in the demand curve
False
Assume the cost of aluminum used by soft-drink companies increases. Which of the following correctly describes the resulting effects in the market for canned soft drinks? I. The demand for soft drinks decreases. II. The quantity of soft drinks demanded decreases. III. The supply of soft drinks decreases. IV. The quantity of soft drinks supplied decreases.
II. The quantity of soft drinks demanded decreases. III. The supply of soft drinks decreases.
Which of the following is an implication of the law of supply?
Producers will offer more units at a higher price and fewer units at a lower price.
whenever there is a change in a ceteris peribus condition there will be a change in supply, which is represented by a shift in the entire supply curve
supply; shift in the entire supply curve
Assume that the cost of aluminum used by soft-drink companies increases. Indicate which of the following statements describing the resulting effects in the market for soft drinks distributed in aluminum cans are true (T) or false (F).
a. the demand for soft drinks decreases F b. the quantity of soft drinks demanded decreases T c. the supply of soft drinks decreases T d. the quantity supplied of soft drinks decreases F
identify which of the following would generate an increase in the market demand for tablet devices
an increase in the price of ultrathin computers, which as substitutes an increase in the number of consumers
Whenever price is greater than the equilibrium price, there is an excess in quantity supplied
surplus
Whenever the price is greater than the equilibrium price, there is an excess quantity supplied
surplus
Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n)
decrease in demand
there is a decrease in the incomes earned by consumers
decrease in demand
there is an increase in the price of carrying cases for wireless earbuds Equilibrium quantity would (decrease). Equilibrium price would (decrease)
decrease in demand decrease, decrease
the market price of economic textbooks increases. this will cause a(n)
decrease in quantity supplied
There is a decrease in the market demand for smartphones. This will cause a(n) Equilibrium quantity would . Equilibrium price would
decrease in quantity supplied Equilibrium quantity would decrease. Equilibrium price would decrease
publishers expect that the market price of economic textbooks will increase next month. this will cause a(n)
decrease in supply
the market price of editorial service increases. this will cause a(n)
decrease in supply
when there is a normal good, an increase in consumer income will result in the
demand curve shifting to the right
The quantity of tickets for a Super Bowl game is fixed at 90,000. At the price per ticket of $1,000, there is excess demand. In this example, prices typically go for about $5,500 in the scalpers' market.
demand; 5,500
Whenever there is a change in a ceteris paribus condition there will be a change in ________, which is represented by a ________.
demand; shift in the entire demand curve
whenever there is a change in ceteris paribus condition there will be a change in demand, which is represented by a shift in the entire demand curve
demand; shift in the entire demand curve
Firms encounter rising costs when they attempt to produce more in the same time period. As a consequence, they must be offered a higher price to be willing to incur the...
direct (or positive) and is called the law of supply
there is normally a (direct) relationship between price and quantity supplied the (supply) curve normally shows a direct relationship between price and quantity supplied the (market supply) curve is obtained by horizontally adding individual supply curves in the market.
direct; supply; market supply
According to the law of supply, the quantity supplied of any commodity is DIRECTLY related to its price
directly
consumers' tastes shift away from using wireless internet access in favor of cable-based internet access.
increase in demand
Firms providing cable-based Internet access services reduce their prices. This will cause a(n)
increase in quantity demanded
the number of publishers of economic textbooks increases. this will cause a(n)
increase in supply
The number of manufacturers of smartphones increases. This will cause a(n)
increase in supply Equilibrium quantity would increase. Equilibrium price would decrease
Consider the chewing gum market shown in the graph at right. Upper A decrease in the supply of chewing gum. will ________ the equilibrium price and _________ the equilibrium quantity.
increase, decrease
market-clearing price occurs at the (intersection) of the market demand curve and the market supply curve. it is also called the (equilibrium) price, the price from which there is no tendency to change unless there is a change in demand or supply
intersection; equilibrium
The market clearing price occurs at the (intersection) of the market demand curve and the market supply curve. It is also called the (equilibrium) price, the price from which there is no tendency to change unless there is a change in demand or supply.
intersession; equilibrium
