MICROECON CH. 3

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T/F: A "change in quantity demanded" is a shift of the entire demand curve to the right or to the left.

FALSE

what are the determinants of supply?

technology, resource prices, and number of producers

how is a market DEMAND CURVE derived from individual demand curves?

add up quantities demanded by all individual consumers for each price

how do you derive a market SUPPLY CURVE from individual supply curves?

add up quantities supplied by all individual producers for each price

statement consistent with the LAW OF SUPPLY

an increase in market price will lead to an increase in quantity supplied

characteristics lead to a DOWNWARD SLOPING DEMAND CURVE

an increase in purchasing power as market price decreases; diminishing marginal utility

characteristics leads to a UPWARD SLOPING SUPPLY CURVE

increasing opportunity costs; increasing marginal costs

a price ceiling will result in a shortage only if the ceiling price is (greater than/less than) the equilibrium price

less than

Demand for automobile will Increase, Decrease, or Cannot be Determined? - the price of gas substantially drops

CANNOT BE DETERMINED

Demand for automobile will Increase, Decrease, or Cannot be Determined? - consumers anticipate that the price of small autos will greatly come down in the near future

DECREASE

Supply of auto tires Increase or Decrease? - a decline in the number of firms in the tire industry

DECREASE

Supply of auto tires Increase or Decrease? - an increase in the prices of rubber used in the production of tires

DECREASE

Supply of auto tires Increase or Decrease? - the levying of a per-unit tax on each auto tire sold

DECREASE

Demand for automobile will Increase, Decrease, or Cannot be Determined? - income declines and small autos are an inferior good

INCREASE

Demand for automobile will Increase, Decrease, or Cannot be Determined? - small automobiles become more fashionable

INCREASE

Demand for automobile will Increase, Decrease, or Cannot be Determined? - the price of large automobiles rises(w/the price of small autos remaining the same)

INCREASE

Supply of auto tires Increase or Decrease? - a decline in the price of large tires used for semi trucks and earth-hauling rigs, a substitute in production(w/no change in the price of auto tires)

INCREASE

Supply of auto tires Increase or Decrease? - a technological advance in the methods of producing tires

INCREASE

Supply of auto tires Increase or Decrease? - the expectation that the equilibrium price of auto tires will be lower in the future than currently

INCREASE

Supply of auto tires Increase or Decrease? - the granting of a 50 cent per unit subsidy for each auto tire produced

INCREASE

Movement along supply curve or Shift in the supply curve? - change in market price

Movement along the supply curve (change in price)

Price and Quantity Increase or Decrease? - demand decreases and supply is constant

Price: DECREASES Quantity: DECREASES

Price and Quantity Increase or Decrease? - supply increases and demand is constant

Price: DECREASES Quantity: INCREASES

Price and Quantity Increase or Decrease? - supply increases and demand decreases

Price: DECREASES Quantity: INDETERMINATE

Price and Quantity Increase, Decrease, or Indeterminate? - supply decreases and demand is constant

Price: INCREASES Quantity: DECREASES

Price and Quantity Increase or Decrease? - demand increases and supply is constant

Price: INCREASES Quantity: INCREASES

Price and Quantity Increase or Decrease? - demand increases and supply decreases

Price: INCREASES Quantity: INDETERMINATE

Price and Quantity Increase or Decrease? - demand decreases and supply decreases

Price: INDETERMINATE Quantity: DECREASES

Price and Quantity Increase or Decrease? - demand increases and supply increases

Price: INDETERMINATE Quantity: INCREASES

Movement along supply curve or Shift in the supply curve? - change in factor productivity

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

Movement along supply curve or Shift in the supply curve? - change in producer expectations

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

Movement along supply curve or Shift in the supply curve? - change in resource prices

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

Movement along supply curve or Shift in the supply curve? - change in taxes

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

Movement along supply curve or Shift in the supply curve? - change in technology

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

Movement along supply curve or Shift in the supply curve? - change in the price of other goods

Shift in the supply curve (shifts from input prices, technology, expectations, taxes and subsidies, number of sellers, and related goods)

statement consistent with LAW OF DEMAND

a reduction in market price will lead to an increase in quantity demanded

suppose that in the market for computer memory chips, the equilibrium price is $50 per chip. if the current price is $55 per chip, then there will be a (shortage/surplus) of memory chips

surplus


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