Microeconomics 3.4
Which of the following statements is true?
An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply
Which of the following statements is true?
An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?
Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.
In recent years, the cost of producing organic produce in the United States has decreased largely due technological advancement. At the same time, more and more Americans prefer organic produce over conventional produce. Which of the following best explains the effect of these events in the organic produce market?
Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.
Let D = demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower levels of bad cholesterol?
D increases, S no change, P and Q increase.
If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?
Demand and supply will both increase.
What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?
Demand will increase, but this will not shift the supply curve.
Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?
Research finds that consumption of olive oil reduces the risk of heart disease.
Let D = demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
S decreases, D no change, P increases, Q decreases.
Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?
S increases, D no change, P decreases, Q increases
Assume that California Merlot is a normal good. Prices of California Merlot have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots?
The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right.
Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?
The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?
The demand for corn would increase and the equilibrium price of corn would increase.
An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)?
The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.
The following appeared in a Florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?
The hurricane caused an increase in the demand for building materials.
Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?
The statement is false because a change in the price of apples would not change the demand for apples.
"Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?
The statement is false because a change in the price of chips would not change the demand for chips.
The price of compact fluorescent light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased. This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.
The statement is false. A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
Assume that microbrewery beer is a normal good. Prices of microbrewery beer have risen steadily in recent years. Over this same period, prices for fermenting vats used in beer making have also risen and consumer incomes have fallen. Which of the following best explains the rising prices of microbrewery beer?
The supply curve for microbrewery beer has shifted to the left more than the demand curve has shifted to the left.
A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in
a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in
a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium price may increase or decrease.
Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?
a decrease in the price of flour
Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?
a decrease in the price of orange juice processing
Assume that cotton is a normal good. Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?
an increase in consumer income
Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?
an increase in consumer income
Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
an increase in supply
Which of the following would definitely cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?
an increase in supply and an increase in demand greater than the increase in supply
An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result
both the equilibrium price and quantity of MP3 players will increase.
Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve. As a resul
both the equilibrium price and quantity of MP3 players will increase.
An article in the Wall Street Journal in early 2001 noted two developments in the market for laser eye surgery. The first development concerned side effects from the surgery, including blurred vision. The second development was that the companies renting eye-surgery machinery to doctors had reduced their charges. In the market for laser eye surgeries, these two developments
decreased demand and increased supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of laser eye surgeries.
In recent years, the consumption of orange juice in the United States has fallen but the price of orange juice has risen. This is because the supply of orange juice has ________ and the demand for orange juice has ________.
decreased; also decreased
Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would
increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine.
Suppose the cost of growing organic corn has risen at the same time as consumer preference for organic corn has fallen. In the market for organic corn, this would be represented by the equilibrium price ________ and the equilibrium quantity ________.
increasing or decreasing; decreasing
Suppose that McDonald's successfully implements self-serve kiosks in their restaurants, which allows the company to reduce the number of employees at each location. All else equal, this technological improvement would
shift the supply curve for its products to the right.
Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. One can conclude that
the demand for tarot card readers has increased.
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve. As a result
the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result
the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
Select the phrase that correctly completes the following statement. "An increase in input prices caused a decrease in the supply of baseballs. As a result ________."
the price of baseballs increased and the quantity demanded of baseballs decreased
Select the phrase that correctly completes the following statement. "A positive change in technology caused an increase in the supply of flat-screen televisions. As a result ________."
the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased
In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit in 2004
the supply curve shifted to the left resulting in an increase in the equilibrium price.
Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges
the supply curve shifted to the right resulting in a decrease in the equilibrium price.
Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that
the supply of swimming pool maintenance services has decreased.
A decrease in the equilibrium quantity for a product will result
when there is a decrease in supply and a decrease in demand for the product
A decrease in the equilibrium price for a product will result
when there is an increase in supply and a decrease in demand for the product.