Microeconomics Chapter 4

As the manager of a farm-to-table restaurant, Carlos sets the prices of entrees each day. Today, his restaurant sold out of avocado toast during brunch service, so he had to recommend to some avocado toast aficionados the goat cheese radish tartine with micro greens. Which price did he MOST likely set for avocado toast?

$7.00

Suppose you manage a convenience store. If macaroni and cheese is an inferior good, what do you suppose would happen to the price and quantity sold of macaroni and cheese as incomes fall during a recession?

Both the price and quantity would increase.

For Elandra, home-brewed coffee is an inferior good, and lattes from the coffee shop are a normal good. Recently, Elandra cut back on lattes and began brewing her own coffee at home. What may have caused this change?

Elandra's income fell.

Consider the market for iPads. What happens if a fantastic new alternative tablet is developed by Samsung and, at the same time, a factory that makes iPads catches fire, destroying 3 million iPads?

The change in price is indeterminate, and quantity decreases.

If drivers for ridesharing services like Uber and Lyft successfully negotiate for higher pay, and parking lot operators in the city raise parking rates, what can you conclude about the new equilibrium in the ridesharing market?

The equilibrium price will rise, but the impact on quantity is unclear.

HelloFresh is a service that provides subscribers with recipes and all the necessary ingredients to prepare meals at home, delivered to their door once per week. Holding other things constant, what would happen if the company found a more efficient way to keep food fresh and safe during shipment?

There would be a movement down the market demand curve.

In which scenario are you NOT part of a market transaction?

You take a photo of flowers in bloom in a city park.

(Figure: Shifts in Demand and Supply II) Diane is an avid gardener. Which graph of the potting soil market illustrates her most probable response if the cost of flowerpots falls?

a

In the market for organic beef, what would cause a price increase?

a rise in the prices of grass and organic corn

For normal goods, an increase in income will result in:

an increase in the equilibrium price and equilibrium quantity.

(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II. The graph shows how supply and demand might shift in response to specific events. Suppose a heat wave destroys one-quarter of the nation's potato crop. Which panel BEST illustrates how this event will affect the market for French fries?

c

Suppose the New York City housing market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a series of new apartment buildings has just been completed. Given these two changes, and assuming that apartment housing is a normal good, we can predict that the price of apartments will _____, and the quantity of apartments bought and sold will _____.

fall; rise or fall

The difference between a centralized economy and a market economy is that:

governments make production decisions in a centralized economy, and individuals make production decisions in a market economy.

When there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

A shortage occurs when:

quantity demanded exceeds quantity supplied.

At Trader Joe's, the price of chocolate chip cookies falls. As a result, you would expect to see a(n):

rise in the quantity demanded of chocolate chip cookies.

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. If the price of quinoa is $10 per bushel, a _____ of _____ bushels per period will result.

surplus; 8,000

In your media studies class, you learn that Westerns were once a staple of network television but are now less common. If the production costs per episode of Westerns are comparable to those of other scripted shows, the most likely explanation for their disappearance is that, over time:

the market demand curve for Westerns shifted to the left.

We expect that price will fall when:

the quantity supplied is greater than the quantity demanded.

An equilibrium in a market occurs:

when the quantity supplied equals the quantity demanded.