Quiz 2

Andre decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Andre pay for his computer?

$2,300

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

Both price and quantity will decrease.

How would a decrease in consumer income affect the market for lawn mowers?

Demand would decrease, leading to a reduction in price and a reduction in quantity sold.

If the demand for a good increased, what would be the effect on the equilibrium price and quantity?

Price would increase, and quantity would increase.

Which of the following events would increase producer surplus?

Sellers' costs increase and the price of the good decreases.

If an increase in the price of good X causes the demand for good Y to decrease, this indicates that

X and Y are complements.

If cable TV service and satellite TV service are substitutes,

a decrease in the price of cable will decrease the demand for satellite TV.

Which of the following would most likely shift the supply curve to the left for Wii video games?

a decrease in the price of computer chips used to make Wii games

If a major hurricane were to destroy the sugarcane crop in Louisiana, there would be

a decrease in the supply of sugarcane.

Which of the following will cause a decrease in the demand for peanut butter?

a doubling of the price of bread

Other things being equal, the effect of a decrease in the price of grapes would be illustrated by

a rightward shift in the demand curve for grapes.

Other things being equal, the effect of an increase in the price of milk would be illustrated by

an upward movement along the demand curve for milk

Market prices provide information to consumers, helping them coordinate their activities so long as

competition is present and buyers and sellers are free to choose mutually agreeable prices.

According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when

competitive markets direct the actions of self-interested individuals.

When economists say the demand for a product has increased, they mean the

demand curve has shifted to the right.

Under competitive conditions, market prices

generally bring the self-interest of individuals into harmony with the general welfare.

The height of the demand curve for a product indicates the

maximum price consumers are willing to pay for an additional unit of it.

If coffee and cream are complements, an increase in the price of coffee will cause

no change in the demand for cream; only quantity demanded would be affected.

If the supply of a good is relatively elastic, this means that the quantity supplied of the good is

not very sensitive to the price of the good.

The total economic cost of producing a good or service is called the

opportunity cost of production.

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

relatively inelastic.

According to the law of supply, as the price of a good increases,

sellers will produce more of the good.

Consumers buy less of a good as its price increases because

substitute goods are now relatively cheaper.

If Georgia experiences a late frost that damages the peach crop, we should expect the

supply curve for peaches to shift to the left and the price of peaches to rise.

Which of the following would most likely increase the price of automobiles?

the United Auto Workers union obtaining a substantial wage increase for auto workers

When economists say an activity is consistent with economic efficiency, they mean

the benefits that result from the activity exceed the costs

When economists say the supply of a product has decreased, they mean that

the supply curve has shifted to the right.

Profits and losses play an important role in helping

to allocate scarce resources in a manner that maximizes the value created to society.