Question 1

In one year,the price of soybeans was $3.50 a bushel,and the Jones family farm planted 7,500 acres of them.In the following year,although the price of soybeans fell to $3.25 a bushel,the Jones family farm planted 8,200 acres of them.Use the concepts of a shift in the supply curve versus a movement along the supply curve to explain why this increase in soybean acreage does not represent a violation of the law of supply.

Accepted Answer

Most likely,the assumption of other thin...

Question 2

Which of the following would best explain a decrease in the supply of squash?

Accepted Answer

A)  An increase in the price of other vegetables
B)  An increase in the price of squash
C)  A decrease in the price of squash
D)  A decrease in the cost of growing squash

Question 3

Refer to the graphs shown. The market is fat-free potato chips that contain the fat substitute olestra. Which graph best represents the impact of increased consumer concern about the effects of olestra on long-term health?

Accepted Answer

A)  Graph a
B)  Graph b
C)  Graph c
D)  Graph d

Question 4

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 5

Refer to the graphs shown. The consequences of improved technology combined with an increase in the number of consumers can best be illustrated by:

Accepted Answer

A)  a.
B)  b.
C)  c.
D)  d.

Question 6

The fallacy of composition refers to the false assumption:

Accepted Answer

A)  that if A happens before B, then A caused B.
B)  that what is true for a part will also be true for the whole.
C)  that what is true for the whole must also be true for a part.
D)  of all other things held constant.

Question 7

What is meant by "the fallacy of composition"? Because of the fallacy of composition,it is not possible to apply the microeconomic analysis of individual firms and consumers directly to the macroeconomic analysis of entire nations.Explain why this is so.

Accepted Answer

The fallacy of composition is the false ...

Question 8

If cigar prices tripled while sales of cigars rose 30 percent, this would likely be due to a shift in demand.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not likely to change the supply of laptops?

Accepted Answer

A)  An increase in consumers' incomes
B)  A technological breakthrough that makes it much less costly to produce computer chips
C)  A decrease in the wage paid to electrical engineers
D)  An increase in taxes on computer chips paid by producers

Question 10

For which of the following markets would the fallacy of composition least likely apply?

Accepted Answer

A)  Labor market
B)  Market for savings and investment
C)  World market for oil
D)  Poultry market

Question 11

Refer to the graphs shown. An increase in quantity demanded is best shown by which arrow?

Accepted Answer

A)  A
B)  B
C)  C
D)  D A

Question 12

According to the law of demand an increase in the price of gasoline will:

Accepted Answer

A)  increase the quantity demanded of gasoline, other things constant.
B)  decrease the quantity demanded of gasoline, other things constant.
C)  increase the demand for gasoline.
D)  decrease the demand for gasoline.

Question 13

The table below shows the quantity demanded and quantity supplied of DVDs at each price level. $$\begin{array} { | r | r | r | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Surplus (+) } \
\text { Shortage (-) }
\end{array} \
\hline 20.00 & 10 & 500 & \
\hline 18.00 & 25 & 400 & \
\hline 16.00 & 45 & 250 & \
\hline 14.00 & 80 & 200 & \
\hline 12.00 & 140 & 140 & \
\hline 10.00 & 200 & 80 & \
\hline 8.00 & 300 & 40 & \
\hline 6.00 & 450 & 5 & \
\hline
\end{array}$$ (a)Fill out the column entitled Surplus/Shortage.
(b)What are the equilibrium price and equilibrium quantity in this market?
(c)Suppose that consumers' taste changed in favor of DVDs due to their high quality.What happens at the original equilibrium price level calculated in Part (b)?
(d)Suppose that advances in technology reduced the production cost of DVD players.What happens at the original equilibrium price level calculated in Part (b)?

Accepted Answer

(a) $$\begin{array} { | r | r | r | r | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & { \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} } & \begin{array} { c } 
\text { Surplus (+) } \
\text { Shortage ( -} )
\end{array} \
\hline 20.00 & 10 & 500 & + 490 \
\hline 18.00 & 25 & 400 & + 375 \
\hline 16.00 & 45 & 250 & + 205 \
\hline 14.00 & 80 & 200 & + 120 \
\hline 12.00 & 140 & 140 & 0 \
\hline 10.00 & 200 & 80 & - 120 \
\hline 8.00 & 300 & 40 & - 260 \
\hline 6.00 & 450 & 5 & - 445 \
\hline
\end{array}$$ (b)Equilibrium occurs when quantity demanded equals quantity supplied,i.e. ,when there are no shortages or surpluses in the market.This point is at a price of $12.00 per DVD and a quantity of 140 DVDs.
(c)The demand for DVDs will increase at each price level.Therefore,at $12.00 per unit,the quantity demanded will be greater than the quantity supplied (140 DVDs).A shortage will appear in the market.
(d)A decrease in the production cost of DVD players increases their supply.The equilibrium price of DVD players decreases,and consumers purchase more of them.Since DVD players and DVDs are complementary goods,the demand for DVDs will shift to the right.At a price of $12.00 per DVD,there will be a shortage of DVDs in the market.

Question 14

The law of supply states that, other things equal, as the price of a good goes:

Accepted Answer

A)  up, the quantity supplied goes up.
B)  up, the supply goes down.
C)  down, the quantity supplied goes up.
D)  down, the supply goes down.

Question 15

A decrease in the number of consumers in a market causes market demand to:

Accepted Answer

A)  decrease, resulting in a surplus which will be eliminated as price rises.
B)  decrease, resulting in a surplus which will be eliminated as price falls.
C)  increase, resulting in a shortage which will be eliminated as price rises.
D)  increase, resulting in a shortage which will be eliminated as price falls.

Question 16

The following graph shows the supply of movie downloads. If price changes from $4.00 to $2.00 then:

Accepted Answer

A)  market quantity supplied will increase by 7.
B)  market quantity supplied will decrease by 12.
C)  Charlie will stop supplying any of this product.
D)  Charlie, Barry, and Ann will proportionally reduce the quantity that they each supply.

Question 17

How would a decline in demand for imported commodities by the Chinese affect the market for cargo transportation to China?

Accepted Answer

A)  Supply of cargo transportation shifts to the right causing an increase in quantity demanded and decline in equilibrium price.
B)  Supply of cargo transportation shifts to the right causing an increase in demand and equilibrium quantity and a decrease in equilibrium price.
C)  Demand for cargo transportation shifts to the left causing a decline in quantity supplied and price.
D)  Demand for cargo transportation shifts to the left causing a decline in supply and equilibrium quantity and price.

Question 18

Which of the following is not held constant as you move along the demand curve?

Accepted Answer

A)  The price of that good
B)  The price of other goods
C)  The incomes of consumers
D)  The preferences of consumers for the good A

Question 19

Given the graph shown, the quantity that would be associated with the price of $4 in a supply table would be:

Accepted Answer

A)  2.
B)  4.
C)  6.
D)  8.

Question 20

Consider the following supply and demand diagram for Tootsie Rolls.Note that the market is currently in equilibrium,with a price of P* and a quantity exchanged of Q*.  For each of the scenarios below,draw a picture that illustrates the impact on price and quantity exchanged.Explain each of your pictures by describing what is happening to the demand side of the market.
(a)The American Association of Chocolate Lovers designates the Tootsie Roll as its official candy.
(b)The Tootsie Roll Company computerizes their Tootsie Roll manufacturing plant,lowering unit costs of production.

Accepted Answer

(a)The diagram: <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The designation of Toot...

Exam 4: Supply and Demand

Correct Answer
verified
Most likely,the assumption of other thin...
View Answer

Which of the following would best explain a decrease in the supply of squash?

Correct Answer
verified

Refer to the graphs shown. The market is fat-free potato chips that contain the fat substitute olestra. Which graph best represents the impact of increased consumer concern about the effects of olestra on long-term health?

Correct Answer
verified

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

Correct Answer
verified

Refer to the graphs shown. The consequences of improved technology combined with an increase in the number of consumers can best be illustrated by:

Correct Answer
verified

The fallacy of composition refers to the false assumption:

Correct Answer
verified

What is meant by "the fallacy of composition"? Because of the fallacy of composition,it is not possible to apply the microeconomic analysis of individual firms and consumers directly to the macroeconomic analysis of entire nations.Explain why this is so.

Correct Answer
verified
The fallacy of composition is the false ...
View Answer

If cigar prices tripled while sales of cigars rose 30 percent, this would likely be due to a shift in demand.

Correct Answer
verified

Which of the following is not likely to change the supply of laptops?

Correct Answer
verified

For which of the following markets would the fallacy of composition least likely apply?

Correct Answer
verified

Refer to the graphs shown. An increase in quantity demanded is best shown by which arrow?

Correct Answer
verified
A

According to the law of demand an increase in the price of gasoline will:

Correct Answer
verified

The law of supply states that, other things equal, as the price of a good goes:

Correct Answer
verified

A decrease in the number of consumers in a market causes market demand to:

Correct Answer
verified

The following graph shows the supply of movie downloads. If price changes from $4.00 to $2.00 then:

Correct Answer
verified

How would a decline in demand for imported commodities by the Chinese affect the market for cargo transportation to China?

Correct Answer
verified

Which of the following is not held constant as you move along the demand curve?

Correct Answer
verified
A

Given the graph shown, the quantity that would be associated with the price of $4 in a supply table would be:

Correct Answer
verified

Correct Answer
verified
(a)The diagram: The designation of Toot...
View Answer

Exam 4: Supply and Demand

Correct AnswerverifiedMost likely,the assumption of other thin...View AnswerShow Answer

Which of the following would best explain a decrease in the supply of squash?

Correct AnswerverifiedShow Answer

Refer to the graphs shown. The market is fat-free potato chips that contain the fat substitute olestra. Which graph best represents the impact of increased consumer concern about the effects of olestra on long-term health?

Correct AnswerverifiedShow Answer

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

Correct AnswerverifiedShow Answer

Refer to the graphs shown. The consequences of improved technology combined with an increase in the number of consumers can best be illustrated by:

Correct AnswerverifiedShow Answer

The fallacy of composition refers to the false assumption:

Correct AnswerverifiedShow Answer

What is meant by "the fallacy of composition"? Because of the fallacy of composition,it is not possible to apply the microeconomic analysis of individual firms and consumers directly to the macroeconomic analysis of entire nations.Explain why this is so.

Correct AnswerverifiedThe fallacy of composition is the false ...View AnswerShow Answer

If cigar prices tripled while sales of cigars rose 30 percent, this would likely be due to a shift in demand.

Correct AnswerverifiedShow Answer

Which of the following is not likely to change the supply of laptops?

Correct AnswerverifiedShow Answer

For which of the following markets would the fallacy of composition least likely apply?

Correct AnswerverifiedShow Answer

Refer to the graphs shown. An increase in quantity demanded is best shown by which arrow?

Correct AnswerverifiedA

According to the law of demand an increase in the price of gasoline will:

Correct AnswerverifiedShow Answer

The law of supply states that, other things equal, as the price of a good goes:

Correct AnswerverifiedShow Answer

A decrease in the number of consumers in a market causes market demand to:

Correct AnswerverifiedShow Answer

The following graph shows the supply of movie downloads. If price changes from $4.00 to $2.00 then:

Correct AnswerverifiedShow Answer

How would a decline in demand for imported commodities by the Chinese affect the market for cargo transportation to China?

Correct AnswerverifiedShow Answer

Which of the following is not held constant as you move along the demand curve?

Correct AnswerverifiedA

Given the graph shown, the quantity that would be associated with the price of $4 in a supply table would be:

Correct AnswerverifiedShow Answer

Correct Answerverified(a)The diagram: The designation of Toot...View AnswerShow Answer

Correct Answer
verified
Most likely,the assumption of other thin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The fallacy of composition is the false ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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A

Correct Answer
verified

Correct Answer
verified
(a)The diagram: The designation of Toot...
View Answer