Question 1

If the number of firms producing electric cars increases and consumer preference for electric cars increases, the equilibrium quantity of electric cars will definitely increase.

Accepted Answer

A) True 
 B)False

Question 2

What are the five variables that will shift the demand curve?

Accepted Answer

1. Income
2. Price of related ...

Question 3

In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?

Accepted Answer

The demand for new automobiles would dec...

Question 4

Figure 3-2 1 to S2. D)  S2 to S1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from

Accepted Answer

A)   A to B.
B)   B to A.
C)   S1 to S2.
D)   S2 to S1.

Question 5

In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?

Accepted Answer

A)   The supply curve shifts to the right.
B)   The supply curve shifts to the left.
C)   The quantity demanded and the quantity supplied increase.
D)   The demand curve shifts to the right.

Question 6

"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.

Accepted Answer

A)   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.
B)   The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell.
C)   The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.
D)   The statement is false because it confuses the law of demand with the law of supply.

Question 7

Figure 3-2 1 to S2. D)  S2 to S1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 3-2. An increase in price of inputs would be represented by a movement from

Accepted Answer

A)   A to B.
B)   B to A.
C)   S1 to S2.
D)   S2 to S1.

Question 8

If the price of gasoline increases, what will be the impact in the market for public transportation?

Accepted Answer

A)   The demand curve for public transportation shifts to the right.
B)   The quantity of public transportation demanded increases.
C)   The demand curve for public transportation shifts to the left.
D)   The quantity of public transportation demanded decreases.

Question 9

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions) ?

Accepted Answer

A)   The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease.
B)   The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease.
C)   The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles.
D)   The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.

Question 10

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

Accepted Answer

A)   an inferior good.
B)   a neutral good.
C)   a necessity.
D)   a normal good.

Question 11

Assume that cotton is a normal good. Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?

Accepted Answer

A)   an increase in consumer income
B)   a drought that sharply reduces cotton output
C)   a decrease in consumer income
D)   unusually good weather that results in a bumper crop of cotton

Question 12

Figure 3-7 
-Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Accepted Answer

A)   Panel (a) 
B)   Panel (b) 
C)   Panel (c) 
D)   Panel (d)

Question 13

If a decrease in income leads to an increase in the demand for sardines, then sardines are

Accepted Answer

A)   an inferior good.
B)   a neutral good.
C)   a necessity.
D)   a normal good.

Question 14

Figure 3-3 
-Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market?

Accepted Answer

A)   Graph B represents the market for original Michelangelo sculptures and Graph A represents the market for Ray Ban sunglasses.
B)   Graph A represents the market for original Michelangelo sculptures and Graph B represents the market for Ray Ban sunglasses.
C)   Graph A represents both the market for original Michelangelo sculptures and Ray Ban sunglasses.
D)   Graph B represents both the market for original Michelangelo sculptures and Ray Ban sunglasses.

Question 15

A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in

Accepted Answer

A)   a decrease in the equilibrium quantity of eggs and no change in the equilibrium price.
B)   a decrease in the equilibrium price of eggs and no change in the equilibrium quantity.
C)   a decrease in the equilibrium price of eggs; the equilibrium quantity may increase or decrease.
D)   a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease.

Question 16

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does the offering of the printing service by Wal-Mart and Costco affect the digital photo printing market?

Accepted Answer

A)   The demand curve for digital photo printing services shifts to the right.
B)   The demand curve for digital photo printing services shifts to the left.
C)   The supply curve for digital photo printing services shifts to the right.
D)   The supply curve for digital photo printing services shifts to the left.

Question 17

Figure 3-8 2 and S1 (point C) . Which of the following changes would cause the equilibrium to change to point B? A)  a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples B)  an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples C)  an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease D)  a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C) . Which of the following changes would cause the equilibrium to change to point B?

Accepted Answer

A)   a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples
B)   an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples
C)   an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D)   a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Question 18

Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

Accepted Answer

A)   technological advancement in the production of electric car batteries.
B)   an increase in the number of manufacturers of electric cars.
C)   a decrease in the price of lithium, which is used in the electric car batteries.
D)   an increase in the price of gasoline.

Question 19

When the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the ________ effect.

Accepted Answer

A)   substitution; income
B)   normal; inferior
C)   substitute; complement
D)   supply; demand

Question 20

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie

Accepted Answer

A)   raspberries and papayas are complements.
B)   raspberries and papayas are inferior goods.
C)   raspberries and papayas are normal goods.
D)   raspberries and papayas are substitutes.

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Figure 3-2 -Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from

Correct Answer
verified

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Correct Answer
verified

What are the five variables that will shift the demand curve?

Correct Answer
verified
1. Income
2. Price of related ...
View Answer

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does the offering of the printing service by Wal-Mart and Costco affect the digital photo printing market?

Correct Answer
verified

If the number of firms producing electric cars increases and consumer preference for electric cars increases, the equilibrium quantity of electric cars will definitely increase.

Correct Answer
verified

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

Correct Answer
verified

Assume that cotton is a normal good. Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?

Correct Answer
verified

A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in

Correct Answer
verified

Figure 3-2 -Refer to Figure 3-2. An increase in price of inputs would be represented by a movement from

Correct Answer
verified

Correct Answer
verified

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C) . Which of the following changes would cause the equilibrium to change to point B?

Correct Answer
verified

Figure 3-3 -Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market?

Correct Answer
verified

In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?

Correct Answer
verified
The demand for new automobiles would dec...
View Answer

In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?

Correct Answer
verified

When the price of a good rises, consumers buy a smaller quantity because of the effect and the effect.

Correct Answer
verified

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions) ?

Correct Answer
verified

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie

Correct Answer
verified

If a decrease in income leads to an increase in the demand for sardines, then sardines are

Correct Answer
verified

Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

Correct Answer
verified

If the price of gasoline increases, what will be the impact in the market for public transportation?

Correct Answer
verified

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Figure 3-2 -Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

Correct AnswerverifiedShow Answer

What are the five variables that will shift the demand curve?

Correct Answerverified1. Income2. Price of related ...View AnswerShow Answer

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does the offering of the printing service by Wal-Mart and Costco affect the digital photo printing market?

Correct AnswerverifiedShow Answer

If the number of firms producing electric cars increases and consumer preference for electric cars increases, the equilibrium quantity of electric cars will definitely increase.

Correct AnswerverifiedShow Answer

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

Correct AnswerverifiedShow Answer

Assume that cotton is a normal good. Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?

Correct AnswerverifiedShow Answer

A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in

Correct AnswerverifiedShow Answer

Figure 3-2 -Refer to Figure 3-2. An increase in price of inputs would be represented by a movement from

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C) . Which of the following changes would cause the equilibrium to change to point B?

Correct AnswerverifiedShow Answer

Figure 3-3 -Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market?

Correct AnswerverifiedShow Answer

In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?

Correct AnswerverifiedThe demand for new automobiles would dec...View AnswerShow Answer

In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?

Correct AnswerverifiedShow Answer

When the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the ________ effect.

Correct AnswerverifiedShow Answer

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions) ?

Correct AnswerverifiedShow Answer

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie

Correct AnswerverifiedShow Answer

If a decrease in income leads to an increase in the demand for sardines, then sardines are

Correct AnswerverifiedShow Answer

Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

Correct AnswerverifiedShow Answer

If the price of gasoline increases, what will be the impact in the market for public transportation?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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1. Income
2. Price of related ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C) . Which of the following changes would cause the equilibrium to change to point B?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The demand for new automobiles would dec...
View Answer

Correct Answer
verified

When the price of a good rises, consumers buy a smaller quantity because of the effect and the effect.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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