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ECON 213 Quiz 3 The Market at Work solutions complete answers
ECON 213 Quiz 3 The Market at Work solutions complete answers
James specializes in college-level economics tutoring. He knows that, during the two weeks before finals, he can charge more for an hour of private tutoring. Expecting this price increase, James will:
The government offers numerous educational subsidies through grants and low-cost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that:
Two goods that are used together are called:
An expectation of a lower price in the future will:
A supply schedule:
The economists at JET Consulting consider Campbell’s Soup to be an inferior good. During a recession, when the income in the economy is decreasing, economists at JET Consulting would expect the demand curve for Campbell’s Soup to ____, causing the equilibrium price to ____ and the equilibrium quantity to _____.
Something is an inferior good if the demand for the good:
1.
11. Which of the following would cause a normal good's demand curve to shift to the left?
a. Income decreases.
b. Income increases.
c. The price increases.
d. The price decreases.
e. The input prices increase.
2.
83. When a hurricane rips through Florida, the price of oranges rises because the:
a. demand curve shifts to the left.
b. supply curve shifts to the right.
c. demand curve shifts to the right.
d. supply curve shifts to the left.
e. supply and demand curves both shift to the left.
3.
According to the accompanying figure, if the price is $10, there is a:
a. shortage of 15 units.
b. surplus of 15 units.
c. shortage of 30 units.
d. surplus of 30 units.
e. surplus of 22 units.
4.
According to the law of demand, all other things being equal,
a. the quantity demanded falls when the price falls, and the quantity demanded rises when the price rises.
b. the quantity demanded falls when the price rises, and the quantity demanded rises when the price falls.
c. the demand falls when the price falls, and the demand rises when the price rises.
d. the demand falls when the price rises, and the demand rises when the price falls.
e. price and quantity are always positively correlated.
5.
According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
a. increase; increase.
b. increase; decrease.
c. decrease; increase.
d. decrease; decrease.
e. remain the same; increase.
6.
As more people migrated West during the gold rush, what do you think happened to the demand curve in most Western markets, holding all else constant?
a. The demand curve shifted to the right.
b. The demand curve shifted to the left.
c. There was no shift, but there was an increase in quantity demanded.
d. There was no shift, but there was a decrease in quantity demanded.
e. There was no shift, nor any increase or decrease in quantity demanded.
7.
Assume there are 100 suppliers of widgets in the widget market. Half of these suppliers supply 35 widgets to the market each, a quarter of these suppliers supply 40 widgets to the market each, and a quarter of these suppliers supply 50 widgets to the market each. What is the market supply for widgets?
a. 100
b. 125
c. 400
d. 4,000
e. 1,750
8.
Changes in population can:
a. alter the supply of a good or service in an area.
b. shift the supply curve of a good or service in an area.
c. cause the price of a good or service to increase in an area but cannot cause the price to decrease.
d. cause the price of a good or service to decrease in an area but cannot cause the price increase.
e. shift the demand curve of a good or service in an area.
9.
A decrease in demand is represented by a:
a. shift of the demand curve to the right.
b. movement along the demand curve to the right.
c. shift of the demand curve to the left.
d. movement along the demand curve to the left.
e. shift in the supply curve.
10.
The demand curve for a good will shift to the right if, holding all else constant,
a. consumers expect future prices to decrease.
b. an input cost of the item goes up.
c. consumers expect future prices to increase.
d. the price of the good goes down.
e. the price of a substitute good goes down.
11.
During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
a. They would both increase.
b. They would both decrease.
c. One would increase and one would decrease, but we don't know which would do what.
d. The price would increase and the quantity would decrease.
e. The price would decrease and the quantity would increase.
12.
The economists at JET Consulting consider Campbell's Soup to be an inferior good. During a recession, when the income in the economy is decreasing, economists at JET Consulting would expect the demand curve for Campbell's Soup to _________, causing the equilibrium price to _________ and the equilibrium quantity to _________.
a. shift to the left; decrease; decrease.
b. shift to the left; increase; increase.
c. shift to the right; decrease; increase.
d. shift to the right; increase; decrease.
e. shift to the right; increase; increase.
13.
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut butter is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
a. The price of peanut butter increases to $7 because of a supply shift.
b. The price of peanut butter decreases to $4 because of a supply shift.
c. The price of peanut butter decreases to $4 because of a demand shift.
d. The price of peanut butter increases to $7 because of a demand shift.
e. The price of peanut butter increases to $7 because of a demand AND a supply shift.
14.
For a market to be competitive:
a. each buyer and seller is small, relative to the whole market; no single decision-maker has any influence over the market price.
b. sellers must produce goods and services that are different from their competitors.
c. sellers should have substantial pricing power.
d. all you need are many buyers and many sellers.
e. the price must be a fair price.
15.
If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?
a. They would both increase.
b. They would both decrease.
c. One would increase and one would decrease, but we don't know which would do what.
d. The price would increase and the quantity would decrease.
e. The price would decrease and the quantity would increase.
16.
If a new french fry-cutting machine works twice as fast as the old machine, McDonald's would:
a. be willing to produce and sell fewer french fries at every price.
b. be making less profit.
c. be willing to produce and sell more french fries at every price.
d. lose customers.
e. pay its employees more.
17.
If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:
a. shift to the right.
b. shift to the left.
c. become steeper.
d. become flatter.
e. increase.
18.
If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.
a. increase; increase.
b. increase; decrease.
c. decrease; decrease.
d. decrease; increase.
e. remain the same; remain the same.
19.
If the price of Gatorade increases, the
a. equilibrium price of Powerade will increase because of a shift in demand.
b. equilibrium price of Powerade will increase because of a shift in supply.
c. equilibrium price of Powerade will decrease because of a shift in demand.
d. equilibrium quantity of Powerade will decrease because of a shift in supply.
e. equilibrium quantity of Powerade will decrease because of a shift in demand.
20.
In March 2012, the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning. Because of this, both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient. If Pepsi and Coke did NOT change their formula, holding all else constant, what do you think would have happened to the demand for these goods, assuming Pepsi and Coke were in a competitive market?
a. The demand curve for both Pepsi and Coke would have shifted to the right, causing the price of both products to decrease and the profits for the companies to fall.
b. The demand curve for Pepsi and Coke would have remained unchanged, but the price of both products would have decreased and the profits for the companies would have fallen.
c. The demand curve for Pepsi and Coke would have decreased, but the prices and profits would not have changed.
d. The demand curve for only one of them would change because Pepsi and Coke are substitutes.
e. The demand curve for Pepsi and Coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.
21.
In one year, 15 bowling alleys opened in California. During that same year, ESPN started broadcasting professional bowling on TV, which sparked more interest in the sport. What would we expect to happen to the price and quantity of a game of bowling in California during that year?
a. Equilibrium price will be indeterminate and equilibrium quantity will go down.
b. Equilibrium price will go up and equilibrium quantity will go up.
c. Equilibrium price will go down and equilibrium quantity will be indeterminate.
d. Equilibrium price will be indeterminate and equilibrium quantity will go up.
e. Equilibrium price will go up and equilibrium quantity will be indeterminate.
22.
Inputs are:
a. goods that are used together.
b. goods that are used in place of one another.
c. goods that you demand more of as your income increases.
d. goods that you demand less of as your income increases.
e. resources that firms use in the production of final goods and services.
23.
The law of supply states that, all other things being equal,
a. the quantity supplied falls when the price falls, and the quantity supplied rises when the price rises.
b. the quantity supplied falls when the price rises, and the quantity supplied rises when the price falls.
c. the supply falls when the price falls, and the demand rises when the price rises.
d. the supply falls when the price rises, and the demand rises when the price falls.
e. price and quantity are always negatively correlated.
24.
Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?
a. The equilibrium price goes up and equilibrium quantity goes up.
b. The equilibrium price is indeterminate and equilibrium quantity goes up.
c. The equilibrium price goes down and equilibrium quantity is indeterminate.
d. The equilibrium price is indeterminate and equilibrium quantity goes down.
e. The equilibrium price goes up and equilibrium quantity is indeterminate.
25.
A monopoly:
a. exists when either the buyer OR the seller has the ability to influence the market price.
b. exists when there are so many buyers and sellers that each has only a small impact on the market price and output.
c. exists when a single consumer demands the entire market for a particular good or service.
d. can have many sellers but only one buyer.
e. exists when a single company supplies the entire market for a particular good or service.
26.
Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would:
a. increase and the quantity would increase.
b. increase and the quantity would decrease.
c. decrease and the quantity would increase.
d. decrease and the quantity would decrease.
e. increase and the quantity would stay the same.
27.
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
a. the change in technology.
b. the change in income.
c. price expectations.
d. the change in input cost.
e. the number of firms in a market.
28.
On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?
a. The demand for coffee will increase in India.
b. The demand for coffee will decrease in India.
c. Both the supply and demand for coffee will increase in India.
d. The supply for coffee will increase in India.
e. The supply for coffee will decrease in India.
29.
Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
a. the demand curve for Coke shift to the right.
b. the demand curve for Coke shift to the left.
c. no change in the demand for Coke.
d. the demand curve for Pepsi shift to the right.
e. the demand curve for Pepsi shift to the left.
30.
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:
a. substitutes.
b. inferior.
c. complements.
d. normal.
e. unrelated.
31.
Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
a. The equilibrium price will go up and equilibrium quantity will go up.
b. The equilibrium price will be indeterminate and equilibrium quantity will go up.
c. The equilibrium price will go down and equilibrium quantity will be indeterminate.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
32.
A shortage occurs whenever:
a. the quantity supplied is greater than the quantity demanded.
b. the price is above the equilibrium quantity.
c. the quantity supplied is less than the quantity demanded.
d. the government places a binding price floor.
e. the government places a nonbinding price ceiling.
33.
A subsidy:
a. is a payment made by the government to encourage consumption or production of a good or service.
b. is a payment taken by the government to discourage consumption or production of a good or service.
c. shifts the demand curve of a product.
d. is designed to decrease the available supply of a good or service.
e. raises the cost of doing business.
34.
Taxes cause the equilibrium price of a good to:
a. increase.
b. decrease.
c. remain the same.
d. go up only for producers.
e. go down only for consumers.
35.
A technological advancement for Good A will shift the _________ curve of Good A to the _________, making the equilibrium price _________.
a. demand; left; decrease.
b. supply; right; increase.
c. demand; right; increase.
d. supply; left; increase.
e. supply; right; decrease.
36.
Top Ramen is a brand of noodles that is widely considered to be an inferior good with a high salt content. What would happen to the equilibrium price and equilibrium quantity of Top Ramen if income went up and the price of salt decreased?
a. The equilibrium price will go up and equilibrium quantity will go up.
b. The equilibrium price will go down and equilibrium quantity will be indeterminate.
c. The equilibrium price will be indeterminate and equilibrium quantity will go up.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
37.
A "twofold" change is when:
a. income goes up and then it goes down.
b. the equilibrium price of both a complement and a substitute changes.
c. supply and demand both shift.
d. equilibrium price and equilibrium quantity both change.
e. some input costs go up and some go down.
38.
What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
a. The equilibrium price will go up and equilibrium quantity will go up.
b. The equilibrium price will go down and equilibrium quantity will be indeterminate.
c. The equilibrium price will be indeterminate and equilibrium quantity will go up.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
39.
What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?
a. Equilibrium price will be indeterminate and equilibrium quantity will go down.
b. Equilibrium price will go up and equilibrium quantity will go up.
c. Equilibrium price will go down and equilibrium quantity will be indeterminate.
d. Equilibrium price will be indeterminate and equilibrium quantity will go up.
e. Equilibrium price will go up and equilibrium quantity will be indeterminate.
40.
What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant?
a. The price falls and the quantity rises.
b. The price rises and the quantity falls.
c. The price falls and the quantity falls.
d. The price rises and the quantity rises.
e. The price falls and the quantity remains constant.
41.
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
a. The equilibrium price of bagels will be indeterminate and the equilibrium quantity will go up.
b. The equilibrium price will go up and the equilibrium quantity will go up.
c. The equilibrium price will go down and the equilibrium quantity will be indeterminate.
d. The equilibrium price will be indeterminate and the equilibrium quantity will go down.
e. The equilibrium price will go up and the equilibrium quantity will be indeterminate.
42.
When both supply and demand shift to the left, the:
a. equilibrium price always rises.
b. equilibrium price always falls.
c. equilibrium quantity always falls.
d. equilibrium quantity always rises.
e. equilibrium quantity is indeterminate.
43.
When both supply and demand shift to the right:
a. equilibrium price always rises.
b. equilibrium price always falls.
c. equilibrium quantity always falls.
d. equilibrium quantity always rises.
e. equilibrium quantity is indeterminate.
44.
When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens?
a. The equilibrium price will go up and the equilibrium quantity will go up.
b. The equilibrium price will go down and equilibrium quantity will be indeterminate.
c. The equilibrium price will be indeterminate and equilibrium quantity will go up.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
45.
When supply shifts left and demand shifts right, the:
a. equilibrium price always rises.
b. equilibrium price always falls.
c. equilibrium quantity always falls.
d. equilibrium quantity always rises.
e. equilibrium price is indeterminate.
46.
When the government places a tax on a good and all else is held constant, which of the following would most likely happen?
a. The overall consumption of the good decreases, assuming the good does not have a vertical demand curve.
b. The price the buyer pays for the good decreases, assuming the good does not have a horizontal demand curve.
c. The supply curve shifts to the right.
d. The government receives no tax revenue if the tax is more than 20%.
e. The price and quantity adjust back to the competitive market equilibrium point.
47.
When the price of an hour of tutoring increases,
a. the demand for tutoring decreases.
b. the demand for tutoring increases.
c. the demand curve for tutoring shifts.
d. the quantity demanded for tutoring increases.
e. the quantity demanded for tutoring decreases.
48.
When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
a. decrease; increase
b. decease; decrease
c. stay the same; stay the same
d. increase; increase
e. increase; decrease
49.
Which following change in the coffee market would shift the supply curve to the right?
a. A study finds that drinking coffee leads to higher grades.
b. The wage for employees in the coffee business decreases.
c. The income in the economy increases.
d. Firms expect the price of coffee to increase in the future.
e. Fifty Starbucks coffee shops close down.
50.
Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?
a. an increase in an input price
b. a decrease in the number of buyers in a market
c. an increase in the price of a substitute good
d. an increase in the expected future price
e. a negative technological change
51.
Which of the following situations would cause the demand curve to shift to the right?
a. a decrease in the number of consumers
b. a decrease in the number of producers
c. an increase in the price of a complement
d. an increase in the price of a substitute
e. a change in tastes and preferences
52.
Which of the following will cause a movement along a good's supply curve?
a. an increase in the price of an input
b. the price of the good increases
c. the production process of the good becomes more efficient
d. more firms enter the market
e. the government places a subsidy on the producer of the good
53.
Which of the following will cause the demand curve for burgers to shift the right?
a. The price of burgers decreases.
b. The price of burgers increases.
c. The price of burger buns increases.
d. A study is published by the National Association for Burger Research that says eating burgers can reduce the risk for bad acne.
e. The price of steak decreases.
54.
Which of the following would cause the demand curve to shift to the right?
a. Income decreases for an inferior good.
b. Income decreases for a normal good.
c. Tastes and preferences decrease.
d. The price of a substitute decreases.
e. The price of a complement increases.
55.
Wine and cheese are complement goods because they are consumed together. What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?
a. It would increase because of a supply shift.
b. It would increase because of a demand shift.
c. It would stay the same because of both a demand and a supply shift.
d. It would decrease because of a supply shift.
e. It would decrease because of a demand shift.
56.
With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the _________ curve to shift to the _________ and making the equilibrium price _________ and the equilibrium quantity _________.
a. demand; right; increase; increase
b. demand; left; decrease; decrease
c. supply; right; decrease; increase
d. supply; left; increase; increase
e. supply; left; increase; decrease
Question 1 When both supply and demand shift to the left, the:
Question 2 If the price of a good increases, holding all else constant,
Question 3 If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?
Question 4 Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:
Question 5 Refer to the table below:
Assume that the market for iPods has only two consumers: Chuck and Ryan. According the table above, if the price of an iPod is $85, the market will demand:
Question 6 Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
Question 7 A monopoly:
Question 8 Refer to the accompanying diagram. An increase in the number of buyers would cause the demand curve to:
Question 9 The government offers numerous educational subsidies through grants and lowcost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that:
Question 10 The change in equilibrium shown in the accompanying figure would be explained by a(n):
Question 11 What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?
Question 12 Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would:
Question 13 According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
Question 14 Consider the following demand schedules for New York Mets Tshirts:
Holding all else constant, which of the following demand schedules is most likely to represent New York Mets Tshirts if they win the World Series?
Question 15 According to the figure below, at the price of $5:
Question 16 The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?
Question 17 Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
Question 18 During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
Question 19 The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Question 20 When both curves shift:
Question 1 Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?
Question 2 What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
Question 3 Some studies have shown that eating chocolate before a test can increase brain activity, thereby causing students to score higher on exams. When these findings were announced, the price and quantity sold of chocolate increased in college towns. One reason for this could have been that the:
Question 4 The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.
Question 5 Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
Question 6 Something is a normal good if the demand for the good:
Question 7 Chuck drives past the same gas station every day. He realizes that the gas station always changes its prices on Tuesdays but keeps the price steady the rest of the week. On Saturday, Chuck turns on the news and hears a report projecting that the price of gasoline is going to increase. Holding all else constant, what do you think would happen to Chuck’s demand for gasoline on Monday?
Question 8 A change in quantity supplied:
Question 9 Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?
Question 10 Refer to the table below. The equilibrium price and quantity in this market is:
Question 11 Refer to the table below. If the price of this good is $2.00, there would be a _________ of _________ units.
Question 12 In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
Question 13 During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
Question 14
The demand curve shift shown in the figure was caused by a(n):
Question 15 If the price of Gatorade increases, the
Question 16 When the demand curve shifts to the left and all else is held constant, the
Question 17 When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
Question 18 Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?
Question 19 Refer to the accompanying graph. If consumers expect the price of a good to decrease in the future and all else is held constant, we would assume that the demand curve would:
Question 20 For a market to be competitive:
Question 1 Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?
Question 2 What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
Question 3 Some studies have shown that eating chocolate before a test can increase brain activity, thereby causing students to score higher on exams. When these findings were announced, the price and quantity sold of chocolate increased in college towns. One reason for this could have been that the:
Question 4 The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.
Question 5 Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
Question 6 Something is a normal good if the demand for the good:
Question 7 Chuck drives past the same gas station every day. He realizes that the gas station always changes its prices on Tuesdays but keeps the price steady the rest of the week. On Saturday, Chuck turns on the news and hears a report projecting that the price of gasoline is going to increase. Holding all else constant, what do you think would happen to Chuck’s demand for gasoline on Monday?
Question 8 A change in quantity supplied:
Question 9 Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?
Question 10 Refer to the table below. The equilibrium price and quantity in this market is:
Question 11 Refer to the table below. If the price of this good is $2.00, there would be a _________ of _________ units.
Question 12 In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
Question 13 During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
Question 14
The demand curve shift shown in the figure was caused by a(n):
Question 15 If the price of Gatorade increases, the
Question 16 When the demand curve shifts to the left and all else is held constant, the
Question 17 When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
Question 18 Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?
Question 19 Refer to the accompanying graph. If consumers expect the price of a good to decrease in the future and all else is held constant, we would assume that the demand curve would:
Question 20 For a market to be competitive:
Question 1 When both supply and demand shift to the left, the:
Question 2 If the price of a good increases, holding all else constant,
Question 3 If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?
Question 4 Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:
Question 5 Refer to the table below: Assume that the market for iPods has only two consumers: Chuck and Ryan. According the table above, if the price of an iPod is $85, the market will demand:
Question 6 Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
Question 7 A monopoly:
Question 8 Refer to the accompanying diagram. An increase in the number of buyers would cause the demand curve to:
Question 9 The government offers numerous educational subsidies through grants and lowcost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that:
Question 10 The change in equilibrium shown in the accompanying figure would be explained by a(n):
Question 11 What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?
Question 12 Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would:
Question 13 According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
Question 14 Consider the following demand schedules for New York Mets Tshirts: Holding all else constant, which of the following demand schedules is most likely to represent New York Mets Tshirts if they win the World Series?
Question 15 According to the figure below, at the price of $5:
Question 16 The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?
Question 17 Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
Question 18 During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
Question 19 The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Question 20 When both curves shift:
Question 1
As more people migrated West during the gold rush, what do you think happened to the demand curve in most Western markets, holding all else constant?
Question 2
Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium?
Question 3
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Question 4
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:
Question 5
Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will:
Question 6
The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Selected Answer: b. rise and the equilibrium price would fall
Question 7
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Question 8
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
Question 9
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
Question 10
If the price of Gatorade increases, the
Question 11
According to the figure below, at the price of $5:
Question 12
Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):
Question 13
Consider the following demand schedules for New York Mets Tshirts: Holding all else constant, which of the following demand schedules is most likely to represent New York Mets Tshirts if they win the World Series?
Question 14
The change in equilibrium shown in the accompanying figure would be explained by a(n):
Question 15
In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.
Question 16
When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
Question 17
Refer to the accompanying figure. What event would cause the supply curve to shift out?
Question 18
Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would:
Question 19
When the demand curve shifts to the right and the supply curve is held constant,
Question 20
If the price of a good increases, holding all else constant,
According to the figure below, at the price of $5:
Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium
When both supply and demand decrease, the equilibrium price
When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens?
In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
When supply shifts left and demand shifts right, the
When the government places a tax on the producer of a good or service
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are
Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):
Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph
Which of the following could cause the supply curve for the market for oranges to shift to the left?
A supply schedule
According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
Which following change in the coffee market would shift the supply curve to the right?
The demand curve for a good will shift to the right if, holding all else constant
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will
When firms in a market expect the price of their product to rise, the supply curve of their good:
Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure
Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would
Question 1 According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
Question 2 A subsidy:
Question 3 As more people migrated West during the gold rush, what do you think happened to the demand curve in most Western markets, holding all else constant?
Question 4 The law of supply states that, all other things being equal,
Question 5 In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that:
Question 6 What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
Question 7 When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price.
Question 8 Consider the following demand schedules for New York Mets Tshirts: Holding all else constant, which of the following demand schedules is most likely to represent New York Mets Tshirts if they win the World Series?
Question 9 The demand curve shift shown in the figure was caused by a(n):
Question 10 Assume that the market for nachos has only two suppliers: Firm 1 and Firm 2. According to this table, if the price of nachos is $6, the market will supply:
Question 11 What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
Question 12 The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Question 13 Which of the following will cause the demand curve for burgers to shift to the right?
Question 14 Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would:
Question 15 When the government places a tax on a good and all else is held constant, which of the following would most likely happen?
Question 16 If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Question 17 Which following change in the coffee market would shift the supply curve to the right?
Question 18 When supply shifts left and demand shifts right, the:
Question 19 Higher input costs:
Question 20 On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?
Question 1 In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
Question 2 Something is a normal good if the demand for the good:
Question 3 During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
Question 4 If the price of Gatorade increases, the
Question 5 The change in equilibrium shown in the accompanying figure would be explained by a(n):
Question 6 Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would:
Question 7 Refer to the accompanying figure. What event would cause the supply curve to shift out?
Question 8 Changes in population can:
Question 9 Refer to the table below: Assume that the market for iPods has only two consumers: Chuck and Ryan. According the table above, if the price of an iPod is $85, the market will demand:
Question 10 Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
Question 11 Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?
Question 12 If the price of rubber were to increase by 20% over the fiscal year and if all else were held constant, what would you expect to happen to the supply curve of tires that are sold separately from automobiles?
Question 13 The demand curve for a good will shift to the right if, holding all else constant,
Question 14 If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.
Question 15 The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?
Question 16 A monopoly:
Question 17 Kim attends the farmer’s market in her hometown of Bakersfield every Sunday. She notices that all of the oranges sold by the many different farmers at the market have roughly the same price, as do most other products that are alike. Which statement best explains why the prices are so similar?
Question 18 The law of supply states that, all other things being equal,
Question 19 When the number of firms in a market decreases,
Question 20 Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will:
Question 1 In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.
Question 2 When the number of firms in a market decreases,
Question 3 A shortage occurs whenever:
Question 4 Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?
Question 5 A subsidy:
Question 6 When firms in a market expect the price of their product to rise, the supply curve of their good:
Question 7 Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
Question 8 If the price of rubber were to increase by 20% over the fiscal year and if all else were held constant, what would you expect to happen to the supply curve of tires that are sold separately from automobiles?
Question 9 The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Question 10 As more people migrated West during the gold rush, what do you think happened to the demand curve in most Western markets, holding all else constant?
Question 11 As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?
Question 12 Something is a normal good if the demand for the good:
Question 13 Which of the following would cause the demand curve to shift to the right?
Question 14 According to the law of demand, all other things being equal,
Question 15 Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium?
Question 16 The law of supply states that, all other things being equal,
Question 17 When both curves shift:
Question 18 Assume that the market for nachos has only two suppliers: Firm 1 and Firm 2. According to this table, if the price of nachos is $6, the market will supply:
Question 19 The demand curve for a good will shift to the right if, holding all else constant,
Question 20 The change in equilibrium shown in the accompanying figure would be explained by a(n):
When the price of an hour of tutoring increases
Something is a normal good if the demand for the good
If the price of a good increases, holding all else constant
Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see
Which of the following will cause the demand curve for burgers to shift to the right
The demand curve shift shown in the figure was caused by a(n):
Refer to the accompanying diagram. An increase in the number of buyers would cause the demand curve to:
Which of the following will cause a movement along a good’s supply curve
Inputs are:
Which following change in the coffee market would shift the supply curve to the right?
Which of the following could cause the supply curve for the market for oranges to shift to the left?
When the demand curve shifts to the right and the supply curve is held constant
The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity
Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price
Refer to the accompanying figure. What event would cause the supply curve to shift out?
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:
What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
When the price is the equilibrium price, we would expect there to be a causing the market to put pressure on the price until it went back to the equilibrium price.
Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
To determine which of two producers has a comparative advantage, you would need to know their
The area inside (within) the production possibilities frontier (PPF) contains
Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand
The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?
Use the following table to answer the questions that follow. What is the surplus when the price floor is $0.75 in the market for public transportation?
Why are binding price ceiling laws passed?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?
Which of the following will cause a movement along a good’s supply curve?
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be
If the cross-price elasticity of demand for two goods is zero, the two goods are
The price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the cross-price elasticity of demand
During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is
For a market to be competitive
If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?
Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?
In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the curve in the market for hybrid cars to
An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an
Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can prices to increase total revenue, and Mommas must prices to increase total revenue.
The scientific method and the tools of economics are useful in examining
A positive statement
When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is
Which of the following will cause the demand curve for burgers to shift the right?
You have an absolute advantage in producing something whenever
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because
Refer to the accompanying figure. What event would cause the supply curve to shift out?
The production possibilities frontier (PPF) shows
With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the curve to shift to the and making the equilibrium price and the equilibrium quantity
Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are available?
According to economists, one reason few professional athletes have PhD’s is that the
What will happen in a market where a binding price floor is removed?
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
Which statement best describes the absolute advantage as shown in the graphs?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?
Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by
In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.
Refer to the following figure for the questions that follow. As you move from points N to M to L, the opportunity cost of additional apple pie
Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is
Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n)
Use the following scenario to answer the questions that follow. Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
Refer to the accompanying table to answer the questions that follow. The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.
When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price
Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
To determine which of two producers has a comparative advantage, you would need to know their
The area inside (within) the production possibilities frontier (PPF) contains
Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?
Use the following table to answer the questions that follow.
What is the surplus when the price floor is $0.75 in the market for public transportation?
Why are binding price ceiling laws passed?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?
Which of the following will cause a movement along a good’s supply curve?
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:
If the cross-price elasticity of demand for two goods is zero, the two goods are
The price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the cross-price elasticity of
During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue ________ because the price elasticity of demand for sugar cookies is ________.
For a market to be competitive:
If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?
Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?
In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.
An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an
Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The demand for ice cream sandwiches is:
While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.
The scientific method and the tools of economics are useful in examining:
A positive statement:
When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is:
Which of the following will cause the demand curve for burgers to shift the right?
You have an absolute advantage in producing something whenever:
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.
Refer to the accompanying figure. What event would cause the supply curve to shift out?
The production possibilities frontier (PPF) shows:
With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the _________ curve to shift to the _________ and making the equilibrium price _________ and the equilibrium quantity _________.
Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are available
According to economists, one reason few professional athletes have PhD’s is that the
What will happen in a market where a binding price floor is removed?
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
Which statement best describes the absolute advantage as shown in the graphs?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?
Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by:
In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.
Refer to the following figure for the questions that follow. As you move from points N to M to L, the opportunity cost of additional apple pie:
Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:
Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):
Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is:
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
Refer to the accompanying table to answer the questions that follow. The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.
Question 1
When the price of an hour of tutoring increases,
Select one:
a. the quantity demanded for tutoring decreases.
b. the demand curve for tutoring shifts.
c. the demand for tutoring increases.
d. the quantity demanded for tutoring increases.
e. the demand for tutoring decreases.
Question 2
Something is a normal good if the demand for the good:
Select one:
a. increases as the consumer’s income increases.
b. increases if the price of a complement good increases.
c. decreases if the price of a substitute good increases.
d. increases as the consumer’s income decreases.
e. decreases as the income of the consumer increases.
Question 3
If the price of a good increases, holding all else constant,
Select one:
a. the demand for all of that good’s substitutes will decrease.
b. the demand curve will shift to the left.
c. the demand for all of that good’s substitutes will increase.
d. the quantity demanded for that good will increase.
e. the demand for all of that good’s complements will increase.
Question 4
Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
Select one:
a. the demand curve for Coke shift to the left.
b. the demand curve for Pepsi shift to the left.
c. the demand curve for Coke shift to the right.
d. no change in the demand for Coke.
e. the demand curve for Pepsi shift to the right.
Question 5
Which of the following will cause the demand curve for burgers to shift to the right?
Select one:
a. A study is published by the National Association for Burger Research that says eating burgers can reduce the risk for bad acne.
b. The price of burgers increases.
c. The price of burger buns increases.
d. The price of steak decreases.
e. The price of burgers decreases.
Question 6
The demand curve shift shown in the figure was caused by a(n):
Select one:
a. decrease in the number of buyers in the market for the good.
b. decrease in the number of firms selling the good.
c. increase in the input cost of the good.
d. increase in the price of a substitute of the good.
e. expectation that the future price of this good will be higher than it is currently.
Question 7
Refer to the accompanying diagram. An increase in the number of buyers would cause the demand curve to:
Select one:
a. shift from D1 to D3.
b. shift from D2 to D3.
c. shift from D1 to D2.
d. shift from D2 to D1.
e. remain at D1.
Question 8
Which of the following will cause a movement along a good’s supply curve?
Select one:
a. an increase in the price of an input
b. more firms enter the market
c. the production process of the good becomes more efficient
d. the price of the good increases
e. the government places a subsidy on the producer of the good
Question 9
Inputs are:
Select one:
a. resources that firms use in the production of final goods and services.
b. goods that you demand less of as your income increases.
c. goods that you demand more of as your income increases.
d. goods that are used together.
e. goods that are used in place of one another.
Question 10
Which following change in the coffee market would shift the supply curve to the right?
Select one:
a. A study finds that drinking coffee leads to higher grades.
b. The wage for employees in the coffee business decreases.
c. Firms expect the price of coffee to increase in the future.
d. Fifty Starbucks coffee shops close down.
e. The income in the economy increases.
Question 11
Which of the following could cause the supply curve for the market for oranges to shift to the left?
Select one:
a. a severe hurricane in Florida
b. a new study saying that eating oranges will give you heart disease
c. an increase in the price of orange juice
d. a decrease in the cost of workers
e. an increase in the income of consumers of oranges
Question 12
When the demand curve shifts to the right and the supply curve is held constant,
Select one:
a. the equilibrium price and quantity decrease.
b. the equilibrium price increases, and the equilibrium quantity decreases.
c. the equilibrium price decreases, and the equilibrium quantity increases.
d. the equilibrium price and quantity increase.
e. you see a movement along the demand curve.
Question 13
The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.
Select one:
a. increases; does not change; does not change; increases
b. increases; increases; decreases; decreases
c. decreases; decreases; increases; increases
d. decreases; increases; increases; decreases
e. increases; decreases; decreases; increases
Question 14
Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:
Select one:
a. increased and the equilibrium quantity increased.
b. stayed the same and the equilibrium quantity stayed the same.
c. decreased and the equilibrium quantity decreased.
d. increased and the equilibrium quantity decreased.
e. decreased and the equilibrium quantity increased.
Question 15
Refer to the accompanying figure. What event would cause the supply curve to shift out?
Select one:
a. The price of an input increased.
b. Consumers earn lower incomes.
c. Consumers earn higher incomes.
d. Firms entered the market.
e. Firms expected the price to rise in the future.
Question 16
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
Select one:
a. Equilibrium price will go up and equilibrium quantity will go down.
b. Equilibrium price will go up and equilibrium quantity will go up.
c. Equilibrium price will go up and equilibrium quantity will be indeterminate.
d. Equilibrium price will be indeterminate and equilibrium quantity will go up.
e. Equilibrium price will go down and equilibrium quantity will be indeterminate.
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Question 17
According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:
Select one:
a. equilibrium price of apples to be indeterminate and the equilibrium quantity of apples in the market to increase.
b. equilibrium price of apples to increase and the equilibrium quantity of apples in the market to decrease.
c. equilibrium quantity of apples in the market to decrease and the equilibrium price of apples to stay the same.
d. equilibrium quantity of apples in the market to be indeterminate and the equilibrium price of apples to increase.
e. equilibrium quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.
Question 18
What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
Select one:
a. The equilibrium price will go down and equilibrium quantity will be indeterminate.
b. The equilibrium price will be indeterminate and equilibrium quantity will go up.
c. The equilibrium price will stay the same and equilibrium quantity will be indeterminate.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will go up and equilibrium quantity will go up.
Question 19
In agriculture, a “bumper crop” refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
Select one:
a. The equilibrium price will be indeterminate and equilibrium quantity will go up.
b. The equilibrium price will go up and equilibrium quantity will be indeterminate.
c. The equilibrium price will go down and equilibrium quantity will be indeterminate.
d. The equilibrium price will be indeterminate and equilibrium quantity will go down.
e. The equilibrium price will go up and equilibrium quantity will go up.
Question 20
The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
Select one:
a. rise and the equilibrium price would fall.
b. rise and the equilibrium price would rise.
c. fall and the equilibrium price would remain constant.
d. fall and the equilibrium price would fall.
e. fall and the equilibrium price would rise.
The measurement of personal savings may be distorted by:
If foreign entities save less and governments run more deficits, we would correctly say that:
If nominal income increases, then:
Let’s say a company invents a very popular device called a Zorgon, which allows you to send small items via a transporter from one place to another. This would affect the consumer price index (CPI) in the sense that the CPI:
An index of the average prices of all goods and services throughout the economy is called:
One misconception that people often have about unemployment is that:
Deflation is occurring in a nation; the implication(s) of this is/are:
An increase in the supply of loanable funds means:
Consider a nation in which the price index last year was 130 and this year it is 150. Which statement is correct?
When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
The phase of the business cycle where the economy is growing slower than usual is called:
Consider a nation in which the price index was 150 last year and this year it is 130. Which statement is correct?
I asked my neighbor to rake the leaves on his lawn because they are blowing into my yard. He responded that it wouldn’t be rational for him to do so. Why would this be the case?
The business cycle measures:
Typically if real wages fall, the quantity demanded of labor rises. If workers agree to 3% wage increases for a fouryear period and inflation is more than 3%, then, based on this information alone:
Does the value of cleaning your house count toward the value of GDP?
Jamal works in a factory in Lake Zurich, Illinois, assembling toy trains. The factory owner updates the current equipment and installs new robots that can do Jamal’s job. As a result, Jamal is laid off and is now unemployed. Jamal would be considered:
Changes in population can:
Which following change in the coffee market would shift the supply curve to the right?
In terms of inflation, the period from the mid 1980s until today in the United States is called the “Great Moderation.” This refers to the fact that:
You are an entrepreneur about to start your first business. Based on this statement:
The difference between the official unemployment rate and the alternate measure of unemployment that includes discouraged workers and underemployed workers:
The concept of the loanable funds market is:
Typically, savers in the loanable funds market are the _________, and borrowers are _________.
Kim attends the farmer’s market in her hometown of Bakersfield every Sunday. She notices that all of the oranges sold by the many different farmers at the market have roughly the same price, as do most other products that are alike. Which statement best explains why the prices are so similar?
Consumption is approximately ________ of GDP
What is the difference between the consumer price index (CPI) and the gross domestic product (GDP) deflator?
Joe sells the house he has lived in for 10 years to the Smith family for $300,000. He receives $50,000 more than his original purchase price 10 years ago. Joe pays his real estate agent a 5% sales commission. This transaction will increase GDP by:
A good is ________ if it takes even a small amount of time, energy, or money to acquire.
As the life expectancy in the United States increases, which of the following could likely happen to the demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else constant, and why?
a. There would be a decrease because individuals are healthier.
b. There would be an increase because the cost of these items is falling.
c. They will stay the same because these changes would affect the supply curve and not the demand curve.
d. There would be a decrease because Social Security benefits are running out
e. There would be an increase because there will be more buyers in these markets.
Government policies such as unemployment compensation and government regulations related to hiring and firing employees result in:
a. higher frictional unemployment.
b. higher structural unemployment.
c. lower cyclical unemployment.
d. lower structural unemployment.
e. lower frictional unemployment
In Country Z, the prices of goods are measured on an annual basis on the last day of the year. In Country Y, the prices of goods are measured on a weekly basis every Wednesday. Comparing the two countries based on this information:
a. Country Y will experience hyperinflation.
b. Country Y more accurately combats the upward bias of its price index by using a chained index.
c. Country Z will experience hyperinflation.
d. Country Z more accurately combats the upward bias of its price index by using a chained index.
e. Neither country has a very good price index; price indices must be measured daily.
How are changes in opportunity cost related to decisionmaking behavior?
a. The higher the opportunity cost of doing activity X, the more likely activity X will be done.
b. The lower the opportunity cost of doing an activity X, the more likely activity X will be done.
c. Changes in the opportunity cost play no role in decisionmaking.
d. The higher the opportunity cost of doing activity Y, the less likely activity X will be done.
e. The lower the opportunity cost of doing activity Y, the more likely activity X will be done
The ratio of Price in an Earlier Time / Price in Today’s Time:
a. would be used to find the percentage of the quality change bias.
b. would be used to convert the consumer price index (CPI) to the gross domestic product (GDP) deflator.
c. would be used to convert an earlier price to today’s price adjusting for inflation.
d. would be used to find the percentage of substitution bias.
e. would be used to convert today’s price to an earlier price adjusting for inflation
If household wealth falls and governments run fewer deficits, we would correctly say that:
a. the new equilibrium quantity of loanable funds would increase, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
b. the new equilibrium quantity of loanable funds would decrease, but we would be unable to tell if the new equilibrium interest rate would be higher or lower than the original.
c. the new equilibrium quantity of loanable funds would be indeterminate, but we would be certain the new equilibrium interest rate would be less than the original.
d. the new equilibrium quantity of loanable funds would be indeterminate, but we would be certain the new equilibrium interest rate would be higher than the original.
e.based on this information and because both changes would affect the demand for loanable funds in the opposite way, we would be unable to say anything about the relationship of the new equilibrium interest rate and quantity to the original interest rate and quantity
Equilibrium in the loanable funds market means:
a. the dollar price at which investment equals savings.
b. the dollar price at which savings equals consumption.
c. the interest rate at which investment equals consumption.
d. the interest rate at which investment equals savings.
e. the interest rate at which savings equals consumption.
Nominal GDP increased from $15.76 trillion to $16.39 trillion, and the price level increased from 112.6 to 114.8. Which of the following is true?
a. Output grew faster than the price level.
b. Output grew slower than the price level.
c. Output grew at the same rate as the price level.
d. Real GDP grew faster than nominal GDP.
e. Real GDP grew at the same rate as nominal GDP.
If real income increases, then:
a. nominal income increases.
b. nominal income rises faster than prices
c. nominal income remains constant but the majority of goods in the consumer price index (CPI) get cheaper.
d. nominal income decreases.
e. nominal income increases if the price index falls.
Assuming the price level increased, if real GDP is less than nominal GDP for a given year, then:
a. the growth in output was equal to the growth in the price level.
b. the growth in output was greater than the growth in the price level.
c. the given year is after the base year.
d. the growth in output was less than the growth in the price level.
e. the given year is before the base year
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
a. $10 and 2 units
b. $10 and 8 units
c. $6 and 4 units
d. $6 and 8 units
e. $10 and 4 units
The long run average growth rate of real GDP in the U.S. economy is about: a. 3%.b. 1%.c. 10%.d. 2%.e. 5%.
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
a. the number of firms in a market.
b. the change in income.
c. the change in input cost.
d. the change in technology.
e. price expectations.
Based on the figure, which of the following statements best applies?
a. During the period shown, Brazil went through inflation, but the overall trend was lower and lower inflation with very rare increases.
b. Typically Brazil experienced moderate inflation.
c. During some years depicted, Brazil experienced inflation; in other years, Brazil experienced deflation.
d. During most years depicted, Brazil experienced hyperinflation.
e. During the period shown, Brazil experienced higher and higher inflation with a few exceptions.
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:
a. shift to the right, causing the equilibrium price to increase.
b. remain the same, but the equilibrium price will increase.
c. remain the same, but the equilibrium price will decrease.
d. shift to the right, causing the equilibrium price to decrease.
e. shift to the left, causing the equilibrium price to increase.
The change in equilibrium shown in the accompanying figure would be explained by a(n):
a. increase in the price of an input and a decrease in the price of a complement.
b. decrease in the price of an input and an increase in the price of a complement.
c. decrease in the price of an input and an increase the in price of a substitute.
d. increase in the price of an input and an increase in the price of a complement.
e. increase in the price of an input and a increase in the price of a substitute.
During normal economic times, unemployment in France and Germany tends to be ____________ than in the United States mainly because of ____________.
a. lower; labor market regulations
b. longer; exchange rates
c. higher; cyclical unemployment
d. higher; labor market regulations
e. higher; exchange rates
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $50. This adds _____ to GDP when the store sells the game to the consumer. a. $30b. $25c. $50d. $20e. nothing
Your roommate arrives home and says, “I am so hungry, I would give up my iPhone for a bowl of chili right now.” You say, “Here is the chili—let’s trade.” Based on this information:
a. you have a lower time preference than your roommate because he gets the chili now.
b. your roommate would engage in consumption smoothing but you would not.
c. the one willing to accept a lower nominal interest rate has a higher time preference.
d. your roommate would be a borrower and you a lender.
e. you have a lower time preference than your roommate because you get the iPhone now
Firms expect more sales and profits in the near future; this would cause:
a. the demand for loanable funds to increase.
b. both the demand and supply of loanable funds to decrease.
c. lower interest rates in the near future.
d. the supply of loanable funds to increase.
e. both the demand and supply of loanable funds to increase.
Wealth increases in the United States because the value of the stock market increases; if all else is equal, this would cause:
a. the supply of loanable funds to increase.
b. a larger gap between the real and nominal rates of interest.
c. the supply of loanable funds to decrease.
d. the demand for loanable funds to increase.
e. corporations to be more willing to borrow.
If your real wage rose but your nominal wage fell, this would imply that:
a. inflation is positive but less than the rate of increase in your wage.
b. the overall price level has fallen more than your nominal wage.
c. your boss took some of your wages illegally.
d. housing prices have fallen and because you own a house, it reduces the value of your real wage.
e. deflation has occurred.
A bond is an instrument that allows the bearer to earn interest. The bearer would be best described as:
a. one who borrows.
b. a financial intermediary.
c. a demander of loanable funds.
d. both a financial intermediary and a borrower.
e. a supplier of loanable funds.
Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?
a. expectations regarding the future price
b. changes in tastes and preferences
c. the price of related goods
d. the number of buyers
e. changes in income
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:
a. shift to the right, causing the equilibrium price to increase.
b. shift to the left, causing the equilibrium price to increase.
c. remain the same, but the equilibrium price will increase.
d. remain the same, but the equilibrium price will decrease.
e. shift to the right, causing the equilibrium price to decrease.
If mustard now costs $0.75 when today’s price index is 225, and if the price index in 1970 was 38, we would most accurately say that:
a. ketchup would cost about $0.13 in 1970 because it typically costs about the same as mustard.
b. mustard cost about $0.20 in 1970.
c. mustard’s price would never increase at the same rate as inflation because it is a food item.
d. if mustard cost $0.10 in 1970, it was relatively cheap as an inflationadjusted price.
e. mustard cost about $4.44 in 1970.
A shortcoming of using real GDP as a measure of economic wellbeing is that it does not measure changes in:a. prices.b. interest rates.c. production.d. unemployment.e. environmental quality.
The interest rate represents:
a. only the opportunity cost of taking a different job.
b. the opportunity cost of saving plus the opportunity cost of inflation.
c. the opportunity cost of consumption.
d. the price of savings, but not investment.
e. the opportunity cost of saving.
The concept of a price index is that:
a.it is an index of how much housing prices have changed, because housing is the most important item in the consumption bundle.
b.it is a measure of how the prices included in the typical basket of goods have changed over time, holding the items in the consumption bundle constant.
c.it is a measure of how the items included in the typical basket of goods have changed over time; it also includes price changes over time.
d.it is a measure of how the items included in the typical basket of goods have changed over time, while holding price changes constant.
e. it is an index of how much gasoline prices have increased, because all prices follow the price of gasoline
You are thinking about building a new mall. Your economic consultants say the mall will bring a 7% rate of return. Because you know that you can borrow money for 5%:
a.assuming conditions don’t change, you will not build the mall because a 2% net rate of return is just too small to be worth it.
b. assuming conditions don’t change, you will build the mall no matter how much it costs.
c. you will build the mall if it costs $50 million but not if it costs $100 million.
d. if the rate of return falls below 5%, you will still build the mall.
e. if the cost of borrowing rises to 8%, you would still build the mall.
Imperfect markets:
Economics is the study of how people allocate their ________ resources to satisfy their nearly _________ wants.
Incentives can be classified as
Jewell attends a wedding reception where dinner is served. For her entrée, she has the option of steak, chicken, or pasta. If she chooses the pasta, then her opportunity cost is
Judy spent eight hours studying for an exam. Normally, she would have spent that time watching TV instead of studying. She figures she could have made a "B" after only studying four hours, but she really wanted an "A." What is Judy's marginal cost in terms of TV viewing to improve her grade from a "B" to an "A"?
Opportunity cost is the ______________ alternative that must be sacrificed in order to get something else.
The difference between the study of microeconomics and the study of macroeconomics is a difference between
The opportunity cost of attending college is likely to be highest for a high school graduate
Think about a country where most economic production comes from factories that create air pollution. What could be a possible trade-off of lower levels of pollution?
Which of the following statements refers to a macroeconomic issue?
You have to decide between going on a cruise with friends or going on a service trip with Alternative Spring Break; both of which cost the same amount. You could also work over the break and earn some extra money, but this would be less valuable to you than either experience. If you choose the cruise, what is your opportunity cost?
You order a $20 Seattle Mariners sweatshirt online for a Father's Day gift. There's a standard shipping charge of $10, but you see that orders $25 or more ship for free. You could also order a $5 Mariners sticker, but you're not sure your father would like it. You decide to order the sticker. This is an example of
Now, assume that both Debra and Mike decide to specialize, and then Debra trades 19 pizzas to Mike for 47 wings. This outcome is shown in the table below. Compared to the result without trade, what are the gains from trade that Debra experiences when she and Mike specialize and trade?
Austin, Jensen, Matthew, and Walker can all produce matches, brushes, cans, and shirts. The table below identifies how many of each good they can make in a day if they devote themselves to producing only that good. matches
brushes cans shirts
Austin 100 50 40 20
Jensen 90 55 45 15
Matthew 95 45 20 40
Walker 55 60 50 25
Based on the figure below, what would be the opportunity cost in terms of wings when producing 20 more pizzas if the economy is efficiently producing 150 wings and 50 pizzas?
Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant.
Suppose that a politician tells you about a plan to create two expensive but necessary programs to build more production facilities for solar power and wind power. At the same time, the politician is unwilling to cut any other programs. Assuming the resources are already being efficiently used in other programs, where would the point the politician is trying to reach be on the production possibilities frontier?
Suppose that in a time of crisis everyone pitches in and works more than full-time. How is this represented by a production possibilities frontier?
The graph below illustrates the effect on the production possibilities frontier if the population grows, making more workers available. This new production possibilities frontier reflects the ability of society to
The table below shows the daily production potential of two workers if they devote all their time to making either pizza or wings. Who has the absolute advantage at producing pizzas?
The table below shows the daily production potential of two workers, if they devote all their time to making either pizza or wings. Who has the absolute advantage at producing wings?
What would we have to assume before constructing a society's production possibilities frontier?
Where would you plot full employment on a production possibilities frontier?
Where would you plot unemployment on a production possibilities frontier?
Which of the following are endogenous factors in a student's decision about whether to attend a particular college? Select all that apply.
Which of the following describes Jonathan having a comparative advantage in producing apples?
Which of the following statements is normative?
Which point on the graph below is unattainable because the economy does not have enough resources to produce it?
Which point on the graph below represents an inefficient use of society's resources?
You are thinking about traveling to visit friends in Atlanta. You can fly or take the bus. A round-trip plane ticket costs $300, and it takes three hours to get from your house to your friend's house if you fly. A round-trip bus ticket costs $150 and it takes 10 hours to get door-to-door using the bus.
The following table describes the production possibilities of two cities in the country of Basebalia:
Pairs of Red Socks per Worker per Hour
Pairs of White Socks per Worker per Hour
Boston 3 3
Chicago 2 1
The following table describes the production possibilities of two cities in the country of Basebalia:
Pairs of Red Socks per Worker per Hour
Pairs of White Socks per Worker per Hour
Boston 3 3
Chicago 2 1
The following table describes the production possibilities of two cities in the country of Basebalia:
Pairs of Red Socks per Worker per Hour
Pairs of White Socks per Worker per Hour
Boston 3 3
Chicago 2 1
Who as a comparative advantage in the production of white socks?
The following table describes the production possibilities of two cities in the country of Basebalia:
Pairs of Red Socks per Worker per Hour
Pairs of White Socks per Worker per Hour
Boston 3 3
Chicago 2 1
Would both countries accept a term of trade of 3 red socks for 1 white sock? If not, which country will not accept?
The following table lists points on the PPFs of two people. Who has a comparative advantage in producing computers.?
Imagine the market for sweatshirts is currently in equilibrium. What will happen to the equilibrium price (P) and quantity (Q) for sweatshirts if a hurricane hits South Carolina and damages the cotton crop?
Imagine the market for sweatshirts is currently in equilibrium. What will happen to the equilibrium price (P) and quantity (Q) for sweatshirts if new, more efficient, knitting machines are invented?
Imagine the market for sweatshirts is currently in equilibrium. What will happen to the equilibrium price (P) and quantity (Q) for sweatshirts if the price of leather jackets fall?
Imagine the market for sweatshirts is currently in equilibrium. What will happen to the equilibrium price (P) and quantity (Q) for sweatshirts if all universities start requiring morning exercise in appropriate (sweatshirt-based) attire?
A change in quantity supplied:
A monopoly:
According to the accompanying figure, if the price is $10, there is
Assume that the market for nachos has only two suppliers: Firm 1 and Firm 2. According to this table, if the price of nachos is $6, the market will supply:
For a market to be competitive:
If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
In one year, 15 bowling alleys opened in California. During that same year, ESPN started broadcasting professional bowling on TV, which sparked more interest in the sport. What would we expect to happen to the price and quantity of a game of bowling in California during that year?
Refer to the accompanying diagram. An increase in the number of buyers would cause the demand curve to:
The change in equilibrium shown in the accompanying figure would be explained by a(n):
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:
Refer to the table below. The equilibrium price and quantity in this market is:
Refer to the table below. If the price of this good is $2.00, there would be a _________ of _________ units.
Chuck drives past the same gas station every day. He realizes that the gas station always changes its prices on Tuesdays but keeps the price steady the rest of the week. On Saturday, Chuck turns on the news and hears a report projecting that the price of gasoline is going to increase. Holding all else constant, what do you think would happen to Chuck's demand for gasoline on Monday?
A survey shows an increase in drug use by young people. In the ensuing debate, two hypotheses are proposed:
Reduced police efforts have increased the availability of drugs on the street
Cutbacks in education have decreased awareness of the dangers of drug addiction
This question is more difficult but really working through it may help you understand the nuances of supply and demand:
A camera takes a picture of drivers who do not stop at a red light, and this practice is used to issue a traffic ticket. These red light cameras can be understood as serving as a(n):
A person has a comparative advantage in the production of a good when she or he can produce the product at a(n) ________ opportunity cost compared to another person.
As a new firm in the apple-picking business, you have considered adding an economist to your management team. What would this economist be unable to help your managerial team with?
Economics is the study of:
I asked my neighbor to rake the leaves on his lawn because they are blowing into my yard. He responded that it wouldn't be rational for him to do so. Why would this be the case?
A town on the Gulf Coast is battered by a massive hurricane that destroys most of its productive resources. The community's production possibilities frontier (PPF) would show an:
Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
What is Rachel's opportunity cost of baking 1 pie?
Economic growth can be depicted on a production possibilities frontier (PPF) as an:
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.
Copy of The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.
Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
The price of good X increases by 25%, causing the quantity consumed of good Y to decrease by 10%. If everything else is held constant in the economy, we can say with certainty that good X and good Y are:
When both supply and demand shift to the left, the:
When a hurricane rips through Florida, the price of oranges rises because the:
Refer to the accompanying diagram. Which of the following scenarios would explain this change in equilibrium?
A local paintball business receives total revenue of $10,000 per month when it charges $12 per person, and $15,000 in total revenue when it charges $8 per person. Over that range of prices, the business faces
College logo water bottles priced at $12 sell at a rate of 30 per week, but when the bookstore marks them down to $8, it finds that it can sell 45 water bottles per week. What is the price elasticity of demand for the water bottles? Use the midpoint formula from the slides to answer this question.
Customers who visit convenience stores at 3 a.m. have a price elasticity of demand that is _____________ elastic than those who visit at 3 p.m.
Demand for a good is elastic if quantity demanded ________________ in response to a price change.
Suppose the price of IBM computers falls from $2,500 to $2,000 and the quantity demanded increases from 10,000 to 20,000. Calculate the price elasticity of demand. Use the midpoint formula to answer this question.
Price elasticity of demand is always negative except when demand is
Which of the following goods is perfectly elastic?
Which of the following goods is perfectly inelastic?
Which of the following goods is relatively elastic?
For which of the following goods would you expect demand to be the most responsive to a rise in price?
If a 20% increase in price causes a 30% drop in quantity demanded, this good is
The income elasticity of demand coefficient is _____________ for normal goods.
Imagine there are two types of airline travelers: vacationers and business travelers. Which do you think will have more elastic demand for airline tickets and why?
A price change causes the quantity demanded to for a good to decrease by 30 percent, while the total revenue of that good increases by 15 percent. What can you say about the price elasticity of demand at this point?
1.
According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:
2.
According to the law of supply, what is the relationship between price and quantity supplied?
3.
According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.
4.
Assume that the market for baseballs is in equilibrium. There is a sudden decrease in income throughout the economy. If all else is held constant, we would expect that:
5.
Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
6.
Assume there are 100 suppliers of widgets in the widget market. Half of these suppliers supply 35 widgets to the market each, a quarter of these suppliers supply 40 widgets to the market each, and a quarter of these suppliers supply 50 widgets to the market each. What is the market supply for widgets?
7.
A change in quantity supplied:
8.
A change in which of the following will cause a change in the quantity supplied of coffee?
9.
Changes in population can:
10.
A decrease in demand is represented by a:
11.
12.
13.
14.
15.
17.
18.
19.
For a market to be competitive:
20.
f the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
22.
Higher input costs:
23.
If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?
24.
If the cost of flour increases from $3 to $5 a bag, you could predict the supply curve for bagels to:
25.
If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.
26.
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
27.
imperfect markets:
28.
An improvement in technology:
29.
In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that:
30.
In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
The equilibrium price will go down and equilibrium quantity will be indeterminate.
31.
In March 2012, the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning. Because of this, both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient. If Pepsi and Coke did NOT change their formula, holding all else constant, what do you think would have happened to the demand for these goods, assuming Pepsi and Coke were in a competitive market?
The demand curve for Pepsi and Coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.
32.
In one year, 15 bowling alleys opened in California. During that same year, ESPN started broadcasting professional bowling on TV, which sparked more interest in the sport. What would we expect to happen to the price and quantity of a game of bowling in California during that year?
Equilibrium price will be indeterminate and equilibrium quantity will go up.
33.
Inputs are:
resources that firms use in the production of final goods and services.
34.
In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.
demand; shift to the right
35.
In the market for breakfast cereal, the market is currently in equilibrium. Suddenly there is a storm that destroys the wheat that farmers had been growing for the cereal manufacturer.
What will happen to the cereal market after the storm?
36.
In the market for desk lamps, which of the following will increase demand?
37.
Kim attends the farmer's market in her hometown of Bakersfield every Sunday. She notices that all of the oranges sold by the many different farmers at the market have roughly the same price, as do most other products that are alike. Which statement best explains why the prices are so similar?
38.
The law of supply states that, all other things being equal,
39.
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will:
40.
Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?
41.
The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:
42.
A monopoly:
43.
Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would:
44.
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains:
45.
On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?
46.
Question Text: Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the
47.
Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?
48.
A shortage occurs whenever:
49.
Smoke detectors have been shown to effectively reduce the death rate due to fires. In order to ensure that as many individuals as possible install a smoke detector, the government recently decided to subsidize the production of smoke detectors.
Which of the following will be the consequences of this subsidy?
50.
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
51.
A subsidy:
52.
The supply curve is _______________ driven by the law of supply.
53.
A supply schedule:
54.
Suppose that many people who earn a living catching fish decide they can make more money selling t-shirts and switch occupations. How will this affect the number of fish supplied by producers?
55.
Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish with using the same number of crewmembers. At the same time a new study shows that eating fish at least three times a week helps prevent heart attacks. How will the market for fish respond?
56.
Suppose the cost of processing fish increases. How will this affect the demand for fish?
57.
Suppose the cost of shipping fish drops. How will this affect the equilibrium price and equilibrium quantity of fish?
58.
Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price:
59.
Taxes cause the equilibrium price of a good to:
60.
A technological advancement for Good A will shift the _________ curve of Good A to the _________, making the equilibrium price _________.
61.
Top Ramen is a brand of noodles that is widely considered to be an inferior good with a high salt content. What would happen to the equilibrium price and equilibrium quantity of Top Ramen if income went up and the price of salt decreased?
62.
What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future?
63.
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
64.
What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease?
65.
What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant?
66.
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
67.
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
68.
When a hurricane rips through Florida, the price of oranges rises because the:
69.
When both supply and demand decrease, the equilibrium price
70.
When both supply and demand shift to the left, the:
71.
When both supply and demand shift to the right:
72.
When firms in a market expect the price of their product to rise, the supply curve of their good:
73.
When Katy went to buy Kylie Jenner's Lip Kit, she discovered that the product that was normally $29.95 was selling for $200.00! Which of the following best explains this phenomenon?
74.
When Katy went to buy Kylie Jenner's Lip Kit, she discovered that the product that was normally $29.95 was selling for $200.00! Which of the following best explains this phenomenon?
75.
When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens?
76.
When supply shifts left and demand shifts right, the:
77.
When supply shifts right and demand shifts left, the:
78.
When the demand curve shifts to the left and all else is held constant, the
79.
When the demand curve shifts to the right and the supply curve is held constant,
80.
When the government places a tax on a good and all else is held constant, which of the following would most likely happen?
81.
When the government places a tax on the producer of a good or service:
82.
When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price.
83.
When the price of an hour of tutoring increases,
84.
Which following change in the coffee market would shift the supply curve to the right?
85.
Which of the following could cause the supply curve for the market for oranges to shift to the left?
86.
Which of the following will cause a shift in the supply curve for tobacco?
87.
Wine and cheese are complement goods because they are consumed together. What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?
88.
You are an owner of a restaurant. In an attempt to increase sales, you have lowered prices by 10%. Which of the following is a NOT consequence of this price change?
89.
You are a producer of calculators. In the market for calculators, two events happened simultaneously last month. There was a fire at your calculator factory that eliminated half of your firm's production capability. At the same time, your compensation costs increased by 5% because of an annual pay raise you give your employees.
