Question 1

If the United States placed an embargo on Swedish products,what would happen in the U.S.market for Swedish furniture?

Accepted Answer

A)  The supply curve would shift to the left.
B)  The supply curve would shift to the right.
C)  The demand curve would shift to the right.
D)  The demand curve would shift to the left.E) None of the above
F) All of the above

Question 2

If the price of refillable butane lighters was to decrease,then

Accepted Answer

A)  the demand for butane would decrease.
B)  the demand for butane would increase.
C)  the quantity of butane demanded would increase.
D)  the quantity of butane demanded would decrease.E) A) and B)
F) B) and C)

Question 3

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

Accepted Answer

A)  both the equilibrium price and quantity of DVD players will decrease.
B)  the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease.
C)  the equilibrium price of DVD players may increase or decrease; the equilibrium quantity will decrease.
D)  the equilibrium price of DVD players will increase; the equilibrium quantity may increase or decrease.E) A) and B)
F) None of the above

Question 4

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

Accepted Answer

A)  an increase in consumer income
B)  an oil spill that sharply reduces oyster output
C)  a decrease in consumer income
D)  a technological advancement in the production of oystersE) B) and C)
F) A) and B)

Question 5

Figure 3-1
 
-Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

Accepted Answer

A)  A to B.
B)  B to A.
C)  D₁ to D₂.
D)  D₂ to D₁.E) B) and C)
F) A) and B)

Question 6

Indicate whether each of the following situations would shift the supply curve to the left,to the right,or not at all.
a.An increase in the price of an input
b.An increase in productivity
c.An increase in the price of a substitute in production
d.A decrease in the expected future price of a product
e.A decrease in the current price of the product

Accepted Answer

a.Shift to the left
...

Question 7

What is the ceteris paribus condition?

Accepted Answer

The ceteris paribus condition ...

Question 8

If consumers believe the price of LCD televisions will decrease in the future,this will cause the demand for LCD televisions to increase now.

Accepted Answer

A) True 
 B)False

Question 9

The substitution effect of a price change refers to

Accepted Answer

A)  the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
B)  the shift of a demand curve when the price of a substitute good changes.
C)  the movement along the demand curve due to a change in purchasing power brought about by the price change.
D)  the shift in the demand curve due to a change in purchasing power brought about by the price change.E) None of the above
F) B) and C)

Question 10

If the price of automobiles was to increase,then

Accepted Answer

A)  the demand for gasoline would decrease.
B)  the demand for gasoline would increase.
C)  the supply of gasoline would increase.
D)  the quantity demanded of gasoline would decrease.E) None of the above
F) B) and D)

Question 11

If a firm has an incentive to increase supply now and decrease supply in the future,the firm expects that the

Accepted Answer

A)  price of its product will be lower in the future than it is today.
B)  price of its product will be higher in the future than it is today.
C)  price of inputs will be lower in the future than they are today.
D)  demand for the product will be lower in the future than it is today.E) None of the above
F) All of the above

Question 12

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

Accepted Answer

A)  raspberries and papayas are complements.
B)  raspberries and papayas are inferior goods.
C)  raspberries and papayas are normal goods.
D)  raspberries and papayas are substitutes.E) None of the above
F) B) and C)

Question 13

The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would shift the supply curve for energy drinks to the left?

Accepted Answer

A)  a decrease in the expected future price of energy drinks
B)  an increase in consumer income (assuming that energy drinks are normal goods) 
C)  a decrease in the number of firms that produce energy drinks
D)  a decrease in the price of an input used to produce energy drinksE) A) and B)
F) A) and C)

Question 15

In response to a shortage the market price of a good will rise; as the price rises,the demand will decrease and supply will increase until equilibrium is reached.

Accepted Answer

A) True 
 B)False

Question 16

Consider the collectors' market for first editions of two popular children's books,Harry Potter and the Order of the Phoenix by J.K.Rowling and Ruby in the Smoke by Philip Pullman.Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel.
a.On one large diagram,draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke.
b.Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel,even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke.
c.Provide a written explanation to accompany your graphical illustration.

Accepted Answer

a.and b.See the figure below.

c. The d...

Question 17

What are the five most important variables that shift the market supply curve?

Accepted Answer

Prices of inputs; Technologica...

Question 18

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Accepted Answer

A)  The new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players.
B)  The new technology caused an increase in the supply of Blu-ray players and an increase in price of Blu-ray players.
C)  The new technology caused an decrease in the demand for Blu-ray players.
D)  The new technology caused an increase in the quantity of Blu-ray players supplied.E) C) and D)
F) A) and B)

Question 19

Which of the following statements is true?

Accepted Answer

A)  An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B)  A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C)  If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D)  If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.E) B) and D)
F) A) and B)

Question 20

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Accepted Answer

A)  a neutral good.
B)  a normal good.
C)  a necessity.
D)  a complement.E) A) and B)
F) B) and D)

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

What are the five most important variables that shift the market supply curve?

Correct Answer
verified
Prices of inputs; Technologica...
View Answer

If consumers believe the price of LCD televisions will decrease in the future,this will cause the demand for LCD televisions to increase now.

Correct Answer
verified

If the price of automobiles was to increase,then

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following would shift the supply curve for energy drinks to the left?

Correct Answer
verified

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
a.Shift to the left
...
View Answer

What is the ceteris paribus condition?

Correct Answer
verified
The ceteris paribus condition ...
View Answer

The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Correct Answer
verified

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

Correct Answer
verified

Correct Answer
verified
a.and b.See the figure below.
c. The d...
View Answer

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Correct Answer
verified

The substitution effect of a price change refers to

Correct Answer
verified

If the United States placed an embargo on Swedish products,what would happen in the U.S.market for Swedish furniture?

Correct Answer
verified

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

Correct Answer
verified

In response to a shortage the market price of a good will rise; as the price rises,the demand will decrease and supply will increase until equilibrium is reached.

Correct Answer
verified

If a firm has an incentive to increase supply now and decrease supply in the future,the firm expects that the

Correct Answer
verified

If the price of refillable butane lighters was to decrease,then

Correct Answer
verified

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

Correct Answer
verified

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

What are the five most important variables that shift the market supply curve?

Correct AnswerverifiedPrices of inputs; Technologica...View AnswerShow Answer

If consumers believe the price of LCD televisions will decrease in the future,this will cause the demand for LCD televisions to increase now.

Correct AnswerverifiedShow Answer

If the price of automobiles was to increase,then

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following would shift the supply curve for energy drinks to the left?

Correct AnswerverifiedShow Answer

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Shift to the left...View AnswerShow Answer

What is the ceteris paribus condition?

Correct AnswerverifiedThe ceteris paribus condition ...View AnswerShow Answer

The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Correct AnswerverifiedShow Answer

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.and b.See the figure below. c. The d...View AnswerShow Answer

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Correct AnswerverifiedShow Answer

The substitution effect of a price change refers to

Correct AnswerverifiedShow Answer

If the United States placed an embargo on Swedish products,what would happen in the U.S.market for Swedish furniture?

Correct AnswerverifiedShow Answer

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

Correct AnswerverifiedShow Answer

In response to a shortage the market price of a good will rise; as the price rises,the demand will decrease and supply will increase until equilibrium is reached.

Correct AnswerverifiedShow Answer

If a firm has an incentive to increase supply now and decrease supply in the future,the firm expects that the

Correct AnswerverifiedShow Answer

If the price of refillable butane lighters was to decrease,then

Correct AnswerverifiedShow Answer

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

Correct AnswerverifiedShow Answer

Correct Answer
verified
Prices of inputs; Technologica...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Shift to the left
...
View Answer

Correct Answer
verified
The ceteris paribus condition ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.and b.See the figure below.
c. The d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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