Econ ch 4 – Flashcard
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Which of the following statements is correct? A. Buyers determine demand, and sellers determine supply. B. Buyers determine both demand and supply. C. Buyers determine supply, and sellers determine demand. D. Sellers determine both demand and supply.
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A. Buyers determine demand, and sellers determine supply.
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For a market for a good or service to exist, there must be a A. specific time and place at which the good or service is traded. B. group of buyers and sellers. C. All of the above are correct. D. high degree of organization present.
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B. group of buyers and sellers.
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A competitive market is a market in which A. there are only a few sellers. B. the forces of supply and demand do not apply. C. no individual buyer or seller has any significant impact on the market price. D. an auctioneer helps set prices and arrange sales.
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C. no individual buyer or seller has any significant impact on the market price.
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If a seller in a competitive market chooses to charge more than the going price, then A. the sellers' profits must increase. B. other sellers would also raise their prices. C. buyers will make purchases from other sellers. D. the owners of the raw materials used in production would raise the prices for the raw materials.
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C. buyers will make purchases from other sellers.
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In competitive markets, which of the following is not correct? A. No individual buyer can influence the market price. B. Some sellers can set prices. C. Firms produce identical products. D. Buyers are price takers.
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B. Some sellers can set prices.
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A movement upward and to the left along a demand curve is called a(n) A. increase in demand. B. decrease in quantity demanded. C. increase in quantity demanded. D. decrease in demand.
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B. decrease in quantity demanded.
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When the price of a good or service changes, A. the demand curve shifts in the same direction. B. there is a movement along a given demand curve. C. the supply curve shifts in the opposite direction. D. the demand curve shifts in the opposite direction.
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B. there is a movement along a given demand curve.
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The movement from point A to point B on the graph shows A. a decrease in quantity demanded. B. an increase in demand. C. a decrease in demand. D. an increase in quantity demanded.
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D. an increase in quantity demanded.
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When we move along a given demand curve, A. all nonprice determinants of demand are held constant. B. all determinants of quantity demanded are held constant. C. only price is held constant. D. income and price are held constant.
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A. all nonprice determinants of demand are held constant.
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When quantity demanded decreases at every possible price, the demand curve has A. shifted to the right. B. not shifted; rather, the demand curve has become flatter. C. shifted to the left D. not shifted; rather, we have moved along the demand curve to a new point on the same curve.
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C. shifted to the left
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The market demand curve A. slopes upward. B.represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. C. is found by vertically adding the individual demand curves. D. represents the sum of the quantities demanded by all the buyers at each price of the good.
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D. represents the sum of the quantities demanded by all the buyers at each price of the good.
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To obtain the market demand curve for a product, sum the individual demand curves A. vertically. B. and then average them. C. horizontally. D. diagonally
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C. horizontally.
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If Consumer A and Consumer B are the only consumers in the market, then the market quantity demanded when the price is $6 is A. 6 units. B. 4 units. C. 8 units. D. 12 units.
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D. 12 units.
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The shift from D to D' is called A. a decrease in demand. B. an increase in quantity demanded. C. an increase in demand. D. a decrease in quantity demanded.
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A. a decrease in demand.
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If the demand curve shifts from D to D', then A. people's incomes must have decreased. B. firms would be willing to supply less of the good than before at each possible price. C. people are willing to buy less of the good than before at each possible price. D. the price of the product has increased, causing consumers to buy less of the product.
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C. people are willing to buy less of the good than before at each possible price.
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The movement from D to D' could be caused by A. a decrease in the price of a substitute. B. a decrease in the price of a complement. C. an increase in price. D. a technological advance.
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A. a decrease in the price of a substitute.
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The movement from D' to D could be caused by A. buyers expecting the price of the good to fall in the near future. B. a decrease in income, assuming the good is inferior. C. a decrease in price. D. an increase in the price of a complement.
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B. a decrease in income, assuming the good is inferior.
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The movement from D' to D in the market for potato chips could be caused by a(n) A. decrease in the price of potato chips. B. announcement by the FDA that potato chips cause cancer. C. increase in the price of a pretzels. D. decrease in income, assuming that potato chips are a normal good
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C. increase in the price of a pretzels.
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Which of the following changes would not shift the demand curve for a good or service? A. a change in expectations about the future price of the good or service B. a change in the price of a related good or service C. a change in the price of the good or service D. a change in income
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C. a change in the price of the good or service
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Soup is an inferior good if the demand A. for soup falls when the price of a substitute for soup rises. B. curve for soup slopes upward. C. for soup falls when income rises. D. for soup rises when the price of soup falls.
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C. for soup falls when income rises.
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Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are A. substitute goods. B. complementary goods. C. inferior goods. D. normal goods.
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A. substitute goods.
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If toast and butter are complements, then which of the following would increase the demand for toast? A. a decrease in the price of toast B. a decrease in the price of butter C. an increase in the price of butter D. Both a) and b) are correct.
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B. a decrease in the price of butter
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Suppose scientists provide evidence that chocolate pudding increases the bad cholesterol levels of those who eat it. We would expect to see A. an increase in the demand for chocolate pudding. B. no change in the demand for chocolate pudding. C. a decrease in the supply of chocolate pudding. D. a decrease in the demand for chocolate pudding.
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D. a decrease in the demand for chocolate pudding.
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Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs A. will not shift; rather, the demand curve for Mustangs will shift to the right next month. B. shifts to the right. C.shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information. D. shifts to the left.
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D. shifts to the left.
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A movement along the supply curve might be caused by a change in A. expectations about future prices. B. production technology. C. input prices. D. the price of the good or service that is being supplied.
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D. the price of the good or service that is being supplied.
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A supply curve slopes upward because A. an increase in input prices increases supply. B. the quantity supplied of most goods and services increases over time. C. as more is produced, total cost of production falls. D. an increase in price gives producers an incentive to supply a larger quantity.
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D. an increase in price gives producers an incentive to supply a larger quantity.
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When quantity supplied decreases at every possible price, we know that the supply curve has A. shifted to the left. B. shifted to the right. C. not shifted; rather, we have moved along the supply curve to a new point on the same curve. D. not shifted; rather, the supply curve has become flatter.
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A. shifted to the left.
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Which of the following changes would not shift the supply curve for a good or service? A. a change in the price of the good or service B. a change in input prices C. a change in production technology D. a change in expectations about the future price of the good or service
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A. a change in the price of the good or service
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In a market, to find the total amount supplied at a particular price, we must A. account for all determinants of demand. B. sum the quantities that individual firms are willing and able to supply at that price. C.calculate the average of the quantities that individual firms are willing and able to supply at that price. D. sum the costs that individual firms incur to supply the product at that price.
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B. sum the quantities that individual firms are willing and able to supply at that price.
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A market supply curve shows A. suppliers' responses, in terms of the amounts they will supply, to the demands of buyers. B. the total quantity supplied at all possible prices. C. the average quantity supplied by producers at all possible prices. D. how quantity supplied changes when consumer income changes.
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B. the total quantity supplied at all possible prices.
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Which supply schedules obey the law of supply? A. Firm B's and Firm D's only B. Firm B's, Firm C's, and Firm D's only C. Firm A's only D. Firm A's and Firm C's only
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A. Firm B's and Firm D's only
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If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is A. 30 units. B. 4 units. C. 10 units. D. 7.5 units.
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A. 30 units.
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Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the A. demand for bicycle assembly workers will increase. B. supply of bicycles will shift to the right. C. supply of bicycles will shift to the left. D. firm must increase output to maintain profit levels.
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C. supply of bicycles will shift to the left.
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An improvement in production technology will A. increase a firm's costs and increase its supply. B. decrease a firm's costs and decrease its supply. C. increase a firm's costs and decrease its supply. D. decrease a firm's costs and increase its supply.
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D. decrease a firm's costs and increase its supply.
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If suppliers expect the price of their product to fall in the future, then they will A. increase supply in the future but not now. B. increase supply now. C. decrease supply now D. decrease supply in the future but not now.
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B. increase supply now.
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A decrease in the number of sellers in the market causes A. the supply curve to shift to the left. B. a movement up and to the right along a stationary supply curve. C. a movement downward and to the left along a stationary supply curve. D. the supply curve to shift to the right.
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A. the supply curve to shift to the left.
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The shift from S to S' could be caused by an A. increase in income. B. improvement in production technology. C. increase in input prices. D. increase in the price of the good.
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B. improvement in production technology.
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The shift from S to S' in the market for peaches could be caused by a(n) A. decrease in the labor costs of the workers who pick peaches. B. increase in income. C. decrease in the price of pears. D. increase in the price of peaches.
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A. decrease in the labor costs of the workers who pick peaches.
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The shift from S' to S in the market for chocolate cake could be caused by a(n) A. decrease in the price of chocolate cake. B. decrease in the price of butter. C. decrease in the number of commercial bakers. D. improvement in oven technology.
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C. decrease in the number of commercial bakers.
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At the equilibrium price, the quantity of the good that buyers are willing and able to buy A. Either a) or c) could be correct. B. is less than the quantity that sellers are willing and able to sell. C. exactly equals the quantity that sellers are willing and able to sell. D. is greater than the quantity that sellers are willing and able to sell.
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C. exactly equals the quantity that sellers are willing and able to sell.
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If demand can be represented by the equation Q^D=2,400-200P and supply can be represented by the equation Q^S=2,000+200P, what are the equilibrium price and quantity? A. P=1; Q=2200 B. P=2; Q=2400 C. P=3; Q=1800 D. P=2; Q=2000
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A. P=1; Q=2200
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In markets, prices move toward equilibrium because of A. the actions of buyers and sellers. B. government regulations placed on market participants. C. increased competition among sellers. D. buyers' ability to affect market outcomes.
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A. the actions of buyers and sellers.
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When the price of a good is higher than the equilibrium price, A. quantity demanded exceeds quantity supplied. B. sellers desire to produce and sell more than buyers wish to purchase. C. a shortage will exist. D. buyers desire to purchase more than is produced.
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B. sellers desire to produce and sell more than buyers wish to purchase.
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When a surplus exists in a market, sellers A.raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. B.lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. C.lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. D.raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.
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C.lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
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Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. A. surplus to exist and the market price of roses to increase. B. shortage to exist and the market price of roses to increase. C. surplus to exist and the market price of roses to decrease. D. shortage to exist and the market price of roses to decrease.
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B. shortage to exist and the market price of roses to increase.
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The law of supply and demand asserts that A. the price of a good will eventually rise in response to an excess demand for that good. B. demand curves and supply curves tend to shift to the right as time goes by. C. when the supply curve for a good shifts, the demand curve for that good shifts in response. D. the equilibrium price of a good will be rising more often than it will be falling.
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A. the price of a good will eventually rise in response to an excess demand for that good.
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If there is currently a shortage of 20 units of the good, then the law of A. supply predicts that the price will rise by $2 to eliminate the shortage. B. supply and demand predicts that the price will fall by $2 to eliminate the shortage. C. demand predicts that the price will rise by $2 to eliminate the shortage. D. supply and demand predicts that the price will rise by $2 to eliminate the shortage.
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D. supply and demand predicts that the price will rise by $2 to eliminate the shortage.
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The equilibrium price and quantity, respectively, are A. $6 and 60 units. B. $12 and 30 units. C. $6 and 30 units. D. $2 and 50 units.
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C. $6 and 30 units.
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If the price were $8, a A. surplus of 45 units would exist, and price would tend to fall. B. shortage of 20 units would exist, and price would tend to rise. C. shortage of 25 units would exist, and price would tend to rise. D. surplus of 25 units would exist, and price would tend to fall.
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D. surplus of 25 units would exist, and price would tend to fall.
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If the price were $4, a A. surplus of 15 units would exist, and price would tend to fall. B. shortage of 25 units would exist, and price would tend to rise. C. shortage of 40 units would exist, and price would tend to rise. D. surplus of 25 units would exist, and price would tend to fall.
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B. shortage of 25 units would exist, and price would tend to rise.
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Which of the following events must cause equilibrium quantity to fall? A. demand decreases and supply increases B. demand and supply both decrease C. demand and supply both increase D. demand increases and supply decreases
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B. demand and supply both decrease
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If the demand for a product decreases, then we would expect equilibrium price A. to decrease and equilibrium quantity to increase. B. to increase and equilibrium quantity to decrease. C. and equilibrium quantity to both decrease. D. and equilibrium quantity to both increase.
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C. and equilibrium quantity to both decrease.
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Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? A. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. B. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. D.Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
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D.Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
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If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés? A. The equilibrium price would increase, and the equilibrium quantity would decrease. B. Both the equilibrium price and quantity would decrease. C. Both the equilibrium price and quantity would increase. D. The equilibrium price would decrease, and the equilibrium quantity would increase.
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C. Both the equilibrium price and quantity would increase.
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What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? A. Price will rise, and the effect on quantity is ambiguous. B. Price will fall, and the effect on quantity is ambiguous. C. Quantity will rise, and the effect on price is ambiguous. D. Quantity will fall, and the effect on price is ambiguous.
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A. Price will rise, and the effect on quantity is ambiguous.
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All else equal, an increase in the income of buyers who consider turkey to be an inferior good would cause a move from A. x to y. B. DA to DB C. DB to DA. D. y to x.
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B. DA to DB
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All else equal, an increase in the number of turkey sellers would cause a move from A. y to x. B. DA to DB. C. x to y. D. DB to DA.
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A. y to x.
