Chapers 3 and 4

Question 1

According to the law of demand, the quantity of a good demanded in a given time period

Answer 1

increases as its price falls, ceteris paribus

Question 2

Ceteris paribus, if the price of a digital camera rises, then we can expect

Answer 2

a decrease in the quantity demanded of digital cameras (movement along the same curve)

Question 3

Ceteris paribus, if the price of Swiss cheese falls, then we will see

Answer 3

an increase in the quantity demanded of Swiss cheese

Question 4

Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of candles?

Answer 4

A decrease in the price of candles

Question 5

Ceteris paribus, if the price of basketballs rises, then we will see

Answer 5

A movement to the left along the demand curve for basketballs

Question 6

Which of the following would generally cause an increase in the demand for automobiles (outward shift in the demand curve or a shift to the right in the demand curve?)

Answer 6

an increase in consumer’s income

Question 7

If buyers expect the price of baseballs to fall in the future, then right now there should be

Answer 7

a decrease in the demand for baseballs

Question 8

Assume Pepsi and Coke are substitutes. An increase in the price of one will result in

Answer 8

an increase in the demand for the other

Question 9

If there are only two airlines that fly between Dallas and New Orleans, what will happen int he market for one airline if the other one goes out of business?

Answer 9

The demand curve will shift to the right

Question 10

Peanut butter and jelly are complements. A decrease in the price of one will result in

Answer 10

an increase in the demand for the other

Question 11

Given a downward-sloping market demand curve for web design services, if the price of web design services is decreased from $12 per hour to $9 per hour then

Answer 11

the quantity demanded for web design services will increase

Question 12

An increase in the price of a good causes a

Answer 12

movement up along the same supply curve

Question 13

Which of the following is most likely to cause an increase in the quantity supplied of candles (movement along the same curve)?

Answer 13

An increase in the price of candles

Question 14

Which of the following events would cause a rightward shift in the market supply of automobiles?

Answer 14

A technological improvement which reduces the cost of production

Question 15

If corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when

Answer 15

the price of wheat changes

Question 16

Which of the following can change without shifting either demand or supply curves

Answer 16

the price of the good itself

Question 17

If there is a surplus at a given price then

Answer 17

that price is greater than the equilibrium price

Question 18

In most markets, the equilibrium price is achieved through

Answer 18

trial and error

Question 19

If the quantity demanded of a good is greater than the quantity supplied of the good at the current price, then in the long run (remember w/out govt. intervention in this market)

Answer 19

price will increase until it reaches the equilibrium price

Question 20

Assuming the demand curve remains the same, an increase in the number of sellers of running shoes causes equilibrium price to

Answer 20

decrease and equilibrium quantity to increase

Question 21

Assume peanut better and jelly are complements. An increase in the price of peanut better jelly will cause the equilibrium price to

Answer 21

decrease and the quantity to increase

Question 22

Suppose a hurricane hits Florida causing widespread damage to houses and businesses. The governor of Florida places a price ceiling on all building materials to keep the prices reasonable. Which of the following is the most likely result?

Answer 22

shortage of building materials long lines at lumber stores, a slower recovery from the storm (all of the above)

Question 23

After a major snowstorm last winter, some college students earned extra money by clearing driveways of snow fro $25. Town officials determined that $25 was too high and set a price ceiling of $15 for this service. Which of the following was the most likely result?

Answer 23

Fewer driveways were cleared

Question 24

Assuming Coca-Cola and Pepsi-Cola are substitute goods, the effect of an increase in the price of Coca-Cola would cause which of the following?

Answer 24

A rightward shift in the demand curve for Pepsi-Cola

Question 25

Decreasing the level of a subsidy (a supply curve shifter) to an industry by the government would result in

Answer 25

a leftward shift of the supply curve

Question 26

The law of supply states that when the price of a commodity rises, the quantity supplied of that commodity rises too and vice versa, ceteris paribus, which means that

Answer 26

two variables are changing and everything else is being held constant

Question 27

Decreasing a tax on an industry by the government would result in

Answer 27

a rightward shift of the supply curve

Question 28

T/F? When the number of buyers in market changes, the market-deman curve for goods and services shifts

Answer 28

True

Question 29

T/F? A decrease in the price of personal computers would shift the demand curve for personal computers to the right (increase in demand).

Answer 29

False

Question 30

There are never shortages or surpluses when the price in a market is equal to the equilibrium price for the market

Answer 30

True

Question 31

As one moves down the demand curve for carrots, the quantity demanded for carrots increases and the price of carrots decreases

Answer 31

True