Unit 2 Chapter 3

Question 1

A graph, which is correct.

Answer 1

when ONE rock concert costs $125, this individual goes to up to FIVE per year

Question 2

Which of the following refers to consumers buying other goods when the price of the good in question rises?

Answer 2

The substitution effect.

Question 3

when analyzing the relationship between the price of a good and quantity demanded, other variables must be held constant. Which term BEST describes such an assumption

Answer 3

the term ceteris paribus

Question 4

Graph. Increase in income….

Answer 4

the arrow moving forward so the graph on the left

Question 5

increase in the price of a COMPLEMENT GOOD

Answer 5

graph on right where arrow moves to the left

Question 6

change in something toher than the price of concert tickets affects market demand

Answer 6

A move from A to C

Question 7

which of the following defines a supply curve?

Answer 7

a curve that shows the relationship between the price of a product and the quantity of the product supplied

Question 8

which of the following best described the LAW OF SUPPLY

Answer 8

an increase in price causes an increase in the quantity supplied, and a decrease in price cause decrease in the quantity supplied.

Question 9

The graphs depict the supply of rock concerts in the US. Which graphs best describes the impact of an increase in the price of an INPUT

Answer 9

one of the materials has risen so supply is going to decrease… to the LEFT!

Question 10

Which of the graphs best describes the impact of an incrwase in the expected future price of conecert tickets?

Answer 10

if concert prices increase, sales will decrease. so graph on the left

Question 11

refer to the graph below. Which of the following moves best describes a change in supply

Answer 11

quantity has increased to across the board (b to c)

Question 12

what is the impact of higher population and income growth on equilibrium in the graph?

Answer 12

a higher equilibrium price and higher equilibrium quantity. EVERYONE MAKES MULLLLAA

Question 13

What happens when the price of the ticket equals $125

Answer 13

There is a SURPLUS of 3 thousand tickets

Question 14

If the magnitude of an increase in supply is greater than the magnitude of an increase in demand, what happens to equilbrium price and quantity in the market.

Answer 14

equilibrium price will fall and quantity will rise.

Question 15

if the magnitude of an increase in demand is greater than the magnitude of an increase in supply, what happens to equilibrium price and quantity in the market?

Answer 15

equilibrium price will rise and quantity will rise

Question 16

Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.

Answer 16

True

Question 17

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now

Answer 17

True

Question 18

a change in supply is represented by a shift of the supply curve

Answer 18

True

Question 19

An increase in the quantity of a product supplied is cause by an increase in the price of the product

Answer 19

True

Question 20

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied

Answer 20

False

Question 21

Market equilibrium occurs where supply equals demand

Answer 21

False

Question 22

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease

Answer 22

True

Question 23

If the demand for product increases and the supply of the same product increase, the equilibrium price will increase

Answer 23

False

Question 24

What is the law of supply? What does this law imply about the shape of the supply curve?

Answer 24

the law of supply states that, holding everything else constant, an increase in price causes an increase in quantity supplied. The positive relationship between price and quantity supplied gives rise to an upward-sloping supply curve.

Question 25

What is the ceteris paribus condition?

Answer 25

the ceteris paribus condition is the requirement that when analyzing the relationship between 2 variables, such as price and quantity demanded, other variables must be held CONSTANT

Question 26

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated.
a-digital camera and memory stick
b-7up and mountain dew
c-swimsuits and flip-flops 
d-tylenol and cat food
e-photocopier and paper

Answer 26

a-compliments
b-sub
c-compliments
d-unrelated
e-compliments

Question 27

Indiciate whether each of the following situation would shift the supply curve to the left, to the right, or not at all.
an increase in the price of an input
an increase in productivity
an increase in the price of a sub. in produce.
a decrease in the expected future price of a product
a decrease in the current price of product

Answer 27

left
right
left
right
no shit

Question 28

what are the two effects that explain the Law of Demand? Briefly explain each effect.

Answer 28

the two effects that explain the LAw of Demand are the income effect and the substitution effect. The income effect is the change in quantity demanded of a good that results from a change in purchasing power due to a change in the good’s price. The substitoin effect is the change in quantity demanded of a good that results from the effect of a change in the food’s price making the food more or less expensive relative to other goods that are substitutes.

Question 29

price decreases

Answer 29

quantity may increase of decrease

Question 30

quantity decreases

Answer 30

price may increase or decrease

Question 31

price increases

Answer 31

quant. may increase or decrease

Question 32

price decreases

Answer 32

quantity decreases

Question 33

price increases

Answer 33

quantity may increase or decrease