Deck 8: Understanding Markets and Industry Changes

Question 1

All these factors will shift good X's supply curve,except

A)Bad weather
B)Change in the price of X
C)Changes in the price of raw materials to produce X
D)A tax charged to good X

Answer 1

B

Question 2

A recent research signified the large health benefits of eating cooked tomatoes.Holding other things constant,this will cause

A)The demand curve for tomatoes to shift to the right
B)The demand curve for tomatoes to shift to the left
C)The supply curve for tomatoes to shift to the right
D)The supply curve for tomatoes to shift to the left

Answer 2

A

Question 3

You lose your job and as a result your demand for steak falls.This implies that you consider steaks to be a

A)Complementary good
B)Normal good
C)Inferior good
D)Substitute good

Answer 3

B

Question 4

Based on the answer above,the price for ipads _____________ and the quantity demanded for ipads ____________.

A)Increase;increase
B)Increase;decrease
C)Decrease;increase
D)Decrease,decrease

Question 5

What will happen to the demand for beers such as Natural Light,Coors Light and Bud Light near college towns if students' income increased tremendously?

A)Demand will fall because students love these beers
B)Demand will fall because these beers are considered inferior goods
C)Demand will rise because these beers are considered inferior goods
D)Demand will not change as students are already maximizing their drinking capacity

Question 6

In the 1990s,many people had rising incomes.At the same time,there was a rise in cost of wood.Holding other factors constant,the demand for houses_________ and the supply for houses_________.

A)Increase,increase
B)Increase,decrease
C)Decrease,increase
D)Decrease,decrease

Question 7

Based on the answer above,the price for laptops _____________ and the quantity supplied for laptops ____________.

A)Increase;increase
B)Increase;decrease
C)Decrease;increase
D)Decrease,decrease

Question 8

Holding other factors constant,bad weather causes the supply curve for agricultural products to

A)Shift to the left,causing the prices of agricultural products to rise
B)Shift to the left,causing the prices of agricultural products to fall
C)Stay the same
D)The supply curve does not shift.Only the demand curve shifts.

Question 9

Changes in prices of a good causes

A)Movement along the demand curve
B)Movement along the supply curve
C)No effect to either curve
D)Both a and b

Question 10

How does an increase in the price of laptop memory chips affect the market of laptops?

A)The demand curve for laptops to shift to the right
B)The demand curve for laptops to shift to the left
C)The supply curve for laptops to shift to the right
D)The supply curve for laptops to shift to the left

Question 11

Based on the answer above,the price for bus rides _____________ and the quantity demanded for bus rides ____________.

A)Increase;increase
B)Increase;decrease
C)Decrease;increase
D)Decrease,decrease

Question 12

Based on the answer above,the price for bus rides _____________ and the quantity demanded for rides ____________.

A)Decreases;decreases
B)Decreases;increases
C)Decreases;uncertain
D)Increases;uncertain

Question 13

As the income for bus consumers increased,the wages of bus drivers increased simultaneously.How does this affect the market for bus rides (inferior good)?

A)The demand curve will shift to the left;the supply curve will shift to the left
B)The demand curve will shift to the left;the supply curve will shift to the right
C)The demand curve will shift to the right;the supply curve will shift to the left
D)The demand curve will shift to the right;the supply curve will shift to the right

Question 14

Suppose the demand for pens increases and the supply for pens decreases.What effect will it have on the quantity?

A)It will rise
B)It will fall
C)uncertain
D)None

Question 15

The law of supply states that,holding other factors constant,as price increases

A)Quantity supplied increases
B)Quantity supplied decreases
C)Quantity demanded increases
D)Quantity demanded decreases

Question 16

Movie theatres decided to increase the price of movie tickets.Holding other factors constant,what happens to the demand for popcorn in the movie theatres?

A)Demand for popcorn shifts to the left because popcorn and movies are substitute goods.
B)Demand for popcorn shifts to the left because popcorn and movies are complementary goods.
C)Demand for popcorn shifts to the right because popcorn and movies are substitute goods.
D)Demand for popcorn shifts to the right because popcorn and movies are complementary goods.

Question 17

How does an increase in income affect the market of ipads (normal good)?

A)The demand curve for ipads to shift to the right
B)The demand curve for ipads to shift to the left
C)The supply curve for ipads to shift to the right
D)The supply curve for ipads to shift to the left

Question 18

Holding other factors constant,a decrease in the tax for producing cars causes

A)The supply curve to shift to the left,causing the prices of coffee to rise
B)The supply curve to shift to the right,causing the prices of coffee to rise
C)The supply curve to shift to the left,causing the prices of coffee to fall
D)The supply curve to shift to the right,causing the prices of coffee to fall

Question 19

How does an increase in income affect the market of bus rides (inferior good)?

A)The demand curve for bus rides to shift to the right
B)The demand curve for bus rides to shift to the left
C)The supply curve for bus rides to shift to the right
D)The supply curve for bus rides to shift to the left

Question 20

Suppose recent and widely circulated medical article reports new benefits of cycling exercise.Simultaneously,the price of the parts needed to make bikes falls.If the change in supply is greater than the change in demand,the price will _________ and the quantity will _________.

A)Rise,rise
B)Rise,fall
C)Fall,rise
D)Fall,fall

Question 21

If the government imposes a price floor at $10 (i.e.the price must be $10 or higher)in the above market,how many goods will be traded?

A)Four
B)Five
C)Six
D)Seven

Question 22

The wages for Nike workers increases.At the same time,we see the price for Adidas shoes increase.How does this affect the market for Nike shoes?

A)The demand curve will shift to the left;the supply curve will shift to the left
B)The demand curve will shift to the left;the supply curve will shift to the right
C)The demand curve will shift to the right;the supply curve will shift to the left
D)The demand curve will shift to the right;the supply curve will shift to the right

Question 23

Now suppose competition among several market makers forces the spread down to $4.How many goods are traded?

A)Four
B)Five
C)Six
D)Seven

Question 24

You love bananas.Due to a bad crop harvest,supply of bananas dropped in half.The price for bananas is expected to double in the near future.As a result,

A)your demand for banana will increase when the price doubles
B)your demand for banana increases today.
C)your demand for peanut butter decreases today
D)it does not affect your demand as you love bananas

Question 25

Suppose there are 11 buyers and 11 sellers,each willing to buy or sell one unit of a good,with values {$14,$13,$12,$11,$10,$9,$8,$7,$6,$5,$4,}.Assume no transaction costs and a competitive market,what is the equilibrium price in this market?

A)7
B)8
C)9
D)10

Question 26

While you were an intern you bought 5 packages of hot dogs a month.After acquiring a full-time job with a considerable higher salary,you stopped purchasing hot dogs.For you,hot dogs are

A)Complementary good
B)Normal good
C)Inferior good
D)Substitute good

Question 27

Based on the answer above,the price for peanut butter_____________ and the quantity demanded for peanut butter ____________.

A)Uncertain;decreases
B)Decreases;increases
C)Decreases;uncertain
D)Increases;uncertain

Question 28

Based on the answer above,the price for Nike shoes_____________ and the quantity demanded for Nike shoes ____________.

A)Uncertain;decreases
B)Decreases;increases
C)Decreases;uncertain
D)Increases;uncertain

Question 29

The price of peanuts increases.At the same time,we see the price for Jelly rise.How does this affect the market for peanut butter?

A)The demand curve will shift to the left;the supply curve will shift to the left
B)The demand curve will shift to the left;the supply curve will shift to the right
C)The demand curve will shift to the right;the supply curve will shift to the left
D)The demand curve will shift to the right;the supply curve will shift to the right

Question 30

Suppose there is a single market maker in this market.What is the optimal bid-ask spread?

A)$6 bid;$12 ask
B)$7 bid;$11 ask
C)$8 bid;$10 ask
D)$9 bid;$9 ask