Question 1

Wine and cheese are complement goods because they are consumed together.What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?

Accepted Answer

Wine and cheese are complement goods, which means that an increase in the price of wine would lead to a decrease in demand for cheese (and vice versa). Therefore, the demand curve for cheese would shift to the left, resulting in a decrease in equilibrium quantity.

Question 2

If all else is held constant,what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Accepted Answer

If the price of an Android phone decreased, it would become a more attractive substitute for the iPhone. This would lead to a decrease in demand for iPhones, causing both the equilibrium price and quantity of iPhones to decrease.

Question 3

Some studies have shown that eating chocolate before a test can increase brain activity,thereby causing students to score higher on exams.When these findings were announced,the price and quantity sold of chocolate increased in college towns.One reason for this could have been that the:

Accepted Answer

The announcement that eating chocolate can increase brain activity and exam scores likely led to an increase in demand for chocolate among students, as they sought to use this information to their advantage. This increase in demand likely led to an increase in both the price and quantity of chocolate sold in college towns, as producers sought to capitalize on the new market demand.

Question 4

The equilibrium price of teddy bears is $5.A study comes out that says owning a teddy bear causes you to earn a lower salary.If all other factors are held constant,which of the following scenarios could happen?

Accepted Answer

The study suggesting a negative outcome from owning teddy bears would likely decrease consumer demand, leading to a decrease in price due to a shift in the demand curve, not the supply curve.

Question 5

If the number of buyers in a market increases from 50 to 100,you would expect the equilibrium price to _________ and the equilibrium quantity to _________,holding all else constant.

Accepted Answer

When the number of buyers in a market increases, demand for the product typically increases, leading to a higher equilibrium price and a higher equilibrium quantity, assuming all other factors remain constant.

Question 6

A technological advancement for Good A will shift the _________ curve of Good A to the _________,making the equilibrium price _________.

Accepted Answer

A technological advancement in producing Good A will increase the supply of Good A. This will shift the supply curve to the right, causing an increase in equilibrium quantity and a decrease in equilibrium price.

Question 7

When supply shifts to the right and demand stays constant,the equilibrium price:

Accepted Answer

The answer of When supply shifts to the right and...

Question 8

A shortage occurs whenever:

Accepted Answer

A shortage occurs when the quantity demanded exceeds the quantity supplied, which is represented by a point below the equilibrium point on a supply and demand graph.

Question 9

When the price is _________ the equilibrium price,we would expect there to be a _________,causing the market to put _________ pressure on the price until it went back to the equilibrium price.

Accepted Answer

When the price is above the equilibrium price, there is more supply than demand, leading to a surplus. This surplus puts downward pressure on the price as sellers lower prices to clear their excess inventory, moving the price back towards equilibrium.

Question 10

According to the accompanying figure,if the price is $10,there is a:

Accepted Answer

The answer of According to the accompanying figure,if the price...

Question 11

Refer to the accompanying diagram.Which of the following scenarios would explain this change in equilibrium?

Accepted Answer

An increase in the price of a substitute good would lead to an increase in demand for this good, causing the equilibrium quantity and price to increase. This is depicted in the diagram as a shift in the demand curve to the right.

Question 12

Assume that the market for baseballs is in equilibrium.There is a sudden decrease in income throughout the economy.If all else is held constant,we would expect that:

Accepted Answer

The answer of Assume that the market for baseballs is...

Question 13

When the demand curve shifts to the left and all else is held constant,the

Accepted Answer

When the demand curve shifts to the left, it means that the consumers are willing to buy less quantity at the given prices. As a result, the equilibrium shifts upwards and we see a decrease in both equilibrium price and quantity. Therefore, option C is the correct answer.

Question 14

The equilibrium price of peanut butter is $5.A study comes out that says the fat in peanut butter is good for your heart.Holding all other factors constant,which of the following scenarios could happen?

Accepted Answer

The demand for peanut butter will increase due to the new study, causing the equilibrium price to increase. Therefore, the price of peanut butter will increase to $7 because of a demand shift. Choice A is incorrect because a supply shift would cause an increase in price only if the supply decreased, not due to a new study. Choice B is incorrect because a supply shift would cause a decrease in price only if the supply increased, not due to a new study. Choice C is incorrect because a demand shift would cause a decrease in price only if the demand decreased, which is unlikely due to the new study. Choice E is incorrect because a supply shift would not occur alongside a demand shift due to the new study.

Question 15

A decrease in demand is represented by a:

Accepted Answer

A decrease in demand means that consumers are now willing to buy less of a product at any given price. This is represented by a shift of the demand curve to the left, showing that at the original prices, a lower quantity of the product will be demanded.

Question 16

When the demand curve shifts to the right and the supply curve is held constant,

Accepted Answer

When the demand curve shifts to the right and the supply curve is held constant, the equilibrium price and quantity both increase. This occurs because as demand increases, consumers are willing to pay more for the product, so producers increase the price and produce more to meet the new demand. This results in a higher equilibrium price and quantity.

Question 17

In the first few months of 2012,the price of gasoline increased by approximately 15%.Because of this increase,we would expect the _________ curve in the market for hybrid cars to _________.

Accepted Answer

The answer of In the first few months of 2012,the...

Question 18

The economists at JET Consulting consider Campbell's Soup to be an inferior good.During a recession,when the income in the economy is decreasing,economists at JET Consulting would expect the demand curve for Campbell's Soup to _________,causing the equilibrium price to _________ and the equilibrium quantity to _________.

Accepted Answer

Inferior goods are those for which demand increases when consumer income decreases. During a recession, as incomes fall, consumers tend to buy more of these goods because they are cheaper alternatives to more expensive options. Therefore, the demand curve for Campbell's Soup would shift to the right, causing both the equilibrium price and quantity to increase.

Question 19

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

Accepted Answer

The answer of Which of the following scenarios would explain...

Question 20

The difference between a tax and a subsidy is that when the government places a tax on a good,it _________ the equilibrium price and _________ the equilibrium quantity,whereas when the government places a subsidy on a good,it _________ the equilibrium price and _________ the equilibrium quantity.

Accepted Answer

When the government places a tax on a good, the cost of production for the producer increases, leading to a decrease in the supply of the good. This shift in the supply curve leads to an increase in the equilibrium price and a decrease in the equilibrium quantity. On the other hand, when the government places a subsidy on a good, the cost of production for the producer decreases, leading to an increase in the supply of the good. This shift in the supply curve leads to a decrease in the equilibrium price and an increase in the equilibrium quantity. Therefore, choice A is the correct answer.

Quiz 3: The Market at Work: Supply and Demand