Question 1

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

Accepted Answer

An improvement in technology would lower the cost of producing computers, which would shift the supply curve to the right. This would lead to a decrease in the equilibrium price and an increase in the quantity of computers sold.

Question 2

If it is discovered that using a smartphone regularly causes brain cancer, then in the market for smartphones,

Accepted Answer

If it is discovered that using a smartphone regularly causes brain cancer, it will lead to a decrease in demand for smartphones. As consumers become aware of the risks associated with using smartphones, they may opt for other alternatives or reduce the amount of time they spend on their phones. This will result in a leftward shift in the demand curve, causing a decrease in both equilibrium price and equilibrium quantity.

Question 3

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and they shift to S₂ and D₂, respectively, then the new equilibrium price and quantity will be

Accepted Answer

Both the supply and demand curves have shifted to the right, indicating an increase in both supply and demand. This typically results in a higher equilibrium quantity and could lead to a higher or lower equilibrium price depending on the magnitude of the shifts. However, without specific details on the shifts' magnitudes and their effects on price and quantity, it's challenging to deduce the exact changes in equilibrium price and quantity. The choice provided suggests an understanding that both quantity and price are affected by shifts in supply and demand.

Question 4

Exhibit 3-3 
-Refer to Exhibit 3-3. If the price is $27,

Accepted Answer

The answer of Exhibit 3-3 
-Refer to Exhibit 3-3. If...

Question 5

If incomes increase, then the ____ in the market for luxury cars as normal goods ____.

Accepted Answer

An increase in incomes would lead to an increase in demand for luxury cars as they are normal goods, meaning that as incomes increase, people will purchase more luxury cars, thereby increasing the demand. There is no direct relationship between incomes and supply, so options A and B can be eliminated. Option D is incorrect because as demand increases, suppliers will likely try to meet this increased demand, leading to an increase in supply, not a decrease. Option E is incorrect because there is no indication that the supply would increase as a result of an increase in incomes.

Question 6

Exhibit 3-4 -Refer to Exhibit 3-4. If S₂ and D₂ are the original supply and demand curves and, ceteris paribus, supply shifts to S₁,

Accepted Answer

When supply shifts from S2 to S1, it indicates an increase in supply, leading to a lower equilibrium price and a higher quantity demanded, moving from Q2 to Q4.

Question 7

When there is a decrease in supply, all else held equal,

Accepted Answer

When there is a decrease in supply, the equilibrium price rises because the goods become scarcer, quantity demanded decreases as a result of the higher price, and the equilibrium quantity decreases because there is less supply available.

Question 8

Suppose it is observed in a market that price has fallen but more product is being produced and sold. This could be caused by a(n)

Accepted Answer

When the price has fallen but more product is being produced and sold, it suggests that there has been an increase in supply. If there was a decrease in supply, prices would more likely have risen. If there was a decrease in demand, production would have decreased and prices would have fallen further.

Question 9

Exhibit 3-4 
-When both supply and demand shift right at the same time,

Accepted Answer

When both supply and demand increase, it leads to a definite increase in the equilibrium quantity because both forces push the quantity in the same direction. However, the effect on price is ambiguous without knowing the relative magnitudes of the shifts in supply and demand.

Question 10

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and, ceteris paribus, demand shifts to D₂,

Accepted Answer

The answer of Exhibit 3-4 
-Refer to Exhibit 3-4. If...

Question 11

Which of the following is the most likely reason for the increase in the price of roses on Valentine's Day?

Accepted Answer

Valentine's Day is a day where people commonly express their love and affection towards others by gifting roses or other flowers. As a result, there is a surge in demand for roses on this day, which causes a corresponding increase in price due to limited supply.

Question 12

The U.S. surgeon general warns that animal fat in the diet poses a health risk. With the discovery that longhorn beef cattle have little body fat, you would expect

Accepted Answer

With the warning against animal fat in the diet, demand for leaner beef is likely to increase. Longhorn cattle, which have little body fat, are a suitable option for this demand. As a result, ranchers would be more willing to produce longhorn cattle as the price rises to meet the demand.

Question 13

Suppose in a financial crisis, major automakers reduce their production of autos while consumers reduce their demand for autos. We can conclude with certainty that in the market of autos,

Accepted Answer

When both supply and demand decrease, the equilibrium quantity will certainly decrease. However, the effect on equilibrium price is uncertain as it depends on the relative magnitudes of the shifts in supply and demand.

Question 14

Exhibit 3-4 -In Exhibit 3-4, which of the following is the most likely reason for the shift of the demand curve from D₁ to D₂?

Accepted Answer

An increase in the number of consumers typically leads to a rightward shift in the demand curve, indicating a higher quantity demanded at each price level. This is because more consumers generally increase the overall demand for a good.

Question 15

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

Accepted Answer

The anticipation of higher future prices for cotton clothing due to a reduced cotton crop can lead consumers to buy more now before prices rise, increasing current demand. This increase in demand shifts the demand curve to the right, leading to a higher equilibrium price and quantity in the current market for cotton clothing.

Question 16

Suppose mobile app engineers have been making earning a high wage rate and the number of individuals becoming mobile app engineers doubles. Then, in the market for mobile app engineers,

Accepted Answer

If the number of individuals becoming mobile app engineers doubles, then the supply of mobile app engineers increases, assuming that demand remains unchanged. As a result, the equilibrium wage rate for mobile app engineers will fall as employers will be able to hire more mobile app engineers at a lower wage rate. This is the basic principle of supply and demand in the labor market. Option A is partially correct in that the equilibrium wage rate will fall but the number of mobile app engineers hired will actually increase due to the larger supply. Option B is incorrect as an increase in supply would not increase demand. Option C is incorrect as the increase in supply would allow for more hiring to occur. Option D is also incorrect as the market becoming saturated would imply an excess supply of mobile app engineers, not an increase in demand.

Question 17

If the equilibrium quantity decreases while the equilibrium price increases, which of the following is the most likely reason?

Accepted Answer

When the equilibrium quantity decreases while the equilibrium price increases, it suggests that both supply and demand decrease. This means that there is less of a product available and consumers are still willing to pay a higher price for it.

Question 18

Exhibit 3-3 
-A market is in equilibrium when a price is low enough for all consumers to afford.

Accepted Answer

A market is in equilibrium when the quantity supplied equals the quantity demanded, not necessarily when the price is low enough for all consumers to afford. The affordability of a price depends on the individual consumers' incomes and preferences.

Question 19

More iPhones are being sold today than one year ago, and the selling price of iPhones has increased. This could have been caused by a(n)

Accepted Answer

An increase in iPhone sales and an increase in their selling price point towards an increase in demand for iPhones. When demand for a product increases, the price of the product usually increases as well.

Question 20

Exhibit 3-4 -In Exhibit 3-4, if D₁ and S₁ are the original supply and demand curves and D₂ and S₂ are the new curves, respectively, then

Accepted Answer

The answer of Exhibit 3-4 -In Exhibit 3-4, if D₁...

Quiz 3: The Supply and Demand Model

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

If it is discovered that using a smartphone regularly causes brain cancer, then in the market for smartphones,

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and they shift to S₂ and D₂, respectively, then the new equilibrium price and quantity will be

Exhibit 3-3 -Refer to Exhibit 3-3. If the price is $27,

If incomes increase, then the in the market for luxury cars as normal goods .

Exhibit 3-4 -Refer to Exhibit 3-4. If S₂ and D₂ are the original supply and demand curves and, ceteris paribus, supply shifts to S₁,

When there is a decrease in supply, all else held equal,

Suppose it is observed in a market that price has fallen but more product is being produced and sold. This could be caused by a(n)

Exhibit 3-4 -When both supply and demand shift right at the same time,

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and, ceteris paribus, demand shifts to D₂,

Which of the following is the most likely reason for the increase in the price of roses on Valentine's Day?

The U.S. surgeon general warns that animal fat in the diet poses a health risk. With the discovery that longhorn beef cattle have little body fat, you would expect

Suppose in a financial crisis, major automakers reduce their production of autos while consumers reduce their demand for autos. We can conclude with certainty that in the market of autos,

Exhibit 3-4 -In Exhibit 3-4, which of the following is the most likely reason for the shift of the demand curve from D₁ to D₂?

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

Suppose mobile app engineers have been making earning a high wage rate and the number of individuals becoming mobile app engineers doubles. Then, in the market for mobile app engineers,

If the equilibrium quantity decreases while the equilibrium price increases, which of the following is the most likely reason?

Exhibit 3-3 -A market is in equilibrium when a price is low enough for all consumers to afford.

More iPhones are being sold today than one year ago, and the selling price of iPhones has increased. This could have been caused by a(n)

Exhibit 3-4 -In Exhibit 3-4, if D₁ and S₁ are the original supply and demand curves and D₂ and S₂ are the new curves, respectively, then

Quiz 3: The Supply and Demand Model

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

If it is discovered that using a smartphone regularly causes brain cancer, then in the market for smartphones,

Exhibit 3-4 -Refer to Exhibit 3-4. If S1 and D1 are the original supply and demand curves and they shift to S2 and D2, respectively, then the new equilibrium price and quantity will be

Exhibit 3-3 -Refer to Exhibit 3-3. If the price is $27,

If incomes increase, then the ____ in the market for luxury cars as normal goods ____.

Exhibit 3-4 -Refer to Exhibit 3-4. If S2 and D2 are the original supply and demand curves and, ceteris paribus, supply shifts to S1,

When there is a decrease in supply, all else held equal,

Suppose it is observed in a market that price has fallen but more product is being produced and sold. This could be caused by a(n)

Exhibit 3-4 -When both supply and demand shift right at the same time,

Exhibit 3-4 -Refer to Exhibit 3-4. If S1 and D1 are the original supply and demand curves and, ceteris paribus, demand shifts to D2,

Which of the following is the most likely reason for the increase in the price of roses on Valentine's Day?

The U.S. surgeon general warns that animal fat in the diet poses a health risk. With the discovery that longhorn beef cattle have little body fat, you would expect

Suppose in a financial crisis, major automakers reduce their production of autos while consumers reduce their demand for autos. We can conclude with certainty that in the market of autos,

Exhibit 3-4 -In Exhibit 3-4, which of the following is the most likely reason for the shift of the demand curve from D1 to D2?

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

Suppose mobile app engineers have been making earning a high wage rate and the number of individuals becoming mobile app engineers doubles. Then, in the market for mobile app engineers,

If the equilibrium quantity decreases while the equilibrium price increases, which of the following is the most likely reason?

Exhibit 3-3 -A market is in equilibrium when a price is low enough for all consumers to afford.

More iPhones are being sold today than one year ago, and the selling price of iPhones has increased. This could have been caused by a(n)

Exhibit 3-4 -In Exhibit 3-4, if D1 and S1 are the original supply and demand curves and D2 and S2 are the new curves, respectively, then

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and they shift to S₂ and D₂, respectively, then the new equilibrium price and quantity will be

If incomes increase, then the in the market for luxury cars as normal goods .

Exhibit 3-4 -Refer to Exhibit 3-4. If S₂ and D₂ are the original supply and demand curves and, ceteris paribus, supply shifts to S₁,

Exhibit 3-4 -Refer to Exhibit 3-4. If S₁ and D₁ are the original supply and demand curves and, ceteris paribus, demand shifts to D₂,

Exhibit 3-4 -In Exhibit 3-4, which of the following is the most likely reason for the shift of the demand curve from D₁ to D₂?

Exhibit 3-4 -In Exhibit 3-4, if D₁ and S₁ are the original supply and demand curves and D₂ and S₂ are the new curves, respectively, then