Question 1

Which figure above shows the effect of a decrease in the number of pizza sellers?

Accepted Answer

The answer of  Which figure above shows the effect...

Question 2

The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?

Accepted Answer

The answer of  The above figure shows the market...

Question 3

Bagels and cream cheese are complementary goods. Suppose that the price of flour, which is used to produce bagels, increases. The equilibrium price of CREAM CHEESE ________, and the equilibrium quantity of CREAM CHEESE ________.

Accepted Answer

When the price of flour increases, the cost of producing bagels goes up, leading to a decrease in the supply of bagels. Since bagels and cream cheese are complementary goods, the demand for cream cheese will decrease as well, leading to a lower equilibrium price and quantity for cream cheese.

Question 4

A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change?

Accepted Answer

The answer of  A construction boom occurs and many...

Question 5

Because of a sharp increase in the price of petrol, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of petrol leads to a

Accepted Answer

When the price of petrol increases, the cost of operating a SUV goes up as well. This leads to a decrease in demand for SUVs, as fewer people are willing to pay the higher cost of both purchasing and operating the vehicle. This results in a leftward shift of the demand curve for SUVs. However, there is no reason for a shift in the supply curve of SUVs since the price of petrol does not directly affect the production of SUVs. Therefore, choice D is the best answer.

Question 6

The number of logging firms increases. Which of the figures above best illustrates this change?

Accepted Answer

The answer of The number of logging firms increases. Which...

Question 7

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________, and the equilibrium quantity ________.

Accepted Answer

When the price of flour increases, the cost of producing bagels goes up, leading to a decrease in supply. This results in a higher equilibrium price for bagels due to the reduced supply, and a lower equilibrium quantity as the higher price reduces demand.

Question 8

Pizza is a normal good. Which figure above shows the effect of a decrease in consumers' incomes?

Accepted Answer

Figure B shows a leftward shift in the demand curve, indicating that as incomes decrease, consumers are willing and able to buy less pizza at any given price.

Question 9

Suppose the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

Accepted Answer

If more home buyers move into the area, then there is an increase in demand for new houses, which will result in an increase in equilibrium price and quantity. A technological advance, falling cost of wood framing, or a decrease in rent for nearby apartments would shift the supply curve, but it is unclear in which direction. An increase in the wage paid to carpenters would increase the cost of production and shift the supply curve leftward. Therefore, the only plausible cause of the increase in equilibrium price and quantity is an increase in demand, which can be explained by more home buyers moving into the area.

Question 10

For consumers, corn chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of corn chips?

Accepted Answer

When the price of salsa (a complement to corn chips) rises, demand for corn chips decreases because consumers are less likely to buy salsa, thereby reducing their demand for corn chips. This leads to a decrease in both the equilibrium price and quantity of corn chips.

Question 11

If an early frost destroys most of the apple crop, the equilibrium price of an apple ________ and the equilibrium quantity ________.

Accepted Answer

An early frost destroying most of the apple crop would decrease the supply of apples. According to the law of supply and demand, a decrease in supply, with demand remaining constant, leads to an increase in price and a decrease in the quantity sold.

Question 12

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.

Accepted Answer

When supply increases but demand remains constant, the equilibrium price falls due to the surplus of goods, and the equilibrium quantity increases as more of the product is available at a lower price.

Question 13

If the price of tangerines increases, the price of oranges also rises because

Accepted Answer

Tangerines and oranges are seen as substitutes by consumers. If the price of tangerines goes up, consumers may shift their purchases to oranges instead, increasing the demand for oranges and thus allowing sellers to raise the price.

Question 14

Suppose the price of bread rises. This rise could be the result of

Accepted Answer

A rise in the price of bread is typically the result of a decrease in the supply of bread, such as a poor harvest or transportation issues. An increase in the supply of bread would generally result in a lower price. A decrease in demand would also lower the price.

Question 15

Suppose the equilibrium price of movie tickets is $10. If the supply curve for movies shifts ________, the equilibrium price will ________.

Accepted Answer

When the supply curve for movies shifts rightward, it indicates an increase in supply. An increase in supply, with demand remaining constant, typically leads to a decrease in the equilibrium price.

Question 16

The above figure shows the market for pizza. The market is in equilibrium when people's incomes decrease. If pizza is a normal good, then which point represents the most likely new price and quantity?

Accepted Answer

The answer of  The above figure shows the market...

Question 17

When laptops were first produced, the price was very high. As time passed, the price of personal laptops fell because

Accepted Answer

Technological advances in the production of laptops led to increased efficiency and lower production costs, which in turn led to lower prices for consumers.

Question 18

If good weather conditions result in a larger than normal crop of peaches, then the

Accepted Answer

An increase in the supply of peaches will shift the supply curve to the right. Since the demand for peaches remains constant, the equilibrium price will decrease and the equilibrium quantity will increase. This is illustrated by the law of supply and demand, which states that an increase in supply results in a lower price and a higher quantity traded. Therefore, the correct choice is E.

Question 19

New technology for producing plywood is developed. Which of the figures above best illustrates this change?

Accepted Answer

The answer of New technology for producing plywood is developed....

Question 20

Which figure above shows the effect if research is published claiming that eating pizza is healthy?

Accepted Answer

Figure A shows an increase in demand for pizza, as consumers perceive it to be a healthier option. This results in an upward shift in the demand curve from D1 to D2, leading to a higher quantity demanded and higher equilibrium price. The other figures do not show an effect that would occur due to publication of research claiming that eating pizza is healthy.

Quiz 4: Demand and Supply