Question 1

The purpose of advertising products to consumers is to

Accepted Answer

The main purpose of advertising products to consumers is to change or influence their tastes towards the product. This is done with the aim of increasing demand and ultimately, sales. Advertising can also help in creating brand awareness, which could lead to customer loyalty and ultimately, increased revenue. It is not aimed at increasing the price of the product or reducing costs for the producer. It also does not aim to decrease the demand for the product.

Question 2

If the price of hotdogs are expected to increase in the future, then:

Accepted Answer

If the price of hotdogs is expected to increase in the future, consumers may choose to buy more now to avoid paying higher prices later, thus increasing the current demand.

Question 3

If the incomes decrease and electricity is a normal good, then:

Accepted Answer

When incomes decrease, people have less disposable income, which means they will reduce their consumption of normal goods, such as electricity. Therefore, the demand for electricity decreases.

Question 4

If a computer company will sell a laptop only if the price is $400 or higher, then $400 is known as:

Accepted Answer

$400 is known as the minimum supply price because it is the minimum price at which the computer company is willing to sell its laptops. The other options do not accurately describe the concept of minimum supply price.

Question 5

When a supply curve is drawn, which of the following is held constant?

Accepted Answer

When constructing a supply curve, factors such as the number of sellers, taxes or subsidies, and prices of inputs are held constant to isolate the relationship between price and quantity supplied.

Question 6

Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that:

Accepted Answer

When the quantity supplied exceeds the quantity demanded, it creates a surplus in the market, which exerts downward pressure on prices. In order to sell the excess supply, suppliers will have to lower the price of cars. Therefore, the price of cars will tend to decrease until the quantity supplied and demanded are equalized.

Question 7

Relative to hotdogs, hotdog buns are considered:

Accepted Answer

Hotdog buns are complementary goods because they are typically consumed together with hotdogs. If the price of hotdogs increases, it is likely that the demand for hotdog buns will decrease because people will be less likely to buy hotdogs and therefore less likely to need the buns. Similarly, if the price of hotdog buns increases, it is likely that the demand for hotdogs will decrease because people will be less likely to buy buns and therefore less likely to need the hotdogs to go with them.

Question 8

Figure 4.1
-Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant. Assuming Mary and Tom are the only consumers in the market, if the market quantity demanded is 3 the price must be:

Accepted Answer

To find the market price, we need to add up the individual quantities demanded at each price. At a price of $20, Mary's quantity demanded is 0 and Tom's quantity demanded is 1, giving us a total quantity demanded of 1. At a price of $15, Mary's quantity demanded is 1 and Tom's quantity demanded is 2, giving us a total quantity demanded of 3 (the market quantity demanded). Therefore, the price must be $15.

Question 9

Figure 4.1
-Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant. Assuming Mary and Tom are the only consumers in the market, if the market quantity demanded is 9 the price must be:

Accepted Answer

The market quantity demanded is the sum of Mary and Tom's individual demands. If the total demand is 9 meals per week, the price must be $5, where their individual demands add up to 9.

Question 10

Suppose that the quantity supplied of pizza exceeds the quantity demanded for pizza. We would expect that:

Accepted Answer

When the quantity supplied of pizza exceeds the quantity demanded, there will be a surplus of pizza in the market, which means that there will be extra pizzas that are not being sold. In order to encourage customers to buy more pizza and reduce the surplus, pizza sellers will have to decrease the price of pizza, which will eventually lead to an increase in the quantity demanded and a decrease in the quantity supplied until the market reaches equilibrium. Therefore, the price of pizza is expected to decrease when the quantity supplied exceeds the quantity demanded.

Question 11

Becky demands more raisins as her income increases. From this, we can conclude that, for Becky:

Accepted Answer

As Becky's income increases, she demands more raisins which suggests that raisins are a normal good for Becky. When people have more income, they generally increase their consumption of normal goods.

Question 12

Suppose that ramen noodles are an inferior good. When income decreases, the equilibrium quantity of ramen noodles will _______ and the equilibrium price of ramen noodles will _______.

Accepted Answer

Inferior goods are those for which demand increases as consumer income decreases. When income decreases, consumers tend to buy more inferior goods like ramen noodles because they are cheaper alternatives. This increase in demand leads to a higher equilibrium quantity and, due to the demand curve shifting to the right, an increase in the equilibrium price as well.

Question 13

Minimum wage laws are examples of

Accepted Answer

Minimum wage laws set a legal minimum price that employers must pay their employees, creating a price floor.

Question 14

Figure 4.3
-Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $50, there is:

Accepted Answer

The answer of  Figure 4.3
-Figure 4.3 illustrates the supply...

Question 15

Peaches and cream are complements. When the price of peaches rises, the equilibrium quantity of cream will _______ and the equilibrium price of cream will _______ .

Accepted Answer

When the price of peaches rises, demand for its complement, cream, decreases, leading to a lower equilibrium quantity and price for cream.

Question 16

Suppose that steak is a normal good. When income decreases, the equilibrium quantity of steak will _______ and the equilibrium price of steak will _______.

Accepted Answer

When income decreases, the demand for steak will decrease since people have less disposable income. As a result, the equilibrium quantity of steak will decrease. Additionally, with a decrease in demand, the equilibrium price of steak will also decrease.

Question 17

The market demand curve is:

Accepted Answer

As the price of a good or service increases, the quantity demanded typically decreases, resulting in a curve with a negative slope. This is because as prices increase, consumers may switch to cheaper substitutes or reduce their overall consumption. Therefore, the market demand curve is typically negatively sloped.

Question 18

Suppose that a natural disaster substantially increases the cost of producing cheese. We would predict that the equilibrium quantity of cheese will _______and the equilibrium price of cheese will _______.

Accepted Answer

When the cost of producing cheese increases, the supply of cheese decreases since it is more expensive to produce. This leads to a decrease in the equilibrium quantity of cheese. However, since demand for cheese is unlikely to change substantially, the decrease in quantity supplied drives up the equilibrium price of cheese. Therefore, the equilibrium price of cheese will increase.

Question 19

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer. As a result of the study, we could predict that the demand curve for orange juice will _______ and the equilibrium price will _______.

Accepted Answer

The release of the Surgeon General's study suggesting that orange juice consumption reduces the risk of cancer will increase the demand for orange juice due to the perceived health benefits associated with its consumption. This increase in demand will result in a higher equilibrium price for orange juice.

Question 20

When a demand curve is drawn, which of the following is not held constant?

Accepted Answer

When a demand curve is drawn, the price of the good itself is not held constant. Instead, the price of the good is varied along the x-axis of the graph while holding all other factors that affect demand constant. The other factors that are held constant include people's preferences, prices of related goods, and people's income.

Quiz 4: Demand, Supply, and Market Equilibrium

The purpose of advertising products to consumers is to

If the price of hotdogs are expected to increase in the future, then:

If the incomes decrease and electricity is a normal good, then:

If a computer company will sell a laptop only if the price is $400 or higher, then $400 is known as:

When a supply curve is drawn, which of the following is held constant?

Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that:

Relative to hotdogs, hotdog buns are considered:

Figure 4.1 -Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant. Assuming Mary and Tom are the only consumers in the market, if the market quantity demanded is 3 the price must be:

Figure 4.1 -Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant. Assuming Mary and Tom are the only consumers in the market, if the market quantity demanded is 9 the price must be:

Suppose that the quantity supplied of pizza exceeds the quantity demanded for pizza. We would expect that:

Becky demands more raisins as her income increases. From this, we can conclude that, for Becky:

Suppose that ramen noodles are an inferior good. When income decreases, the equilibrium quantity of ramen noodles will _ and the equilibrium price of ramen noodles will _.

Minimum wage laws are examples of

Figure 4.3 -Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $50, there is:

Peaches and cream are complements. When the price of peaches rises, the equilibrium quantity of cream will _ and the equilibrium price of cream will _ .

Suppose that steak is a normal good. When income decreases, the equilibrium quantity of steak will _ and the equilibrium price of steak will _.

The market demand curve is:

Suppose that a natural disaster substantially increases the cost of producing cheese. We would predict that the equilibrium quantity of cheese will _and the equilibrium price of cheese will _.

Suppose that the Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer. As a result of the study, we could predict that the demand curve for orange juice will _ and the equilibrium price will _.

When a demand curve is drawn, which of the following is not held constant?