Question 1

The market for diamond rings is closely linked to the market for high-quality diamonds.If a large quantity of high-quality diamonds enters the market,then the

Accepted Answer

If a large quantity of high-quality diamonds enters the market, the supply curve for diamond rings will shift right, which will create a surplus at the current price. The excess supply will result in a decrease in the price of diamond rings, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

Question 2

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that lattés cause heart attacks?

Accepted Answer

The introduction of the machine that reduces the amount of labor necessary to produce steamed milk will reduce the cost of producing lattés, leading to a decrease in the equilibrium price. However, the discovery that lattés cause heart attacks will decrease the demand for lattés, leading to an ambiguous effect on equilibrium quantity. Depending on the magnitude of the shift in demand, the equilibrium quantity could either increase or decrease or remain unchanged.

Question 3

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive,digital cameras become cheaper,the cost of the resources needed to manufacture traditional film falls,and more firms decide to manufacture traditional film?

Accepted Answer

If traditional cameras become more expensive, consumers will switch to digital cameras, causing a decrease in demand for traditional camera film. At the same time, if the cost of resources needed to manufacture traditional film falls, more firms may decide to manufacture it, increasing the supply of traditional film. These factors would lead to a decrease in the equilibrium price of traditional camera film. The effect on quantity, however, is ambiguous because the increase in supply may offset the decrease in demand.

Question 4

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,the premature deaths of thousands of turkeys would cause a move from

Accepted Answer

The answer of Figure 4-19
The diagram below pertains to the...

Question 5

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,a sale on chicken would cause a move from

Accepted Answer

A sale on chicken would make chicken relatively cheaper, causing consumers to substitute chicken for other goods, such as beef. This would shift the demand curve for beef to the left, from DA to DB.

Question 6

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk,which is used to make lattés,increased,and scientists discovered that lattés cause heart attacks?

Accepted Answer

The answer of What would happen to the equilibrium price...

Question 7

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?

Accepted Answer

The use of a machine that reduces the amount of labor necessary to produce steamed milk would shift the supply curve to the right, increasing the equilibrium quantity. The discovery that coffee prevents heart attacks would increase the demand for lattés, also shifting the demand curve to the right. The net effect on the equilibrium price would be ambiguous, as the two shifts in supply and demand could either cancel each other out or lead to an increase or decrease in price, but the equilibrium quantity would definitely increase. Therefore, the best choice is D.

Question 8

What will happen to the equilibrium price of new textbooks if more students attend college,paper becomes cheaper,textbook authors accept lower royalties,and fewer used textbooks are sold?

Accepted Answer

The answer of What will happen to the equilibrium price...

Question 9

Consider the market for new DVDs.If DVD players became cheaper,buyers expected DVD prices to fall next year,used DVDs became more expensive,and DVD production technology improved,then the equilibrium price of a new DVD would

Accepted Answer

The answer of Consider the market for new DVDs.If DVD...

Question 10

Music compact discs are normal goods.What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties,compact disc players become cheaper,more firms start producing music compact discs,and music lovers experience an increase in income?

Accepted Answer

The decrease in royalties for musicians and the decrease in the cost of production due to more firms entering the market will lead to a decrease in the cost of making music compact discs. This will cause the supply curve to shift to the right, causing an increase in quantity and a decrease in price. Additionally, the increase in income for music lovers will lead to an increase in demand for music compact discs, causing another shift in demand to the right. This will cause a further increase in quantity and an increase in price. The effect on price is ambiguous, but the effect on quantity will definitely rise. Therefore, the best answer is D.

Question 11

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,an increase in the income of buyers who consider turkey to be an inferior good would cause a move from

Accepted Answer

An inferior good is one for which demand decreases as income increases. Therefore, an increase in income of buyers who consider turkey to be an inferior good would cause a decrease in demand for turkey, shifting the demand curve to the left from DA to DB.

Question 12

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises,the price of steel rises,public transportation becomes cheaper and more comfortable,and auto-workers negotiate higher wages?

Accepted Answer

The increase in gasoline prices and improvements in public transportation make owning and using cars less attractive, reducing demand. The rise in steel prices and higher wages for auto-workers increase production costs, reducing supply. Both effects lead to a decrease in quantity. The price effect is ambiguous because the demand and supply shifts have opposing effects on price.

Question 13

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,the approach of Thanksgiving would cause a move from

Accepted Answer

The answer of Figure 4-19
The diagram below pertains to the...

Question 14

Which of the following sets of events must cause an increase in the price of a new house?

Accepted Answer

A combination of higher wages for carpenters and higher wood prices would increase the cost of building a new house, which would lead to an increase in house prices. Increases in consumer incomes would allow people to afford more expensive houses, further driving up demand and prices. Higher apartment rents would make owning a house a more attractive option, and increases in population would also increase demand for housing. Finally, expectations of higher house prices in the future would create a self-fulfilling prophecy of increasing prices.

Question 15

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,buyers expecting turkey to be more expensive in the future would cause a current move from

Accepted Answer

If buyers expect the price of turkey to go up in the future, they will want to buy more turkey now before the price increase takes effect. This will cause an increase in current demand, shifting the demand curve from DB to DA.

Question 16

Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
 
-Refer to Figure 4-19.All else equal,a large number of people becoming vegetarians would cause a move from

Accepted Answer

A large number of people becoming vegetarians would decrease the demand for meat, which would cause the equilibrium price of meat to fall and the quantity of meat demanded to decrease. This would cause a movement from point A to point B on the graph.

Question 17

New oak tables are normal goods.What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises,the price of oak wood rises,more buyers enter the market for oak tables,and the price of the glue used in the production of the new oak tables increased?

Accepted Answer

If the price of maple tables rises, consumers may switch to purchasing oak tables instead, increasing demand for oak tables. This would cause the equilibrium price for oak tables to rise. 
If the price of oak wood rises and the price of glue used in production increases, the cost of producing oak tables will increase. As a result, the supply of oak tables will decrease, causing the equilibrium price to rise further. 
With more buyers entering the market for oak tables, the demand for oak tables will increase, causing the equilibrium price to rise even further. 
Therefore, the price of oak tables will rise, but the effect on quantity is ambiguous as it will depend on the magnitude of the various changes in supply and demand.

Question 18

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly fell,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was good for you?

Accepted Answer

If the price of peanuts goes up, it will increase the cost of producing peanut butter, which will lead to a decrease in supply. On the other hand, if the price of jelly falls, it will increase the demand for peanut butter, which will lead to an increase in demand. The decrease in supply and increase in demand will lead to an increase in price, but the effect on quantity is ambiguous. 
If fewer firms decide to produce peanut butter, it will further decrease the supply of peanut butter, which will lead to an increase in price and a decrease in quantity. 
If health officials announce that eating peanut butter is good for you, it will increase the demand for peanut butter, which will lead to an increase in both price and quantity. However, the effect of this factor alone may not be strong enough to outweigh the other factors affecting the market. Therefore, the overall effect on quantity is ambiguous.

Question 19

Pens are normal goods.What will happen to the equilibrium price of pens if the price of pencils rises,consumers experience an increase in income,writing in ink becomes fashionable,people expect the price of pens to rise in the near future,the population increases,fewer firms manufacture pens,and the wages of pen-makers increase?

Accepted Answer

The answer of Pens are normal goods.What will happen to...

Question 20

New cars are normal goods.What will happen to the equilibrium price of new cars if the price of gasoline rises,the price of steel falls,public transportation becomes cheaper and more comfortable,auto-workers accept lower wages,and automobile insurance becomes more expensive?

Accepted Answer

The answer of New cars are normal goods.What will happen...

Quiz 4: The Market Forces of Supply and Demand.

The market for diamond rings is closely linked to the market for high-quality diamonds.If a large quantity of high-quality diamonds enters the market,then the

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that lattés cause heart attacks?

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive,digital cameras become cheaper,the cost of the resources needed to manufacture traditional film falls,and more firms decide to manufacture traditional film?

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,the premature deaths of thousands of turkeys would cause a move from

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,a sale on chicken would cause a move from

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk,which is used to make lattés,increased,and scientists discovered that lattés cause heart attacks?

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?

What will happen to the equilibrium price of new textbooks if more students attend college,paper becomes cheaper,textbook authors accept lower royalties,and fewer used textbooks are sold?

Consider the market for new DVDs.If DVD players became cheaper,buyers expected DVD prices to fall next year,used DVDs became more expensive,and DVD production technology improved,then the equilibrium price of a new DVD would

Music compact discs are normal goods.What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties,compact disc players become cheaper,more firms start producing music compact discs,and music lovers experience an increase in income?

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,an increase in the income of buyers who consider turkey to be an inferior good would cause a move from

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises,the price of steel rises,public transportation becomes cheaper and more comfortable,and auto-workers negotiate higher wages?

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,the approach of Thanksgiving would cause a move from

Which of the following sets of events must cause an increase in the price of a new house?

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,buyers expecting turkey to be more expensive in the future would cause a current move from

Figure 4-19 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-19.All else equal,a large number of people becoming vegetarians would cause a move from

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly fell,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was good for you?

New cars are normal goods.What will happen to the equilibrium price of new cars if the price of gasoline rises,the price of steel falls,public transportation becomes cheaper and more comfortable,auto-workers accept lower wages,and automobile insurance becomes more expensive?