Question 1

The athletic shoe industry is highly competitive. In recent years, companies like Allbirds and Skechers began offering shoes made of different materials or in different styles to better compete with industry giants Nike and Adidas. These new styles of athletic shoes that are being marketed to compete with shoes by Nike and Adidas would be considered
A) complements to shoes by Nike and Adidas.
B) substitutes for shoes by Nike and Adidas.
C) inferior goods compared to the shoes by Nike and Adidas.
D) normal goods compared to shoes by Nike and Adidas.

Accepted Answer

Substitutes are goods that can be used in place of another. In this context, shoes by Allbirds and Skechers are marketed as alternatives to those by Nike and Adidas, making them substitutes.

Question 2

If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking boots, this will likely
A) increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered complements.
B) increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered substitutes.
C) decrease the demand for athletic shoes, because athletic shoes are considered inferior goods and sandals and hiking boots are considered normal goods.
D) decrease the demand for athletic shoes, because athletic shoes are considered normal goods and sandals and hiking boots are considered inferior goods.

Accepted Answer

Athletic shoes, sandals, and hiking boots serve similar purposes for consumers, making them substitutes. If consumers prefer athletic shoes over the others, demand for athletic shoes increases as they are chosen over their substitutes.

Question 3

Technological advances have resulted in lower prices for smart watches. What is the impact of this on the market for traditional watches?
A) The demand curve for traditional watches shifts to the right.
B) The supply curve for traditional watches shifts to the right.
C) The demand curve for traditional watches shifts to the left.
D) The supply curve for traditional watches shifts to the left.

Accepted Answer

When the prices of smart watches decrease due to technological advances, consumers are more likely to buy smart watches instead of traditional watches. This leads to a decrease in demand for traditional watches, represented by a leftward shift in the demand curve for traditional watches.

Question 4

Technological advancements have led to lower prices and an increase in the sale of digital cameras. How does this affect the digital photo printing paper market?
A) The demand curve for digital photo printing paper shifts to the right.
B) The demand curve for digital photo printing paper shifts to the left.
C) The supply curve for digital photo printing paper shifts to the right.
D) The supply curve for digital photo printing paper shifts to the left.

Accepted Answer

The increase in the sale of digital cameras, due to technological advancements and lower prices, typically leads to more people taking digital photos. This increase in digital photography activity is likely to increase the demand for digital photo printing paper, as more people may want to print their digital photos. Therefore, the demand curve for digital photo printing paper shifts to the right.

Question 5

Which of the following has occurred as the millennials and generation Z have come of age?
A) The demand for "fast casual" food has decreased in the U.S. market.
B) The demand for diapers has decreased in the U.S. market.
C) The demand for traditional fast food has increased in the U.S. market.
D) all of the above

Accepted Answer

The demand for diapers has decreased in the U.S. market as millennials and generation Z are having children at a later age compared to previous generations, leading to a lower birth rate.

Question 6

Which of the following generation categories has the largest population in the United States in 2020?
A) the millennials
B) generation X
C) generation Z
D) the centenarians

Accepted Answer

Millennials, those born approximately between 1981 and 1996, were the largest generation in the United States in 2020, surpassing Baby Boomers and Generation X.

Question 7

Factors that will tend to lead to higher demand for athletic shoes include all of the following except
A) the popularity of the product with millennials and members of generation Z.
B) the trend away from women wearing high heels toward wearing more casual shoes.
C) slowing population growth in Europe and North America.
D) rising incomes in some developing countries.

Accepted Answer

Factors that increase demand for athletic shoes typically include growing popularity among younger generations (A), shifts in fashion trends such as moving away from high heels to more casual shoes (B), and rising incomes in developing countries (D) because these factors increase the potential customer base or the purchasing power of consumers. However, slowing population growth in Europe and North America (C) would likely not lead to higher demand for athletic shoes, as it suggests a stagnating or shrinking pool of potential consumers in those regions.

Question 8

How does the decreasing use of DVD players affect the market for DVDs?
A) The demand curve for DVDs shifts to the right.
B) The quantity of DVDs demanded decreases.
C) The quantity of DVDs demanded increases.
D) The demand curve for DVDs shifts to the left.

Accepted Answer

As DVD players become less common, fewer people will want to buy DVDs, causing the demand curve for DVDs to shift to the left.

Question 9

If consumers believe the price of OLED televisions will decrease in the future, this will cause the demand for OLED televisions to increase now.

Accepted Answer

If consumers expect prices to decrease in the future, they are more likely to wait to purchase, leading to a decrease in current demand, not an increase.

Question 10

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated.
a. Blu-ray discs and video-on-demand
b. Fiat 500 and Mini Cooper S
c. Toothpaste and toothbrush
d. Popcorn and snowboards
e. Razors and razor blades

Accepted Answer

The answer of For each of the following pairs of...

Question 11

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

Accepted Answer

The answer of Use the following demand schedule for apples...

Question 12

A decrease in the price of dashboard cameras will result in
A) a smaller quantity of dashboard cameras supplied.
B) a larger quantity of dashboard cameras supplied.
C) a decrease in the demand for dashboard cameras.
D) an increase in the supply of dashboard cameras.

Accepted Answer

A decrease in the price of dashboard cameras, according to the law of supply, will lead to a smaller quantity of dashboard cameras being supplied because suppliers are less willing to supply a product at lower prices.

Question 13

As a result of fracking, ________ had become the world's largest oil producer in 2018.
A) Saudi Arabia
B) the United States
C) Russia
D) Canada

Accepted Answer

The United States became the world's largest oil producer in 2018, largely due to the increase in oil production from hydraulic fracturing (fracking) technologies.

Question 14

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

Accepted Answer

The answer of Use the following supply schedule for cherries...

Question 15

-Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?
A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
B) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.
C) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.
D) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Accepted Answer

When there is a surplus in the market, it means that the quantity supplied is greater than the quantity demanded at the current price. This surplus puts downward pressure on the price, leading it to decrease. As the price decreases, the quantity demanded will increase because consumers are more willing to buy the product at lower prices, and the quantity supplied will decrease because producers are less willing to supply the product at lower prices. This process continues until the market reaches equilibrium, where quantity demanded equals quantity supplied, which is suggested to be at $25 in this scenario.

Question 16

Nearly one-fifth of China's 1.4 billion people are under the age of 15. How will this affect high school enrollment over the next fifteen years? The labor market over the next fifteen years?

Accepted Answer

The answer of Nearly one-fifth of China's 1.4 billion people...

Question 17

Positive technological change in the production of OLED televisions caused the price of OLED televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to OLED televisions)?
A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer OLED televisions and Blu-ray players.
D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Accepted Answer

When the price of OLED televisions falls due to positive technological change, it makes these televisions more affordable, leading to an increase in their demand. Since OLED televisions and Blu-ray players are complementary goods, the increased demand for OLED televisions will also increase the demand for Blu-ray players. As demand for Blu-ray players increases, the equilibrium price of Blu-ray players will also increase due to higher demand.

Question 18

"The price of LED light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased. This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.
A) The statement is false. A decrease in the price of LED light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
B) The statement is false because the demand for incandescent light bulbs would increase as the price of LED light bulbs fell.
C) The statement is false because LED light bulb producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.
D) The statement is false because it confuses the law of demand with the law of supply.

Accepted Answer

The statement correctly identifies that improvements in LED technology and subsequent price reductions would decrease the demand for incandescent bulbs. However, it inaccurately claims that a decrease in the price of incandescent bulbs would further decrease their demand, which contradicts the law of demand stating that demand typically increases as prices decrease.

Question 19

-Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?
A) The equilibrium point will move from A to E.
B) The equilibrium point will move from A to B.
C) The equilibrium point will move from A to C.
D) The equilibrium will first move from A to B, then return to A.

Accepted Answer

The decrease in the price of oranges will decrease the demand for apples (shift D1 left), and the increase in wages will decrease the supply of apples (shift S1 left), moving the equilibrium from A to E.

Question 20

-Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E). Which of the following changes would cause the equilibrium to change to point A?
A) a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples
B) an increase in the wages of apple workers and a decrease in the price of oranges, a substitute for apples
C) an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D) a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Accepted Answer

The answer of 
-Refer to Figure 3-8. The graph in...

Quiz 3: Where Prices Come From: The Interaction of Demand and Supply

If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking boots, this will likely

Technological advances have resulted in lower prices for smart watches. What is the impact of this on the market for traditional watches?

Technological advancements have led to lower prices and an increase in the sale of digital cameras. How does this affect the digital photo printing paper market?

Which of the following has occurred as the millennials and generation Z have come of age?

Which of the following generation categories has the largest population in the United States in 2020?

Factors that will tend to lead to higher demand for athletic shoes include all of the following except

How does the decreasing use of DVD players affect the market for DVDs?

If consumers believe the price of OLED televisions will decrease in the future, this will cause the demand for OLED televisions to increase now.

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. a. Blu-ray discs and video-on-demand b. Fiat 500 and Mini Cooper S c. Toothpaste and toothbrush d. Popcorn and snowboards e. Razors and razor blades

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

A decrease in the price of dashboard cameras will result in

As a result of fracking, ________ had become the world's largest oil producer in 2018.

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

-Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

Nearly one-fifth of China's 1.4 billion people are under the age of 15. How will this affect high school enrollment over the next fifteen years? The labor market over the next fifteen years?

Positive technological change in the production of OLED televisions caused the price of OLED televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to OLED televisions) ?

-Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E) . Which of the following changes would cause the equilibrium to change to point A?