Question 1

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

Accepted Answer

With an increase in supply and assuming constant demand, the price of flat-screen televisions will decrease and the quantity demanded will increase. This is the law of supply and demand. Option A incorrectly implies an increase in demand while Option B incorrectly implies a decrease in both supply and demand. Option D is incorrect as it suggests a decrease in supply due to a decrease in price, which is not how the law of supply and demand works. Therefore, the best choice is C.

Question 2

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Accepted Answer

This is because if insurance companies cover part of the cost, more people will be able to afford laser eye surgery which will increase the demand for it. Additionally, more doctors entering the field will increase the supply of laser eye surgery services. Therefore, both demand and supply will increase.

Question 3

"The price of compact fluorescent 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.

Accepted Answer

The answer of "The price of compact fluorescent light bulbs...

Question 4

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Accepted Answer

The decline in manufacturing costs due to new technology allowed for an increase in the supply of Blu-ray players, which led to a decrease in price. This is the basic principle of supply and demand, where an increase in supply will result in a decrease in price. Therefore, choice A is the best answer.

Question 5

"Because apples and oranges are substitutes,an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?

Accepted Answer

The answer of "Because apples and oranges are substitutes,an increase...

Question 6

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Accepted Answer

An increase in supply would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon. This is because there is more salmon available than consumers are willing to buy at the current price, so suppliers lower the price in order to sell more. As a result, there is an increase in quantity demanded as the price falls, and an increase in quantity supplied as suppliers respond to the lower price.

Question 7

Figure 3-8 -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 there is a shortage of apples how will the equilibrium point change?

Accepted Answer

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

Question 8

The demand for lobster is higher in the summer than in the spring.If the price of lobster is lower in summer than in spring then

Accepted Answer

If the demand for lobster is higher in summer than in spring but the price of lobster is lower in summer, then it implies that there is more supply of lobster in the summer compared to spring. Therefore, option A is the correct choice.

Question 9

Figure 3-8 -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?

Accepted Answer

According to the graph, a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples would cause a shift in the supply curve from S₂ to SS0U1B12S0U1B0, resulting in a new equilibrium point at A. This is because a decrease in the wages of apple workers would increase the cost of production for apples, causing a decrease in the quantity supplied of apples, while an increase in the price of oranges would make them a more attractive substitute for apples, causing a decrease in the quantity demanded of apples.

Question 10

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Accepted Answer

If insurance companies cover a portion of the price of laser eye surgery, it will reduce the out-of-pocket expenses for patients and make the procedure more affordable. This will likely increase the demand for the surgery. However, it is unlikely to affect the supply of laser eye surgery providers in the market. Therefore, the demand curve will shift rightward, leading to an increase in quantity demanded and equilibrium price without affecting the supply curve.

Question 11

The following appeared in a Florida newspaper a week after a hurricane hit the state."Floridians are relieved that the storm produced no fatalities but homeowners face weeks,if not months,of rebuilding.Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path.Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?

Accepted Answer

The answer of The following appeared in a Florida newspaper...

Question 12

Which of the following statements is true?

Accepted Answer

According to the law of demand and supply, an increase in demand causes a shift in the demand curve, leading to an increase in equilibrium price and quantity. However, the increase in price due to an increase in demand does not cause a further change in demand or supply. Therefore, statement A is true. Statement B is incorrect as a decrease in supply causes equilibrium price to increase, but it does not necessarily result in a decrease in demand. Statement C is also incorrect as an increase in both demand and supply can have a different effect on equilibrium quantity, depending on the magnitude of the change. Finally, statement D is incorrect as a decrease in demand and an increase in supply will always result in a decrease in equilibrium price.

Question 13

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 14

Figure 3-8 -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?

Accepted Answer

A decrease in the price of oranges (a substitute) will decrease the demand for apples, shifting the demand curve left from D1 to D2. An increase in wages for apple workers will increase production costs, shifting the supply curve left from S1 to S2. The new equilibrium is at point E, where the new demand and supply curves intersect.

Question 15

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 16

All else equal,a shortage of display screens used in the manufacture of tablet computers would

Accepted Answer

A shortage of display screens would lead to an increase in the cost of production for tablet computers, as firms would have to pay more to obtain the necessary input. As a result, firms would be able to produce less output at any given price level, and the supply curve would shift to the left. This would lead to a higher equilibrium price and a lower equilibrium quantity, as the market adjusts to the scarcity of display screens. The demand curve for tablet computers is not affected by the shortage of display screens.

Question 17

Figure 3-8 -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 there is an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples, the equilibrium could move to which point?

Accepted Answer

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

Question 18

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

Accepted Answer

The answer of Positive technological change in the production of...

Question 19

A decrease in the equilibrium price for a product will result

Accepted Answer

A decrease in equilibrium price for a product is caused by a shift in the supply and/or demand curve. If there is an increase in supply and a decrease in demand for the product, then the equilibrium price will decrease. Therefore, choice C is the correct answer.

Question 20

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Accepted Answer

The answer of Assume that both the demand curve and...

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

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Figure 3-8 -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 there is a shortage of apples how will the equilibrium point change?

The demand for lobster is higher in the summer than in the spring.If the price of lobster is lower in summer than in spring then

Figure 3-8 -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?

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Which of the following statements is true?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

All else equal,a shortage of display screens used in the manufacture of tablet computers would

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

A decrease in the equilibrium price for a product will result

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

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

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Figure 3-8 -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 there is a shortage of apples how will the equilibrium point change?

The demand for lobster is higher in the summer than in the spring.If the price of lobster is lower in summer than in spring then

Figure 3-8 -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?

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Which of the following statements is true?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

All else equal,a shortage of display screens used in the manufacture of tablet computers would

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

A decrease in the equilibrium price for a product will result

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Figure 3-8 -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 there is a shortage of apples how will the equilibrium point change?

Figure 3-8 -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?