Question 1

In 2011,the price of peanuts was rising,which lead peanut butter sellers to expect the price of peanut butter would rise in the future.Consequently,in the current market for peanut butter there was ________ which resulted in ________ in the price of peanut butter and ________ in the quantity of peanut butter.

Accepted Answer

The answer of In 2011,the price of peanuts was rising,which...

Question 2

Crude oil can be refined into home heating oil or gasoline.If very cold weather caused the price of home heating oil to increase then,the

Accepted Answer

The increase in price of home heating oil would not affect the supply of gasoline as they are two separate products. However, it may lead to an increase in demand for gasoline as consumers may switch to using gasoline as a substitute for home heating oil. This increase in demand would lead to an increase in the equilibrium price of gasoline. Therefore, option C is correct while options A and D are incorrect.

Question 3

If workers who make DVDs get a pay raise,the equilibrium price of a DVD ________ and the equilibrium quantity of DVDs ________.

Accepted Answer

If workers who make DVDs get a pay raise, the cost of producing DVDs will increase. This will shift the supply curve to the left, leading to a higher equilibrium price and a lower equilibrium quantity. Therefore, the correct answer is B.

Question 4

In 2011,the price of peanuts increased.In the market for peanut butter,this change lead to ________ and which therefore ________ the price of peanut butter and ________ the quantity of peanut butter.

Accepted Answer

An increase in the price of peanuts would lead to a decrease in the supply of peanut butter, since it would become more expensive for producers to make peanut butter. This would then lead to an increase in the price of peanut butter and a decrease in the quantity of peanut butter available in the market.

Question 5

There is a technological advance in the production of ice cream.As a result,the supply curve of ice cream shifts ________ and ________.

Accepted Answer

A technological advance in the production of ice cream would make production more efficient, leading to an increase in supply. This shift in the supply curve to the right would cause the equilibrium price to fall (due to increased supply) and the equilibrium quantity to increase (as more ice cream is available at lower prices).

Question 6

"The recent hurricanes in Florida are bringing financial gain to California citrus growers.Due to extensive damage to the Florida citrus crop,California citrus products are commanding their highest prices ever." Which of the following statements best explains the economics of this quotation?

Accepted Answer

The reduced supply of Florida oranges caused an increase in their price, which made California oranges a more attractive substitute product. As a result, the demand for California oranges increased, which caused their price to rise. This is an example of the substitute effect in action.

Question 7

Which of the following increases the equilibrium price of a used car and decreases the equilibrium quantity?

Accepted Answer

A new fee that used car dealers must pay on all sales of used cars increases the cost of selling used cars, which shifts the supply curve to the left. This results in a higher equilibrium price and a lower equilibrium quantity.

Question 8

If a technological advance takes place in the computer industry,then the equilibrium price of a computer will ________ and the equilibrium quantity will ________.

Accepted Answer

A technological advance in the computer industry will increase supply, causing the equilibrium price to fall and the equilibrium quantity to increase.

Question 9

What is the effect on the price and quantity of wooden desks of a rise in the price of wood?

Accepted Answer

A rise in the price of wood would increase the cost of production of wooden desks. As a result, the supply curve of wooden desks would shift to the left, decreasing the equilibrium quantity of wooden desks and increasing the equilibrium price. Therefore, the best choice is D, which states that the equilibrium quantity of wooden desks decreases and the equilibrium price rises.

Question 10

A fall in the price of wheat fertilizer ________ the equilibrium price of wheat and ________ the equilibrium quantity of wheat.

Accepted Answer

A fall in the price of wheat fertilizer will lower the cost of producing wheat, which will shift the supply curve to the right. As a result, the equilibrium price of wheat will decrease, and the equilibrium quantity of wheat will increase.

Question 11

After 2009,the price of tablets fell each year and manufacturers of tablets produced and sold more tablets each year.This result is because the

Accepted Answer

The decrease in the price of tablets each year and the increase in the quantity produced and sold each year suggests that the supply curve of tablets shifted rightward, resulting in a greater quantity supplied at each price level.

Question 12

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price.Which of the following will happen?

Accepted Answer

Technological improvements typically make production more efficient, leading to a rightward shift in the supply curve, indicating an increase in supply. On the other hand, an increase in the expected future price can lead producers to reduce current supply in anticipation of higher future profits, shifting the supply curve leftward. The net effect on the equilibrium price and quantity depends on the relative magnitudes of these shifts, which cannot be determined without additional information.

Question 13

We observe that the equilibrium price of digital cameras has fallen and the equilibrium quantity of digital cameras has increased.Which of the following events could be responsible for this?

Accepted Answer

Technological advances in digital camera production would decrease the cost of production, shifting the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity. The other options would not directly affect the supply and demand of digital cameras.

Question 14

If the price of aluminum used to make bicycles increases,the price of a bicycle rises because of a

Accepted Answer

An increase in the price of aluminum, which is a key input in the production of bicycles, leads to a higher cost of production for bicycle manufacturers, which reduces their profitability. As a result, firms will be less willing to supply bicycles at the previous market price, leading to a leftward shift in the supply curve for bicycles. This will result in a higher equilibrium price for bicycles and a lower equilibrium quantity, as shown in the graph below. Therefore, the correct answer is D, as an increase in the price of aluminum leads to a leftward shift of the supply curve of bicycles, resulting in a higher price of bicycles.

(Note: the graph is not provided due to limitations of the text-only format)

Question 15

In the market for bananas,the price is $2.00 a bunch.An increase in the supply of bananas decreases the price of bananas and ________.

Accepted Answer

An increase in the supply of bananas leads to a decrease in price, which in turn increases the quantity of bananas demanded according to the law of demand. This is because consumers are more willing to buy more bananas at the lower price.

Question 16

An increase in the price of jet fuel will ________ air flights and the equilibrium quantity of air flights will ________.

Accepted Answer

An increase in the price of jet fuel raises costs for airlines, reducing the supply of air flights, which leads to a decrease in the equilibrium quantity of air flights.

Question 17

During the last decade,the price of a computer fell every year and the quantity sold increased every year.This experience suggests that the

Accepted Answer

The experience described shows a decrease in price and an increase in quantity sold, which is consistent with a rightward shift in the supply curve. This is because lower prices incentivize producers to increase the quantity supplied, leading to an increase in the quantity sold. This does not necessarily contradict the law of demand, as it is still possible for the quantity demanded to increase as prices fall. However, the best explanation for this experience is a rightward shift in the supply curve.

Question 18

Many Southern farmers face a choice between planting peanuts or cotton.In 2011,farmers anticipated higher prices for cotton.In the market for peanuts in 2011,there would be ________ in the supply of peanuts,which leads to ________ in the price of peanuts and ________ in the quantity of peanuts.

Accepted Answer

If Southern farmers choose to plant cotton instead of peanuts, there will be a decrease in the supply of peanuts since fewer farmers will be planting peanuts. This decrease in supply will lead to an increase in the price of peanuts (due to the law of supply and demand) and a decrease in the quantity of peanuts produced (since fewer farmers are planting them).

Question 19

Suppose the equilibrium price of a gallon of gasoline drops from $4.00 to $3.85 and the equilibrium quantity increases from 365 millions of gallons per week to 372 millions of gallons per week.These changes can be the result of

Accepted Answer

A decrease in price and an increase in quantity can only occur when the supply curve shifts to the right. This means that producers are offering more gasoline at every price level, resulting in a lower equilibrium price and a higher equilibrium quantity. Therefore, the correct choice is A) an increase in supply.

Question 20

If both demand and supply increase,what will be the effect on the equilibrium price and quantity?

Accepted Answer

When both demand and supply increase, it is uncertain what the effect on price will be. The quantity will definitely increase, but the price could either rise, fall, or remain the same. This depends on the magnitude of the changes in demand and supply. If the increase in demand is greater than the increase in supply, then the price will rise. If the increase in supply is greater than the increase in demand, then the price will fall. If both increases are equal, the price will remain the same.

Quiz 3: Demand and Supply

In 2011,the price of peanuts was rising,which lead peanut butter sellers to expect the price of peanut butter would rise in the future.Consequently,in the current market for peanut butter there was which resulted in in the price of peanut butter and in the quantity of peanut butter.

Crude oil can be refined into home heating oil or gasoline.If very cold weather caused the price of home heating oil to increase then,the

If workers who make DVDs get a pay raise,the equilibrium price of a DVD and the equilibrium quantity of DVDs .

In 2011,the price of peanuts increased.In the market for peanut butter,this change lead to and which therefore the price of peanut butter and the quantity of peanut butter.

There is a technological advance in the production of ice cream.As a result,the supply curve of ice cream shifts and .