Question 1

A decrease in the equilibrium price for a product will result

Accepted Answer

An increase in supply would result in a lower equilibrium price, and a decrease in demand would also result in a lower equilibrium price. Therefore, when there is an increase in supply and a decrease in demand for the product, the equilibrium price would decrease.

Question 2

"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 3

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges

Accepted Answer

An increase in the supply of oranges due to the bumper crop would shift the supply curve to the right. This would lead to an excess supply of oranges at the original equilibrium price, causing a decrease in the price until the excess supply is sold. Therefore, the correct option is A - the supply curve shifted to the right resulting in a decrease in the equilibrium price.

Question 4

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,which allows the company to reduce the number of employees at each location.All else equal,this technological improvement would

Accepted Answer

The answer of Suppose that McDonald's successfully implements self-serve kiosks...

Question 5

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

A positive change in technology caused an increase in the supply of flat-screen televisions. This increase in supply, according to the law of supply, causes a decrease in price and an increase in the quantity demanded of the product. Therefore, the correct choice is C, which states that the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased.

Question 6

Select the phrase that correctly completes the following statement."An increase in input prices caused a decrease in the supply of baseballs.As a result ________."

Accepted Answer

An increase in input prices will cause a decrease in supply, shifting the supply curve to the left. This will result in a higher equilibrium price and a lower equilibrium quantity demanded. Therefore, the correct choice is C, where the price of baseballs increases and the quantity demanded decreases. Option A is incorrect because an increase in price does not cause a decrease in demand. Option B is incorrect because a decrease in supply will lead to a decrease in the equilibrium quantity, not an increase. Option D is incorrect because an increase in price does not cause an increase in supply.

Question 7

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise.Holding everything else constant,how would this affect the market for corn (a substitute for wheat)?

Accepted Answer

If the price of wheat, a substitute for corn, increases, consumers will likely switch to buying more corn instead. This will increase the demand for corn and cause the equilibrium price of corn to increase. The supply of corn is not directly affected by the change in the price of wheat, so choice A is incorrect. Choice C is incorrect because the decrease in the affordability of both wheat and corn would reduce the demand for both, which contradicts the substitution effect. Choice D is incorrect because an increase in demand would lead to an increase in the equilibrium price of corn, not a decrease.

Question 8

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 9

A decrease in the equilibrium quantity for a product will result

Accepted Answer

The answer of A decrease in the equilibrium quantity for...

Question 10

Suppose the cost of growing organic corn has risen at the same time as consumer preference for organic corn has fallen.In the market for organic corn,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

The answer of Suppose the cost of growing organic corn...

Question 11

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

If more insurance companies cover part of the cost of laser eye surgery, more people will be able to afford it, increasing demand. At the same time, more doctors entering the field will increase the supply of available surgeons, potentially lowering prices and increasing overall supply. Therefore, both demand and supply will increase in the market for laser eye surgery.

Question 12

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 (with no change in demand) would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon. This is because there is more supply than demand, so sellers will have to lower their prices to sell their product, which in turn will increase the quantity demanded by buyers.

Question 13

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes,accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions,will result in

Accepted Answer

Since there is a decrease in both demand and supply for incandescent light bulbs, the equilibrium quantity will decrease. However, the effect on equilibrium price cannot be determined as it depends on the relative magnitude of the shifts in demand and supply. Therefore, the equilibrium price may increase or decrease, but the equilibrium quantity will definitely decrease.

Question 14

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
...

Question 15

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 16

Let D = demand,S = supply,P = equilibrium price,and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

Accepted Answer

The answer of Let D = demand,S = supply,P =...

Question 17

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would

Accepted Answer

The favorable weather in California vineyards will increase the supply of red wine, which will lead to an increase in the equilibrium quantity of red wine. At the same time, the studies showing the health benefits of red wine will increase the demand for it, thus increasing the equilibrium price. However, the effect on the equilibrium price is uncertain because the increase in supply may offset the increase in demand, resulting in a stable or slightly fluctuating price. Therefore, the best choice is B, which states an increase in both supply and demand but an uncertain effect on the equilibrium price.

Question 18

In recent years,the consumption of orange juice in the United States has fallen but the price of orange juice has risen.This is because the supply of orange juice has ________ and the demand for orange juice has ________.

Accepted Answer

The answer of In recent years,the consumption of orange juice...

Question 19

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

Accepted Answer

The answer of "Because chips and salsa are complements,an increase...

Question 20

Which of the following would definitely cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

Accepted Answer

The answer of Which of the following would definitely cause...

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