Question 1

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
A) the supply of lobster is lower in spring than in summer.
B) consumers' tastes for lobster are greater in spring than in summer.
C) there is a surplus of lobster in summer and a shortage of lobster in spring.
D) there are more substitutes for lobster in summer than there are in spring.

Accepted Answer

The higher demand for lobster in the summer suggests that there is a greater supply of lobster during that season, which could lead to lower prices. Therefore, if prices are lower in the summer than in the spring, it is likely due to an increase in supply during the summer months.

Question 2

"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.
A) The statement is false. A decrease in the price of compact fluorescent 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 compact fluorescent light bulbs fell.
C) The statement is false because compact fluorescent light bulbs 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 answer of "The price of compact fluorescent light bulbs...

Question 3

All else equal,a shortage of display screens used in the manufacture of tablet computers would
A) shift the supply curve for tablet computers to the right.
B) shift the supply curve for tablet computers to the left.
C) shift the demand curve for tablet computers to the right.
D) shift the demand curve for tablet computers to the left.

Accepted Answer

A shortage of display screens used in the manufacture of tablet computers would increase the cost of production for tablet manufacturers, leading to a decrease in supply, which would shift the supply curve to the left.

Question 4

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?
A) Demand will increase, but this will not shift the supply curve.
B) Supply will increase, but this will not shift the demand curve.
C) Demand and supply will both increase.
D) Demand will increase and supply will decrease.

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 5

A decrease in the equilibrium price for a product will result
A) when the quantity demanded for the product exceeds the quantity supplied.
B) when there is a decrease in supply and a decrease in demand for the product.
C) when there is an increase in supply and a decrease in demand for the product.
D) when there is a decrease in demand and a decrease in the number of firms producing the product.

Accepted Answer

A decrease in equilibrium price occurs when there is more supply than demand, which can happen with an increase in supply and a decrease in demand. Therefore, option C is the correct answer. Option A is the opposite of what causes a decrease in equilibrium price, as it refers to a shortage rather than a surplus. Option B may lead to a decrease in equilibrium price if the decrease in demand is greater than the decrease in supply, but this is not always the case. Option D does not provide any information on whether there is a surplus or a shortage, so it cannot be the correct choice.

Question 6

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?
A) The new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players.
B) The new technology caused an increase in the supply of Blu-ray players and an increase in price of Blu-ray players.
C) The new technology caused an decrease in the demand for Blu-ray players.
D) The new technology caused an increase in the quantity of Blu-ray players supplied.

Accepted Answer

The introduction of new technology has allowed for a cost decrease in manufacturing Blu-ray players, which has caused an increase in the supply of Blu-ray players. This increase in supply has subsequently led to a decrease in the price of Blu-ray players as manufacturers try to compete for market share. As a result, choice A is the best answer.

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) none of the points shown 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? B) B C) C D) E

Accepted Answer

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

Question 8

Which of the following statements is true?
A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Accepted Answer

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

Question 9

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?
A) The hurricane reduced the number of suppliers of building materials.
B) The hurricane created an artificial shortage of building materials.
C) The hurricane caused an increase in the demand for building materials.
D) There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm.

Accepted Answer

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

Question 10

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?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Accepted Answer

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

Question 11

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

Question 12

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) 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 LCD 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

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

Question 13

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?
A) Demand will increase, but these two factors will not shift the supply curve.
B) Supply will increase, but these two factors will not shift the demand curve.
C) Demand and supply will both increase.
D) Demand will increase and supply will decrease.

Accepted Answer

The increase in insurance coverage and the entry of more doctors into the field will both lead to an increase in demand for laser eye surgery, as more people will become aware of the availability and affordability of the procedure. At the same time, the entry of more doctors into the field will also increase the supply of laser eye surgery services, which will help to meet the increased demand. Therefore, both demand and supply will increase in this market as a result of these two factors.

Question 14

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?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Accepted Answer

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

Question 15

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
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.
E)) Which of the following changes would cause the equilibrium to change to point A?

Accepted Answer

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

Question 16

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
A) both the equilibrium price and quantity of MP3 players will increase.
B) the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease.
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase.
D) the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease.

Accepted Answer

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

Question 17

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 ________."
A) the price of flat-screen televisions decreased and the demand for flat-screen televisions increased
B) the equilibrium quantity of flat-screen televisions decreased
C) the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased
D) the price of flat-screen televisions decreased. The lower price caused the supply of flat-screen televisions to decrease

Accepted Answer

A positive change in technology causes an increase in supply, which leads to a decrease in price and an increase in quantity demanded. Therefore, the correct phrase to complete the statement would be "the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased" (option C). Option A is incorrect because an increase in supply would actually lead to a decrease in price, not an increase. Option B is incorrect because an increase in supply would lead to an increase in the equilibrium quantity. Option D is incorrect because a decrease in price would actually cause an increase in supply, not a decrease.

Question 18

"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?
A) The statement will be true if consumer tastes for apples and oranges do not change.
B) The statement is false because a change in the price of apples would not change the demand for apples.
C) The statement is false because oranges are inferior goods; apples are normal goods.
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Accepted Answer

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

Question 19

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
A) a decrease in demand and an increase in supply
B) an increase in supply
C) an increase in supply and an increase in demand greater than the increase in supply
D) a decrease in demand and a decrease in supply

Accepted Answer

An increase in supply alone would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon, as there would be more salmon available for purchase at each price. Decreases in demand, as in option A and D, would only cause a decrease in the equilibrium price, while option C would depend on the magnitude of the increase in demand compared to the increase in supply.

Question 20

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) The equilibrium point will move from A to B. A)) If there is a shortage of apples how will the equilibrium point change? B) The equilibrium point will move from A to C. C) There will be no change in the equilibrium point. D) The equilibrium point will move from A to E.

Accepted Answer

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

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

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

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

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

A decrease in the equilibrium price for a product will result

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 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?

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) ?

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?

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?

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

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 ________."

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