Question 1

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 S₁ (point C)) Which of the following changes would cause the equilibrium to change to point B? 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 an increase 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 Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 2

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

Accepted Answer

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

Question 3

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 D₁and 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? A) none of the points shown B) B C) C D) E

Accepted Answer

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

Question 4

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 ________."
A) the price of baseballs increased and the demand for baseballs decreased
B) the equilibrium quantity of baseballs increased
C) the price of baseballs increased and the quantity demanded of baseballs decreased
D) the price of baseballs increased. The higher price caused the supply of baseballs to increase

Accepted Answer

An increase in input prices would cause a decrease in supply, resulting in a higher price for the product. This decrease in supply and increase in price would lead to a decrease in the quantity demanded of the product, as seen in choice C.

Question 5

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

According to the law of demand and supply, an increase in demand causes a higher equilibrium price and quantity, while a decrease in demand leads to a lower equilibrium price and quantity. Similarly, an increase in supply leads to a lower equilibrium price and higher equilibrium quantity, and a decrease in supply leads to a higher equilibrium price and lower equilibrium quantity. However, the change in equilibrium price does not cause a further change in demand or supply. Therefore, option A is the correct statement.

Question 6

"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 7

Which of the following statements is true?
A) An increase in supply 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 8

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

An increase in supply causes a decrease in price and an increase in quantity demanded, so option C is the correct choice. Option A is incorrect because a decrease in price would increase demand, not decrease it. Option B is incorrect because an increase in supply would increase the equilibrium quantity, not decrease it. Option D is incorrect because a decrease in price would not cause the supply to decrease, but rather increase.

Question 9

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 would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon. This is because there would be a greater supply of salmon than demand, causing sellers to lower their prices in order to sell their product and resulting in consumers wanting to purchase more salmon due to the lower prices. None of the other choices would result in both a decrease in price and an increase in quantity.

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?
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 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?
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 12

All else equal,the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a
A) shift the supply curve for iPhones to the right.
B) shift the supply curve for iPhones to the left.
C) shift the demand curve for iPhones to the right.
D) shift the demand curve for iPhones to the left.

Accepted Answer

A decrease in consumer preference for the iPhone 5 would result in a shift of the demand curve for iPhones to the left. This is because fewer consumers would be willing to buy the iPhone 5 at the given price, resulting in a decrease in quantity demanded. A shift in the supply curve would imply a change in the quantity supplied at each price point, which is not necessarily related to changes in consumer preference.

Question 13

A decrease in the equilibrium quantity 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

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

Question 14

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?
A) an increase 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 an increase in supply

Accepted Answer

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

Question 15

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

According to the law of supply and demand, a decrease in the equilibrium price can only occur when there is an excess supply of the product. This can happen when there is an increase in supply and/or a decrease in demand for the product. Therefore, the only option that describes this scenario is choice C.

Question 16

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? 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

A decrease in the wages of apple workers would shift the supply curve to the right (from S₂ to SS2U2B12S2U2B0) and an increase in the price of oranges, a substitute for apples, would shift the demand curve to the left (from D₂ to DS2U2B12S2U2B0), causing a new equilibrium point at A. The other choices would either shift both curves in the same direction or would have conflicting effects on the supply and demand curves.

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 S₂ (point B)) Which of the following changes would cause the equilibrium to change to point C? 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 an increase 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

A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples, would cause the supply curve to shift to the right (S₃) and the demand curve to shift to the left (D₂), resulting in a new equilibrium at point C.

Question 18

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

As the insurance coverage increases, more people will be able to afford the procedure, increasing demand. Additionally, more doctors entering the field will increase the supply. Therefore, both demand and supply will increase.

Question 19

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.
A) increasing; increasing or decreasing
B) increasing or decreasing; decreasing
C) decreasing; increasing or decreasing
D) increasing or decreasing; increasing

Accepted Answer

When the cost of raising beef cattle rises, it causes an increase in the supply curve, as producers need to charge a higher price to cover their costs. At the same time, consumer preference for beef falling causes a decrease in the demand curve, as consumers are less willing to pay for beef. These changes lead to a shift in the equilibrium point, where price and quantity intersect. The equilibrium price can either increase or decrease due to the shift in supply and demand, but since the demand for beef has fallen, the equilibrium quantity will decrease. Therefore, the best choice is B - increasing or decreasing equilibrium price and decreasing equilibrium quantity.

Question 20

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 decline in the cost of manufacturing Blu-ray players allowed for an increase in the supply of Blu-ray players, resulting in a decrease in price. This is due to the basic principle of supply and demand: when supply increases, prices decrease. Therefore, the correct answer is A.

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

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 S₁ (point C) ) Which of the following changes would cause the equilibrium to change to point B?

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 ________."

Which of the following statements is true?

Which of the following statements is true?

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?

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

All else equal,the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a

A decrease in the equilibrium quantity for a product will result

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

A decrease in the equilibrium price for a product will 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 D₂ and S₂ (point E) ) Which of the following changes would cause the equilibrium to change to point A?

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 S₂ (point B) ) Which of the following changes would cause the equilibrium to change to point C?

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?

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .

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?

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

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 S1 (point C) ) Which of the following changes would cause the equilibrium to change to point B?

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 ________."

Which of the following statements is true?

Which of the following statements is true?

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?

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

All else equal,the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a

A decrease in the equilibrium quantity for a product will result

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

A decrease in the equilibrium price for a product will 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 D2 and S2 (point E) ) Which of the following changes would cause the equilibrium to change to point A?

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 S2 (point B) ) Which of the following changes would cause the equilibrium to change to point C?

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?

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

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?

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 S₁ (point C) ) Which of the following changes would cause the equilibrium to change to point B?

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?

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 S₂ (point B) ) Which of the following changes would cause the equilibrium to change to point C?

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .