Question 1

Assume that the graphs show a competitive market for the product stated in the question.   Select the graph above that best shows the change in the market specified in the following situation: In the market for wheat, when the cost of fertilizer decreases.

Accepted Answer

The answer of Assume that the graphs show a competitive...

Question 2

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.  Refer to the above graph. The supply curve in this event-ticket market is vertical because:

Accepted Answer

The supply curve is vertical because the organizers are selling a fixed number of tickets, and they cannot increase the quantity supplied even if the price increases. This is because the number of tickets available for sale is limited, and the organizers cannot produce more tickets to meet the increasing demand. Therefore, the supply curve is perfectly inelastic, and any shift in demand will result in a change in price but not in the quantity supplied.

Question 3

What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased?

Accepted Answer

The decrease in demand for pink salmon was accompanied by an increase in supply. However, the increase in supply was greater than the decrease in demand, resulting in a decrease in equilibrium price and an increase in equilibrium quantity.

Question 4

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

Accepted Answer

The answer of In the market for sushi, an increase...

Question 5

In markets where the supply curve is vertical, changes in:

Accepted Answer

In a market with a vertical supply curve, the quantity supplied is fixed and does not change with price. Therefore, changes in demand will only affect the equilibrium price, not the equilibrium quantity.

Question 6

The scalping of tickets for an event is a sign that the stated price on the ticket is:

Accepted Answer

Scalping occurs when the demand for tickets exceeds the supply at the stated price, indicating that the price is below the market clearing price.

Question 7

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.  Refer to the above graph for the event-ticket market. A scalpers' market will exist if the event organizers set the official ticket price at:

Accepted Answer

The answer of The graph below shows the market for...

Question 8

In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

Accepted Answer

If Canadian companies import more products from the U.S., they will need to exchange Canadian dollars for U.S. dollars to pay for those imports. This will increase the supply of Canadian dollars in the foreign exchange market, leading to a decrease in the value of the Canadian dollar relative to the U.S. dollar. Therefore, the demand for Canadian dollars will not increase in this scenario.

Question 9

The supply curve in a market is vertical instead of upsloping whenever:

Accepted Answer

A vertical supply curve indicates that sellers are only willing to sell a fixed quantity of the item, regardless of the price. This could be because they have a limited supply of the item, or they have set production limits. As the price increases, the quantity supplied does not increase, resulting in a vertical supply curve.

Question 10

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Accepted Answer

An increase in American investments in British financial markets will result in an increase in demand for pounds, which will lead to a depreciation of the dollar against the pound. This is a basic principle of supply and demand in the foreign exchange market.

Question 11

Assume that the graphs show a competitive market for the product stated in the question.   Select the graph above that best shows the change in the market specified in the following situation: In the market for gasoline, when the price of oil, which is used to produce gasoline, increases because of reduced production by major oil-producing nations.

Accepted Answer

The answer of Assume that the graphs show a competitive...

Question 12

If the price of oil increases significantly, buyers and sellers of gasoline will both expect the price of gasoline to also increase. If sellers of gasoline act on their expectations more than the buyers do, then:

Accepted Answer

The answer of If the price of oil increases significantly,...

Question 13

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

Accepted Answer

When ticket prices are set above the equilibrium level, it typically leads to excess supply (unsold tickets) rather than a secondary market with scalping, which is more common when prices are set below equilibrium, leading to excess demand.

Question 14

In the market for crude oil, if the change in demand due to falling price of natural gas (a substitute for oil) is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Accepted Answer

According to the law of demand, if the price of a substitute product falls, the demand for the original product will decrease. Therefore, if the price of natural gas falls, the demand for crude oil may decrease. On the other hand, disruptions in oil-well operations in the Middle East will decrease the supply of crude oil. However, if the decrease in demand is greater than the decrease in supply, the equilibrium price of crude oil will decrease.

Question 15

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event.  Refer to the above market graph for tickets to a "Final Four" sports event. Given this market, if the event organizers pre-set the price at $20, then this action would result in a:

Accepted Answer

The answer of The graph below shows the market for...

Question 16

Assume that the graphs show a competitive market for the product stated in the question.   Select the graph above that best shows the change in the market specified in the following situation: In the market for Florida oranges, when a major frost damages the orange crop in California.

Accepted Answer

The answer of Assume that the graphs show a competitive...

Question 17

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

Accepted Answer

The answer of The presence of ticket scalpers in popular...

Question 18

In the market for gasoline, if the change in demand due to the start of the summer driving season is greater than the change in supply due to disruptions in the refinery operations in the Gulf, then the equilibrium quantity will increase.

Accepted Answer

The increase in demand outweighs the decrease in supply, resulting in an increase in equilibrium quantity.

Question 19

When tickets are "scalped," then in this market transaction:

Accepted Answer

In a scalping transaction, both the buyer and seller benefit. The seller benefits by selling the ticket at a higher price than face value, while the buyer benefits by obtaining a ticket they desire, often for a sold-out event.

Question 20

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.

Accepted Answer

The answer of In the market for sushi, an increase...

Quiz 3: Demand, Supply, and Market Equilibrium

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: In the market for wheat, when the cost of fertilizer decreases.

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. Refer to the above graph. The supply curve in this event-ticket market is vertical because:

What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased?

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

In markets where the supply curve is vertical, changes in:

The scalping of tickets for an event is a sign that the stated price on the ticket is:

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. Refer to the above graph for the event-ticket market. A scalpers' market will exist if the event organizers set the official ticket price at:

In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

The supply curve in a market is vertical instead of upsloping whenever:

In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

If the price of oil increases significantly, buyers and sellers of gasoline will both expect the price of gasoline to also increase. If sellers of gasoline act on their expectations more than the buyers do, then:

If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets.

In the market for crude oil, if the change in demand due to falling price of natural gas (a substitute for oil) is greater than the change in supply due to disruptions in oil-well operations in the Middle East, then the equilibrium price of oil will decrease.

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: In the market for Florida oranges, when a major frost damages the orange crop in California.

The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers.

In the market for gasoline, if the change in demand due to the start of the summer driving season is greater than the change in supply due to disruptions in the refinery operations in the Gulf, then the equilibrium quantity will increase.

When tickets are "scalped," then in this market transaction:

In the market for sushi, an increase in the price of fish along with an increase in the popularity of sushi among consumers will cause the equilibrium quantity to increase, but the effect on the equilibrium price is indeterminate.