Question 1

If the supply of solar panels increases,

Accepted Answer

According to the law of supply, an increase in the supply of a product leads to a decrease in its price and an increase in the quantity demanded. Therefore, if the supply of solar panels increases, the price of solar panels will decrease and the quantity demanded will increase.

Question 2

Bagels and cream cheese are complementary goods.Suppose that the price for flour,which is used to produce bagels,increases.The equilibrium price of cream cheese ________,and the equilibrium quantity of cream cheese ________.

Accepted Answer

Since bagels and cream cheese are complementary goods, an increase in the price of flour (leading to higher costs for producing bagels, and likely higher prices for bagels) would decrease the demand for both bagels and their complement, cream cheese. This would lead to a fall in the equilibrium price of cream cheese and a decrease in the equilibrium quantity of cream cheese.

Question 3

If consumers buy a large number of plug-in electric cars,the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.

Accepted Answer

The demand for electricity will increase as more consumers use electric cars, leading to a higher equilibrium price and an increased equilibrium quantity of electricity. This is because the demand curve for electricity shifts to the right, causing both the price and quantity to rise in the market.

Question 4

Suppose the equilibrium price of movie tickets is $10.If the supply curve for movies shifts ________,the equilibrium price will ________.

Accepted Answer

When the supply curve shifts rightward, it indicates an increase in supply. This leads to a decrease in the equilibrium price as more movie tickets become available at every price level.

Question 5

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

Accepted Answer

If the demand for new houses increases, and the supply does not change, then the equilibrium price and quantity will both increase. This is because the increase in demand will create excess demand (shortage) at the initial equilibrium price, prompting sellers to raise the price until the excess demand is eliminated and the market reaches a new equilibrium. The increase in quantity is a result of the increase in demand being met by increased production from sellers, who are able to charge a higher price. Therefore, option B is the only choice that describes a change in equilibrium price and quantity that is consistent with economic theory.

Question 6

If a freeze destroys oranges before they are harvested,the equilibrium price of an orange ________ and the equilibrium quantity ________.

Accepted Answer

A freeze destroying oranges before they are harvested would reduce the supply of oranges. This decrease in supply, with demand remaining constant, would lead to an increase in the equilibrium price and a decrease in the equilibrium quantity.

Question 7

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

Accepted Answer

An increase in the number of home buyers moving into the area would increase demand for new houses, leading to an increase in equilibrium price and quantity. A is incorrect because an increase in wages for carpenters would increase the cost of production, leading to a decrease in quantity supplied. B is incorrect because a technological advance would decrease the cost of production, leading to an increase in quantity supplied and possibly a decrease in price. C is incorrect because a decrease in the rent for apartments could lead to a decrease in demand for new houses, leading to a decrease in equilibrium price and quantity. E is incorrect because a decrease in the cost of wood framing would increase supply, leading to an increase in quantity supplied and possibly a decrease in price.

Question 8

Computer chips are a normal good.Suppose the economy slips into a recession so that income falls.As a result,the demand for computer chips ________ so that the price of a computer chip ________.

Accepted Answer

In a recession, income falls and consumers have less disposable income to spend on goods and services, including computer chips. As a result, the demand for computer chips decreases, causing the price of a computer chip to fall as producers lower the price to encourage consumers to buy. Therefore, choice D is the correct answer.

Question 9

Suppose that the price of bread rises.This rise could be the result of

Accepted Answer

A rise in the price of bread is usually due to a decrease in the supply of bread. This could be caused by a variety of factors such as a drought affecting wheat crops or an increase in the cost of production. When the supply of bread decreases, the demand for bread remains constant or may even increase, leading to a rise in prices. An increase in the supply of bread would actually cause prices to fall.

Question 10

An increase in the equilibrium price and a decrease in the equilibrium quantity can be the result of

Accepted Answer

A decrease in supply would mean that there is less of the good available in the market, which would cause the price to increase due to increased competition among buyers. However, since there is less of the good available, the quantity demanded would decrease, leading to a decrease in equilibrium quantity.

Question 11

Because of a sharp increase in the price of gasoline,the demand for Sports Utility vehicles (SUVs)has decreased.So,the high price of gasoline leads to a

Accepted Answer

The increase in the price of gasoline is causing consumers to seek alternatives to SUVs. This will cause a leftward shift in the demand curve for SUVs, meaning that at each price level, consumers will be willing to buy fewer SUVs. However, there is no indication that the supply curve of SUVs has been affected, so there will be no shift in this curve. Therefore, the answer is B.

Question 12

Assume a market is in equilibrium.There is an increase in supply,but no change in demand As a result the equilibrium price ________,and the equilibrium quantity ________.

Accepted Answer

When supply increases but demand remains constant, the equilibrium price falls due to the surplus of goods, and the equilibrium quantity increases as more of the good is available at a lower price.

Question 13

Suppose that over the next few years the demand for dancing to country and western music decreases.Hence,at country and western dance clubs the equilibrium price of admission ________ and the equilibrium quantity of dancing ________.

Accepted Answer

A decrease in demand will lead to a decrease in both equilibrium price and quantity. Therefore, the correct choice is D.

Question 14

When personal computers were first produced,the price was very high.As time passed,the price of personal computers fell because

Accepted Answer

Technological advances in the production of personal computers led to economies of scale and lower production costs, which resulted in lower prices for consumers.

Question 15

For consumers,taco chips and salsa are complements.If the price of salsa rises,what is the effect on the equilibrium price and quantity of taco chips?

Accepted Answer

Taco chips and salsa are complements, meaning they are consumed together. If the price of salsa rises, people may reduce their consumption of the complementary good, taco chips, leading to a decrease in demand. As a result, the equilibrium price of taco chips falls and the equilibrium quantity decreases. This is reflected in choice A.

Question 16

The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month.Many new Web design firms now enter the market.As a result,

Accepted Answer

With an increase in the number of new Web design firms, the supply of Web pages in the market increases. This shift in the supply curve to the right results in a lower price for Web pages. Therefore, the equilibrium price falls, leading to a higher quantity demanded. Hence, choice A is the correct option.

Question 17

If good weather conditions result in a larger than normal crop of peaches,then the

Accepted Answer

According to the law of supply, an increase in supply results in a decrease in price. Therefore, a larger than normal crop of peaches would result in an increase in supply, causing the equilibrium price of peaches to fall. However, the equilibrium quantity of peaches would increase since there are more peaches available at a lower price. Therefore, option B is the correct answer.

Question 18

If the price of tangerines increases,the price of oranges also rises because

Accepted Answer

When the price of tangerines increases, consumers tend to switch to buying oranges instead because they view the two goods as substitutes. This increase in demand for oranges leads to an increase in price.

Question 19

Which of the following lowers the equilibrium price of a canoe?

Accepted Answer

An increase in the supply of canoes, without a change in demand, typically results in a lower equilibrium price because more canoes are available for sale, which often leads to sellers reducing prices to attract buyers.

Question 20

Suppose that people decide riding scooters is no longer fun.The equilibrium price of a scooter ________,and the equilibrium quantity of scooters ________.

Accepted Answer

If people decide riding scooters is no longer fun, the demand for scooters will decrease. As a result, the equilibrium price of a scooter will fall and the equilibrium quantity of scooters will decrease. This is because scooter producers will need to lower the price to encourage people to buy scooters. The decrease in demand will also mean that scooter producers will need to produce fewer scooters. Therefore, the best choice is D, falls; decreases.

Quiz 4: Demand and Supply

If the supply of solar panels increases,

Bagels and cream cheese are complementary goods.Suppose that the price for flour,which is used to produce bagels,increases.The equilibrium price of cream cheese ,and the equilibrium quantity of cream cheese .

If consumers buy a large number of plug-in electric cars,the equilibrium price of electricity will and the equilibrium quantity of electricity will .

Suppose the equilibrium price of movie tickets is $10.If the supply curve for movies shifts ,the equilibrium price will .

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

If a freeze destroys oranges before they are harvested,the equilibrium price of an orange and the equilibrium quantity .

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

Computer chips are a normal good.Suppose the economy slips into a recession so that income falls.As a result,the demand for computer chips so that the price of a computer chip .

Suppose that the price of bread rises.This rise could be the result of

An increase in the equilibrium price and a decrease in the equilibrium quantity can be the result of

Because of a sharp increase in the price of gasoline,the demand for Sports Utility vehicles (SUVs) has decreased.So,the high price of gasoline leads to a

Assume a market is in equilibrium.There is an increase in supply,but no change in demand As a result the equilibrium price ,and the equilibrium quantity .

Suppose that over the next few years the demand for dancing to country and western music decreases.Hence,at country and western dance clubs the equilibrium price of admission and the equilibrium quantity of dancing .

When personal computers were first produced,the price was very high.As time passed,the price of personal computers fell because

For consumers,taco chips and salsa are complements.If the price of salsa rises,what is the effect on the equilibrium price and quantity of taco chips?

The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month.Many new Web design firms now enter the market.As a result,

If good weather conditions result in a larger than normal crop of peaches,then the

If the price of tangerines increases,the price of oranges also rises because

Which of the following lowers the equilibrium price of a canoe?

Suppose that people decide riding scooters is no longer fun.The equilibrium price of a scooter ,and the equilibrium quantity of scooters .