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

Question 1

The athletic shoe industry is highly competitive. In recent years, companies like Allbirds and Skechers began offering shoes made of different materials or in different styles to better compete with industry giants Nike and Adidas. These new styles of athletic shoes that are being marketed to compete with shoes by Nike and Adidas would be considered

A) complements to shoes by Nike and Adidas.
B) substitutes for shoes by Nike and Adidas.
C) inferior goods compared to the shoes by Nike and Adidas.
D) normal goods compared to shoes by Nike and Adidas.

Answer 1

substitutes for shoes by Nike and Adidas.

Question 2

If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking boots, this will likely

A) increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered complements.
B) increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered substitutes.
C) decrease the demand for athletic shoes, because athletic shoes are considered inferior goods and sandals and hiking boots are considered normal goods.
D) decrease the demand for athletic shoes, because athletic shoes are considered normal goods and sandals and hiking boots are considered inferior goods.

Answer 2

increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered substitutes.

Question 3

Technological advances have resulted in lower prices for smart watches. What is the impact of this on the market for traditional watches?

A) The demand curve for traditional watches shifts to the right.
B) The supply curve for traditional watches shifts to the right.
C) The demand curve for traditional watches shifts to the left.
D) The supply curve for traditional watches shifts to the left.

Answer 3

The demand curve for traditional watches shifts to the left.

Question 4

Technological advancements have led to lower prices and an increase in the sale of digital cameras. How does this affect the digital photo printing paper market?

A) The demand curve for digital photo printing paper shifts to the right.
B) The demand curve for digital photo printing paper shifts to the left.
C) The supply curve for digital photo printing paper shifts to the right.
D) The supply curve for digital photo printing paper shifts to the left.

Question 5

Which of the following has occurred as the millennials and generation Z have come of age?

A) The demand for "fast casual" food has decreased in the U.S. market.
B) The demand for diapers has decreased in the U.S. market.
C) The demand for traditional fast food has increased in the U.S. market.
D) all of the above

Question 6

Which of the following generation categories has the largest population in the United States in 2020?

A) the millennials
B) generation X
C) generation Z
D) the centenarians

Question 7

Factors that will tend to lead to higher demand for athletic shoes include all of the following except

A) the popularity of the product with millennials and members of generation Z.
B) the trend away from women wearing high heels toward wearing more casual shoes.
C) slowing population growth in Europe and North America.
D) rising incomes in some developing countries.

Question 8

How does the decreasing use of DVD players affect the market for DVDs?

A) The demand curve for DVDs shifts to the right.
B) The quantity of DVDs demanded decreases.
C) The quantity of DVDs demanded increases.
D) The demand curve for DVDs shifts to the left.

Question 9

If consumers believe the price of OLED televisions will decrease in the future, this will cause the demand for OLED televisions to increase now.

Question 10

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated.
a. Blu-ray discs and video-on-demand
b. Fiat 500 and Mini Cooper S
c. Toothpaste and toothbrush
d. Popcorn and snowboards
e. Razors and razor blades

Question 11

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

Question 12

A decrease in the price of dashboard cameras will result in

A) a smaller quantity of dashboard cameras supplied.
B) a larger quantity of dashboard cameras supplied.
C) a decrease in the demand for dashboard cameras.
D) an increase in the supply of dashboard cameras.

Question 13

As a result of fracking, ________ had become the world's largest oil producer in 2018.

A) Saudi Arabia
B) the United States
C) Russia
D) Canada

Question 14

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

Question 15

-Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
B) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.
C) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.
D) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Question 16

Nearly one-fifth of China's 1.4 billion people are under the age of 15. How will this affect high school enrollment over the next fifteen years? The labor market over the next fifteen years?

Question 17

Positive technological change in the production of OLED televisions caused the price of OLED televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to OLED 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 OLED televisions and Blu-ray players.
D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Question 18

"The price of LED 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 LED 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 LED light bulbs fell.
C) The statement is false because LED light bulb 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.

Question 19

-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.

Question 20

-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

Question 21

-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

Question 22

-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

Question 23

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

Question 24

Select the phrase that correctly completes the following statement. "A positive change in technology caused an increase in the supply of OLED televisions. As a result ________."

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

Question 25

In recent years the consumption of cobalt, which is used in the manufacture of batteries for electric automobiles, has risen but the price of cobalt has fallen. This is because the supply of cobalt has ________ and the demand for cobalt has ________.

A) decreased; increased
B) decreased; also decreased
C) increased; decreased
D) increased; also increased

Question 26

Suppose the cost of harvesting merino wool has risen at the same time as consumer preference for merino wool has risen. In the market for merino wool, this would result in 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

Question 27

Suppose that Reebok successfully implements 3D printing technology in several of its shoe models, which allows the company to avoid much of the traditional production process used in the manufacture of shoes. All else equal, this technological improvement would

A) shift the supply curve for its products to the right.
B) shift the supply curve for its products to the left.
C) shift the demand curve for its products to the right.
D) shift the demand curve for its products to the left.

Question 28

According to a report from the Intergovernmental Panel on Climate Change (IPCC), if humans do not reduce their impact on climate, rising temperatures will threaten agricultural food supplies that could trigger a global food crisis. Jonathan Foley, the executive director of Project Drawdown, has stated that about 25 percent of climate change today is driven by agriculture and factory farming., which is equivalent to the damage caused by all the world's electricity generation. Foley advocates being smarter about how we grow and use food, and reducing food waste as ways to address climate change. Included in the ways experts say people can develop more sustainable habits around food are adopting a more plant-based diet, eat more whole and locally grown foods, eat less junk food, cook less and reuse leftovers, eat smaller portions, and compost plant-based food waste.
Source: Julie Compton, " How our diets impact climate change-and what we can do about it," nbcnews.com, August 12, 2019

-Refer to the Article Summary. A large number of millennials and members of generation Z have expressed concern over the negative impact of climate change. Suppose that as a way to help fight climate change, many of these people decide to consume more locally grown produce, while at the same time more local farmers choose to sell more of their produce at local farmers' markets. All else equal, what will happen in the market for locally grown produce 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.

Question 29

In December 2019, the minimum age to purchase all tobacco products in the United States rose from 18 to 21. In much of Europe, the legal age to purchase tobacco products is still 18. If the legal age to purchase tobacco products in the United States was changed back to 18, how would this affect the market for cigarettes? All else equal, what would happen to the equilibrium price and quantity of cigarettes?