Question 1

Refer to the accompanying diagram.Which of the following scenarios would explain this change in equilibrium?

Accepted Answer

An increase in the price of a substitute good would cause consumers to shift their preferences towards the lower-priced good, resulting in an increase in demand and a shift in the equilibrium point to the right.

Question 2

A technological advancement for Good A will shift the ________ curve of Good A to the ________,making the equilibrium price ________.

Accepted Answer

A technological advancement in the production of Good A would make its production more efficient, leading to an increase in supply. This shift in the supply curve to the right typically results in a lower equilibrium price, as more of the good can be produced at each price level.

Question 3

The difference between a tax and a subsidy is that when the government places a tax on a good,it ________ the equilibrium price and ________ the equilibrium quantity,whereas when the government places a subsidy on a good,it ________ the equilibrium price and ________ the equilibrium quantity.

Accepted Answer

A tax on a good typically increases the equilibrium price (as the cost of production or selling price for consumers increases) and decreases the equilibrium quantity (as higher prices lead to lower demand). Conversely, a subsidy decreases the equilibrium price (by making it cheaper to produce or buy) and increases the equilibrium quantity (as lower prices boost demand).

Question 4

When firms in a market expect the price of their products to rise,the supply curve of their goods ________,causing the equilibrium price to ________.

Accepted Answer

The answer of When firms in a market expect the...

Question 5

Refer to the accompanying figure.What event would cause the supply curve to shift out?

Accepted Answer

The answer of Refer to the accompanying figure.What event would...

Question 6

Assume that the market for baseballs is in equilibrium.There is a sudden decrease in income throughout the economy.If all else is held constant,we would expect that if baseballs are a(n)________ good,then the demand curve will shift to the ________,causing the equilibrium price and quantity to ________.

Accepted Answer

If baseballs are considered a normal good, a decrease in income would lead to a decrease in demand for baseballs. This is represented by a leftward shift of the demand curve. As a result, both the equilibrium price and quantity of baseballs would fall.

Question 7

When a hurricane rips through Florida,the price of oranges rises because the

Accepted Answer

A hurricane can damage orange trees and disrupt transportation, which reduces the supply of oranges. As a result, the supply curve shifts to the left, causing the price of oranges to rise.

Question 8

When supply shifts to the right and demand stays constant,the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

When supply increases (shifts to the right) and demand stays constant, the equilibrium price decreases due to the higher availability of the product, and the equilibrium quantity increases because more of the product is available at a lower price.

Question 9

If the number of buyers in a market increases from 50 to 100,you would expect the equilibrium price to ________ and the equilibrium quantity to ________,holding all else constant.

Accepted Answer

When the number of buyers in a market increases, demand for the product typically increases, leading to a higher equilibrium price and a higher equilibrium quantity, assuming all other factors remain constant.

Question 10

Oil is a main component in the manufacture of plastic bags.If the price of oil were to increase,the price of plastics bags would ________ and the quantity would ________.

Accepted Answer

If the price of oil increases, the cost of producing plastic bags also increases. This means that the price of plastic bags would increase as well. As a result, consumers may choose to buy less of them, causing the quantity to decrease. Therefore, the correct answer is B - the price of plastic bags would increase and the quantity would decrease if the price of oil increases.

Question 11

The market for footballs is perfectly competitive.If all else is held constant and the price of leather decreases,we would expect that the equilibrium quantity of footballs would ________ and the equilibrium price would ________.

Accepted Answer

If the price of leather decreases, the cost of production of footballs decreases, which means that suppliers can afford to sell more footballs at any given price. Thus, the supply curve shifts to the right. As a result, there is a surplus of footballs in the market, and suppliers cut the price to clear the surplus. This reduces the equilibrium price of footballs. At the same time, the increase in supply leads to an increase in the equilibrium quantity of footballs. Therefore, the correct answer is B) rise; fall.

Question 12

Sabrina decided to start selling lemonade on her street.The other kids in the neighborhood noticed that Sabrina was making a lot of money selling lemonade.These kids decided to open their own lemonade stand.When they opened their own lemonade stand,the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

The increase in supply (due to more lemonade stands in the neighborhood) will cause a decrease in the equilibrium price, while the increase in demand (due to more kids wanting to buy lemonade) will cause an increase in equilibrium quantity.

Question 13

The equilibrium price of teddy bears is $5.A study comes out that says owning a teddy bear causes you to earn a lower salary.If all other factors are held constant,which of the following scenarios could happen?

Accepted Answer

The study suggesting a negative outcome from owning teddy bears would likely decrease consumer demand, leading to a decrease in price due to a shift in the demand curve, not the supply curve.

Question 14

When the demand curve shifts to the left and all else is held constant,the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

When the demand curve shifts to the left, it indicates a decrease in demand. This leads to a lower equilibrium price and a lower equilibrium quantity, as suppliers will reduce prices to sell their now less demanded products, and the quantity sold will also decrease due to the lower demand.

Question 15

If all else is held constant,what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Accepted Answer

A decrease in the price of Android phones, which are substitutes for iPhones, would lead to a decrease in the demand for iPhones. This would result in a lower equilibrium price and quantity for iPhones as consumers switch to the more affordable Android options.

Question 16

Wine and cheese are complement goods because they are consumed together.What would we expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?

Accepted Answer

Wine and cheese are complement goods, meaning that an increase in the price of wine will likely lead to a decrease in the demand for cheese. Therefore, the equilibrium quantity of cheese will decrease due to the decrease in demand.

Question 17

What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant?

Accepted Answer

A decrease in the price of cotton, a key input in shirt production, would lower production costs for manufacturers. This would likely lead to an increase in supply, causing the equilibrium price to fall and the equilibrium quantity to rise as more shirts are produced and sold at a lower price.

Question 18

A decrease in demand is represented by a

Accepted Answer

A decrease in demand means that consumers are less willing and able to buy a certain good or service at any given price. This will shift the demand curve to the left, indicating a lower quantity demanded at each price point.

Question 19

According to the supply and demand model,when the cotton gin was invented,if all else was held constant,we would expect the equilibrium price of cotton to ________ and the equilibrium quantity of cotton to ________.

Accepted Answer

The invention of the cotton gin increased the productivity of cotton harvesting, which resulted in an increase in the supply of cotton. According to the law of supply, a higher quantity supplied would bring down the price at which cotton would be sold. This would lead to a decrease in the equilibrium price of cotton. At the same time, due to the lower price, consumers would be willing to purchase more cotton than before, which would lead to an increase in the equilibrium quantity of cotton. Therefore, the best choice is C.

Question 20

Taxes cause the equilibrium price of a good to

Accepted Answer

Taxes increase the cost of production for producers, shifting the supply curve left. This leads to a higher equilibrium price and a lower equilibrium quantity. Therefore, the answer is A) increase.

Quiz 3: The Market at Work: Supply and Demand

Refer to the accompanying diagram.Which of the following scenarios would explain this change in equilibrium?

A technological advancement for Good A will shift the curve of Good A to the ,making the equilibrium price .

The difference between a tax and a subsidy is that when the government places a tax on a good,it the equilibrium price and the equilibrium quantity,whereas when the government places a subsidy on a good,it the equilibrium price and the equilibrium quantity.

When firms in a market expect the price of their products to rise,the supply curve of their goods ,causing the equilibrium price to .

Refer to the accompanying figure.What event would cause the supply curve to shift out?

Assume that the market for baseballs is in equilibrium.There is a sudden decrease in income throughout the economy.If all else is held constant,we would expect that if baseballs are a(n) good,then the demand curve will shift to the ,causing the equilibrium price and quantity to .

When a hurricane rips through Florida,the price of oranges rises because the

When supply shifts to the right and demand stays constant,the equilibrium price and the equilibrium quantity .

If the number of buyers in a market increases from 50 to 100,you would expect the equilibrium price to and the equilibrium quantity to ,holding all else constant.

Oil is a main component in the manufacture of plastic bags.If the price of oil were to increase,the price of plastics bags would and the quantity would .

The market for footballs is perfectly competitive.If all else is held constant and the price of leather decreases,we would expect that the equilibrium quantity of footballs would and the equilibrium price would .