Question 1

Which of the following would increase the equilibrium price and increase the equilibrium quantity of used cars?

Accepted Answer

A fall in income would increase the demand for used cars if they are considered an inferior good, leading to an increase in both equilibrium price and quantity.

Question 2

In March, the quantity of orange juice sold in the town of Jackson was 3000 cartons and the price $3. In May, the quantity of orange juice sold in the town of Jackson was 3500 cartons and the price was
$3)20. This change in the price and quantity sold could have been the result of

Accepted Answer

The increase in both price and quantity sold suggests a demand increase, which could be due to the release of a medical study highlighting health benefits.

Question 3

When demand increases, the equilibrium price _ and the equilibrium quantity _.

Accepted Answer

When demand increases, there is more competition among buyers for the limited quantity of the good available, which causes the price to increase. As the price increases, suppliers are willing to produce and sell more of the good, which leads to an increase in the equilibrium quantity. Therefore, the correct answer is D: rises; increases.

Question 4

Which of the following statements is correct?

Accepted Answer

When demand increases, it typically leads to a higher price and a higher quantity sold, as suppliers are willing to produce more to meet the increased demand at a higher price.

Question 5

When the demand for a good decreases, its equilibrium price and equilibrium quantity
)

Accepted Answer

When the demand for a good decreases, there is a surplus of the good in the market, causing sellers to lower the price in order to attract buyers. This results in a decrease in the equilibrium price and quantity.

Question 6

Which of the following would result in a movement along, but no shift in, the supply curve of grapefruit juice?

Accepted Answer

The answer of Which of the following would result in...

Question 7

If good A is a normal good and income increases, the equilibrium price of A and the equilibrium quantity of A .

Accepted Answer

A normal good is one for which demand increases as income increases. This means that as income increases, the demand for good A will increase, leading to an increase in both the equilibrium price of A and the equilibrium quantity of A. Therefore, choice C (rises; increases) is the correct answer.

Question 8

Suppose the equilibrium price of bottled water has risen from $1.00 per bottle to $2.00 per bottle and the equilibrium quantity has increased. These changes are a result of a shift of the
Curve for bottled water.

Accepted Answer

When the equilibrium price has risen and the equilibrium quantity has increased, it means that there was an increase in demand while the supply remained relatively constant. Therefore, the demand curve shifted rightward.

Question 9

An increase in demand combined with no change in supply

Accepted Answer

An increase in demand with no change in supply leads to a shortage, as demand exceeds supply. This shortage results in upward pressure on prices, causing the equilibrium price to increase. Therefore, the correct answer is D.

Question 10

The price of a gallon of milk falls. Which of the following is a possible cause?

Accepted Answer

If a discovery shows that milk causes diabetes, demand for milk would likely decrease, leading to a fall in its price.

Question 11

If the price of a CD is equal to the equilibrium price, there will be of CDs and the price will .

Accepted Answer

If the price of a CD is equal to the equilibrium price, it means that the quantity demanded and the quantity supplied are equal. Therefore, there is neither a shortage nor a surplus of CDs, and the price will not change.

Question 12

If the price of a video rental is below its equilibrium price, the quantity supplied is than the quantity demanded. If the price of a video rental is above its equilibrium price, the quantity supplied is _ than the quantity demanded.

Accepted Answer

When the price is below equilibrium, quantity demanded exceeds quantity supplied. When the price is above equilibrium, quantity supplied exceeds quantity demanded.

Question 13

-The figure illustrates the market for pens. The equilibrium quantity is

Accepted Answer

The equilibrium quantity is where the supply and demand curves intersect, which is given as 500 pens a month.

Question 14

If the price of a video rental is below its equilibrium price, there will be a _ of video rentals and the price will .

Accepted Answer

When the price is below equilibrium, demand exceeds supply, creating a shortage, which typically causes the price to rise as consumers compete for the limited rentals.

Question 15

Assume that beef and pork are substitutes for consumers. There is a drought in the cattle grazing areas. The drought will shift the

Accepted Answer

The drought will reduce the supply of beef, leading to higher beef prices. As beef and pork are substitutes, consumers will demand more pork as an alternative, shifting the demand curve for pork rightward.

Question 16

If there is surplus of a good, then the quantity demanded _ _ the quantity supplied and the price will .

Accepted Answer

If there is a surplus of a good, it means that quantity supplied is greater than the quantity demanded. This leads to a situation where the sellers need to lower the price in order to sell their surplus. As a result, the price will fall. Therefore, the correct choice is D) is less than; fall.

Question 17

If the U.S. Surgeon General announces that increased wheat consumption could cause heightened anxiety levels among children and adults, what happens to the equilibrium price and quantity of shredded wheat?

Accepted Answer

The announcement by the U.S. Surgeon General will lead to a decrease in demand for shredded wheat due to the potential increase in anxiety levels among consumers. As a result, the equilibrium price and quantity of shredded wheat will both decrease. This is represented by a leftward shift of the demand curve, leading to a new equilibrium point with a lower price and quantity.

Question 18

-The table shows the demand and supply schedules for jeans.

Accepted Answer

At $40 a pair, if demand exceeds supply, there is a shortage, causing the price to rise as consumers compete to purchase the limited quantity available.

Question 19

For consumers, goods A and B are complementary goods. The cost of a resource used in the production of A decreases. As a result,

Accepted Answer

A decrease in the cost of producing A will increase its supply, lowering its price. As A and B are complements, the lower price of A will increase the demand for B, raising its price.

Question 20

When demand decreases and supply does not change, the equilibrium price and the equilibrium quantity .

Accepted Answer

When the demand for a product decreases while the supply remains unchanged, there will be an excess supply of the product which will lead to a decrease in the equilibrium price and quantity. This is because producers will have to lower the price of the product to encourage consumers to buy more, resulting in a lower quantity demanded. As a result, the equilibrium price and quantity will fall.

Quiz 3: Demand and Supply