Question 1

An increase in demand combined with no change in supply

Accepted Answer

With an increase in demand and no change in supply, there will be excess demand in the market, leading to a shortage of the product. This shortage will cause the price to rise until it reaches a new equilibrium point where the quantity demanded equals the quantity supplied. Therefore, the equilibrium price will rise.

Question 2

Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?

Accepted Answer

When used cars are an inferior good, a fall in income will increase the demand for them. This will shift the demand curve to the right, raising the equilibrium price and increasing the equilibrium quantity of used cars. A increase in the wage rate paid to used car salespeople would increase the cost of selling used cars, which could shift the supply curve to the left or have no effect on the equilibrium price and quantity, depending on the elasticity of supply.

Question 3

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

Question 4

If the price of a movie download falls, the rental rate of DVDs and the equilibrium quantity of DVDs rented .

Accepted Answer

If the price of a movie download falls, it becomes a substitute good for renting DVDs. As a result, the demand for DVDs falls and the equilibrium quantity of DVDs rented decreases, causing the rental rate of DVDs to also decrease.

Question 5

What will happen to the equilibrium price and equilibrium quantity of ice cream cones when consumersʹ incomes decrease?

Accepted Answer

When consumers' incomes decrease, the demand for normal goods decreases, leading to a decrease in both equilibrium price and quantity.

Question 6

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

Since A and B are complementary goods, a decrease in the cost of a resource used in the production of A would result in an increase in the supply of A. This increase in supply would cause the equilibrium price of A to fall. However, since A and B are complementary goods, the decrease in the price of A would increase the demand for B. This increase in demand for B would cause the equilibrium price of B to rise. Therefore, the equilibrium price of B will rise and the equilibrium price of A will fall.

Question 7

Suppose that people find out that eating more fish improves their health, leading them to increase their demand for fish. As a result, the equilibrium price of fish and the equilibrium quantity .

Accepted Answer

As demand for fish increases, the equilibrium price will rise, as suppliers will be willing to supply more fish at a higher price. The equilibrium quantity will also increase as suppliers will produce more fish to meet the increased demand. Therefore, the correct answer is (C) rises, increases.

Question 8

Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be

Accepted Answer

When the price of sugar increases, the demand for coffee decreases because they are complements. This decrease in demand leads to a decrease in the price of coffee.

Question 9

Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will

Accepted Answer

When demand for a product increases, both the equilibrium price and equilibrium quantity typically increase as a result of the higher demand.

Question 10

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

Accepted Answer

If good A is a normal good, an increase in income of the consumers will lead to an increase in demand for good A, leading to a rightward shift in the demand curve. This shift in the demand curve will lead to an increase in both the equilibrium price and quantity of good A.

Question 11

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

The increase in both equilibrium price and quantity suggests a rightward shift in the demand curve, indicating higher demand for bottled water.

Question 12

If the U.S. Surgeon General announced that increased grapefruit juice consumption could help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit juice?

Accepted Answer

With the announcement of increased grapefruit juice consumption preventing heart attacks, there will be a shift in the demand curve to the right. This will lead to an increase in both equilibrium price and quantity as consumers will be willing to purchase more grapefruit juice at a higher price. Therefore, the correct answer is D.

Question 13

A decrease in the demand for beef because of concerns over cholesterol results in

Accepted Answer

A decrease in demand for beef would lead to a surplus of beef on the market, which would put downward pressure on beef prices. This is because producers would need to lower the price to encourage consumers to buy the excess beef that is now available. Therefore, the correct choice is B.

Question 14

Long-distance travel by bus is an inferior good. As peopleʹs incomes increase and other things remain the same, you predict that the

Accepted Answer

As an inferior good, the demand for long-distance travel by bus decreases as people's incomes increase, leading to a fall in price.

Question 15

Which of the following raises the price of a used car and increases the equilibrium quantity sold?

Accepted Answer

A new 8 percent federal excise tax on new car purchases would make new cars more expensive, leading consumers to consider used cars instead, thus increasing the demand for used cars, raising their price and equilibrium quantity sold.

Question 16

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

Accepted Answer

Since coffee and sugar are complements, a decrease in the supply of coffee will decrease the demand for sugar, resulting in a leftward shift of the demand curve for sugar. This decrease in demand for sugar means that the price of sugar will decrease. Therefore, the correct choice is C.

Question 17

Until 2007, the price of sport utility vehicles SUVs) rose and each year more were purchased. This experience suggests that

Accepted Answer

The fact that the price of SUVs rose and more were purchased suggests that there was a rightward shift of the demand curve for SUVs, meaning that consumers were willing to pay more for SUVs at each quantity demanded.

Question 18

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

Accepted Answer

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

Question 19

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

If the U.S. Surgeon General announces that increased wheat consumption could cause heightened anxiety levels among children and adults, it would decrease the demand for shredded wheat, leading to a leftward shift in the demand curve. As a result, the equilibrium price and quantity of shredded wheat will decrease. Therefore, choice D is the correct answer.

Question 20

If the demand for hamburgers decreases, the equilibrium price

Accepted Answer

When demand decreases, the quantity demanded at each price level falls. This means that the market is left with an excess supply of hamburgers, which creates downward pressure on price. Therefore, the equilibrium price falls while the equilibrium quantity decreases.

Quiz 3: Demand and Supply