Question 1

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

Accepted Answer

An increase in the price of tapioca flour, a key ingredient, raises production costs, leading to a decrease in the supply of bubble tea.

Question 2

In the market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even larger increase in the demand for online tutors. These events will cause the equilibrium price of online tutoring to _____ and the equilibrium quantity to _____.

Accepted Answer

When both supply and demand increase, the equilibrium quantity will rise. However, if the increase in demand is larger than the increase in supply, the equilibrium price will also rise.

Question 3

Suppose that a major drought causes a 30 percent reduction in the peanut harvest. If there is no change in demand, this event would cause a _____ at the original equilibrium price, and the equilibrium price will therefore _____ and the equilibrium quantity will _____.

Accepted Answer

A reduction in supply due to the drought will cause a shortage at the original equilibrium price, leading to an increase in the equilibrium price and a decrease in the equilibrium quantity.

Question 4

An institution that enables buyers and sellers to interact and transact with one another is known as a(n):

Accepted Answer

A market is a platform where buyers and sellers come together to exchange goods and services. It can be physical, like a street market, or digital, like an e-commerce website. In a market, supply and demand determine the prices of goods and services, and buyers and sellers negotiate the terms of the exchange. Other options mentioned do not have the same characteristics of a marketplace.

Question 5

Another way of referring to a market economy is as a:

Accepted Answer

A market economy is often referred to as a price system because prices are determined by supply and demand, guiding the allocation of resources.

Question 6

If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n):

Accepted Answer

If sellers expect higher prices in the future, they may hold onto their cars now to sell them later at a higher price, leading to a decrease in current supply, which is represented by a leftward shift of the supply curve.

Question 7

In the market for Chinese take-out, suppose that the price of Sushi take-out, a substitute, decreases in price. What will happen to the demand for Chinese take-out?

Accepted Answer

When the price of a substitute good (Sushi take-out) decreases, consumers are likely to switch to the cheaper option, leading to a decrease in demand for Chinese take-out.

Question 8

When a large factory closed in the town of Greenville, income fell for many residents. As a result, demand for normal goods would _____ and demand for inferior goods would _____.

Accepted Answer

When income falls, demand for normal goods decreases because people have less money to spend. Conversely, demand for inferior goods increases as people look for cheaper alternatives.

Question 9

A market exists when:

Accepted Answer

A market exists when people exchange money for goods and services. This exchange creates a demand for goods and services, which in turn leads to the production of those goods and services by suppliers. The price of the goods and services is determined by the forces of supply and demand.

Question 10

The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a _____ of _____ units.

Accepted Answer

The answer of The graph represents the market for water...

Question 11

For any given product, _____ is determined by what the market will bear.

Accepted Answer

The price of a product is ultimately determined by what the market is willing to pay for it. This is influenced by factors such as supply and demand, production costs, and the perceived value of the product to the consumer. The quantity and quality of the product can also impact the price, but ultimately it is the market that sets the price.

Question 12

Suppose there are three massage therapists, with a supply schedule that indicates their willingness to supply massages at various prices. What is the market quantity of massages supplied at $60, and does this supply schedule follow the law of supply? $$\begin{array} { | c | c | c | c | } 
\hline \text { Price } & \text { Tracey } & \text { Kira } & \text { Peter } \
\hline \$ 40 & 5 & 10 & 3 \
\hline \$ 60 & 8 & 15 & 6 \
\hline \$ 80 & 13 & 20 & 9 \
\hline
\end{array}$$

Accepted Answer

The market quantity of massages supplied at $60 is 29 (8 from Tracey, 15 from Kira, and 6 from Peter). The supply schedule follows the law of supply, as the quantity supplied increases with the price.

Question 13

Which factor would NOT cause the demand curve for green tea to shift to the right?

Accepted Answer

A decrease in the price of green tea would cause a movement along the demand curve, not a shift to the right.

Question 14

The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _____ and result in the equilibrium price of solar panel installations to _____.

Accepted Answer

Technological advances and subsidies make it cheaper and more efficient to produce solar panels, increasing supply, which shifts the supply curve to the right and leads to a decrease in the equilibrium price.

Question 15

Which statement is a CORRECT description of the law of demand?

Accepted Answer

As prices of a good fall, the quantity demanded of that good rises.

Question 16

Which statement is NOT true when a market is in equilibrium?

Accepted Answer

In market equilibrium, there is no surplus or shortage, meaning sellers do not have leftover inventory; they sell exactly what is demanded.

Question 17

In the graph, an increase in quantity demanded would be represented by a change from point a to point _____, while a decrease in demand would be represented by a change from point d to point _____.

Accepted Answer

The answer of In the graph, an increase in quantity...

Question 18

Which item is NOT an example of a market?

Accepted Answer

The Internal Revenue Service (IRS) is a government agency responsible for tax collection and tax law enforcement, not a platform for buying and selling goods or services.

Question 19

The supply curve represents the _____ price at which a firm is willing to _____.

Accepted Answer

The supply curve represents the minimum price at which a firm is willing to sell various quantities of a good, reflecting the lowest price at which sellers are willing to offer their goods for sale.

Question 20

Which factor would shift the supply of skateboards to the right?

Accepted Answer

A large reduction in the price of wheels, a key input in skateboard production, would lower production costs, encouraging producers to supply more skateboards at each price level, thus shifting the supply curve to the right.

Quiz 3: Supply and Demand

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

In the market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even larger increase in the demand for online tutors. These events will cause the equilibrium price of online tutoring to _ and the equilibrium quantity to _.

Suppose that a major drought causes a 30 percent reduction in the peanut harvest. If there is no change in demand, this event would cause a ___ at the original equilibrium price, and the equilibrium price will therefore _ and the equilibrium quantity will ___.

An institution that enables buyers and sellers to interact and transact with one another is known as a(n) :

Another way of referring to a market economy is as a:

If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n) :

In the market for Chinese take-out, suppose that the price of Sushi take-out, a substitute, decreases in price. What will happen to the demand for Chinese take-out?

When a large factory closed in the town of Greenville, income fell for many residents. As a result, demand for normal goods would _ and demand for inferior goods would _.

A market exists when:

The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a _ of _ units.

For any given product, _____ is determined by what the market will bear.

Which factor would NOT cause the demand curve for green tea to shift to the right?

The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _ and result in the equilibrium price of solar panel installations to _.

Which statement is a CORRECT description of the law of demand?

Which statement is NOT true when a market is in equilibrium?

In the graph, an increase in quantity demanded would be represented by a change from point a to point _, while a decrease in demand would be represented by a change from point d to point _.

Which item is NOT an example of a market?

The supply curve represents the _ price at which a firm is willing to _.

Which factor would shift the supply of skateboards to the right?