Question 1

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

Accepted Answer

The increase in both the price and quantity of SUVs purchased suggests a rightward shift of the demand curve for SUVs, indicating an increase in demand. This is because, according to the law of demand, if demand increases while supply remains constant, both the price and quantity sold will increase.

Question 2

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

Accepted Answer

When the supply curve of coffee shifts leftward due to poor weather, it means there is less coffee available, which will likely increase its price and decrease its consumption. Since coffee and sugar are complements, the demand for sugar will decrease as people buy less coffee, leading to a decrease in the price of sugar.

Question 3

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 would likely lead to a decrease in demand for shredded wheat as consumers try to avoid the potential negative health effects. This decrease in demand would cause both the equilibrium price and quantity of shredded wheat to fall.

Question 4

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

When the cost of a resource used in the production of good A decreases, the supply of good A increases, leading to a decrease in the price of A. Since goods A and B are complements, a decrease in the price of A leads to an increase in demand for both A and B, raising the equilibrium price of B.

Question 5

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, typically both the equilibrium price and quantity increase as suppliers adjust to meet the higher demand.

Question 6

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

Accepted Answer

A fall in income, if used cars are considered an inferior good, would lead to an increase in demand for used cars as consumers shift away from purchasing new, more expensive cars. This increased demand would raise the equilibrium price and increase the equilibrium quantity of used cars.

Question 7

Between 2001 and 2015, equilibrium college tuition rose from $15,000 to $27,000 and equilibrium enrollment increased from 16 million to 21 million students. These changes could be the result of

Accepted Answer

An increase in demand for college education would lead to both higher tuition prices and increased enrollment, as more individuals are willing to pay for and seek higher education, shifting the demand curve to the right. This results in a new equilibrium with both higher prices and quantities.

Question 8

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

The announcement would likely increase demand for grapefruit juice as people try to prevent heart attacks, leading to a higher equilibrium price and quantity as suppliers respond to the increased demand.

Question 9

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 two goods are complements, an increase in the price of one leads to a decrease in the demand for the other. Since sugar and coffee are complements, an increase in the price of sugar will decrease the demand for coffee, potentially leading to a decrease in its price.

Question 10

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

Accepted Answer

As people's incomes increase, the demand for inferior goods like long-distance bus travel decreases, leading to a potential decrease in price.

Question 11

An increase in demand combined with no change in supply

Accepted Answer

When demand increases but supply remains constant, the equilibrium price rises because there are more buyers competing for the same amount of goods.

Question 12

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

Accepted Answer

When the price of a movie download falls, it becomes a more attractive option compared to renting DVDs, leading to a decrease in demand for DVD rentals. This results in a lower rental rate (price) and a decrease in the equilibrium quantity of DVDs rented.

Question 13

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

Accepted Answer

A discovery that milk causes diabetes could lead to a decrease in demand for milk, as consumers may choose to avoid it due to health concerns. This decreased demand could cause the price of milk to fall.

Question 14

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

A rightward shift of the demand curve indicates an increase in demand at every price level, which can lead to both a higher equilibrium price and a higher equilibrium quantity, as described in the scenario.

Question 15

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

Accepted Answer

When consumers' incomes decrease, the demand for normal goods (like ice cream cones, assuming they are considered a normal good) decreases, leading to a lower equilibrium price and quantity.

Question 16

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, increasing demand for used cars, thus raising their price and equilibrium quantity sold.

Question 17

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

When demand for a good increases, the equilibrium price and quantity of that good both increase. This is because higher demand leads to higher prices as consumers are willing to pay more, and suppliers increase production to meet the higher demand, resulting in a higher quantity sold.

Question 18

If the demand for hamburgers decreases, the equilibrium price

Accepted Answer

When the demand for a product decreases, both the equilibrium price and the equilibrium quantity decrease. This is because lower demand leads to a surplus at the original price, prompting sellers to lower prices and reduce production.

Question 19

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

Accepted Answer

For a normal good, when income increases, demand for the good increases, leading to a higher equilibrium price and quantity.

Question 20

In March, the quantity of orange juice sold in the town of Jackson was 3,000 cartons and the price $3. In May, the quantity of orange juice sold in the town of Jackson was 3,500 cartons and the price was $3.20. This change in the price and quantity sold could have been the result of

Accepted Answer

BCThe increase in both price and quantity sold suggests a shift in demand, which could be caused by factors like a positive medical study (A), reduced discounts (B), or a supply shock increasing prices and, indirectly, perceived value (C). A warm winter increasing supply (D) would typically lower prices, not raise them, making it an unlikely cause.

Quiz 3: Demand and Supply