Question 1

An increase in demand coupled with an increase in supply results in a(n)

Accepted Answer

An increase in both demand and supply will lead to an increase in equilibrium quantity, as both factors are increasing the amount of the good consumers are willing and able to buy. However, the effect on equilibrium price is ambiguous, as it will depend on the relative magnitude of the shifts in demand and supply. If the increase in demand is larger than the increase in supply, then price would increase. If the increase in supply is larger than the increase in demand, then price would decrease. Therefore, the effect on equilibrium price is ambiguous.

Question 2

All of the following would be examples of a spot markets except one.Which would not be a spot market?

Accepted Answer

The answer of All of the following would be examples...

Question 3

Given the demand curve for laptop computers,if the government began to encourage households to own a computer by providing a subsidy to each family that buys one,

Accepted Answer

The answer of Given the demand curve for laptop computers,if...

Question 4

An increase in demand causes

Accepted Answer

An increase in demand will lead to a shift in the demand curve to the right. This will cause the equilibrium price and equilibrium quantity to increase. This is because there is now more demand for the product, and suppliers will need to produce more at a higher price in order to meet this demand. A surplus or excess supply would occur if there was too much supply relative to the demand, which is not the case when there is an increase in demand. An improvement in technology is not related to changes in demand and supply, and therefore is not the correct choice.

Question 5

The most likely reason that oil prices spiked during 2007-2008 was because

Accepted Answer

The answer of The most likely reason that oil prices...

Question 6

Which of the following is the best definition of a spot market?

Accepted Answer

A spot market is a market in which a good is bought or sold for immediate delivery or consumption. It is also known as a cash market, as opposed to a futures market where goods are traded with delivery at a future date. Therefore, option D is the correct definition of a spot market.

Question 7

The rapid rise in oil prices during 2007-2008 can be explained by noting the fact that

Accepted Answer

The rapid rise in oil prices during 2007-2008 can be explained by the fact that the demand for oil increased more rapidly than the supply for oil increased. This was due to factors such as strong economic growth in developing countries, particularly China and India, and geopolitical tensions in oil-producing regions. As demand outstripped supply, prices increased rapidly.

Question 8

A speculator is someone who

Accepted Answer

A speculator is someone who buys a good for a low price, hoping to sell it in the future for a higher price. They take on risk in the hopes of making a profit.

Question 9

Which of the following would be the best example of a spot market?

Accepted Answer

A spot market is a market where goods are sold for immediate delivery or payment. The market for bananas can be considered a spot market as they are perishable goods that are sold and exchanged immediately. The other options involve goods that may be held for a longer period of time before they are sold.

Question 10

A decrease in demand coupled with a decrease in supply results in a(n)

Accepted Answer

When both demand and supply decrease, the equilibrium quantity will definitely decrease, but the effect on equilibrium price is ambiguous because it depends on the relative magnitudes of the shifts in demand and supply.

Question 11

Characterizing a market involves

Accepted Answer

The answer of Characterizing a market involves
...

Question 12

Evan left a job in which he was earning $75,000 a year for one he liked better but pays only $50,000 a year.Around the same time as the job switch,Evan needed to buy a new car.Had he kept his old job he would have bought a new car but instead he was forced to buy a used car.Therefore

Accepted Answer

Since Evan chose to buy a used car after switching to a job with a lower salary, it suggests that used cars are inferior goods for him. If new cars were normal goods for him, he would have still opted to buy a new car even after switching to a job with a lower salary. Therefore, option E is the best choice.

Question 13

A decrease in demand and an increase in supply results in a(n)

Accepted Answer

When demand decreases, it tends to lower both equilibrium price and quantity. When supply increases, it tends to lower equilibrium price but increase equilibrium quantity. The combined effect is a definite decrease in equilibrium price, but the effect on equilibrium quantity is ambiguous as it depends on the relative magnitudes of the shifts in demand and supply.

Question 14

An increase in demand coupled with a decrease in supply results in a(n)

Accepted Answer

If demand increases and supply decreases simultaneously, it will lead to a shortage in the market. This will cause the equilibrium price to rise as consumers will compete to buy the limited quantity available. However, the effect on equilibrium quantity is ambiguous as it will depend on how much the demand and supply curves have shifted.

Question 15

Defining a market involves deciding how to view

Accepted Answer

Defining a market involves considering the thing being traded (such as goods, services, or resources), the decision makers (such as buyers and sellers), and the trading environment (such as laws and regulations, competition, and market dynamics). It's not just about supply and demand or the presence of shortages or surpluses. Nor is it only about normative analysis, which involves making subjective value judgments about what ought to be rather than describing what is.

Question 16

If Greg uses a special glue to make model planes that he sells and the price of his model planes increases,then one would expect that the equilibrium price of the special glue would _______ and the equilibrium quantity would _________.

Accepted Answer

When the price of model planes increases, Greg is likely to produce more planes to maximize profit, increasing the demand for special glue. This increased demand will raise the equilibrium price and quantity of the glue.

Question 17

The three-step procedure for economic analysis

Accepted Answer

The three-step procedure for economic analysis typically begins with characterizing the market, which involves understanding the nature of the market, the players involved, and the interactions between them.

Question 18

One of the three Key Steps of economic analysis is

Accepted Answer

Describing the conditions necessary for equilibrium and a method for determining that equilibrium is one of the three key steps of economic analysis. The other two steps are identifying the demanders and suppliers and examining how they interact, and analyzing how changes in market conditions can affect the equilibrium.

Quiz 3: Supply and Demand