Question 1

If Canada bans the importation of beluga caviar (the most prized of caviars)from the Caspian Sea, what happens in the market for caviar in Canada?
A)The supply curve shifted to the left.
B)The supply curve shifted to the right.
C)The demand curve shifted to the right.
D)The demand curve shifted to the left.

Accepted Answer

If Canada bans the importation of beluga caviar from the Caspian Sea, this reduces the available supply of beluga caviar in the Canadian market, causing a leftward shift in the supply curve. As a result, the price of beluga caviar in Canada will likely increase.

Question 2

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the
A)price of its product will be lower in the future than it is today.
B)price of its product will be higher in the future than it is today.
C)price of inputs will be lower in the future than they are today.
D)demand for the product will be lower in the future than it is today.

Accepted Answer

The answer of If a firm has an incentive to...

Question 3

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all.
a.An increase in the number of firms in the market
b.An increase in the current price of the product
c.A decrease in productivity
d.An increase in the expected future price of a product
e.A decrease in the price of an input

Accepted Answer

The answer of Indicate whether each of the following situations...

Question 4

Figure 3.2
 
-Refer to Figure 3.2.An increase in the price of substitutes in production would be represented by a movement from
A)A to B.
B)B to A.
C)S₁ to S₂.
D)S₂ to S₁.

Accepted Answer

An increase in the price of substitutes in production would lead to a decrease in supply. This means that the supply curve would shift leftward from S₂ to S₁.

Question 5

Which of the following would shift the supply curve for MP3 players to the right?
A)an increase in the price of a substitute in production
B)an increase in consumer income (assuming that all MP3 players are normal goods)
C)a decrease in the number of firms that produce MP3 players
D)a decrease in the price of an input used to produce MP3 players

Accepted Answer

A decrease in the price of an input used to produce MP3 players would result in lower production costs for firms, leading to an increase in supply and a rightward shift of the supply curve. None of the other choices would directly affect the supply of MP3 players.

Question 6

The popularity of digital cameras has enticed large discount stores like Walmart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?
A)The demand curve for digital photo printing services shifts to the right.
B)The demand curve for digital photo printing services shifts to the left.
C)The supply curve for digital photo printing services shifts to the right.
D)The supply curve for digital photo printing services shifts to the left.

Accepted Answer

The answer of The popularity of digital cameras has enticed...

Question 7

Alberta ranchers can raise either cattle or sheep on their land.Which of the following would cause the supply of sheep to increase?
A)an increase in the price of sheep
B)a decrease in the price of cattle
C)an increase in the demand for cattle
D)an increase in the price of sheep feed

Accepted Answer

If the price of cattle decreases, ranchers may choose to switch to raising sheep instead, causing an increase in the supply of sheep. None of the other choices would have a direct impact on the supply of sheep.

Question 8

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

Accepted Answer

The answer of From a supply perspective, what impact would...

Question 9

Which of the following is the correct way to describe equilibrium in a market?
A)At equilibrium, demand equals supply.
B)At equilibrium, quantity demanded equals quantity supplied.
C)At equilibrium, market forces no longer apply.
D)At equilibrium, scarcity is eliminated.

Accepted Answer

Equilibrium in a market occurs when the quantity demanded by consumers is equal to the quantity supplied by producers. This means that there is no shortage or surplus in the market and the price is stable. Both demand and supply are important in determining equilibrium, so option A is not as comprehensive. Market forces still apply at equilibrium, so option C is incorrect. Finally, scarcity is an inherent economic condition and is not eliminated at equilibrium, making option D incorrect.

Question 10

If a firm expects that the price of its product will be higher in the future than it is today
A)the firm will go out of business.
B)the firm has an incentive to increase supply now and decrease supply in the future.
C)the firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future.
D)the firm has an incentive to decrease supply now and increase supply in the future.

Accepted Answer

If the firm expects that the price of its product will be higher in the future than it is today, it has an incentive to decrease supply now and increase supply in the future. By decreasing supply now, it can create scarcity and increase demand, which can drive up prices in the short term. Then, when prices are expected to be higher in the future, the firm can increase supply to take advantage of the higher prices and maximize profits.

Question 11

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

This statement describes the law of supply, which states that as the price of a product increases, the quantity supplied by producers will increase as well. This is because producers are incentivized to supply more of a product at a higher price, as it increases their profits.

Question 12

What is the law of supply? What does this law imply about the shape of the supply curve?

Accepted Answer

The answer of What is the law of supply? What...

Question 13

A change in supply is represented by a shift of the supply curve.

Accepted Answer

A change in supply, such as a change in production costs or input prices, will shift the supply curve to the left or right as the quantity supplied at each price point changes.

Question 14

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

Accepted Answer

Quantity supplied is the specific amount of a good or service that a firm is willing and able to produce and sell at a given price. It is a fundamental concept in the study of economics and is essential for understanding how markets work.

Question 15

The supply curve for watches
A)shows the supply of watches consumers are willing and able to buy at any given price.
B)is downward sloping.
C)shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase.
D)shows the relationship between the price of watches and the quantity of watches supplied.

Accepted Answer

The supply curve for watches shows the relationship between the price of watches and the quantity of watches supplied. As the price of watches increases, suppliers are willing and able to produce and sell more watches. Therefore, the supply curve slopes upward from left to right.

Question 16

A decrease in the price of GPS systems will result in
A)a smaller quantity of GPS systems supplied.
B)a larger quantity of GPS systems supplied.
C)a decrease in the demand for GPS systems.
D)an increase in the supply of GPS systems.

Accepted Answer

The answer of A decrease in the price of GPS...

Question 17

Figure 3.2
 
-Refer to Figure 3.2.A decrease in the price of the product would be represented by a movement from
A)A to B.
B)B to A.
C)S₁ to S₂.
D)S₂ to S₁.

Accepted Answer

A decrease in the price of the product would result in an increase in quantity demanded, which would be represented by a movement along the demand curve from point B (higher price) to point A (lower price). The supply curve remains unchanged in this scenario, so choices C and D are not relevant. Movement along a curve represents a change in quantity demanded/supplied, while a shift in the curve represents a change in demand/supply. Therefore, choice A is also not relevant, as it implies a shift in the demand curve rather than a movement along it.

Question 18

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Accepted Answer

The answer of An increase in the number of firms...

Question 19

Figure 3.2
 
-Refer to Figure 3.2.An increase in the number of firms in the market would be represented by a movement from
A)A to B.
B)B to A.
C)S₁ to S₂.
D)S₂ to S₁.

Accepted Answer

An increase in the number of firms in the market would shift the supply curve to the right, indicating an increase in supply. This is represented by a movement from S₁ to S₂. Neither A nor B would be affected by a change in the number of firms in the market.

Question 20

Danielle Ocean pays for monthly pool maintenance for her home swimming pool.Last week the owner of the pool service informed Danielle that she will have to raise her monthly service fee because of increases in the price of pool chemicals.How is the market for pool maintenance services affected by this?
A)There is an increase in the supply of pool maintenance services.
B)There is a decrease in the demand for pool maintenance services.
C)There is a decrease in the quantity of pool maintenance services supplied.
D)There is a decrease in the supply of pool maintenance services.

Accepted Answer

When the price of pool chemicals increases, the cost of providing pool maintenance services also increases. As a result, some pool maintenance providers may choose to supply fewer services or even exit the market entirely, leading to a decrease in the supply of pool maintenance services. This increase in cost may also lead some consumers to either reduce the frequency of their pool maintenance or choose to do it themselves, resulting in a decrease in the quantity of pool maintenance services supplied. However, there is no indication that there is a decrease in demand for pool maintenance services, so option B is not correct. Therefore, option D is the best choice.

Quiz 3: Where Prices Come From: the Interaction of Demand and Supply

If Canada bans the importation of beluga caviar (the most prized of caviars) from the Caspian Sea, what happens in the market for caviar in Canada?

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the

Figure 3.2 -Refer to Figure 3.2.An increase in the price of substitutes in production would be represented by a movement from

Which of the following would shift the supply curve for MP3 players to the right?

The popularity of digital cameras has enticed large discount stores like Walmart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?

Alberta ranchers can raise either cattle or sheep on their land.Which of the following would cause the supply of sheep to increase?

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

Which of the following is the correct way to describe equilibrium in a market?

If a firm expects that the price of its product will be higher in the future than it is today

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

What is the law of supply? What does this law imply about the shape of the supply curve?

A change in supply is represented by a shift of the supply curve.

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

The supply curve for watches

A decrease in the price of GPS systems will result in

Figure 3.2 -Refer to Figure 3.2.A decrease in the price of the product would be represented by a movement from

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Figure 3.2 -Refer to Figure 3.2.An increase in the number of firms in the market would be represented by a movement from