Question 1

Select the phrase that correctly completes the following statement."A decrease in the expected future price caused an increase in the supply of smartphones.As a result

Accepted Answer

According to the law of supply, a decrease in expected future prices causes an increase in supply. This means that smartphone producers will be more willing to supply smartphones at the current price in order to avoid selling them at a lower price in the future. As a result, the supply curve will shift to the right. This will lower the price of smartphones, but also increase the quantity demanded (as per the law of demand). Therefore, choice C is the correct answer.

Question 2

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result

Accepted Answer

A decrease in the number of manufacturers causes a decrease in the supply of sailboats. According to the law of supply, a decrease in supply would cause an increase in price and a decrease in quantity demanded. Therefore, the correct statement is "the price of sailboats increased and the quantity demanded of sailboats decreased." Option A is incorrect because an increase in price would lead to a decrease in demand, not vice versa. Option B is incorrect because a decrease in supply would decrease the equilibrium quantity, not increase it. Option D is incorrect because an increase in price would not cause an increase in supply, rather it would cause a decrease in quantity supplied.

Question 3

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.As a result

Accepted Answer

The answer of Assume that both the demand curve and...

Question 4

An increase in the equilibrium price for a product will result

Accepted Answer

An increase in equilibrium price occurs when there is a decrease in supply and an increase in demand for the product. This is because the decrease in supply means there is less of the product available, while the increase in demand means there is more demand for the product. This leads to a situation where the market price for the product must increase in order to balance supply and demand, resulting in an increase in equilibrium price.

Question 5

Which of the following statements is true?

Accepted Answer

When demand decreases, equilibrium price decreases. This decrease in price then results in a decrease in quantity supplied. This is according to the law of demand which states that as price decreases, quantity demanded increases and as price increases quantity demanded decreases. Similarly, according to the law of supply, as price increases, quantity supplied increases and as price decreases, quantity supplied decreases. Therefore, a decrease in demand causes a decrease in equilibrium price and a decrease in equilibrium quantity supplied. Choice A is incorrect because a decrease in demand causes a decrease in equilibrium price and a decrease in equilibrium quantity supplied, not a decrease in supply. Choice C is incorrect because an increase in both demand and supply causes an increase in equilibrium quantity but the equilibrium price depends on the magnitude of the two changes. Choice D is incorrect because a decrease in demand and an increase in supply both lead to a decrease in equilibrium price but the change in equilibrium quantity depends on the size of the changes in demand and supply.

Question 6

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
...

Question 7

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

Accepted Answer

The price of a product typically decreases if the demand for it decreases while its supply increases, as this creates a surplus of the product in the market, leading to lower prices to stimulate sales.

Question 8

Suppose consumer preference for beef starts to rise while the cost of raising beef continues to rise.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

The answer of Suppose consumer preference for beef starts to...

Question 9

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

Accepted Answer

The answer of Assume that both the demand curve and...

Question 10

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery,and fewer doctors decide to enter the field of joint replacement surgery?

Accepted Answer

If insurance companies start covering a smaller portion of the cost, fewer people will be able to afford knee replacement surgery. As a result, demand for the surgery will decrease. If fewer doctors enter the field, the supply of joint replacement surgeries will also decrease. Therefore, both the demand and supply curves will shift left, resulting in a decrease in both demand and supply.

Question 11

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts more than the demand curve.As a result

Accepted Answer

When the demand curve shifts to the left, it indicates a decrease in demand, and when the supply curve shifts to the right more significantly, it indicates an increase in supply. The larger shift in supply compared to demand will lead to a decrease in the equilibrium price due to excess supply. The equilibrium quantity will increase because the increase in supply outweighs the decrease in demand.

Question 12

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to ________ and the equilibrium quantity of the smart phones to ________.

Accepted Answer

According to the law of supply, an increase in supply results in a decrease in price and an increase in quantity. Therefore, if Google increases the supply of smart phones, the equilibrium price would decrease and the equilibrium quantity would increase. Choice C is the only one that reflects this relationship.

Question 13

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts less than the demand curve.As a result

Accepted Answer

When the demand curve shifts to the left, it indicates a decrease in demand, and when the supply curve shifts to the right, it indicates an increase in supply. However, since the demand curve shifts more than the supply curve, the dominant effect is a decrease in both the equilibrium price and quantity of DVD players.

Question 14

Digital video recorders (DVRs)were introduced to the market in 1999,and new technology has allowed for the cost of manufacturing the recorders to decline significantly since the initial introduction.How did this change in technology affect the market for DVRs?

Accepted Answer

The new technology allowed for a more efficient manufacturing process, which increased the supply of DVRs and lowered the cost of production. As a result, the lower production costs led to a decrease in the price of DVRs. Therefore, choice A is the correct answer.

Question 15

Which of the following would cause a decrease in the equilibrium price and decrease in the equilibrium quantity of papayas?

Accepted Answer

The answer of Which of the following would cause a...

Question 16

Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?

Accepted Answer

A decrease in supply would cause a decrease in the equilibrium quantity and an increase in the equilibrium price of watermelon. This is because with less supply available, consumers would be willing to pay more for the same quantity of watermelon, leading to an increase in price. However, the decrease in supply would also decrease the quantity available, leading to a decrease in the equilibrium quantity.

Question 17

"Because Coke and Pepsi are substitutes,a decrease in the price of Pepsi will cause the demand for Coke to decrease.This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement?

Accepted Answer

The statement is false because a change in the price of Coke would not change the demand for Coke; it would change the quantity demanded. The demand curve itself shifts due to factors other than the good's own price, such as changes in consumer income, tastes, or prices of related goods. Changes in the good's own price move the quantity demanded along the demand curve, not the position of the demand curve.

Question 18

An increase in the equilibrium quantity of a product will result

Accepted Answer

An increase in the equilibrium quantity of a product can occur when there is an increase in both supply and demand for the product. This is because when both supply and demand increase, the quantity of the product that both buyers and sellers are willing and able to trade at the given price increases, resulting in a new equilibrium quantity that is higher than the previous one.

Question 19

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Accepted Answer

If insurance companies cover a smaller portion of the cost of knee replacement surgery, patients will have to pay more out-of-pocket. This makes the surgery less affordable for some, leading to a decrease in demand. The supply curve, which represents the willingness and ability of producers to offer goods at different prices, would not be directly affected by this change in insurance coverage.

Question 20

"The price of digital cameras fell because of improvements in production technology.As a result,the demand for non-digital cameras decreased.This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

Accepted Answer

While the price of digital cameras falling could decrease the demand for non-digital cameras, the statement incorrectly assumes that the price of non-digital cameras falling would decrease the demand for those cameras. In fact, a decrease in price could potentially increase demand. Additionally, the statement oversimplifies the relationship between production technology and price, and does not take into account factors such as competition and consumer preferences.

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

Select the phrase that correctly completes the following statement."A decrease in the expected future price caused an increase in the supply of smartphones.As a result

Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.As a result

An increase in the equilibrium price for a product will result

Which of the following statements is true?

Which of the following statements is true?

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

Suppose consumer preference for beef starts to rise while the cost of raising beef continues to rise.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery,and fewer doctors decide to enter the field of joint replacement surgery?

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts more than the demand curve.As a result

All else equal,the desired increase in the supply of smart phones for Google would cause the equilibrium price of the smart phones to and the equilibrium quantity of the smart phones to .

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts less than the demand curve.As a result

Digital video recorders (DVRs) were introduced to the market in 1999,and new technology has allowed for the cost of manufacturing the recorders to decline significantly since the initial introduction.How did this change in technology affect the market for DVRs?

Which of the following would cause a decrease in the equilibrium price and decrease in the equilibrium quantity of papayas?

Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?

An increase in the equilibrium quantity of a product will result

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?