Question 1

Harvey Rabbitt pays for monthly cable TV service.Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area.How is the market for cable TV services affected by this?

Accepted Answer

The entry of new cable companies increases the number of suppliers in the market, which leads to an increase in the supply of cable TV service. This increase in supply may lead to lower prices and more options for consumers, which could increase demand. However, the information provided in the question only mentions a decrease in price, which suggests that the decrease is due to an increase in supply rather than an increase in demand.

Question 2

If the United States placed an embargo on Swedish products, what would happen in the U.S.market for Swedish furniture?

Accepted Answer

An embargo on Swedish products would restrict or limit the quantity of Swedish furniture available in the US market, leading to a decrease in the supply of Swedish furniture. As a result, the supply curve would shift to the left.

Question 3

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

Accepted Answer

A change in supply is caused by a shift in the entire supply curve to the left or right, indicating a change in the quantity of goods or services that suppliers are willing and able to produce and sell at a given price level. This can be caused by various factors such as changes in technology, input prices, regulations, taxes, or producer expectations.

Question 4

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

Accepted Answer

An increase in the price of an input used to produce MP3 players would increase the cost of production for MP3 players, leading to a decrease in supply and a leftward shift of the supply curve. The other choices would either have no effect or a positive effect on the supply of MP3 players.

Question 5

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 6

A positive technological change will cause the supply of a good to increase.

Accepted Answer

A positive technological change will increase the efficiency of production, which will lower the cost of producing the good. This will incentivize firms to produce more of the good, thus increasing the supply.

Question 7

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

Accepted Answer

If the price of cattle decreases, ranchers may choose to raise more sheep instead. This leads to an increase in the supply of sheep. None of the other options provided would directly cause an increase in the supply of sheep.

Question 8

An increase in the price of off-road vehicles will result in

Accepted Answer

The answer of An increase in the price of off-road...

Question 9

Vineyards can grow either red wine grapes or white wine grapes on their land.Which of the following would cause the supply of red wine grapes to decrease?

Accepted Answer

If there is an increase in the price of white wine grapes, vineyards may choose to plant more white wine grapes to take advantage of the higher price. This would result in a decrease in the supply of red wine grapes as vineyards allocate more of their land to white wine grape production.

Question 10

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

Accepted Answer

The entry of large discount stores into the digital photo printing market increases the availability of these services, shifting the supply curve to the right.

Question 11

Which of the following would cause an increase in the supply of peanut butter?

Accepted Answer

An increase in the number of firms that produce peanut butter would increase the supply of peanut butter as there would be more producers able and willing to sell it in the market.

Question 12

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

Accepted Answer

According to the law of supply, as the price of a product increases, the quantity supplied of that product also increases.

Question 13

An increase in the price of pineapples will result in

Accepted Answer

The answer of An increase in the price of pineapples...

Question 14

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

Accepted Answer

If the firm expects that the price of its product will be higher in the future, it has an incentive to decrease supply now and increase supply in the future in order to maximize profits. By decreasing supply now, the firm can create scarcity and drive up the price, while increasing supply in the future can take advantage of the higher prices. This is known as "backward bending supply curve" behavior.

Question 15

The supply curve for watches

Accepted Answer

The supply curve for watches shows us how much of that good producers are willing to supply at each given price. It is a relationship between the quantity of watches supplied and the price of watches, and it is represented by a downward-sloping curve.

Question 16

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

Accepted Answer

A decrease in the price of an input used to produce MP3 players would lower the cost of production for firms, leading to an increase in the quantity supplied at each price level and thus a rightward shift of the supply curve. Choice A would not affect the supply of MP3 players, but rather the supply of a substitute in production. Choice B would affect the demand for MP3 players, not the supply. Choice C would decrease the number of firms supplying MP3 players, leading to a leftward shift of the supply curve.

Question 17

A decrease in the price of GPS systems will result in

Accepted Answer

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

Question 18

In February, market analysts predict that the price of titanium will rise in March.What happens in the titanium market in February, holding everything else constant?

Accepted Answer

The answer of In February, market analysts predict that the...

Question 19

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

Accepted Answer

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

Question 20

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 amount of a good or service that a firm is willing and able to supply at a given price, so the statement is true.

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