Question 1

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 2

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, it has an incentive to decrease supply now and increase supply in the future. By decreasing supply now, the firm can create a scarcity effect and potentially drive up the price, while increasing supply in the future will allow the firm to take advantage of the higher price. This strategy is called supply-side intertemporal price discrimination.

Question 3

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 4

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, the quantity of watches supplied by firms also increases. This is because firms are willing to produce more watches as they can make a larger profit at a higher price. The supply curve is upward sloping, not downward sloping as stated in choice B. Choice A is incorrect because the supply curve does not show the willingness and ability of consumers to buy watches, but rather the willingness and ability of firms to produce watches. Choice C is incorrect because it suggests that the supply curve shows a relationship between firms' supply decisions and consumers' demand decisions, which is not the case.

Question 5

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 price would lead to an increase in quantity demanded, resulting in a movement along the demand curve from point B to A.

Question 6

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 an...

Question 7

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

Accepted Answer

A change in supply can be caused by factors such as technology, input prices, and taxes, and it will cause a shift of the entire supply curve either to the right (increase in supply) or to the left (decrease in supply).

Question 8

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 9

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 raise more sheep instead to make up for the lost revenue from cattle. This would result in an increase in the supply of sheep. None of the other choices would directly impact the supply of sheep in this scenario.

Question 10

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 quantity of a good or service that a firm is able and willing to produce and sell at a given price.

Question 11

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?
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

The ban on importation of beluga caviar from the Caspian Sea reduced the available supply of caviar in the U.S., causing the supply curve to shift to the left. This typically results in an increase in price and a decrease in quantity demanded.

Question 12

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 13

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 lower production costs for firms, making it more profitable to produce and sell MP3 players. This would lead to an increase in the quantity supplied at each price level, shifting the supply curve to the right. The other choices would not directly affect the supply curve for MP3 players.

Question 14

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?
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 15

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 result in an increase in supply, shifting the supply curve to the right from S1 to S2. This would result in a lower equilibrium price (P2) and a higher equilibrium quantity (Q2) as shown in the diagram. Therefore, the correct choice is C, S1 to S2.

Question 16

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 17

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, an increase in the price of a product will lead to an increase in the quantity supplied, as producers are incentivized to produce more at higher prices.

Question 18

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 reduce the supply of the good, hence shift the supply curve to the left (from S1 to S2). Thus, the correct answer is D.

Question 19

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, resulting in neither a shortage nor a surplus of goods. This is better described by B. A is incomplete, as it does not specify a quantity. C and D are incorrect statements.

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 he will have to raise his 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

The increase in the price of pool chemicals will increase the cost of production for the pool maintenance service provider. As a result, the supply of pool maintenance services will decrease, as it becomes less profitable for the provider to offer the service at the same price. Therefore, the owner of the pool service is forced to raise his monthly service fee to cover his increased costs. This means that there will be a decrease in the supply of pool maintenance services.

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

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

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

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

The supply curve for watches

Figure 3-2 -Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from

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

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

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

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

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

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?

A decrease in the price of GPS systems will result in

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 Wal-Mart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?

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

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

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 is the correct way to describe equilibrium in a market?