Question 1

Article Summary
World Tourism Day 2017,with its official celebration on September 27 in Qatar,was focused on sustainable tourism.Established by the United Nations World Tourism Organization (UNWTO),World Tourism Day has been celebrated since 1980,and the theme for 2017 was the "International Year of Sustainable Tourism for Development." The event was designed with two sessions: one focused on 'Tourism as a driver of economic growth',and the other 'Tourism and the Planet: committed to a greener future'.With over 1.2 billion travellers crossing international borders in 2016,and that number expected to grow to 1.8 billion by 2030,sustainable tourism is viewed by many as an important catalyst for diversification and economic growth.
Source: Vicky Karantzavelou," World Tourism Day 2017 celebrated on the theme Sustainable Tourism - a Tool for Development," traveldailynews.com,August 14,2017
-Refer to the Article Summary.Assume that more global tourist destinations begin to offer and publicize sustainable tourism to American tourists and,due to the growing number of millennials attracted to sustainability,more Americans choose to embrace sustainable tourism.All else equal,what will happen to the equilibrium price and equilibrium quantity in the market for sustainable tourism as a result of these two factors?

Accepted Answer

The increase in demand from American tourists, attracted by sustainability, alongside more destinations offering sustainable tourism, suggests both an increase in demand and supply. Typically, an increase in demand would increase both price and quantity, while an increase in supply would decrease price but increase quantity. The combined effect on price is uncertain (it could increase or decrease depending on the relative shifts in demand and supply), but the quantity is expected to increase as both shifts suggest more transactions in the market for sustainable tourism.

Question 2

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall.Holding everything else constant,how would this affect the market for wheat (a substitute for corn)?

Accepted Answer

When the price of corn falls due to a positive technological change, consumers are likely to buy more corn instead of its substitutes like wheat. This leads to a decrease in the demand for wheat, causing the equilibrium price of wheat to decrease as well.

Question 3

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 watermelons due to scarcity. A decrease in demand will decrease both the equilibrium price and quantity. An increase in demand and supply will lead to an increase in the equilibrium quantity but a change in the equilibrium price will depend on the comparative increase in demand and supply. Thus, B is the only option that will cause an increase in equilibrium price and a decrease in equilibrium quantity.

Question 4

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

Accepted Answer

The increase in consumer preference for organic corn would shift the demand curve to the right, leading to a higher equilibrium price. The rise in the cost of growing organic corn would shift the supply curve to the left, also contributing to a higher equilibrium price. The effect on equilibrium quantity is uncertain without knowing the relative magnitudes of the shifts in supply and demand; hence, the equilibrium quantity could increase or decrease.

Question 5

"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 6

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 7

In recent years,the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen,with the decrease in supply being larger than the decrease in demand.In this situation,the equilibrium price of orange juice will have ________ and the equilibrium quantity of orange juice will have ________.

Accepted Answer

When both demand and supply decrease, but the decrease in supply is larger than the decrease in demand, the equilibrium price increases due to the scarcity of supply. The equilibrium quantity decreases because the overall market size has shrunk with the decrease in both demand and supply.

Question 8

Suppose a drought resulted in a major reduction in the California lettuce crop.In the market for lettuce

Accepted Answer

A reduction in the California lettuce crop due to a drought would mean a decrease in the supply of lettuce. This would shift the supply curve to the left, meaning that at any given price, there would be a lower quantity supplied. As a result, the market would move to a new equilibrium point with a higher price and a lower quantity of lettuce sold. Therefore, the correct option is A - the supply curve shifted to the left, resulting in an increase in the equilibrium price.

Question 9

An increase in the demand for LED light bulbs due to changes in consumer tastes,accompanied by an increase in the supply of LED light bulbs as a result of government subsidies,will result in

Accepted Answer

An increase in both demand and supply of LED light bulbs will lead to an increase in the equilibrium quantity of LED light bulbs. However, the equilibrium price may increase or decrease depending on the extent of the increase in demand and supply. If the increase in supply is greater than the increase in demand, the equilibrium price may decrease. On the other hand, if the increase in demand is greater than the increase in supply, the equilibrium price may increase. Therefore, there is a possibility of both an increase or decrease in equilibrium price, but the equilibrium quantity will increase.

Question 10

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

Accepted Answer

The increase in tobacco harvest would result in an increase in supply of cigarettes, while the studies showing the health risks of smoking would decrease demand for cigarettes. This would lead to a decrease in the equilibrium price of cigarettes (due to the increase in supply) and an uncertain effect on the equilibrium quantity (due to the decrease in demand potentially offsetting the increase in supply). Therefore, the best choice is C.

Question 11

An increase in the equilibrium quantity of a product will result

Accepted Answer

An increase in the equilibrium quantity of a product occurs when there is an increase in both supply and demand for the product. This means that producers are willing and able to produce more of the product at a given price, while consumers are willing and able to purchase more of the product at that same price. This results in a shift of the demand and supply curves to the right, causing the equilibrium price to stay the same but the equilibrium quantity to increase.

Question 12

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 will lead to an increase in supply. This means that there will be more smartphones supplied in the market. As a result, the price of smartphones will decrease and the quantity of smartphones demanded will increase, which is reflected in choice C. Option A is incorrect because a decrease in price is due to an increase in supply rather than an increase in demand. Option B is incorrect because an increase in supply would lead to an increase, not a decrease, in equilibrium quantity. Option D is incorrect because the text explicitly states that there was an increase, not a decrease, in the supply of smartphones.

Question 13

Which of the following statements is true?

Accepted Answer

When there is a decrease in demand, the equilibrium price falls. This then creates a surplus of goods, resulting in a decrease in quantity supplied to reach a new equilibrium. This is known as the law of demand and is a fundamental principle of economics. None of the other options is accurate or complete.

Question 14

An increase in the equilibrium price for a product will result

Accepted Answer

An increase in the equilibrium price for a product occurs when there is a decrease in supply and an increase in demand for the product. This is because the quantity demanded exceeds the quantity supplied at the old equilibrium price, causing the price to increase until a new equilibrium is reached where the quantity demanded is equal to the quantity supplied at a higher price. An increase in demand alone or an increase in the number of firms producing the product may not necessarily result in an increase in the equilibrium price.

Question 15

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

Accepted Answer

A decrease in demand leads to a lower equilibrium price and quantity, as the demand curve shifts leftward.

Question 16

Which of the following statements is true?

Accepted Answer

B) A decrease in supply, with demand holding constant, leads to an increase in the equilibrium price due to the scarcity of the product. This higher price, in turn, results in a decrease in the quantity demanded, aligning with the law of demand.

Question 17

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 18

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 started to cover a smaller portion of the cost of the surgery, fewer people would be able to afford knee replacement surgery, leading to a decrease in demand. If fewer doctors decide to enter the field of joint replacement surgery, this would limit the supply of knee replacement surgeries. Therefore, both demand and supply will decrease in the market for knee replacement surgery.

Question 19

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

When the supply of sailboats decreases due to a decrease in the number of manufacturers, it causes a decrease in the quantity of sailboats demanded. This creates a shortage in the market, which leads to an increase in the price of sailboats. Therefore, the correct phrase to complete the statement is "the price of sailboats increased and the quantity of sailboats demanded decreased." Option A is incorrect because a decrease in supply causes an increase in price and decrease in demand. Option B is incorrect because a decrease in the number of manufacturers would generally lead to a decrease in the equilibrium quantity. Option D is incorrect because it suggests that an increase in price causes an increase in supply, which is not true.

Question 20

Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,and this investment in technology allows the company to reduce the number of employees at each location.All else equal,this technological improvement would ________ the equilibrium price for its products and ________ the equilibrium quantity consumed.

Accepted Answer

The implementation of self-serve kiosks would reduce the cost of production for McDonald's, leading to a shift in supply to the right. This would result in a lower equilibrium price and a higher equilibrium quantity consumed. The reduction in number of employees would decrease production costs, but would also lead to a decrease in the demand for the products. However, the decrease in cost would have a stronger effect on the market, resulting in an increase in the quantity consumed despite the decrease in demand. Therefore, the correct answer is C, decrease in equilibrium price and increase in equilibrium quantity consumed.

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

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall.Holding everything else constant,how would this affect the market for wheat (a substitute for corn) ?

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

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

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?

Suppose a drought resulted in a major reduction in the California lettuce crop.In the market for lettuce

An increase in the demand for LED light bulbs due to changes in consumer tastes,accompanied by an increase in the supply of LED light bulbs as a result of government subsidies,will result in

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

An increase in the equilibrium quantity of a product will result

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

Which of the following statements is true?

An increase in the equilibrium price for a product will result

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

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?

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?

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