Question 1

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?
A)A decrease in the price of orange juice processing
B)An increase in the cost of fertilizer used for orange groves
C)A decrease in income, assuming orange juice is a normal good
D)A decrease in the population

Accepted Answer

A decrease in the price of orange juice processing would lead to a decrease in the cost of producing orange juice, which would result in a lower price for consumers. This would make it more affordable for orange juice drinkers to consume more orange juice. The other options would have a negative impact on the production or consumption of orange juice.

Question 2

If the price of a product is above equilibrium, what forces it down?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of If the price of a product is...

Question 3

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3.7 
-Refer to Figure 3.7.Assume that...

Question 4

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for walnuts if the Centres for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
A)D increases, S no change, P and Q increase
B)S increases, D no change, P decreases, Q increases
C)D and S increase, P and Q decrease
D)D no change, S increases, P decreases, Q decreases

Accepted Answer

The announcement by CDC will increase the demand for walnuts as more people will want to consume them to lower bad cholesterol. This will lead to an increase in D, while S remains the same. The increase in demand will cause an increase in both P and Q as the market moves towards a new equilibrium.

Question 5

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3.7 
-Refer to Figure 3.7.Assume that...

Question 6

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for children's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

Panel (b) shows an increase in the cost of producing children's clothing due to the rise in wages of seamstresses. This increase in cost shifts the supply curve to the left, resulting in a higher equilibrium price and a lower equilibrium quantity.

Question 7

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that________.
A)the law of demand has been violated.
B)the number of tarot card readers has increased.
C)the demand for tarot card readers has increased.
D)tarot card readers are deliberately charging high prices because they provide services for superstitious clients.

Accepted Answer

If the price and sales of tarot card reading services have both increased, it indicates that there is an increased demand for these services. This is in accordance with the law of demand, which states that as the price of a good/service increases, the quantity demanded decreases, and vice versa. Therefore, option A can be eliminated. Option B is not a necessary consequence of the increase in price and sales, hence it can also be eliminated. Option D is not supported by evidence in the question stem.

Question 8

Assume that the price for air conditioner maintenance services has risen and sales of these services have fallen.One can conclude that________.
A)the law of supply has been violated.
B)the demand for air conditioner maintenance services has increased.
C)the supply of air conditioner maintenance services has decreased.
D)air conditioner maintenance services are becoming more technologically advanced.

Accepted Answer

When the price for a service rises and sales fall, it indicates a decrease in demand. Therefore, the supply of air conditioner maintenance services has not increased, which suggests a decrease in supply.

Question 9

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:
A)a decrease in the equilibrium quantity of lobster and no change in the equilibrium price.
B)an increase in the equilibrium price of lobster and no change in the equilibrium quantity.
C)an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
D)a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

Accepted Answer

An increase in demand tends to raise both the equilibrium price and quantity, while a decrease in supply tends to raise the price but lower the quantity. The combined effect will definitely increase the price, but the effect on quantity is uncertain without knowing the relative magnitudes of the demand and supply shifts.

Question 10

Which of the following would cause both the equilibrium price and equilibrium quantity of wheat, (assume that wheat is a normal good)to increase?
A)An increase in consumer income
B)A drought that sharply reduces wheat output
C)A decrease in consumer income
D)Unusually good weather that results in a bumper crop of wheat

Accepted Answer

An increase in consumer income, assuming wheat is a normal good, would lead to an increase in demand for wheat. This increased demand would push both the equilibrium price and quantity of wheat upwards, as consumers are willing to buy more wheat at higher prices.

Question 11

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for used movie tickets, an inferior good.Which panel describes what happens in this market as a result of a decrease in income?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

Panel (c) illustrates what happens in the market for an inferior good, like used movie tickets, when there is a decrease in income. In this scenario, the demand for the inferior good increases (the demand curve shifts to the right) because people have less income and are more likely to buy cheaper alternatives.

Question 12

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3.7 
-Refer to Figure 3.7.Assume that...

Question 13

Table 3.1 
-Refer to Table 3.1.The table contains information about the corn market.Use the table to answer the following questions.
a. What are the equilibrium price and quantity of corn?
b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $9 per bushel?
e.If the market price is $9 per bushel, what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 22 000 bushels of corn?
g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $21 per bushel?
j.If the market price is $21 per bushel, what must happen to restore equilibrium in the market?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Table 3.1 
-Refer to Table 3.1.The table...

Question 14

Draw a supply and demand graph showing an equilibrium price of $50 and an equilibrium quantity of 200 units.Explain what would happen if the selling price was $75, and illustrate this on the graph.Explain what would happen if the selling price was $25, and illustrate this on the graph.Be sure to label each axis and curve on the graph.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Draw a supply and demand graph showing...

Question 15

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for redwood trees if the government restricts the amount of forest lands that can be logged?
A)D decreases, S no change, P and Q decrease
B)S decreases, D no change, P increases, Q decreases
C)D and S decrease, P and Q increase
D)D no change, S decreases, P increases, Q increases

Accepted Answer

If the government restricts the amount of forest lands that can be logged, the supply of redwood trees will decrease since there will be fewer trees available for logging. However, demand for redwood trees is unlikely to change significantly. As a result, the equilibrium price of redwood trees will increase as buyers compete for a limited supply. Meanwhile, the equilibrium quantity of redwood trees will decrease due to the limited supply. Therefore, option B is the correct choice.

Question 16

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in:
A)a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.
B)a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
D)an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

Accepted Answer

A decrease in demand for soft drinks will shift the demand curve to the left, reducing both the equilibrium price and quantity. An increase in supply due to reductions in input prices will shift the supply curve to the right, reducing the equilibrium price further but increasing the equilibrium quantity. Therefore, the equilibrium price of soft drinks will decrease, but the equilibrium quantity may either increase or decrease, depending on the magnitude of the shifts in supply and demand.

Question 17

Figure 3.7 
-Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3.7 
-Refer to Figure 3.7.Assume that...

Question 18

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?
A)A decrease in the price of flour
B)An increase in the price of flour
C)An increase in the price of rye bread, a substitute for white bread
D)An increase in the price of butter, a complement for white bread

Accepted Answer

A decrease in the price of flour, a key ingredient in making white bread, would lower the cost of production for white bread. This would lead to a decrease in the equilibrium price of white bread, making it more affordable for consumers. Additionally, the lower cost of production would encourage firms to produce more white bread, leading to an increase in the equilibrium quantity.

Question 19

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?
A)An increase in the price of olive oil presses
B)A decrease in the cost of transporting olive oil to markets
C)An increase in the price of land used to plant olives
D)Research finds that consumption of olive oil reduces the risk of heart disease

Accepted Answer

Research finding that consumption of olive oil reduces the risk of heart disease is likely to increase demand for olive oil, allowing producers to sell more olive oil at a higher price. The other options either increase costs for producers or have no direct impact on demand for olive oil.

Question 20

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good)to decrease?
A)An increase in consumer income
B)A freeze that sharply reduces potato output
C)A decrease in consumer income
D)A technological advancement that results in a bumper crop of potatoes

Accepted Answer

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

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

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

If the price of a product is above equilibrium, what forces it down? _ _

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for walnuts if the Centres for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for children's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that________.

Assume that the price for air conditioner maintenance services has risen and sales of these services have fallen.One can conclude that________.

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:

Which of the following would cause both the equilibrium price and equilibrium quantity of wheat, (assume that wheat is a normal good) to increase?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for used movie tickets, an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for redwood trees if the government restricts the amount of forest lands that can be logged?

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in:

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?

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

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

If the price of a product is above equilibrium, what forces it down? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for walnuts if the Centres for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for children's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that________.

Assume that the price for air conditioner maintenance services has risen and sales of these services have fallen.One can conclude that________.

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:

Which of the following would cause both the equilibrium price and equilibrium quantity of wheat, (assume that wheat is a normal good) to increase?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for used movie tickets, an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for redwood trees if the government restricts the amount of forest lands that can be logged?

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in:

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?

If the price of a product is above equilibrium, what forces it down? _ _