Question 1

What will happen to the equilibrium price and equilibrium quantity of ice cream cones when consumers' incomes decrease?

Accepted Answer

If ice cream cones are a normal good, a decrease in consumers' income will lead to a decrease in demand for ice cream cones. This will cause a leftward shift in the demand curve, leading to a new equilibrium with a lower equilibrium price and quantity.

Question 2

Suppose that people find out that eating more fish improves their health, leading them to increase their demand for fish. As a result, the equilibrium price of fish ________ and the equilibrium quantity ________.

Accepted Answer

An increase in demand for fish will shift the demand curve to the right. This will cause the equilibrium price and quantity to increase. Therefore, option B is the most appropriate choice.

Question 3

If the price of a movie download falls, the rental rate of DVDs ________ and the equilibrium quantity of DVDs rented ________.

Accepted Answer

When the price of a movie download falls, it becomes a more attractive option compared to renting DVDs, leading to a decrease in demand for DVD rentals. This results in a lower rental rate (price) and a decrease in the equilibrium quantity of DVDs rented.

Question 4

If the demand for hamburgers decreases, the equilibrium price

Accepted Answer

If the demand for hamburgers decreases, the equilibrium price will fall because there will be less demand for the same quantity of supply. As a result, the equilibrium quantity will also decrease because suppliers will produce less at a lower price. Therefore, option D (falls and the equilibrium quantity decreases) is the correct choice.

Question 5

For consumers, goods A and B are complementary goods. The cost of a resource used in the production of A decreases. As a result

Accepted Answer

The decrease in cost of a resource used in the production of A will shift the supply curve of A to the right, leading to a lower equilibrium price of A. This lower price of A will increase the quantity demanded of A, which in turn will increase the demand for complementary good B, leading to a higher equilibrium price of B. Therefore, the equilibrium price of B will rise and the equilibrium price of A will fall.

Question 6

Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?

Accepted Answer

A fall in income, if used cars are considered an inferior good, would lead to an increase in demand for used cars as consumers shift away from more expensive new cars. This increased demand would raise the equilibrium price and increase the equilibrium quantity of used cars.

Question 7

Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will

Accepted Answer

When demand for a product increases, typically both the equilibrium price and quantity increase as suppliers respond to higher demand by raising prices and increasing production.

Question 8

Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be

Accepted Answer

When two goods are complements, an increase in the price of one leads to a decrease in the demand for the other. Therefore, if the price of sugar increases, the demand for coffee will decrease, potentially leading to a decrease in the price of coffee.

Question 9

If the U.S. Surgeon General announced that increased grapefruit juice consumption could help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit juice?

Accepted Answer

The announcement would likely increase the demand for grapefruit juice as people try to prevent heart attacks, leading to a higher equilibrium price and quantity as suppliers respond to the increased demand.

Question 10

If the U.S. Surgeon General announces that increased wheat consumption could cause heightened anxiety levels among children and adults, what happens to the equilibrium price and quantity of shredded wheat?

Accepted Answer

The announcement would likely lead to a decrease in demand for shredded wheat as consumers try to avoid the potential negative health effects. This decrease in demand would cause both the equilibrium price and quantity of shredded wheat to fall.

Question 11

Suppose the equilibrium price of bottled water has risen from $1.00 per bottle to $2.00 per bottle and the equilibrium quantity has increased. These changes are a result of a ________ shift of the ________ curve for bottled water.

Accepted Answer

A rightward shift of the demand curve indicates an increase in demand at every price level, which can lead to both a higher equilibrium price and a higher equilibrium quantity, as described in the scenario.

Question 12

Long-distance travel by bus is an inferior good. As people's incomes increase and other things remain the same, you predict that the

Accepted Answer

The answer of Long-distance travel by bus is an inferior...

Question 13

In March, the quantity of orange juice sold in the town of Jackson was 3000 cartons and the price $3. In May, the quantity of orange juice sold in the town of Jackson was 3500 cartons and the price was $3.20. This change in the price and quantity sold could have been the result of

Accepted Answer

BCThe increase in both price and quantity sold suggests a shift in demand, which could be caused by A) a positive change in consumer preferences due to health benefits, B) a decrease in discounts available, making people willing to pay more, or C) a supply shock due to a reduced crop, increasing prices and possibly shifting demand due to perceived scarcity or future price increases. D) is incorrect because an increase in supply (yield) would typically lower prices, not increase them.

Question 14

If good A is a normal good and income increases, the equilibrium price of A ________ and the equilibrium quantity of A ________.

Accepted Answer

As income increases, demand for normal goods such as A increases, leading to a higher equilibrium price and quantity. This is represented by a rightward shift in the demand curve.

Question 15

Between 2001 and 2015, equilibrium college tuition rose from $15,000 to $27,000 and equilibrium enrollment increased from 16 million to 21 million students. These changes could be the result of

Accepted Answer

Equilibrium tuition increases along with an increase in equilibrium enrollment, which suggests that demand for higher education increased during the observed period. Therefore, the best choice is A, an increase in demand.

Question 16

Until 2007, the price of sport utility vehicles (SUVs)rose and each year more were purchased. This experience suggests that

Accepted Answer

The fact that the price of SUVs rose while more were being purchased suggests that there was a rightward shift of the demand curve, meaning that consumers were willing to pay higher prices for SUVs and were purchasing more of them. This could be due to a variety of factors, such as increased advertising, changes in consumer preferences, or increased incomes. It does not necessarily imply technological advances or a leftward movement along the supply curve.

Question 17

The price of a gallon of milk falls. Which of the following is a possible cause?

Accepted Answer

A discovery that milk causes diabetes could lead to a decrease in demand for milk as consumers might avoid it due to health concerns, leading to a decrease in its price.

Question 18

An increase in demand combined with no change in supply

Accepted Answer

When demand increases while supply remains constant, there is a shortage of the goods. Consumers are willing to pay more for the product, and this bidding war drives up the equilibrium price. Therefore, the correct answer is A, which states that an increase in demand combined with no change in supply raises the equilibrium price.

Question 19

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

Accepted Answer

Poor weather causes a leftward shift of the supply curve for coffee, which reduces the quantity of coffee supplied at any given price. As a result, the demand for sugar (a complement) will also decrease, leading to a leftward shift of the demand curve for sugar. With lower demand for sugar, the price of sugar will decrease. Therefore, the answer is B, a decrease in the price of sugar.

Question 20

Which of the following raises the price of a used car and increases the equilibrium quantity sold?

Accepted Answer

The answer of Which of the following raises the price...

Quiz 3: Demand and Supply