Question 1

The entry of new firms into a market,all other things equal,will have what effect on equilibrium price and quantity?

Accepted Answer

The entry of new firms into a market will increase competition, which will result in a decrease in price and an increase in quantity demanded. This is because the new firms will increase the supply of the product, which will push the equilibrium price down, and the increase in competition will result in more consumers purchasing the product, thus increasing the equilibrium quantity.

Question 2

An increase in the price of cars will have what effect on the equilibrium price and quantity of gasoline?

Accepted Answer

An increase in the price of cars is likely to decrease the demand for cars, leading to a decrease in the demand for gasoline (a complementary good). This decrease in demand for gasoline will lead to a lower equilibrium price and quantity for gasoline.

Question 3

Suppose that all workers receive a wage reduction.What would the impact on the market for autos be?

Accepted Answer

If all workers receive a wage reduction, it means that their purchasing power also reduces. As a result, the demand for autos would fall since workers have less money to spend on purchasing a new vehicle. On the other hand, the supply of autos would increase because the production costs are reduced as labor costs fall. Thus, the automakers may increase the supply of autos to maintain their profit margins, resulting in a surplus. Therefore, the correct answer is C, i.e., the supply of autos would increase and the demand for autos would fall.

Question 4

A change in the quantity demanded

Accepted Answer

A change in the quantity demanded refers to a movement along a given demand curve in response to a change in price (option D). However, a change in any of the other factors that influence demand, such as income, consumer preferences, or the availability of substitute goods, would shift the entire demand curve either to the left or the right (option A) and result in a change in the quantity demanded at any given price. Therefore, a change in the quantity demanded can be both a movement along a given demand curve and a shift in the demand curve itself (which is why option E is the correct answer).

Question 5

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and equilibrium price and quantity increase to $10 and 65,which of the following could have caused the change?

Accepted Answer

An increase in consumer income would shift the demand curve to the right, leading to a higher equilibrium price and quantity.

Question 6

A publicized report that finds orange juice prevents certain diseases will have what effect on the equilibrium price and quantity of orange juice?

Accepted Answer

The publicized report that orange juice prevents certain diseases will increase the demand for orange juice. This will shift the demand curve to the right, causing both price and quantity to increase. Thus, the new equilibrium point will be at a higher price and higher quantity than before.

Question 7

An increase in consumer income will have what effect on the equilibrium price and quantity of hot dogs?

Accepted Answer

The effect on equilibrium price and quantity depends on whether hot dogs are considered a normal or inferior good, which is not specified.

Question 8

Which of the following is true for inferior goods?

Accepted Answer

Inferior goods are those for which demand falls as consumer income rises. This is because as people's incomes grow, they tend to purchase higher-quality substitutes for inferior goods. The law of demand still applies to inferior goods; as the price goes up, the quantity demanded decreases, and vice versa. It is not true that inferior goods are always of low quality, as this can vary based on consumer preferences and market conditions.

Question 9

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and more consumers develop a preference for Dr. Pepper, the new equilibrium price and quantity are

Accepted Answer

If more consumers develop a preference for Dr. Pepper, the demand curve shifts to the right, from DS1 to DS2. This shifts the equilibrium point from point A to point B, where the new equilibrium quantity is 65 and the new equilibrium price is 10. Therefore, the answer is C.

Question 10

The Following Questions Refer to the graph below. 
-Which of the following is NOT one of the "other things equal" underlying the demand curve?

Accepted Answer

The prices of resources are part of the "other things equal" assumptions underlying the demand curve, meaning that they are considered constant during the analysis. The purchasing power of buyers and their tastes and preferences are also assumed to be constant, but they are explicitly listed as "other things equal" in the question stem.

Question 11

If the price of film increases at the same time the cost of camera production increases,what will happen to the equilibrium price and quantity in the camera market?

Accepted Answer

The increase in the price of film (a complement to cameras) would likely decrease the demand for cameras, pushing the equilibrium price and quantity of cameras down. However, the increase in the cost of camera production would decrease the supply of cameras, pushing the equilibrium price up and quantity down. These two effects work in opposite directions on quantity, making the overall impact on equilibrium price and quantity indeterminate without more information.

Question 12

There is an increase in the quantity of pizza purchased but no change in the price of pizzA.Which of the following is most likely to have occurred?

Accepted Answer

When both supply and demand increase, the quantity purchased can increase while the price remains unchanged, as the increase in supply can offset the increase in demand, keeping the price stable.

Question 13

Assume lettuce and salad dressing are complements in consumption.An increase in the price of lettuce will

Accepted Answer

When two goods are complements in consumption, an increase in the price of one good will decrease the demand for both goods. Therefore, an increase in the price of lettuce will lead to a fall in the demand for salad dressing, as consumers will likely purchase less lettuce and therefore need less dressing.

Question 14

An increase in the price of flashlights will have what effect on the equilibrium price and quantity of batteries?

Accepted Answer

Flashlights and batteries are complementary goods. An increase in the price of flashlights will decrease the demand for flashlights, leading to a decrease in the demand for batteries. This will result in a decrease in both the equilibrium price and quantity of batteries.

Question 15

A technological advance in the production of computers will have what effect on the equilibrium price and quantity in the computer market?

Accepted Answer

Technological advance in production will shift the supply curve to the right, resulting in a decrease in price and an increase in quantity. Therefore, the answer is D.

Question 16

As the baby boom generation continues to age,what will happen to the equilibrium price and quantity of homes in retirement communities?

Accepted Answer

As the baby boom generation ages, there will be an increased demand for retirement communities, leading to an increase in the equilibrium price and quantity of homes in these communities. This is because as more people in the baby boom generation retire and choose to move to retirement communities, the demand for these homes will increase. The increase in demand will lead to an increase in the price of these homes, as well as an increase in the quantity of homes being sold.

Question 17

Two goods are said to be substitutes in consumption if

Accepted Answer

Substitutes in consumption are goods where an increase in the price of one leads to an increase in the demand for the other, as consumers switch to the more affordable option.

Question 18

An increase in the wages of orange pickers will have what effect in the market for oranges?

Accepted Answer

An increase in the wages of orange pickers will increase the cost of production for oranges which will cause the supply curve to shift to the left. This will result in a decrease in the quantity of oranges supplied and an increase in the price of oranges. Therefore, the correct choice is A.

Question 19

If consumers expect an increase in the price of coffee next month,what will happen to the equilibrium price and quantity of coffee this month?

Accepted Answer

If consumers expect an increase in the price of coffee next month, they are likely to buy more coffee this month to avoid higher prices later. This increase in demand will push the current equilibrium price and quantity of coffee up.

Question 20

If there is a technological advance in the production of paper at the same time consumer income increases (assume paper is a normal good),what will happen in the market for paper?

Accepted Answer

Technological advances increase supply, which tends to lower prices and increase quantity. An increase in consumer income increases demand, which tends to raise prices and increase quantity. The net effect on price is indeterminate without knowing the relative magnitudes of the shifts, but quantity will increase.

Quiz 2: Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

The entry of new firms into a market,all other things equal,will have what effect on equilibrium price and quantity?

An increase in the price of cars will have what effect on the equilibrium price and quantity of gasoline?

Suppose that all workers receive a wage reduction.What would the impact on the market for autos be?

A change in the quantity demanded

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and equilibrium price and quantity increase to $10 and 65,which of the following could have caused the change?

A publicized report that finds orange juice prevents certain diseases will have what effect on the equilibrium price and quantity of orange juice?

An increase in consumer income will have what effect on the equilibrium price and quantity of hot dogs?

Which of the following is true for inferior goods?

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and more consumers develop a preference for Dr. Pepper, the new equilibrium price and quantity are

The Following Questions Refer to the graph below. -Which of the following is NOT one of the "other things equal" underlying the demand curve?

If the price of film increases at the same time the cost of camera production increases,what will happen to the equilibrium price and quantity in the camera market?

There is an increase in the quantity of pizza purchased but no change in the price of pizzA.Which of the following is most likely to have occurred?

Assume lettuce and salad dressing are complements in consumption.An increase in the price of lettuce will

An increase in the price of flashlights will have what effect on the equilibrium price and quantity of batteries?

A technological advance in the production of computers will have what effect on the equilibrium price and quantity in the computer market?

As the baby boom generation continues to age,what will happen to the equilibrium price and quantity of homes in retirement communities?

Two goods are said to be substitutes in consumption if

An increase in the wages of orange pickers will have what effect in the market for oranges?

If consumers expect an increase in the price of coffee next month,what will happen to the equilibrium price and quantity of coffee this month?

If there is a technological advance in the production of paper at the same time consumer income increases (assume paper is a normal good) ,what will happen in the market for paper?

Quiz 2: Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

The entry of new firms into a market,all other things equal,will have what effect on equilibrium price and quantity?

An increase in the price of cars will have what effect on the equilibrium price and quantity of gasoline?

Suppose that all workers receive a wage reduction.What would the impact on the market for autos be?

A change in the quantity demanded

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D1 and S1,and equilibrium price and quantity increase to $10 and 65,which of the following could have caused the change?

A publicized report that finds orange juice prevents certain diseases will have what effect on the equilibrium price and quantity of orange juice?

An increase in consumer income will have what effect on the equilibrium price and quantity of hot dogs?

Which of the following is true for inferior goods?

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D1 and S1,and more consumers develop a preference for Dr. Pepper, the new equilibrium price and quantity are

The Following Questions Refer to the graph below. -Which of the following is NOT one of the "other things equal" underlying the demand curve?

If the price of film increases at the same time the cost of camera production increases,what will happen to the equilibrium price and quantity in the camera market?

There is an increase in the quantity of pizza purchased but no change in the price of pizzA.Which of the following is most likely to have occurred?

Assume lettuce and salad dressing are complements in consumption.An increase in the price of lettuce will

An increase in the price of flashlights will have what effect on the equilibrium price and quantity of batteries?

A technological advance in the production of computers will have what effect on the equilibrium price and quantity in the computer market?

As the baby boom generation continues to age,what will happen to the equilibrium price and quantity of homes in retirement communities?

Two goods are said to be substitutes in consumption if

An increase in the wages of orange pickers will have what effect in the market for oranges?

If consumers expect an increase in the price of coffee next month,what will happen to the equilibrium price and quantity of coffee this month?

If there is a technological advance in the production of paper at the same time consumer income increases (assume paper is a normal good) ,what will happen in the market for paper?

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and equilibrium price and quantity increase to $10 and 65,which of the following could have caused the change?

The Following Questions Refer to the graph below. -If the market starts in equilibrium with D₁ and S₁,and more consumers develop a preference for Dr. Pepper, the new equilibrium price and quantity are