Question 1

One In the News article in the text titled "Students Struggle to Find Final Four Tickets" described how professional scalpers use the Internet to sell hard-to-get tickets to concerts and sporting events.Apparently the initial price of the tickets being scalped was too

Accepted Answer

The initial price was too low for equilibrium, leading to a higher demand than supply, causing a shortage of tickets.

Question 2

Ceteris paribus,a consumer that purchases a sports car must consider the price of gasoline because these goods are

Accepted Answer

Sports cars and gasoline are complements in consumption because the use of one (a sports car) increases the consumption of the other (gasoline).

Question 3

If a price is above equilibrium,

Accepted Answer

When a price is above equilibrium, it means that the quantity supplied exceeds the quantity demanded, creating a surplus. This surplus puts downward pressure on the price, leading it to fall. As the price falls, producers are less incentivized to supply as much, leading to a decrease in the quantity supplied.

Question 4

An In The News article in the text titled "People Would Donate Kidneys for Payment" stated that 6,475 people were waiting for a kidney transplant.Which of the following statements is not true?

Accepted Answer

The article clearly states that people would be willing to donate their kidneys for payment, indicating that allowing the sale of kidneys at a price greater than zero would increase the number of available kidneys. Therefore, statement C is not true. Statements A, B, and D are all supported by the article.

Question 5

Ceteris paribus,for the owner of a sawmill,lumber and the sawdust that go into particle board are

Accepted Answer

Lumber and sawdust are complementary inputs in the production of particle board. Lumber is the main input and sawdust is a by-product that is also used in the production process. Therefore, a change in the price or availability of either input will affect the sawmill operator's decision.

Question 6

If the wages of corn farmers decrease,then the

Accepted Answer

A decrease in wages for corn farmers reduces production costs, which can lead to an increase in supply, causing the supply curve to shift to the right.

Question 7

Ceteris paribus,for a farmer,corn and wheat are

Accepted Answer

Substitutes in production mean that a farmer can choose to produce either corn or wheat based on their profitability, market conditions, or personal preference. If the conditions favor the production of corn over wheat, the farmer might allocate more resources to growing corn, and vice versa, making them substitutes in the context of production decisions.

Question 8

If the actual market price were fixed at $15 per unit in Figure 3.2,  Figure 3.2 Supply and Demand

Accepted Answer

The answer of If the actual market price were fixed...

Question 9

Which of the following statements about markets is not true?

Accepted Answer

Markets do not necessarily have a physical location. In fact, many markets operate virtually or through electronic means.

Question 10

If the price of "X" increases and you buy less "Y," then

Accepted Answer

The answer of If the price of "X" increases and...

Question 11

If the market wage for fast-food restaurants is $4 and the government enforces a minimum wage of $7,the unemployment rate will

Accepted Answer

This is because the market wage for fast-food restaurants is $4 but the government has enforced a minimum wage of $7 which is higher than the market wage. This causes the quantity of labor supply to increase as more people are willing to work for the higher wage. However, the quantity of labor demand decreases as employers are less willing to hire workers at the higher wage. This creates a labor surplus, which means there are more workers looking for jobs than there are jobs available. As a result, unemployment increases.

Question 12

One In the News article in the text titled "Students Struggle to Find Final Four Tickets" described how professional scalpers use the Internet to sell hard-to-get tickets to concerts and sporting events.When scalpers resell tickets at prices closer to equilibrium,

Accepted Answer

When scalpers resell tickets at higher prices, it increases the incentive for people to sell their tickets, making the market shortage smaller. This means that more people are willing to sell their tickets, which in turn decreases the price premium that scalpers can charge. Therefore, scalpers will still make a profit, but the market shortage is smaller.

Question 13

If the actual market price were fixed at $6 per unit in Figure 3.2,  Figure 3.2 Supply and Demand

Accepted Answer

The answer of If the actual market price were fixed...

Question 14

If the price of "X" increases and you buy more "Y," then

Accepted Answer

When the price of "X" increases and you buy more of "Y," it indicates that "X" and "Y" are substitutes (you replace "X" with "Y" due to the price increase). This increased demand for "Y" could lead to an increase in its price, assuming supply doesn't change.

Question 15

If corn products are found to cause cancer,then the

Accepted Answer

If corn products are found to cause cancer, it is likely that consumers will want to buy less corn, leading to a decrease in demand. This is represented by a leftward shift in the demand curve for corn.

Question 16

Restaurants like to give away free salty peanuts while you wait for your food in order to

Accepted Answer

By giving away free salty peanuts, restaurants are able to encourage customers to order expensive beverages to quench their thirst. Salty foods make people thirsty, and by offering beverages, restaurants are able to increase their sales. This strategy is commonly used by restaurants to boost their profits.

Question 17

If the market wage for fast-food restaurants is $11 and the government enforces a minimum wage of $7,the unemployment rate will

Accepted Answer

When the government enforces a minimum wage that is below the market wage, it does not affect employment because employers are already paying a higher wage than the minimum. Therefore, both the supply and demand for labor remain unchanged at the market wage of $11.

Question 18

The In the News article titled "Seafood Prices Rise on BP Oil Spill" suggests that seafood prices increased because of a decrease in supply.When the availability of seafood worsens,the supply curve of seafood shifts to the left,causing

Accepted Answer

When the supply of seafood decreases, there is a shift in the supply curve to the left. This results in a new equilibrium point where the price of seafood moves up along the market demand curve. This is because consumers are willing to pay a higher price to obtain the limited supply of seafood. Therefore, choice C is the best answer. The other options do not accurately describe the effect of decreased supply on seafood prices.

Question 19

If the government required the actual market price to be fixed at $6 per unit in Figure 3.3,   Figure 3.3 Shifts of Supply and Demand

Accepted Answer

If the government sets a fixed price of $6 per unit, which is below the equilibrium price of $8, it will result in a binding or effective price ceiling. This is because the quantity demanded will exceed the quantity supplied at that price, leading to excess demand or a shortage. Sellers will not be willing to sell as much at the lower price, while buyers will be willing to buy more at the cheaper rate. This will lead to rationing of the product, long queues, and black markets, among other unintended consequences. Therefore, a binding price ceiling would be expected to result.

Question 20

If a price is below equilibrium,

Accepted Answer

When a price is below equilibrium, it results in a shortage because the quantity demanded exceeds the quantity supplied. This shortage puts upward pressure on the price, leading it to rise. As the price rises, suppliers are incentivized to increase the quantity supplied to meet the higher demand, thus moving towards equilibrium.

Quiz 3: Supply and Demand