Question 1

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 2

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for walnuts if the Centers 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 the Centers for Disease Control and Prevention will increase the demand for walnuts as consumers become more aware of the health benefits associated with consuming them. This will shift the demand curve to the right, resulting in an increase in price and quantity supplied. As a result, there will be an increase in equilibrium price and quantity, but there will be no change in supply.

Question 3

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

The answer of An increase in the demand for lobster...

Question 4

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 lower cost of production for orange juice, which could then be passed on to the consumers in the form of a lower price. This would encourage orange juice drinkers to consume more orange juice at the lower price. An increase in the cost of fertilizer used for orange groves (B) would lead to a higher cost of production for oranges, which could lead to an increase in the price of orange juice if the higher cost is passed on to the consumers. A decrease in income (C) would make orange juice less affordable for some consumers, leading to a decrease in demand. A decrease in the population (D) would have no direct effect on the quantity demanded of orange juice, as long as there are still orange juice drinkers in the population. Therefore, A is the best choice.

Question 5

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 6

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 7

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 8

Assume that the price for swimming pool 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 swimming pool maintenance services has increased.
C)the supply of swimming pool maintenance services has decreased.
D)swimming pool maintenance services are becoming more technologically advanced.

Accepted Answer

According to the law of supply, when the price of a good or service increases, the quantity supplied also increases. However, in this scenario, the sales of swimming pool maintenance services have fallen, indicating that the supply has decreased. Therefore, C is the correct answer. A and D are not relevant to the scenario mentioned, and B contradicts the given information.

Question 9

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

The research findings that consumption of olive oil reduces the risk of heart disease would create an increase in demand for olive oil, leading to producers being able to sell more at a higher price. A) an increase in the price of olive oil presses would increase the cost of production for producers, leading to a decrease in supply and an increase in price. B) A decrease in the cost of transporting olive oil to markets would decrease the cost of production for producers, leading to a decrease in price as they may opt to pass on the savings to consumers. C) An increase in the price of land used to plant olives would increase the cost of production for producers, leading to a decrease in supply and an increase in price.

Question 10

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 will shift the demand curve to the left, resulting in a new equilibrium point with a lower quantity and potentially a lower price. An increase in supply will shift the supply curve to the right, resulting in a new equilibrium point with a lower price and potentially a higher quantity. Therefore, we can conclude that the equilibrium price will decrease, but the equilibrium quantity may increase or decrease depending on the size of the shifts in demand and supply.

Question 11

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 12

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for tropical hardwood trees if the governments restrict 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

When the government restricts the amount of forest lands that can be logged, the supply of tropical hardwood trees decreases, resulting in a shift left in the supply curve. This leads to an increase in the equilibrium price (P) and a decrease in the equilibrium quantity (Q), as the amount of tropical hardwood available in the market has decreased. The demand for tropical hardwood trees is likely to remain the same, as there will still be demand for this product, even with the supply decrease. Therefore, the correct answer is B, where S decreases, D no change, P increases, and Q decreases.

Question 13

Figure 3-7 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women'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 a decrease in the quantity supplied and an increase in the equilibrium price, which is what would happen in a market for women's clothing if the wages of seamstresses (who produce the garments) were to rise. This would lead to a higher cost of production, resulting in a decrease in supply and a higher price to maintain equilibrium.

Question 14

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

According to the law of demand, as the price of a good or service increases, the quantity demanded for that good or service decreases. However, in this scenario, both the price and sales have increased, indicating a shift in the demand curve rather than violating the law of demand. This suggests that there has been an increase in the demand for tarot card readers.

Question 15

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 16

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 decrease production costs for bread manufacturers. This would then lead to a decrease in the equilibrium price of white bread as they are able to produce it more efficiently. Additionally, the decrease in production costs would allow manufacturers to increase the quantity of white bread produced, leading to an increase in the equilibrium quantity of white bread. Thus, the correct answer is A.

Question 17

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...

Question 18

Figure 3-7 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,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

The answer of Figure 3-7 
-Refer to Figure 3-7.Assume that...

Question 19

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 20

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

Accepted Answer

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

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

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?

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

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

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

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?

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

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

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 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 tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women'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

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?

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

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

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

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