Question 1

In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the U.S.?

Accepted Answer

The ban on the importation of beluga caviar would decrease the supply of caviar in the U.S. market, causing the supply curve to shift to the left. This would likely result in an increase in the price of caviar, as the decrease in supply would make the product scarcer and therefore more expensive. There is no indication in the question that the demand curve would shift, as the ban specifically targeted the supply of beluga caviar, not the demand for caviar in general.

Question 2

Which of the following would shift the supply curve for MP3 players to the right?

Accepted Answer

A decrease in the price of an input used to produce MP3 players would lower the production costs for MP3 players, causing firms to supply more at any given price. This would shift the supply curve to the right. None of the other choices would affect the supply of MP3 players.

Question 3

If a firm expects that the price of its product will be higher in the future than it is today

Accepted Answer

If the firm expects higher prices in the future, it has an incentive to hold back supply now and increase supply in the future, when prices are higher. This is because the firm can earn a higher profit by selling its product at the higher price in the future rather than selling it at the lower price now. Therefore, the firm has an incentive to decrease supply now and increase supply in the future.

Question 4

Figure 3-2 
-Refer to Figure 3-2. A decrease in the price of inputs would be represented by a movement from

Accepted Answer

A decrease in the price of inputs would result in a decrease in the cost of production, causing the supply curve to shift to the right from S1 to S2. Therefore, the correct answer is C - a movement from S1 to S2.

Question 5

A decrease in the price of GPS systems will result in

Accepted Answer

The answer of A decrease in the price of GPS...

Question 6

Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease?

Accepted Answer

If the price of white wine grapes increases, vineyards may choose to allocate more of their land to growing white wine grapes instead of red wine grapes, causing the supply of red wine grapes to decrease.

Question 7

Which of the following would shift the supply curve for MP3 players to the left?

Accepted Answer

An increase in the price of an input used to produce MP3 players will increase the cost of production for firms, resulting in a decrease in the quantity they are willing and able to supply at any given price level. This will shift the supply curve to the left.

Question 8

Figure 3-2 
-Refer to Figure 3-2. An increase in the price of the product would be represented by a movement from

Accepted Answer

The answer of Figure 3-2 
-Refer to Figure 3-2. An...

Question 9

Figure 3-2 
-Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

Accepted Answer

The answer of Figure 3-2 
-Refer to Figure 3-2. An...

Question 10

Figure 3-2 
-Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from

Accepted Answer

The answer of Figure 3-2 
-Refer to Figure 3-2. A...

Question 11

The supply curve for watches

Accepted Answer

The supply curve for watches shows the relationship between the price of watches and the quantity of watches supplied. As the price of watches increases, producers are willing and able to supply more watches, and as the price of watches decreases, producers are willing and able to supply less watches. Therefore, the supply curve is upward sloping.

Question 12

Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?

Accepted Answer

The increase in the price of pool chemicals will increase the cost of production for the pool maintenance service provider. This will lead to a decrease in the supply of pool maintenance services, as the provider may not be willing or able to offer the same amount of services at a lower profit margin. Therefore, the owner raising his monthly service fee suggests a decrease in the supply of pool maintenance services.

Question 13

An increase in the price of off-road vehicles will result in

Accepted Answer

The answer of An increase in the price of off-road...

Question 14

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

Accepted Answer

A decrease in the price of cattle would make it less profitable for ranchers to raise cattle, so they may choose to switch to raising sheep instead, leading to an increase in the supply of sheep. None of the other choices directly affect the supply of sheep.

Question 15

Figure 3-2 
-Refer to Figure 3-2. A decrease in the price of substitutes in production would be represented by a movement from

Accepted Answer

A decrease in the price of substitutes in production would shift the supply curve to the right (S1 to S2). This is because producers will now be able to produce their goods at a lower cost, and therefore are willing to supply more of them at any given price. A and B are incorrect because they represent movements along the same supply curve, not a shift of the curve. D is incorrect because it represents an increase, not a decrease, in the price of substitutes in production.

Question 16

Figure 3-2 
-Refer to Figure 3-2. A technological advancement would be represented by a movement from

Accepted Answer

The answer of Figure 3-2 
-Refer to Figure 3-2. A...

Question 17

Figure 3-2 
-Refer to Figure 3-2. A decrease in the number of firms in the market would be represented by a movement from

Accepted Answer

A decrease in the number of firms in the market would result in a decrease in supply. This is represented by a shift from S1 to S2. Therefore, the correct answer is D, where the movement is from S2 to S1, indicating an increase in the number of firms in the market, which is opposite to the given scenario.

Question 18

Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?

Accepted Answer

The approval of three new cable companies to enter the market increases the number of suppliers, therefore, increasing the supply of cable TV services. This change in supply would likely lead to a decrease in the price of cable TV services in the market.

Question 19

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does this affect the digital photo printing market?

Accepted Answer

The answer of The popularity of digital cameras has enticed...

Question 20

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the

Accepted Answer

If the firm expects the price of its product to be lower in the future, it has an incentive to sell more now when prices are higher, and reduce supply in the future when prices are expected to drop.

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

In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the U.S.?

Which of the following would shift the supply curve for MP3 players to the right?

If a firm expects that the price of its product will be higher in the future than it is today

Figure 3-2 -Refer to Figure 3-2. A decrease in the price of inputs would be represented by a movement from

A decrease in the price of GPS systems will result in

Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease?

Which of the following would shift the supply curve for MP3 players to the left?

Figure 3-2 -Refer to Figure 3-2. An increase in the price of the product would be represented by a movement from

Figure 3-2 -Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

Figure 3-2 -Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from

The supply curve for watches

An increase in the price of off-road vehicles will result in

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

Figure 3-2 -Refer to Figure 3-2. A decrease in the price of substitutes in production would be represented by a movement from

Figure 3-2 -Refer to Figure 3-2. A technological advancement would be represented by a movement from

Figure 3-2 -Refer to Figure 3-2. A decrease in the number of firms in the market would be represented by a movement from

Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does this affect the digital photo printing market?

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the