Question 1

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts more than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)the equilibrium price of MP3 players will decrease;the equilibrium quantity will increase.
C)the equilibrium price of MP3 players may increase or decrease;the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase;the equilibrium quantity will decrease.

Accepted Answer

When demand shifts right and supply shifts left but supply shifts more, the equilibrium price increases and the equilibrium quantity decreases.

Question 2

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance,a complement to motorcycles,the equilibrium could move to which point?
A)A

B)B
C)C
D)E

Accepted Answer

An increase in wages for motorcycle workers would increase production costs, shifting the supply curve leftward. An increase in the price of motorcycle insurance, a complement, would decrease demand, shifting the demand curve leftward. Both shifts would move the equilibrium to a point like E, where both supply and demand have decreased.

Question 3

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts less than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)both the equilibrium price and quantity of MP3 players will increase.
C)the equilibrium price of MP3 players may increase or decrease;the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase;the equilibrium quantity will decrease.

Accepted Answer

The answer of Assume that the demand curve for MP3...

Question 4

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C).Which of the following changes would cause the equilibrium to change to point B?
A)a positive change in the technology used to produce apples and decrease in the price of oranges,a substitute for apples
B)an increase in the wages of apple workers and an increase in the price of oranges,a substitute for apples
C)an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease

D)a decrease in the wages of apple workers and an increase in the price of oranges,a substitute for apples

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 5

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If the price of motorcycle engines increases,and the wages of motorcycle workers increase,how will the equilibrium point change?
A)The equilibrium point will move from A to E.

B)The equilibrium point will move from A to B.
C)The equilibrium point will move from A to C.
D)The equilibrium will first move from A to B,then return to A.

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 6

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A).If there is a shortage of apples,how will the equilibrium point change?
A)The equilibrium point will move from A to B.

B)The equilibrium point will move from A to C.
C)There will be no change in the equilibrium point.
D)The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 7

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A).If there is an increase in the wages of apple workers and an increase in the price of oranges,a substitute for apples,the equilibrium could move to which point?
A)none of the points shown

B)B
C)C
D)E

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 8

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result,the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall;as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.
A)The statement is false.A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs,but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
B)The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell.
C)The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology;doing so would reduce their profits.
D)The statement is false because it confuses the law of demand with the law of supply.

Accepted Answer

The answer of "The price of compact fluorescent light bulbs...

Question 9

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point
A)a positive change in the technology used to produce apples and decrease in the price of oranges,a substitute for apples
B)an increase in the wages of apple workers and a decrease in the price of oranges,a substitute for apples
C)an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D)a decrease in the wages of apple workers and an increase in the price of oranges,a substitute for apples
E).Which of the following changes would cause the equilibrium to change to point A?

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 10

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If there is a surplus of motorcycles how will the equilibrium point change?
A)The equilibrium point will move from A to B.

B)The equilibrium point will move from A to C.
C)There will be no change in the equilibrium point.
D)The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 11

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C).If the price of motorcycle side cars (a complement to motorcycles)decreases,and the wages of motorcycle workers increase,how will the equilibrium point change?
A)The equilibrium point will move from C to E.
B)The equilibrium point will move from C to B.
C)The equilibrium point will move from C to A.

D)The equilibrium will first move from C to A,then return to C.

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 12

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S2 (point B).If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good),the equilibrium could move to which point?
A)A
B)B

C)C
D)E

Accepted Answer

An increase in the number of companies producing motorcycles would shift the supply curve to the right (from S2 to S3). Since this increase in production would lead to more motorcycles being available in the market, it would put downward pressure on prices. A decrease in income (assuming motorcycles are a normal good) would shift the demand curve to the left (from D1 to D2). This would reduce the quantity of motorcycles demanded at every price level.

The new equilibrium would occur at the intersection of the new supply curve (S3) and the new demand curve (D2), which is point C. At this point, the quantity of motorcycles bought and sold would decrease, and the price would likely decrease as well.

Question 13

Which of the following statements is true?
A)An increase in demand causes a change in equilibrium price;the change in price does not cause a further change in demand or supply.
B)A decrease in supply causes equilibrium price to rise;the increase in price then results in a decrease in demand.
C)If both demand and supply increase there must be an increase in equilibrium price;equilibrium quantity may either increase or decrease.
D)If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Accepted Answer

The answer of Which of the following statements is true?
A)An...

Question 14

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A).If the price of oranges,a substitute for apples,decreases and the wages of apple workers increase,how will the equilibrium point change?
A)The equilibrium point will move from A to E.
B)The equilibrium point will move from A to B.
C)The equilibrium point will move from A to C.
D)The equilibrium will first move from A to B,then return to A.

Accepted Answer

The decrease in the price of oranges will decrease the demand for apples (shift D1 left), and the increase in wages will decrease the supply of apples (shift S1 left), moving the equilibrium from A to E.

Question 15

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S1 (point A).If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks,how will the equilibrium point change?
A)The equilibrium point will move from A to B.

B)The equilibrium point will move from A to C.
C)There will be no change in the equilibrium point.
D)The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 16

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S2 (point
A)The equilibrium point will move from E to A.
B)The equilibrium point will move from E to B.
C)The equilibrium point will move from E to C.
D)The equilibrium point will remain at E.
E).If the technology to produce motorcycles improves and the number of buyers increases,how will the equilibrium point change?

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 17

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S2 (point B).Which of the following changes would cause the equilibrium to change to point C?
A)a positive change in the technology used to produce apples and decrease in the price of oranges,a substitute for apples
B)an increase in the wages of apple workers and an increase in the price of oranges,a substitute for apples

C)an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D)a decrease in the wages of apple workers and an increase in the price of oranges,a substitute for apples

Accepted Answer

A positive change in the technology used to produce apples and a decrease in the price of oranges, a substitute for apples, would cause the equilibrium to change to point C. This is because the increase in technology would shift the supply curve to the right, and the decrease in the price of oranges would shift the demand curve to the right. The new equilibrium would be at the intersection of the new supply and demand curves, which is point C.

Question 18

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C).Which of the following changes would cause the equilibrium to change to point B?
A)a positive change in the technology used to produce motorcycles and decrease in the price of motorcycle insurance,a complement to motorcycles
B)an increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance,a complement to motorcycles
C)an increase in the number of motorcycle producers and an increase in the number of consumers who prefer riding motorcycles

D)an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance,a complement to motorcycles

Accepted Answer

The answer of Figure 3-8 
-Refer to Figure 3-8.The graph...

Question 19

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S2 (point B).If there is an decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks,how will the equilibrium point change?
A)The equilibrium point will move from B to A.
B)The equilibrium point will move from B to C.

C)There will be no change in the equilibrium point.
D)The equilibrium point will move from B to E.

Accepted Answer

A decrease in the price of fertilizer used on sugar cane will shift the supply curve to the right (from S2 to S3), leading to a decrease in the equilibrium price and an increase in the equilibrium quantity. However, a decrease in tastes for sugar-sweetened soft drinks will shift the demand curve to the left (from D1 to D2), leading to a decrease in both the equilibrium price and quantity. The net effect of these two changes is a decrease in the equilibrium price and an ambiguous effect on the equilibrium quantity. Thus, the new equilibrium point will be at C (where the new demand curve intersects the new supply curve).

Question 20

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)the equilibrium price of MP3 players will decrease;the equilibrium quantity will increase.
C)the equilibrium price of MP3 players may increase or decrease;the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase;the equilibrium quantity will decrease.

Accepted Answer

When both the demand curve and the supply curve shift to the right, the equilibrium quantity will definitely increase. However, since the supply curve shifts more than the demand curve, the increase in quantity supplied will exceed the increase in quantity demanded. This means that there will be an excess supply of MP3 players, causing the price to decrease. Therefore, the equilibrium price of MP3 players will decrease, while the equilibrium quantity will increase.

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

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts more than the demand curve.As a result

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts less than the demand curve.As a result

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C) .Which of the following changes would cause the equilibrium to change to point B?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A) .If there is a shortage of apples,how will the equilibrium point change?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A) .If there is a surplus of motorcycles how will the equilibrium point change?

Which of the following statements is true?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S2 (point

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S2 (point B) .Which of the following changes would cause the equilibrium to change to point C?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C) .Which of the following changes would cause the equilibrium to change to point B?

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result