Question 1

"Because chips and salsa are complements,an increase in the price of chips will cause the demand for salsa to decrease.This initial shift in demand for chips results in a higher price for chips;this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?
A)The statement will be true if consumer tastes for chips and salsa do not change.
B)The statement is false because a change in the price of chips would not change the demand for chips.
C)The statement is false because salsa is an inferior good;chips are normal goods.
D)The statement is false because one cannot assume that chips and salsa are complements for all consumers.

Accepted Answer

The answer of "Because chips and salsa are complements,an increase...

Question 2

Let D = demand,S = supply,P = equilibrium price,and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?
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 answer of Let D = demand,S = supply,P =...

Question 3

Select the phrase that correctly completes the following statement."An increase in input prices caused a decrease in the supply of baseballs.As a result ________."
A)the price of baseballs increased and the demand for baseballs decreased
B)the equilibrium quantity of baseballs increased
C)the price of baseballs increased and the quantity demanded of baseballs decreased
D)the price of baseballs increased.The higher price caused the supply of baseballs to increase

Accepted Answer

An increase in input prices causes a decrease in the supply of baseballs, which leads to a decrease in the quantity supplied at each price level. This shift in the supply curve to the left will cause an increase in the price of baseballs and a decrease in the quantity demanded, resulting in a movement along the demand curve. Therefore, choice C is the correct option. Option A is incorrect because an increase in the price of baseballs doesn't necessarily cause a decrease in demand. Option B is incorrect because an increase in input prices would not lead to an increase in the equilibrium quantity of baseballs. Option D is incorrect because an increase in the price of baseballs would not cause an increase in the supply of baseballs.

Question 4

All else equal,the decrease in the price of complementary products for the Apple Watch,such as Sensoria's wearable technology,would
A)shift the supply curve for the Apple Watch to the right.
B)shift the supply curve for the Apple Watch to the left.
C)shift the demand curve for the Apple Watch to the right.
D)shift the demand curve for the Apple Watch to the left.

Accepted Answer

When the price of complementary products decreases, the demand for the Apple Watch increases as consumers are more likely to purchase both products together. Therefore, this shifts the demand curve for the Apple Watch to the right.

Question 5

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?
A)Demand will increase,but this will not shift the supply curve.
B)Supply will increase,but this will not shift the demand curve.
C)Demand and supply will both increase.
D)Demand will increase and supply will decrease.

Accepted Answer

If insurance companies cover a portion of the price of laser eye surgery, it would make the procedure more affordable and increase demand for it. However, this would not directly impact the supply of the procedure, as there would still be the same number of providers offering the service. Therefore, the demand curve would shift rightward, leading to a higher quantity demanded and a higher price, but the supply curve would remain unchanged.

Question 6

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?
A)an increase in demand and an increase in supply
B)an increase in supply
C)an increase in supply and an increase in demand greater than the increase in supply
D)a decrease in demand and an increase in supply

Accepted Answer

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

Question 7

A decrease in the equilibrium quantity for a product will result
A)when the quantity demanded for the product exceeds the quantity supplied.
B)when there is a decrease in supply and a decrease in demand for the product.
C)when there is an increase in supply and a decrease in demand for the product.
D)when there is a decrease in demand and an increase in the number of firms producing the product.

Accepted Answer

The answer of A decrease in the equilibrium quantity for...

Question 8

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would
A)increase demand and decrease supply,resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine.
B)increase demand and increase supply,resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine.
C)increase demand and increase supply,resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine.
D)increase demand and increase supply,resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.

Accepted Answer

The answer of Studies have shown that drinking one glass...

Question 9

"Because apples and oranges are substitutes,an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples;this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?
A)The statement will be true if consumer tastes for apples and oranges do not change.
B)The statement is false because a change in the price of apples would not change the demand for apples.
C)The statement is false because oranges are inferior goods;apples are normal goods.
D)The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Accepted Answer

The answer of "Because apples and oranges are substitutes,an increase...

Question 10

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes,accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions,will result in
A)a decrease in the equilibrium quantity of incandescent light bulbs and no change in the equilibrium price.
B)a decrease in the equilibrium price of incandescent light bulbs and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of incandescent light bulbs;the equilibrium quantity may increase or decrease.
D)a decrease in the equilibrium quantity of incandescent light bulbs;the equilibrium price may increase or decrease.

Accepted Answer

A decrease in both demand and supply will result in a decrease in the equilibrium quantity of incandescent light bulbs. The equilibrium price may increase or decrease depending on the magnitude of the decrease in demand and supply. However, it is more likely that the equilibrium price will also decrease due to the decrease in demand and increased competition among remaining suppliers.

Question 11

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise.Holding everything else constant,how would this affect the market for corn (a substitute for wheat)?
A)The supply of corn would decrease and the equilibrium price of corn would increase.
B)The demand for corn would increase and the equilibrium price of corn would increase.
C)The demand for corn would decrease because consumers could afford to buy less wheat and corn.
D)The demand for corn would increase and the equilibrium price of corn would decrease.

Accepted Answer

When the price of wheat rises, demand for corn (a substitute for wheat) increases as consumers switch to a cheaper alternative. This leads to an increase in the demand for corn and an increase in the equilibrium price of corn. Option A is incorrect because a negative technological change in the production of wheat would not affect the supply of corn. Option C is also incorrect because the consumers would still demand corn as an alternative to wheat. Option D is incorrect because an increase in demand would lead to an increase in the equilibrium price of corn, not a decrease.

Question 12

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price ________ and the equilibrium quantity ________.
A)increasing;increasing or decreasing
B)increasing or decreasing;decreasing
C)decreasing;increasing or decreasing
D)increasing or decreasing;increasing

Accepted Answer

The answer of The cost of raising beef cattle has...

Question 13

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."
A)the price of flat-screen televisions decreased and the demand for flat-screen televisions increased
B)the equilibrium quantity of flat-screen televisions decreased
C)the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased
D)the price of flat-screen televisions decreased.The lower price caused the supply of flat-screen televisions to decrease

Accepted Answer

An increase in supply usually leads to a decrease in price and an increase in quantity demanded. Therefore, option C is the correct choice. Option A is incorrect because if the demand for flat-screen televisions increased, it would have led to an increase in both price and quantity demanded. Option B is incorrect because an increase in supply would have led to an increase in equilibrium quantity, not a decrease. Option D is incorrect because it suggests that the lower price caused a decrease in supply, which is contrary to the initial statement that there was an increase in supply due to a positive change in technology.

Question 14

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges
A)the supply curve shifted to the right resulting in a decrease in the equilibrium price.
B)the supply curve shifted to the right resulting in an increase in the equilibrium price.
C)the demand curve shifted to the left resulting in a decrease in the equilibrium price.
D)the demand curve shifted to the right resulting in an increase in the equilibrium price.

Accepted Answer

An increase in the supply of oranges due to the bumper crop in Florida would result in a rightward shift of the supply curve. This would create an excess supply of oranges, causing the price to decrease until a new equilibrium is reached. Therefore, choice A is the correct answer.

Question 15

Because new plastic and recycled plastic are substitutes,as the price of newly produced plastic decreases
A)the demand curve for recycled plastic shifts to the left.
B)the demand curve for recycled plastic shifts to the right.
C)there is a movement up along the demand curve for recycled plastic.
D)there is a movement down along the demand curve for recycled plastic.

Accepted Answer

As the price of newly produced plastic decreases, people will be less likely to buy recycled plastic because it is more expensive in comparison. This will cause a decrease in the demand for recycled plastic, represented by a leftward shift in the demand curve.

Question 16

Which of the following statements is true?
A)An increase in supply 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 17

The following appeared in a Florida newspaper a week after a hurricane hit the state."Floridians are relieved that the storm produced no fatalities but homeowners face weeks,if not months,of rebuilding.Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path.Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?
A)The hurricane reduced the number of suppliers of building materials.
B)The hurricane created an artificial shortage of building materials.
C)The hurricane caused an increase in the demand for building materials.
D)There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm.

Accepted Answer

The answer of The following appeared in a Florida newspaper...

Question 18

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
A)a decrease in demand and an increase in supply
B)an increase in supply
C)an increase in supply and an increase in demand greater than the increase in supply
D)a decrease in demand and a decrease in supply

Accepted Answer

An increase in supply would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon. This is because with more supply available, suppliers would have to lower prices in order to attract buyers, and with a lower price, consumers would be willing and able to purchase more of the product.

Question 19

A decrease in the equilibrium price for a product will result
A)when the quantity demanded for the product exceeds the quantity supplied.
B)when there is a decrease in supply and a decrease in demand for the product.
C)when there is an increase in supply and a decrease in demand for the product.
D)when there is a decrease in demand and a decrease in the number of firms producing the product.

Accepted Answer

When there is an increase in supply and a decrease in demand for the product, the equilibrium price decreases. This is because the increase in supply results in a surplus of the product, leading to firms lowering prices in order to sell off their excess inventory. At the same time, the decrease in demand means there are fewer buyers willing to purchase the product at the previous price, so firms must lower prices even further to stimulate demand.

Question 20

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?
A)Demand will increase,but these two factors will not shift the supply curve.
B)Supply will increase,but these two factors will not shift the demand curve.
C)Demand and supply will both increase.
D)Demand will increase and supply will decrease.

Accepted Answer

If more insurance companies cover part of the price of laser eye surgery, this will make it more affordable for consumers, leading to an increase in demand. With more doctors entering the field, the supply of laser eye surgery services will increase. Therefore, both factors will cause an increase in both demand and supply in the market for laser eye surgery.

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

Let D = demand,S = supply,P = equilibrium price,and Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

Select the phrase that correctly completes the following statement."An increase in input prices caused a decrease in the supply of baseballs.As a result ________."

All else equal,the decrease in the price of complementary products for the Apple Watch,such as Sensoria's wearable technology,would

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

A decrease in the equilibrium quantity for a product will result

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and favorable weather has increased the grape harvest of California vineyards.In the market for red wine,these two developments would

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes,accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions,will result in

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise.Holding everything else constant,how would this affect the market for corn (a substitute for wheat) ?

The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen.In the market for beef,this would be represented by the equilibrium price and the equilibrium quantity .

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."

Suppose favorable weather resulted in a bumper crop of oranges in Florida.In the market for oranges

Because new plastic and recycled plastic are substitutes,as the price of newly produced plastic decreases

Which of the following statements is true?

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

A decrease in the equilibrium price for a product will result

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery,what will happen in the market for laser eye surgery as a result of these two factors?