Question 1

Which of the following generation categories has the largest population in the United States in 2015?
A)the millennials
B)generation X
C)the baby boomers
D)the centenarians

Accepted Answer

The answer of Which of the following generation categories has...

Question 2

In January,buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January,holding all else constant?
A)The supply curve shifts to the right.
B)The demand curve shifts to the left.
C)The demand curve shifts to the right.
D)The quantity demanded increases.

Accepted Answer

When buyers expect that the price of gold will rise in the next month, the demand for gold increases in the current month due to speculative demand. This results in a rightward shift in the demand curve for gold. All else constant, this will lead to an increase in the equilibrium price and quantity of gold in the market.

Question 3

How does the increasing use of MP3 players affect the market for compact discs?
A)The demand curve for compact discs shifts to the right.
B)The supply curve for compact discs shifts to the left.
C)The supply curve for compact discs shifts to the right.
D)The demand curve for compact discs shifts to the left.

Accepted Answer

The increasing use of MP3 players means that more people are opting for digital music rather than physical CDs. This decreases the demand for CDs, shifting the demand curve for compact discs to the left.

Question 4

If smartwatches are considered substitutes for smartphones,then the decline in the price of smartwatches would,all else equal
A)increase the demand for smartphones.
B)decrease the demand for smartphones.
C)increase the quantity of smartphones demanded.
D)decrease the quantity of smartphones demanded.

Accepted Answer

If smartwatches are substitutes for smartphones, then a decrease in the price of smartwatches will make them relatively cheaper compared to smartphones. As a result, consumers will switch to buying more smartwatches and less smartphones, leading to a decrease in the demand for smartphones. Therefore, the correct choice is B.

Question 5

If the price of music downloads was to decrease,then
A)the demand for MP3 players would decrease.
B)the demand for MP3 players would increase.
C)the supply of MP3 players would increase.
D)the quantity of MP3 players demanded would decrease.

Accepted Answer

A decrease in the price of music downloads would make them more accessible and affordable for consumers. As a result, the demand for MP3 players would likely increase, as people would want a device to play their newly downloaded music on.

Question 6

In June,buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June,holding everything else constant?
A)The demand curve shifts to the right.
B)The quantity demanded increases.
C)The quantity demanded decreases.
D)The demand curve shifts to the left.

Accepted Answer

When buyers of titanium expect a fall in the price of titanium in the future, they tend to delay their purchases in anticipation of lower prices. This leads to a decrease in the quantity demanded of titanium in the market. As a result, the demand curve shifts to the left.

Question 7

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?
A)The demand curve for California wine shifts to the left in anticipation of higher prices in the future.
B)The demand curve for California wine shifts to the right in anticipation of higher prices in the future.
C)The supply curve for California wine shifts to the right in anticipation of higher prices in the future.
D)The supply curve for California wine shifts to the left in anticipation of lower quantities in the future.

Accepted Answer

Buyers rushing to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest indicates an increase in demand for California wine. As a result, the demand curve for California wine shifts to the right in anticipation of higher prices in the future. This is because buyers are anticipating a shortage of wine due to lower grape harvest and are therefore willing to pay higher prices to secure their supply.

Question 8

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas,potato chips and pistachios are
A)substitutes in consumption.
B)both inferior goods.
C)complements in consumption.
D)both luxury goods.

Accepted Answer

When the price of pistachios increased, Tomas substituted them for potato chips, indicating that they are substitutes in consumption.

Question 9

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?
A)The calcium supply curve shifts to the right because of a change in tastes in favor of calcium.
B)The calcium demand curve shifts to the right because of a change in tastes in favor of calcium.
C)The calcium demand curve shifts to the left because this new information will increase the price of calcium.
D)The calcium supply curve shifts to the left because this new information will increase the price of calcium.

Accepted Answer

The link between calcium consumption and a reduction in osteoporosis creates a positive externality, which means that consuming calcium has benefits for not only the consumer but also for society as a whole. This new information may lead individuals to want to consume more calcium, which will shift the calcium demand curve to the right. As a result, the market for calcium will experience an increase in both equilibrium price and quantity.

Question 10

A firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it
A)should wait until its competitors develop a similar product before deciding on devoting resources to its own product development.
B)is not able to develop more than one new product at a time.
C)must be certain that the product it chooses to develop will be successful or it will not be able to stay in business.
D)faces a trade-off,because resources used to develop one product will not be available to develop another product.

Accepted Answer

The statement "any firm has only limited resources" implies that resources used for one project will not be available for another project. This means that the firm must make a trade-off and choose which project to allocate its resources towards. Therefore, option D is the correct answer. Option A is not a sound strategy because the firm may lose out on market opportunities by waiting for competitors to develop a similar product. Option B is not necessarily true as a firm may have enough resources to develop multiple products simultaneously. Option C is also not necessarily true as there is always a risk involved in product development, and successful businesses are those that can manage and learn from failure.

Question 11

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?
A)The supply of fertilizer increases.
B)The supply of fertilizer decreases.
C)The demand for fertilizer increases.
D)The demand for fertilizer decreases.

Accepted Answer

Since farmers are producing more corn and wheat, they will require more fertilizer. Hence, the demand for fertilizer will increase.

Question 12

If,in response to a decrease in the price of grapes,the quantity of grapes demanded increases,economists would describe this as
A)an increase in demand.
B)an increase in quantity demanded.
C)a change in consumer income.
D)an increase in consumers' taste for grapes.

Accepted Answer

An increase in quantity demanded occurs when the price of a good decreases and causes consumers to buy more of the good. It is different from an increase in demand, which is when factors such as consumer income or taste for the good lead to a shift in the entire demand curve.

Question 13

A(n)________ is represented by a leftward shift of the demand curve while a(n)________ is represented by a movement along a given demand curve.
A)decrease in demand;increase in demand
B)decrease in demand;increase in quantity demanded
C)increase in demand;decrease in quantity demanded
D)decrease in quantity demanded;decrease in demand

Accepted Answer

A leftward shift of the demand curve represents a decrease in demand, while a movement along a given demand curve represents a change in quantity demanded. Therefore, option B, decrease in demand; increase in quantity demanded, is the best choice to complete the sentence.

Question 14

Suppose that when the price of raspberries increases,Lonnie increases his purchases of papayas.To Lonnie
A)raspberries and papayas are complements.
B)raspberries and papayas are inferior goods.
C)raspberries and papayas are normal goods.
D)raspberries and papayas are substitutes.

Accepted Answer

When the price of raspberries increases, Lonnie increases his purchases of papayas, which means that he see raspberries and papayas as substitutes, since he is willing to substitute one for the other as the price of one increases.

Question 15

If the price of automobiles was to increase,then
A)the demand for gasoline would decrease.
B)the demand for gasoline would increase.
C)the supply of gasoline would increase.
D)the quantity of gasoline demanded would decrease.

Accepted Answer

The answer of If the price of automobiles was to...

Question 16

The law of demand implies,holding everything else constant,that as the price of gelato
A)increases,the demand for gelato will increase.
B)increases,the quantity of gelato demanded will increase.
C)decreases,the quantity of gelato demanded will increase.
D)decreases,the demand for gelato will increase.

Accepted Answer

The answer of The law of demand implies,holding everything else...

Question 17

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?
A)The demand curve for traditional cameras shifts to the right.
B)The supply curve for traditional cameras shifts to the right.
C)The demand curve for traditional cameras shifts to the left.
D)The supply curve for traditional cameras shifts to the left.

Accepted Answer

The lower prices of digital cameras make them more affordable and accessible to consumers, resulting in a shift in demand away from traditional cameras. As a result, the demand curve for traditional cameras shifts to the left. With less demand for traditional cameras, their prices may also decrease, causing a potential shift in supply. However, the question specifically mentions the impact of lower digital camera prices on the market for traditional cameras, so we can conclude that the most significant impact will be on demand, leading to a leftward shift in the demand curve for traditional cameras.

Question 18

Which of the following has occurred as the millennial generation has come of age?
A)The demand for "fast casual" food has decreased in the U.S.market.
B)The demand for golf equipment has decreased in the U.S.market.
C)The demand for traditional fast food has increased in the U.S.market.
D)all of the above

Accepted Answer

Studies show that the millennial generation is less interested in playing golf, which has led to a decrease in demand for golf equipment in the U.S. market. There is no evidence to suggest that the demand for traditional fast food has increased, and while there have been reports of a slowdown in the growth of "fast casual" food, it has not been a significant decline.

Question 19

Suppose that when the price of hamburgers decreases,the Ruiz family increases their purchases of ketchup.To the Ruiz family
A)hamburgers and ketchup are complements.
B)hamburgers and ketchup and substitutes.
C)hamburgers and ketchup are normal goods.
D)hamburgers are normal goods and ketchup is an inferior good.

Accepted Answer

The fact that the Ruiz family increases their purchases of ketchup when the price of hamburgers decreases indicates that hamburgers and ketchup are complements. This is because their consumption is positively related; when the consumption of hamburgers increases, the consumption of ketchup also increases.

Question 20

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?
A)The demand curve for digital photo printing paper shifts to the right.
B)The demand curve for digital photo printing paper shifts to the left.
C)The supply curve for digital photo printing paper shifts to the right.
D)The supply curve for digital photo printing paper shifts to the left.

Accepted Answer

The answer of Technological advancements have led to lower prices...

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

Which of the following generation categories has the largest population in the United States in 2015?

In January,buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January,holding all else constant?

How does the increasing use of MP3 players affect the market for compact discs?

If smartwatches are considered substitutes for smartphones,then the decline in the price of smartwatches would,all else equal

If the price of music downloads was to decrease,then

In June,buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June,holding everything else constant?

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

Tomas increased his consumption of potato chips when the price of pistachios increased.For Tomas,potato chips and pistachios are

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

A firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

If,in response to a decrease in the price of grapes,the quantity of grapes demanded increases,economists would describe this as

A(n) is represented by a leftward shift of the demand curve while a(n) is represented by a movement along a given demand curve.

Suppose that when the price of raspberries increases,Lonnie increases his purchases of papayas.To Lonnie

If the price of automobiles was to increase,then

The law of demand implies,holding everything else constant,that as the price of gelato

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital) cameras?

Which of the following has occurred as the millennial generation has come of age?

Suppose that when the price of hamburgers decreases,the Ruiz family increases their purchases of ketchup.To the Ruiz family

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?