Question 1

Figure 3-2 
-Refer to Figure 3-2.An increase in price of inputs would be represented by a movement from
A)A to B.
B)B to A.
C)S1 to S2.
D)S2 to S1.

Accepted Answer

An increase in price of inputs would lead to an increase in the cost of production, causing a shift from S1 to S2, indicating a decrease in the quantity producers are willing to supply at each price level. Therefore, the correct choice is D, which represents a shift from S2 to S1.

Question 2

Figure 3-2 
-Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from
A)A to B.
B)B to A.
C)S1 to S2.
D)S2 to S1.

Accepted Answer

A decrease in price would cause an increase in quantity demanded, leading to a movement along the demand curve from point A to point B. There is no mention of a change in supply, so choices C and D, which involve shifts in the supply curve, are not applicable.

Question 3

If in the market for oranges the supply has increased,then
A)the supply curve for oranges has shifted to the right.
B)the supply curve for oranges has shifted to the left.
C)there has been a movement upwards along the supply curve for oranges.
D)there has been a movement downwards along the supply curve for oranges.

Accepted Answer

An increase in supply would shift the supply curve to the right. This means that at each price, there would be a greater quantity of oranges supplied.

Question 4

Draw a demand curve and label it D1.On the graph,illustrate an increase in demand and a decrease in demand,and label the curves D2 and D3,respectively.Starting on demand curve D1,explain the shift that would result from each of the following events:
a.a decrease in income and the good is a normal good
b.a decrease in income and the good is an inferior good
c.an increase in the price of a substitute good
d.an increase in the price of a complementary good
e.a decrease in the taste for the good
f.an increase in population
g.a decrease in the expected future price of the good

Accepted Answer

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Question 5

Cole was discussing the market for cocoa beans with his friend John Schmidt.Cole said,"Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years,the price of cocoa beans has been rising and rising and people are buying more and more.I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.

Accepted Answer

The answer of Cole was discussing the market for cocoa...

Question 6

Figure 3-2 
-Refer to Figure 3-2.An increase in the number of firms in the market would be represented by a movement from
A)A to B.
B)B to A.
C)S1 to S2.
D)S2 to S1.

Accepted Answer

An increase in the number of firms in the market would result in an increase in supply, shifting the supply curve to the right from S1 to S2. This would result in a lower equilibrium price (P2) and a higher equilibrium quantity (Q2) as shown in the diagram. Therefore, the correct choice is C, S1 to S2.

Question 7

Explain the Law of Demand.

Accepted Answer

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Question 8

Which of the following would cause a decrease in the supply of milk?
A)an increase in the price of cookies (assuming that milk and cookies are complements)
B)a decrease in the price of milk
C)an increase the price of a product that producers sell instead of milk
D)an increase in the number of firms that produce milk

Accepted Answer

If the price of a product that producers sell instead of milk increases, producers may switch to producing that product instead of milk, leading to a decrease in the supply of milk. The other choices either have no direct relation to the supply of milk (choice B) or would increase the supply of milk (choices A and D).

Question 9

Last year,the Pottery Palace supplied 8,000 ceramic pots at $40 each.This year,the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence,The Pottery Palace has experienced
A)a decrease in supply.
B)an increase in supply.
C)an increase in the quantity supplied.
D)a decrease in the quantity supplied.

Accepted Answer

The answer of Last year,the Pottery Palace supplied 8,000 ceramic...

Question 10

Figure 3-2 
-Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from
A)A to B.
B)B to A.
C)S1 to S2.
D)S2 to S1.

Accepted Answer

An increase in the price of substitutes in production would reduce the supply of the good, hence shift the supply curve to the left (from S1 to S2). Thus, the correct answer is D.

Question 11

A supply schedule
A)is a table that shows the relationship between the price of a product and the quantity of the product supplied.
B)is a curve that shows the relationship between the price of a product and the quantity of the product supplied.
C)is the relationship between the supply of a product and the cost of producing the product.
D)is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Accepted Answer

A supply schedule is a table that lists the various quantities of a product or service that producers are willing to supply at each specific price point. It shows the relationship between the price of a product and the quantity of the product supplied.

Question 12

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if
A)supplier expectations about future prices change.
B)the price of the good changes.
C)the cost of producing the good changes.
D)prices of substitutes in production change.

Accepted Answer

A change in the quantity supplied refers to a movement along the supply curve due to a change in the price of the good. A change in supply refers to a shift in the entire supply curve due to a change in factors other than the price of the good, such as changes in production costs or technology, supplier expectations, or prices of substitutes. Therefore, options A, C, and D would all lead to a change in supply, not just a change in the quantity supplied.

Question 13

Use the following demand schedule for cherries to draw a graph of the demand curve.Be sure to label the demand curve and each axis,and show each point on the demand curve.
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars per } \
\text { bushel) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (thousands of } \
\text { bushels) }
\end{array} \
\hline 60 & 40 \
\hline 50 & 80 \
\hline 40 & 120 \
\hline 30 & 160 \
\hline 20 & 200 \
\hline
\end{array}$$

Accepted Answer

The answer of Use the following demand schedule for cherries...

Question 14

Explain the difference between substitutes and complements.

Accepted Answer

The answer of Explain the difference between substitutes and complements....

Question 15

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated.
a.House plants and potato chips
b.Eyeglasses and contact lenses
c.Motorcycles and gasoline
d.Smartphone and smartphone apps
e.Red wine and white wine

Accepted Answer

The answer of For each of the following pairs of...

Question 16

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated.
a.Swim fins and scuba tanks
b.Coca Cola and Volkswagens
c.Printers and ink cartridges
d.Ice and ice chests
e.Heineken and Corona

Accepted Answer

The answer of For each of the following pairs of...

Question 17

Suppose that in October,market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October,holding everything else constant?
A)The supply curve shifts to the right.
B)The supply curve shifts to the left.
C)The quantity of platinum demanded and the quantity of platinum supplied both increase.
D)The demand curve shifts to the right.

Accepted Answer

The answer of Suppose that in October,market analysts predict that...

Question 18

What is the difference between a demand schedule and a demand curve?

Accepted Answer

The answer of What is the difference between a demand...

Question 19

If in the market for peaches the supply curve has shifted to the left
A)the supply of peaches has increased.
B)the supply of peaches has decreased.
C)the quantity of peaches supplied has increased.
D)the quantity of peaches supplied has decreased.

Accepted Answer

When the supply curve shifts to the left, it means that the quantity of peaches supplied has decreased at every price. This could be due to factors such as bad weather, disease or pest infestation impacting the peach crop, or a decrease in the number of peach farmers. Therefore, the best choice is B, the supply of peaches has decreased.

Question 20

What is the difference between an "increase in supply" and an "increase in quantity supplied"?
A)There is no difference between the two terms;they both refer to a shift of the supply curve.
B)There is no difference between the two terms;they both refer to a movement along a given supply curve.
C)An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased.
D)An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Accepted Answer

The answer of What is the difference between an "increase...

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

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

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

If in the market for oranges the supply has increased,then

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

Explain the Law of Demand.

Which of the following would cause a decrease in the supply of milk?

Last year,the Pottery Palace supplied 8,000 ceramic pots at $40 each.This year,the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence,The Pottery Palace has experienced

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

A supply schedule

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Explain the difference between substitutes and complements.

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.House plants and potato chips b.Eyeglasses and contact lenses c.Motorcycles and gasoline d.Smartphone and smartphone apps e.Red wine and white wine

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

Suppose that in October,market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October,holding everything else constant?

What is the difference between a demand schedule and a demand curve?

If in the market for peaches the supply curve has shifted to the left

What is the difference between an "increase in supply" and an "increase in quantity supplied"?