Question 1

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.

Accepted Answer

When the number of buyers in a market increases, demand for the product typically increases, leading to a higher equilibrium price and a higher equilibrium quantity, assuming all other factors remain constant.

Question 2

The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?

Accepted Answer

The study suggesting a negative outcome from owning teddy bears would likely decrease consumer demand, leading to a decrease in price due to a shift in the demand curve, not the supply curve.

Question 3

A technological advancement for Good A will shift the _________ curve of Good A to the _________, making the equilibrium price _________.

Accepted Answer

A technological advancement in the production of Good A would make its production more efficient, leading to an increase in supply. This shift in the supply curve to the right typically results in a lower equilibrium price, as more of the good can be produced at each price level.

Question 4

Wine and cheese are complement goods because they are consumed together. What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?

Accepted Answer

Wine and cheese are complement goods, which means that when the price of wine increases, the demand for cheese will decrease. As a result, the equilibrium quantity of cheese will also decrease due to a decrease in demand. Therefore, the correct answer is E.

Question 5

A decrease in demand is represented by a:

Accepted Answer

A decrease in demand means that consumers are willing and able to purchase less of the product at every given price. This is represented by a shift of the demand curve to the left, which means that at every price level, the quantity demanded will be lower than before.

Question 6

If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

Accepted Answer

A decrease in the price of Android phones, which are substitutes for iPhones, would lead to a decrease in the demand for iPhones. This would result in a lower equilibrium price and quantity for iPhones as consumers switch to the more affordable Android options.

Question 7

When the demand curve shifts to the left and all else is held constant, the

Accepted Answer

When the demand curve shifts to the left, it means that there is a decrease in demand for the product or service. This decrease in demand leads to a decrease in both the equilibrium price and quantity. This is because there is less demand for the product, so producers need to lower the price in order to sell all of their goods. As a result, the quantity of goods sold decreases since there is less demand for them.

Question 8

In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.

Accepted Answer

The answer of In the first few months of 2012,...

Question 9

A shortage occurs whenever:

Accepted Answer

A shortage occurs when the quantity supplied is less than the quantity demanded, meaning that there is excess demand in the market.

Question 10

The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.

Accepted Answer

When the government places a tax on a good, it increases the cost of production, which shifts the supply curve to the left. This reduces the equilibrium quantity and increases the equilibrium price. On the other hand, when the government places a subsidy on a good, it provides financial assistance to suppliers. This reduces the cost of production and shifts the supply curve to the right. This increases the equilibrium quantity and decreases the equilibrium price. So, option A is the correct answer.

Question 11

The economists at JET Consulting consider Campbell's Soup to be an inferior good. During a recession, when the income in the economy is decreasing, economists at JET Consulting would expect the demand curve for Campbell's Soup to _________, causing the equilibrium price to _________ and the equilibrium quantity to _________.

Accepted Answer

Inferior goods are those for which demand increases when consumer income decreases. During a recession, as incomes fall, consumers tend to buy more of these goods because they are cheaper alternatives to more expensive options. Therefore, the demand curve for Campbell's Soup would shift to the right, causing both the equilibrium price and quantity to increase.

Question 12

When the demand curve shifts to the right and the supply curve is held constant,

Accepted Answer

When the demand curve shifts to the right and the supply curve is held constant, the equilibrium price and quantity both increase. This is because the increase in demand leads to a higher price and quantity sold at equilibrium.

Question 13

Which of the following scenarios would explain the change in equilibrium shown in the accompanying figure?

Accepted Answer

The answer of Which of the following scenarios would explain...

Question 14

Assume that the market for baseballs is in equilibrium. There is a sudden decrease in income throughout the economy. If all else is held constant, we would expect that:

Accepted Answer

The answer of Assume that the market for baseballs is...

Question 15

Some studies have shown that eating chocolate before a test can increase brain activity, thereby causing students to score higher on exams. When these findings were announced, the price and quantity sold of chocolate increased in college towns. One reason for this could have been that the:

Accepted Answer

The increase in price and quantity sold suggests that consumers increased their demand for chocolate in response to the reported benefits of consuming it before exams. The other options (A, C, D, and E) don't make sense based on the information given.

Question 16

According to the accompanying figure, if the price is $10, there is a:

Accepted Answer

A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price. If the figure shows that at $10, the quantity supplied is 15 units more than the quantity demanded, then there is a surplus of 15 units.

Question 17

When supply shifts to the right and demand stays constant, the equilibrium price:

Accepted Answer

The answer of When supply shifts to the right and...

Question 18

When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price.

Accepted Answer

When the price is above the equilibrium price, there is more supply than demand, leading to a surplus. This surplus puts downward pressure on the price as sellers lower prices to clear their excess inventory, moving the price back towards equilibrium.

Question 19

The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut butter is good for your heart. Holding all other factors constant, which of the following scenarios could happen?

Accepted Answer

The study stating that the fat in peanut butter is good for your heart would increase the demand for peanut butter, as more consumers would be willing to buy it. This would result in a demand shift to the right, causing the equilibrium price to increase. Therefore, the price of peanut butter would likely increase to $7 due to a demand shift. A supply shift is less likely to occur because the study does not necessarily affect the production or availability of peanut butter. Choice E is also possible, as both shifts could occur simultaneously, but it is less likely than D.

Question 20

-Refer to the accompanying diagram. Which of the following scenarios would explain this change in equilibrium?

Accepted Answer

If the price of a substitute of the good increased, consumers would shift their demand towards the original good, causing an increase in equilibrium quantity and an increase in equilibrium price as shown in the diagram.

Quiz 3: The Market at Work: Supply and Demand

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _ and the equilibrium quantity to _, holding all else constant.