Question 1

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated.
A.Digital camera and memory stick
B.7Up and Mountain Dew
C.Swimsuits and flip-flops
D.Tylenol and cat food
E.Photocopier and paper

Accepted Answer

a.complements
b.Subs...

Question 2

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Accepted Answer

A)  the law of demand has been violated.
B)  the number of tarot card readers has increased.
C)  the demand for tarot card readers has increased.
D)  tarot card readers are deliberately charging high prices because they provide services for superstitious clients.

Question 3

In a perfectly competitive market, there are ________ buyers and ________ sellers.

Accepted Answer

A)  many; few
B)  few; many
C)  many; many
D)  few; few

Question 4

If the price of music downloads was to decrease, then

Accepted Answer

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.

Question 5

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets.To the Landry family

Accepted Answer

A)  hamburgers and chicken nuggets are complements.
B)  hamburgers and chicken nuggets are inferior goods.
C)  hamburgers and chicken nuggets are normal goods.
D)  hamburgers and chicken nuggets are substitutes.

Question 7

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

Accepted Answer

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.

Question 8

Cigars are becoming increasingly popular in the United States, and a growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S.market.How has this affected the equilibrium price and quantity of cigars?

Accepted Answer

The supply curve for cigars sh...

Question 9

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good.
a.The population increases and the price of inputs increase.
b.The price of a complement increases and technology advances.
c.The number of firms in the market increases and income increases.
d.Price is expected to increase in the future.
e.Consumer preference increases and the price of a substitute in production decreases.

Accepted Answer

a.Price increases; Quantity may increase...

Question 10

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?

Accepted Answer

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.

Question 11

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?

Accepted Answer

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.

Question 12

Discuss the correct and incorrect economic analysis in the following statement.
"If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase.This will result in a price decrease, which will then cause the supply of pineapples to decrease."

Accepted Answer

The supply of pineapples will ...

Question 13

Table 3-2
 
-Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market.If the price of caviar rises from $65 to $75, the market quantity demanded would

Accepted Answer

A)  decrease by 36 oz.
B)  increase by 52 oz.
C)  increase by 36 oz.
D)  decrease by 52 oz.

Question 14

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Accepted Answer

A) True 
 B)False

Question 15

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Accepted Answer

A)  D decreases, S no change, P and Q decrease
B)  S decreases, D no change, P increases, Q decreases
C)  D and S decrease, P and Q increase
D)  D no change, S decreases, P increases, Q increases

Question 16

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

Accepted Answer

An increase in the price of mo...

Question 17

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

Accepted Answer

A)  a decrease in the price of orange juice processing
B)  an increase in the cost of fertilizer used for orange groves
C)  a decrease in income, assuming orange juice is a normal good
D)  a decrease in the population

Question 18

An increase in the price of off-road vehicles will result in

Accepted Answer

A)  a smaller quantity of off-road vehicles supplied.
B)  a larger quantity of off-road vehicles supplied.
C)  an increase in the demand for off-road vehicles.
D)  a decrease in the supply of off-road vehicles.

Question 19

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 20

Figure 3-6
 
-Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

Accepted Answer

A)  the quantity demanded exceeds the quantity supplied by 75. The price will eventually rise to $25 where quantity demanded will equal quantity supplied.
B)  the demand exceeds the supply of tote bags by 55. Some consumers will have an incentive to offer to buy tote bags at a higher price.
C)  there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.
D)  there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.

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

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Correct Answer
verified

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Correct Answer
verified

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

Correct Answer
verified

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

Correct Answer
verified
An increase in the price of mo...
View Answer

An increase in the price of off-road vehicles will result in

Correct Answer
verified

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?

Correct Answer
verified

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

Correct Answer
verified

If the price of music downloads was to decrease, then

Correct Answer
verified

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets.To the Landry family

Correct Answer
verified

Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase.This will result in a price decrease, which will then cause the supply of pineapples to decrease."

Correct Answer
verified
The supply of pineapples will ...
View Answer

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Correct Answer
verified

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

Correct Answer
verified

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated. A.Digital camera and memory stick B.7Up and Mountain Dew C.Swimsuits and flip-flops D.Tylenol and cat food E.Photocopier and paper

Correct Answer
verified
a.complements
b.Subs...
View Answer

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Correct Answer
verified

In a perfectly competitive market, there are buyers and sellers.

Correct Answer
verified

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market.If the price of caviar rises from $65 to $75, the market quantity demanded would

Correct Answer
verified

Cigars are becoming increasingly popular in the United States, and a growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S.market.How has this affected the equilibrium price and quantity of cigars?

Correct Answer
verified
The supply curve for cigars sh...
View Answer

Correct Answer
verified
a.Price increases; Quantity may increase...
View Answer

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?

Correct Answer
verified

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Correct Answer
verified

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

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Correct AnswerverifiedShow Answer

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity.What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Correct AnswerverifiedShow Answer

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

Correct AnswerverifiedShow Answer

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

Correct AnswerverifiedAn increase in the price of mo...View AnswerShow Answer

An increase in the price of off-road vehicles will result in

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price

Correct AnswerverifiedShow Answer

If the price of music downloads was to decrease, then

Correct AnswerverifiedShow Answer

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets.To the Landry family

Correct AnswerverifiedShow Answer

Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase.This will result in a price decrease, which will then cause the supply of pineapples to decrease."

Correct AnswerverifiedThe supply of pineapples will ...View AnswerShow Answer

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated. A.Digital camera and memory stick B.7Up and Mountain Dew C.Swimsuits and flip-flops D.Tylenol and cat food E.Photocopier and paper

Correct Answerverifieda.complementsb.Subs...View AnswerShow Answer

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Correct AnswerverifiedShow Answer

In a perfectly competitive market, there are ________ buyers and ________ sellers.

Correct AnswerverifiedShow Answer

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market.If the price of caviar rises from $65 to $75, the market quantity demanded would

Correct AnswerverifiedShow Answer

Cigars are becoming increasingly popular in the United States, and a growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S.market.How has this affected the equilibrium price and quantity of cigars?

Correct AnswerverifiedThe supply curve for cigars sh...View AnswerShow Answer

Correct Answerverifieda.Price increases; Quantity may increase...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An increase in the price of mo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The supply of pineapples will ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.complements
b.Subs...
View Answer

Correct Answer
verified

In a perfectly competitive market, there are buyers and sellers.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The supply curve for cigars sh...
View Answer

Correct Answer
verified
a.Price increases; Quantity may increase...
View Answer

Correct Answer
verified

Correct Answer
verified