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Refer to the accompanying figure.When the price changes from P₁ to P₂,we will see a(n) : Refer to the accompanying figure.When the price changes from P₁ to P₂,we will see a(n) : A) decrease in supply from Q₁ to Q₂. B) increase in supply from Q₂ to Q₁. C) decrease in quantity supplied from Q₁ to Q₂. D) increase in quantity supplied from Q₂ to Q₁. E) shift of the supply curve.


A) decrease in supply from Q₁ to Q₂.
B) increase in supply from Q₂ to Q₁.
C) decrease in quantity supplied from Q₁ to Q₂.
D) increase in quantity supplied from Q₂ to Q₁.
E) shift of the supply curve.

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During the winter months,many elderly persons leave their homes in northern New York and travel south to Florida or Arizona.What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?


A) They would both increase.
B) They would both decrease.
C) One would increase and one would decrease, but we don't know which would do what.
D) The price would increase and the quantity would decrease.
E) The price would decrease and the quantity would increase.

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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?


A) It would increase because of a supply shift.
B) It would increase because of a demand shift.
C) It would stay the same because of both a demand and a supply shift.
D) It would decrease because of a supply shift.
E) It would decrease because of a demand shift.

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Answer the following questions about a market that is perfectly competitive: a. If the price is above the equilibrium price, would there be a shortage or a surplus? b. What will happen if the price is below the equilibrium price? c. During a shortage, how does the market respond until it once again reaches equilibrium?

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a.If the price is above the equilibrium ...

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The price of good X increases by 25%,causing the quantity consumed of good Y to decrease by 10%.If everything else is held constant in the economy,we can say with certainty that good X and good Y are:


A) substitutes.
B) inferior.
C) complements.
D) normal.
E) unrelated.

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Refer to the table below.The equilibrium price and quantity in this market is: Refer to the table below.The equilibrium price and quantity in this market is: A) $4.00 and 40 units. B) $4.00 and 80 units. C) $2.00 and 50 units. D) $2.00 and 60 units. E) $8.00 and 40 units.


A) $4.00 and 40 units.
B) $4.00 and 80 units.
C) $2.00 and 50 units.
D) $2.00 and 60 units.
E) $8.00 and 40 units.

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Refer to the accompanying diagram.Which of the following scenarios would explain this change in equilibrium? Refer to the accompanying diagram.Which of the following scenarios would explain this change in equilibrium? A) A number of firms left the market. B) A number of buyers entered the market, and a number of firms entered the market. C) The price of a complement of this good increased. D) The price of a substitute of this good increased. E) The price of this good decreased.


A) A number of firms left the market.
B) A number of buyers entered the market, and a number of firms entered the market.
C) The price of a complement of this good increased.
D) The price of a substitute of this good increased.
E) The price of this good decreased.

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On January 30,2012,Starbucks India announced plans to open 50 cafés.What would you expect to happen to the market for coffee in India,assuming all other factors are held constant?


A) The demand for coffee will increase in India.
B) The demand for coffee will decrease in India.
C) Both the supply and demand for coffee will increase in India.
D) The supply for coffee will increase in India.
E) The supply for coffee will decrease in India.

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Refer to the table below: Refer to the table below: Assume that the market for iPods has only two consumers: Chuck and Ryan.According the table above,if the price of an iPod is $85,the market will demand: A) 8 iPods. B) 6 iPods. C) 5 iPods. D) 28 iPods. E) 45 iPods. Assume that the market for iPods has only two consumers: Chuck and Ryan.According the table above,if the price of an iPod is $85,the market will demand:


A) 8 iPods.
B) 6 iPods.
C) 5 iPods.
D) 28 iPods.
E) 45 iPods.

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Imperfect markets:


A) do not exist in democracies.
B) always result in supply exceeding demand.
C) always result in demand exceeding supply.
D) occur when the buyer or seller has an influence on the price.
E) can't occur if there are many buyers and many sellers.

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Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium? Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium? A) (15, $10) B) (15, $6) C) (22, $8) D) (30, $6) E) (30, $10)


A) (15, $10)
B) (15, $6)
C) (22, $8)
D) (30, $6)
E) (30, $10)

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If the cost of flour increases from $3 to $5 a bag,you could predict the supply curve for bagels to:


A) shift to the right.
B) shift to the left.
C) become steeper.
D) become flatter.
E) increase.

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James specializes in college-level economics tutoring.He knows that,during the two weeks before finals,he can charge more for an hour of private tutoring.Expecting this price increase,James will:


A) supply less tutoring now, shifting supply to the left.
B) supply more tutoring now, shifting supply to the right.
C) supply less tutoring now, shifting supply to the right.
D) supply more tutoring now, shifting supply to the left.
E) change the price of tutoring without any shift in supply.

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In March 2012,the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning.Because of this,both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient.If Pepsi and Coke did NOT change their formula,holding all else constant,what do you think would have happened to the demand for these goods,assuming Pepsi and Coke were in a competitive market?


A) The demand curve for both Pepsi and Coke would have shifted to the right, causing the price of both products to decrease and the profits for the companies to fall.
B) The demand curve for Pepsi and Coke would have remained unchanged, but the price of both products would have decreased and the profits for the companies would have fallen.
C) The demand curve for Pepsi and Coke would have decreased, but the prices and profits would not have changed.
D) The demand curve for only one of them would change because Pepsi and Coke are substitutes.
E) The demand curve for Pepsi and Coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.

Correct Answer

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


A) demand; left; decrease.
B) supply; right; increase.
C) demand; right; increase.
D) supply; left; increase.
E) supply; right; decrease.

Correct Answer

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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?


A) The price of teddy bears increases to $7 because of a supply shift.
B) The price of teddy bears decreases to $4 because of a supply shift.
C) The price of teddy bears decreases to $4 because of a demand shift.
D) The price of teddy bears increases to $7 because of a demand shift.
E) The price of teddy bears increases to $7 because of both a demand shift and a supply shift.

Correct Answer

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Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph? Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph? A) firms entering the market B) firms leaving the market C) buyers entering the market D) buyers leaving the market E) an input cost decreasing


A) firms entering the market
B) firms leaving the market
C) buyers entering the market
D) buyers leaving the market
E) an input cost decreasing

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If the price of a good increases,holding all else constant,


A) the demand for all of that good's substitutes will decrease.
B) the quantity demanded for that good will increase.
C) the demand for all of that good's complements will increase.
D) the demand for all of that good's substitutes will increase.
E) the demand curve will shift to the left.

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In one year,15 bowling alleys opened in California.During that same year,ESPN started broadcasting professional bowling on TV,which sparked more interest in the sport.What would we expect to happen to the price and quantity of a game of bowling in California during that year?


A) Equilibrium price will be indeterminate and equilibrium quantity will go down.
B) Equilibrium price will go up and equilibrium quantity will go up.
C) Equilibrium price will go down and equilibrium quantity will be indeterminate.
D) Equilibrium price will be indeterminate and equilibrium quantity will go up.
E) Equilibrium price will go up and equilibrium quantity will be indeterminate.

Correct Answer

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Which of the following could cause the supply curve for the market for oranges to shift to the left?


A) an increase in the income of consumers of oranges
B) a decrease in the cost of workers
C) an increase in the price of orange juice
D) a new study saying that eating oranges will give you heart disease
E) a severe hurricane in Florida

Correct Answer

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