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chapter_3 - Principles of Macroeconomics, 9e ­ TB1...

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Unformatted text preview: Principles of Macroeconomics, 9e ­ TB1 (Case/Fair/Oster) Chapter 3 1 Demand, Supply, and Market Equilibriu 3.1 m Fir 1 M ul ti pl e C 1) h o i c e Michael individual who sold computers by mail order. The company founded by Dell is now one of the largest Dell was and most successful computer companies in the United States. Michael Dell would be classified as a(n) the first A) entrepreneur. B) opportunist. C) monopolist. D) socialist. Answer: A Diff: 1 Topic: Firms and Households Skill: Conceptual 2) Firms are organizations that A) take advantage of the public. B) transform C) resources into products. transform D) outputs into inputs. consumer outputs. Answer: B Diff: 1 Topic: Firms and Households Skill: Definition 3) An entrepreneur is a person who does all of the following EXCEPT A) assumes the risk of a firm. B) organizes and manages a firm. C) turns a new idea or product into a business. D) always makes a profit. Answer: D Diff: 1 Topic: Firms and Households Skill: Definition 4) Why do firms engage in the activity of production? A) to help society advance technologically B) to participate in the circular flow C) to acquire D) profits to develop a supply schedule Answer: C Diff: 1 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 2 Tr ue /F al 1) s e Economis ts would classify the Boston Symphony Orchestra as a firm. Answer: TRUE Diff: 2 Topic: Firms and Households Skill: Conceptual AACSB: Reflective Thinking 2) Househol ds are the consuming units of the economy. Answer: TRUE Diff: 1 Topic: Firms and Households Skill: Definition 3) Entrepren eurs are unnecessary in a market economy and their profit is unearned. Answer: FALSE Diff: 1 Topic: Firms and Households Skill: Conceptual 3.2 Inpu 1 M ul ti pl e C 1) h o i c e In input or factor markets A) consumers B) purchase products. firms supply C) goods. households D) supply resources households demand goods. Answer: C Diff: 1 Topic: Input Markets and Output Markets Skill: Conceptual 2) A factor market is A) where goods are exchanged. B) where resources are exchanged. C) where goods are made. D) organized by government. Answer: B Diff: 1 Topic: Input Markets and Output Markets Skill: Definition 3) In an output market A) consumers B) purchase products. firms purchase resources. C) households earn income. D) land, labor and capital may be exchanged. Answer: A Diff: 2 Topic: Input Markets and Output Markets Skill: Conceptual 4) Among the factors of production are A) capital. B) wages. C) income. D) all of the above Answer: A Diff: 2 Topic: Input Markets and Output Markets Skill: Fact 2 Tr ue /F al 1) s e Factors of production are traded in the product market. Answer: FALSE Diff: 1 Topic: Input Markets and Output Markets Skill: Conceptual 2) Househol ds are paid income for the resources they supply in an input market. Answer: TRUE Diff: 1 Topic: Input Markets and Output Markets Skill: Conceptual 3) Labor is demanded by firms in an output market. Answer: FALSE Diff: 1 Topic: Input Markets and Output Markets Skill: Conceptual 3.3 De 1 M ul ti pl e C 1) h o i c e Which of the following is held constant along the demand curve? A) price of the B) good quantity C) income D) both A and B Answer: C Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 2) Which of the following will NOT cause a shift in the demand curve for compact discs? A) a change in B) income a change in C) wealth a change in the price of downloadable online music D) a change in the price of compact discs Answer: D Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 3) The "law of demand" implies that A) as prices fall, B) demand increases. as prices rise, demand increases. C) as prices fall, quantity demanded increases. D) as prices rise, quantity demanded increases. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Definition 4) Accordin g to the law of demand, as prices rise, ceteris paribus A) demand B) increases. demand C) decreases. quantity D) demanded decreases. quantity demanded increases. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Definition 5) Accordin g to the law of demand there is ________ relationship between price and quantity demanded. A) a positive B) a negative C) either a positive or negative D) a constantly changing Answer: B Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual 6) As an consumes more of a product within a given period of time, it is likely that each additional unit consumed individual will yield A) successively B) less satisfaction. successively C) more satisfaction. the same D) amount of satisfaction. less satisfaction for a while and then start to add more satisfaction. Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in the Figure below to answer the questions that follow. Figure 3.1 7) Refer to 3.1. Which of the following would be most likely to cause the demand for Dr. Pepper to shift from D0 to Figure D1? A) a decrease in B) income, assuming that Dr. Pepper is a normal good an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper C) a decrease in D) the price of Dr. Pepper a reduction in the price of sugar used to make Dr. Pepper Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in the Figure below to answer the questions that follow. Figure 3.2 8) Refer to 3.2. Which of the following would be most likely to cause the demand for macaroni and cheese to shift Figure from D1 to D0? A) an increase in the price of macaroni and cheese B) an increase in the price of flour used to make macaroni and cheese C) an increase in income, assuming macaroni and cheese is a normal good D) an increase in the quantity demanded for macaroni and cheese Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 9) If the demand for coffee decreases as income decreases, coffee is a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good. Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 10) If the demand for sardines increases as income decreases, sardines are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.3 below to answer the questions that follow. Figure 3.3 11) Refer to Figure 3.3. As your income increased, the demand for X shifted from D1 to D2. Good X is A) an inferior B) good. a normal good. C) a luxury good. D) an income- neutral good. Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.4 below to answer the questions that follow. Figure 3.4 12) Refer to 3.4. If consumer income falls, the demand for tuna fish sandwiches shifts from D0 to D1. This implies Figure that tuna fish sandwiches are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.5 below to answer the questions that follow. Figure 3.5 13) Refer to 3.5. If consumer income increases, the demand for chili peppers shifts from D0 to D1. This implies that Figure chili peppers are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 14) Suppose demand for books goes down when the price of video games goes down. We can say that these two the goods are A) complements. B) substitutes. C) unrelated D) goods. perfect substitutes. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 15) During an downturn when consumer income falls, the demand for tacos increases and the demand for sushi economic decreases. This implies that tacos A) and sushi are B) complements. are a normal C) good and sushi is an inferior good. are an inferior good and sushi is a normal good. D) are an economic bad and sushi is an economic good. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 16) A good whose demand is inversely related to income is a(n) A) normal good. B) inferior good. C) regular good. D) new good. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Definition 17) In college practically existed on instant noodles, but now you earn $95,000 a year. You never want to see instant you noodles again. We can safely conclude that you consider instant noodles to be a(n) A) normal good. B) complementary good. C) luxury. D) inferior good. Answer: D Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 18) For inferior goods, an increase in income will cause the A) quantity B) demanded to fall. demand to C) increase. demand to fall. D) quantity demanded to increase. Answer: C Diff: 1 Topic: Demand in Product / Output Markets Skill: Definition 19) A decrease in demand for cameras would likely be caused by A) an increase in the price of a substitute good. B) an increase in the price of cameras. C) an increase in the price of a complementary good. D) a decrease in the price of cameras. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 20) When the decrease in the price of one good causes the demand for another good to decrease, the goods are A) normal. B) inferior. C) substitutes. D) complements. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Definition 21) Demand for one item goes down when the price of another item goes up. These items must be A) substitutes. B) complements. C) normal goods. D) inferior goods. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Definition 22) In to news reports that taking aspirin daily can reduce an individual's risk of a heart attack, there will most response likely be a(n) A) increase in the supply of aspirin. B) decrease in the supply of aspirin. C) increase in the demand for aspirin. D) increase in the quantity demanded of aspirin. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 23) Demand curves are derived while holding constant A) income, tastes, and the price of the good. B) only income C) and tastes. income, tastes, and the prices of other goods. D) only tastes and the price of other goods. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual 24) The quantity demanded of Pepsi has decreased. The best explanation for this is that A) the price of B) Coca-Cola has increased. Pepsi's C) advertising is not as effective as in the past. the price of D) Pepsi has increased. Pepsi consumers had an increase in income. Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.6 below to answer the questions that follow. Figure 3.6 25) Refer to Figure 3.6. The number of DVDs Isabel rents per week increases from 4 to 7. This is caused by A) an increase in income if DVDs are a normal good. B) a decrease in C) the price of popcorn which is a complement to DVDs. a decrease in D) the rental price of DVDs. either A or B Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 26) A change in the price of a good or service leads to a ________ that leads to a ________. A) change in B) demand; movement along the demand curve change in C) quantity demanded; movement along the demand curve change in D) demand; shift in the demand curve change in quantity demanded; shift of the demand curve Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 27) A change in income, preferences, or prices of other goods or services leads to a ________ that causes a ________. A) change in B) demand; movement along the demand curve change in C) quantity demanded; movement along the demand curve change in D) demand; shift of the demand curve change in quantity demanded; shift of the demand curve Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.7 below to answer the following questions. Figure 3.7 28) Refer to 3.7. Assume the market is initially at Point B and that pizza is a normal good. A decrease in income Figure would cause the market to move from Point B on demand curve D2 to A) demand curve B) D1. demand curve C) D3. Point A on D) demand curve D2. Point C on demand curve D2. Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 29) Refer to 3.7. If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement Figure from Point B on demand curve D2 to A) demand curve B) D1. demand curve C) D3. Point A on D) demand curve D2. Point C on demand curve D2. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 30) Refer to 3.7. If pizza and hamburgers are substitutes, an increase in the price of hamburgers will cause a Figure movement from Point B on demand curve D2 to A) demand curve B) D1. demand curve C) D3. Point A on D) demand curve D2. Point C on demand curve D2. Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 31) Refer to Figure 3.7. A movement from Point C to Point B on demand curve D2 would be caused by a(n) A) decrease in B) income, assuming pizza is a normal good. decrease in the price of hamburgers, assuming that pizza and hamburgers are substitutes. C) decrease in the price of pizza. D) increase in the price of pizza. Answer: D Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 32) Refer to Figure 3.7. A decrease in demand is represented by the movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to Point A. D) along D2 from Point B to Point C. Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 33) Refer to Figure 3.7. An increase in quantity demanded is represented by movement A) from D2 to D1. B) from D2 to D3. C) along D2 from Point B to point A. D) along D2 from Point B to point C. Answer: D Diff: 2 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.8 below to answer the following questions. Figure 3.8 34) Refer to 3.8. Assume that there are only two people in the market for baseball caps: Alex and Ryan. Along the Figure market demand curve for baseball caps, at a price of ________, quantity demanded would be ________. A) $10; 7 B) $10; 11 C) $8; 12 D) $8; 13 Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 35) Refer to 3.8. Assume there are only two people in the market for baseball caps: Alex and Ryan. Along the market Figure demand curve for baseball caps, at a price of ________, quantity demanded would be ________. A) $10; 6 B) $10; 12 C) $8; 14 D) $8; 25 Answer: C Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.9 below to answer the following questions. Figure 3.9 36) Refer to 3.9. Assume that there are only two people in the market for coconuts: Sasha and Kyle. Along the market Figure demand curve for coconuts, at a price of ________, quantity demanded would be ________. A) $14; 7 B) $14; 9 C) $10; 9 D) $10; 8 Answer: A Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 37) Refer to 3.9. Assume there are only two people in the market for coconuts: Sasha and Kyle. Along the market Figure demand curve for coconuts, at a price of ________, quantity demanded would be ________. A) $10; 9 B) $10; 10 C) $14; 9 D) $14; 8 Answer: B Diff: 2 Topic: Demand in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Scenario 3.1 below to answer the following questions. SCENARIO 3.1: Rented DVDs and movies shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs and movies shown in theaters are normal goods. People watch rented DVDs more often in the winter than in the summer. 38) Refer to plasma TVs sold in the United States are imported from Japan. If the United States government reduces Scenario the number of plasma TVs that can be imported into the United States, ceteris paribus, what would 3.1. Most happen? A) The price of B) plasma TVs and the rental price of DVDs would decrease. The price of C) plasma TVs would decrease and the rental price of DVDs would increase. The price of D) plasma TVs would increase and the rental price of DVDs would decrease. The price of plasma TVs and the rental price of DVDs would increase. Answer: C Diff: 3 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 39) Refer to 3.1. To raise additional revenues, the government imposes an entertainment tax on movie tickets, but Scenario there are no new additional taxes levied on rented DVDs. This would lead to A) an increase in the price of movie tickets, but no change in the rental price of DVDs. B) an increase in the price of movie tickets and the rental price of DVDs. C) an increase in the price of a movie ticket and a decrease in the rental price of DVDs. D) no change in the price of a movie ticket and an increase in the rental price of DVDs. Answer: B Diff: 3 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 40) Refer to 3.1. You observe that the rental price for DVDs is higher in the winter than in the summer. This would Scenario be explained by the fact that A) demand for B) rented DVDs is higher in the winter than in the summer. the quantity C) demanded of rented DVDs is higher in the winter than in the summer. there are more DVDs released into the rental market in the winter than in the summer. D) consumer income tends to fall in the winter and increase in the summer. Answer: A Diff: 3 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 41) Referto 3.1. The number of stores renting DVDs is reduced by 25%, reducing the number of DVDs available. Scenario Which of the following would occur? A) The rental price of DVDs would increase, and the price of plasma TVs and movie tickets would decrease. B) The rental price of DVDs would increase, but the price of plasma TVs and movie tickets would be unaffected. C) The rental price of DVDs and movie tickets would decrease, but the price of plasma TVs would increase. D) The rental price the price of movie tickets would increase, but the price of plasma TVs would decrease. of DVDs and Answer: D Diff: 3 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 2 Tr ue /F al 1) s e Wealth is a flow measure. Answer: FALSE Diff: 1 Topic: Demand in Product / Output Markets Skill: Fact 2) A change in the price of a good or service leads to a change in quantity demanded of the good. Answer: TRUE Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 3) Quantity demanded of a product is determined only by how much of that product consumers desire. Answer: FALSE Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual 4) Inferior goods are always substandard. Answer: FALSE Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual 5) If iPods and iTunes are complements, then a decrease in the price of iPods will result in a decrease in the demand for iTunes. Answer: FALSE Diff: 1 Topic: Demand in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 3.4 Sup 1 M ul ti pl e C 1) h o i c e Accordin g to the law of supply, there is a A) negative B) relationship between price and the quantity of a good supplied. positive C) relationship between price and the quantity of a good supplied. negative D) relationship between price and the change in supply. positive relationship between price and the change in supply. Answer: B Diff: 2 Topic: Supply in Product / Output Markets Skill: Definition 2) The price drives used in the manufacturing of laptop computers has risen. This will lead to ________ laptop of hard computers. A) an increase in the supply of B) a decrease in C) the supply of an increase in the quantity supplied of D) a decrease in the quantity supplied of Answer: B Diff: 3 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 3) If the price of chili increases, there will be ________ of chili cheese fries. A) an increase in the supply B) a decrease in C) the supply an increase in the quantity supplied D) a decrease in the quantity supplied Answer: B Diff: 3 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 4) A frozen manufacturer can produce either pizzas or calzones. As the result of an increase in the price of calzones, food the firm produces more calzones and fewer pizzas. An economist would explain this by saying A) the supply of B) calzones increased and the supply of pizzas decreased. there has been an increase in the quantity supplied of calzones and a decrease in the quantity supplied of pizzas. C) there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza. D) the supply of calzones increased and the quantity supplied of pizza decreased. Answer: C Diff: 3 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.14 below to answer the following questions. Figure 3.14 5) Refer to 3.14. A decrease in the wage rate of pizza makers will cause a movement from Point B on supply curve Figure S2 to A) Point A on B) supply curve S2. Point B on C) supply curve S2. supply curve D) S3. supply curve S1. Answer: C Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 6) Refer to Figure 3.14. An increase in supply is represented by the movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2. Answer: A Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 7) Refer to Figure 3.14. A decrease in quantity supplied is represented by a movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2. Answer: D Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 8) Refer to 3.14. An increase in the price of pizza sauce will cause a movement from Point B on supply curve S2 to Figure A) supply curve B) S3. supply curve C) S1. Point A on D) supply curve S2. Point C on supply curve S2. Answer: B Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 9) Refer to Figure 3.14. A movement from Point A to Point B on supply curve S2 would be caused by a(n) A) increase in the price of pizza. B) decrease in the demand for pizza. C) increase in the price of pizza dough. D) increase in the price of hamburgers, assuming hamburgers are a substitute for pizza. Answer: B Diff: 3 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.15 below to answer the following questions. Figure 3.15 10) Refer to 3.15. An increase in the wage rate of gardenburger makers will cause a movement from Point B on Figure supply curve S2 to A) Point A on B) supply curve S2. Point B on C) supply curve S2. supply curve D) S3. supply curve S1. Answer: D Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 11) Refer to Figure 3.15. A decrease in supply is represented by the movement from A) S2 to S3. B) S2 to S1. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2. Answer: B Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 12) Refer to Figure 3.15. An increase in quantity supplied is represented by a movement from A) S2 to S1. B) S2 to S3. C) Point B to Point A along supply curve S2. D) Point B to Point C along supply curve S2. Answer: C Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 13) Refer to 3.15. A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Figure Point B on supply curve S2 to A) supply curve B) S3. supply curve C) S1. Point A on D) supply curve S2. Point C on supply curve S2. Answer: A Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 14) Refer to Figure 3.15. A movement from Point C to Point B on supply curve S2 would be caused by a(n) A) decrease in the price of gardenburgers. B) increase in the demand for gardenburgers. C) decrease in the price of mushrooms. D) decrease in the price of hamburgers, assuming hamburgers are a substitute for pizza. Answer: B Diff: 3 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 15) The change in the price of a good leads to a change in ________, which leads to a ________. A) quantity B) supplied; movement along a supply curve quantity C) supplied; shift of the supply curve supply; D) movement along a supply curve supply; shift of the supply curve Answer: A Diff: 2 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.16 below to answer the questions that follow. Figure 3.16 16) Refer to Figure 3.16. The supply curve for hula hoops shifts from S0 to S1. This could be caused by A) an decrease in the price of hula hoops. B) a decrease in C) the number of firms selling hula hoops. a decrease in D) the demand for hula hoops. either B or C Answer: B Diff: 2 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.11 below to answer the questions that follow. Figure 3.11 17) Refer to Figure 3.11. Assume hamburgers are a normal good. An increase in income will cause a movement from: A) Point A to Point B. B) Point G to Point F. C) D1 to D2. D) S1 to S2. Answer: C Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 18) Refer to 3.11. Assume hamburgers and hot dogs are substitutes. A decrease in the price of hot dogs will cause a Figure movement from: A) Point A to Point B. B) Point F to Point G. C) D2 to D1. D) D1 to D2. Answer: C Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 19) Refer to 3.11. Assume hamburgers and french fries are complements. A decrease in the price of french fries will Figure cause a movement from: A) Point A to Point B. B) Point G to Point F. C) D1 to D2. D) S2 to S1 . Answer: C Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 20) Refer to Figure 3.11. An increase in the number of cattle ranchers will cause a movement from: A) Point B to Point A. B) Point G to Point F. C) D2 to D1. D) S2 to S1. Answer: D Diff: 2 Topic: Supply in Product / Output Markets Skill: Analytic AACSB: Analytic Skills 2 Tr ue /F al 1) s e A shift of the supply curve is caused by a change in a good's own price. Answer: FALSE Diff: 1 Topic: Supply in Product / Output Markets Skill: Conceptual 2) A ical advance in the production of MP3 players will cause the equilibrium selling price to increase. technolog Answer: FALSE Diff: 1 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 3) An increase in the wage rate of steel workers will reduce the supply of steel. Answer: TRUE Diff: 1 Topic: Supply in Product / Output Markets Skill: Conceptual AACSB: Reflective Thinking 4) Quantity supplied is determined by how much producers are willing and able to produce. Answer: TRUE Diff: 1 Topic: Supply in Product / Output Markets Skill: Conceptual 3.5 Mar ket Equ ilibr ium 1 M ul ti pl e C 1) h o i c e Equilibriu m is the condition that exists A) whenever there is no government intervention in the market. B) when the C) demand curve intersects the price axis. when quantity demanded equals quantity supplied. D) when the demand curve intersects the quantity axis. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Definition Refer to the information provided in Table 3.1 below to answer the questions that follow. Price per Pizza $3 6 9 12 15 2) Table 3.1 Quantity Demanded (Pizzas per Month) 1,200 1,000 800 600 400 Quantity Supplied (Pizzas per Month) 600 700 800 900 1,000 Refer to Table 3.1. This market will be in equilibrium if the price per pizza is A) $6. B) $9. C) $12. D) $15. Answer: B Diff: 1 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 3) Refer to Table 3.1. If the price per pizza is $12, the price will A) remain constant because the market is in equilibrium. B) increase C) because there is an excess demand in the market. decrease D) because there is an excess demand in the market. decrease because there is an excess supply in the market. Answer: D Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 4) Refer to Table 3.1. If the price per pizza is $15, there is a(n) A) market B) equilibrium. excess demand of 400 units. C) excess demand of 900 units. D) excess supply of 600 units. Answer: D Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 5) Refer to Table 3.1. If the price per pizza is $6, there is an excess A) demand of 300 pizzas. B) demand of 600 pizzas. C) supply of 700 pizzas. D) supply of 1,000 pizzas. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 6) Refer to Table 3.1. In this market there will be an excess demand of 300 pizzas at a price of A) $6. B) $9. C) $12. D) $15. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 7) Refer to Table 3.1. In this market there will be an excess supply of 300 pizzas at a price of A) $6. B) $9. C) $12. D) $15. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 8) Refer to Table 3.1. If the price per pizza is $3, the price will A) remain constant because the market is in equilibrium. B) increase C) because there is an excess demand in the market. increase D) because there is an excess supply in the market. decrease because there is an excess supply in the market. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Table 3.2 below to answer the questions that follow. Table 3.2 Price per Quantity Demanded Cheeseburger (Cheeseburgers per Month) $5 1,500 6 1,200 7 900 8 600 9 300 9) Quantity Supplied (Cheeseburgers per Month) 500 700 900 1,100 1,300 Refer to Table 3.2. This market will be in equilibrium if the price per cheeseburger is A) $5. B) $6. C) $7. D) $8. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 10) Refer to Table 3.2. If the price per cheeseburger is $6, the price will A) remain constant because the market is in equilibrium. B) decrease C) because there is an excess demand in the market. increase D) because there is an excess demand in the market. decrease because there is an excess supply in the market. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 11) Refer to Table 3.2. If the price per cheeseburger is $9, there is a(n) A) market B) equilibrium. excess demand of 500 units. C) excess demand of 300 units. D) excess supply of 1,000 units. Answer: D Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 12) Refer to Table 3.2. If the price per cheeseburger is $5, there is an excess A) demand of 300 cheeseburgers. B) supply of 500 cheeseburgers. C) demand of D) 1,000 cheeseburgers. supply of 2,000 cheeseburgers. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 13) Refer to Table 3.2. In this market there will be an excess demand of 500 cheeseburgers at a price of A) $5. B) $6. C) $7. D) $8. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 14) Refer to Table 3.2. In this market there will be an excess supply of 500 cheeseburgers at a price of A) $5. B) $6. C) $8. D) $9. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 15) Refer to Table 3.2. If the price per cheeseburger is $7, the price will A) remain constant because the market is in equilibrium. B) increase C) because there is an excess demand in the market. increase D) because there is an excess supply in the market. decrease because there is an excess supply in the market. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 16) When there is an excess supply of a product in an unregulated market, the tendency is for A) price to rise. B) price to C) decrease. quantity D) supplied to increase. quantity demanded to decrease. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.17 below to answer the questions that follow. Figure 3.17 17) Refer to 3.17. The market for sunglasses is in equilibrium at a price of ________ and a quantity of ________ Figure sunglasses. A) $30; 300 B) $30; 600 C) $60; 450 D) $90; 300 Answer: C Diff: 1 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 18) Refer to Figure 3.17. At a price of $30, there is an excess A) demand of 450 sunglasses. B) demand of 750 sunglasses. C) demand of 300 sunglasses. D) supply of 300 sunglasses. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 19) Refer to Figure 3.17. If this market is unregulated and the price is currently $90, you would expect that the price A) of sunglasses B) would remain at $90, because firms would not want to reduce the price. of sunglasses C) would fall to $30, so the firm could sell its excess supply. of sunglasses D) would fall to $60, where quantity demanded equals quantity supplied. of sunglasses would fall, but the new price is indeterminate from the information provided. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 20) Refer to Figure 3.17. At a price of $90, there is an excess A) demand of 150 sunglasses. B) supply of 450 sunglasses. C) demand of 600 sunglasses. D) supply of 600 sunglasses. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 21) When there is a shortage of a product in an unregulated market, there is a tendency for A) price to rise. B) price to fall. C) quantity D) demanded to increase. quantity supplied to decrease. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 22) If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will A) increase, the B) quantity demanded will fall, and the quantity supplied will rise. increase, the C) quantity demanded will rise, and the quantity supplied will fall. decrease, the D) quantity demanded will rise, and the quantity supplied will fall. decrease, the quantity demanded will fall, and the quantity supplied will rise. Answer: C Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 23) DVDs players are complements. An increase in the price of DVD players would cause which of the following and DVD in the market for DVDs? A) The equilibrium price and quantity of DVDs would increase. B) The equilibrium price and quantity of DVDs would decrease. C) The equilibrium price of DVDs would increase and the equilibrium quantity would decrease. D) The equilibrium price of DVDs would decrease and the equilibrium quantity would increase. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 24) Suppose game discs are a normal good. If the income of video game players increases, you predict that in the that video market for video games A) both B) equilibrium price and quantity will fall. both C) equilibrium price and quantity will increase. equilibrium D) price will increase and quantity will decrease. equilibrium price will fall but quantity will increase. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.18 below to answer the questions that follow. Figure 3.18 25) Refer to Figure 3.18. The current price of a bag of pretzels is $1.10. You accurately predict that in this market A) price tends to remain constant and quantity supplied increases. B) price, quantity demanded, and quantity supplied decrease. C) price and D) quantity demanded increase and quantity supplied decreases. price and quantity supplied decrease and quantity demanded increases. Answer: D Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 26) When Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop Hurricane was destroyed. Ceteris paribus, A) the supply of B) sugar decreased and the price of sugar increased. the supply of C) sugar decreased and the price of sugar decreased. the demand for sugar increased and the price of sugar increased. D) the demand for sugar decreased and the price of sugar decreased. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 27) The price mozzarella cheese, which is used in making pizza, increases. In the market for pizza you would expect of that A) the demand for pizza would increase and the price of pizza would increase. B) the demand for pizza would decrease and the price of pizza would fall. C) the supply of D) pizza would decrease and the price of pizza would increase. the supply of pizza would increase and the price of pizza would decrease. Answer: C Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 28) If ents in technology have reduced the cost of producing personal computers, you accurately predict that in improvem the market for personal computers, there will be a(n) A) increase in the supplied of personal computers, a reduction in the price, and an increase in the quantity demanded. quantity B) increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded. C) increase in the supply of personal computers, a reduction in the price, and an increase in the demand. D) decrease in the supply of personal computers, an increase in the price, and a decrease in the demand. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 29) Which of following will definitely occur when there is a simultaneous decrease in demand and a decrease in the supply? A) an increase in equilibrium price B) a decrease in C) equilibrium price an increase in equilibrium quantity D) a decrease in equilibrium quantity Answer: D Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 30) A movement along the demand curve to the left may be caused by a A) rise in income. B) decrease in C) supply. fall in the D) number of substitute goods. fall in the price of inputs. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 31) Which of following will definitely occur when there is an increase in the supply of and decrease in demand for the MP3 players? A) an increase in equilibrium price B) a decrease in C) equilibrium price an increase in equilibrium quantity D) a decrease in equilibrium quantity Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 32) Which of following will definitely occur when there is an increase in demand for and a decrease in supply of milk? the A) an increase in equilibrium price B) a decrease in C) equilibrium price an increase in equilibrium quantity D) a decrease in equilibrium quantity Answer: A Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 33) An insect resistant to currently used pesticides has infested the cotton crop, and this year's crop is only half of what that is was produced last year. You accurately predict that this A) will shift the cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall. supply curve of B) will shift the cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of supply curve of cotton will decrease. C) will shift the cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton supply curve of will decrease. D) will shift the cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall. supply curve of Answer: C Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 34) Papayas grapefruit are substitute goods. A drought in California destroyed a good portion of the grapefruit crop. and Ceteris paribus, A) the price of both papayas and grapefruit will increase. B) the price of both papayas and grapefruit will fall. C) the price of D) grapefruit will increase and the price of papayas will fall. the price of grapefruit will fall and the price of papayas will increase. Answer: A Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.19 below to answer the questions that follow. Figure 3.19 35) Refer to Figure 3.19. When the economy moves from Point A to Point B, there has been A) an increase in demand and an increase in supply. B) an increase in demand and an increase in quantity supplied. C) an increase in quantity demanded and an increase in quantity supplied. D) an increase in quantity demanded and an increase in supply. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 36) Refer to Figure 3.19. When the economy moves from Point A to Point C, there has been A) a decrease in B) supply and a decrease in quantity demanded. a decrease in C) quantity supplied and a decrease in demand. a decrease in D) supply and an increase in quantity demanded. an increase in supply and a decrease in quantity demanded. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 37) Refer to Figure 3.19. When the economy moves from Point A to Point E, there has been A) an increase in demand and an increase in supply. B) a decrease in C) demand and a decrease in supply. an increase in demand and a decrease in supply. D) an increase in quantity demanded and an increase in quantity supplied. Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 38) Refer to Figure 3.19. When the economy moves from Point E to Point B, there has been A) an increase in supply and an increase in quantity demanded. B) an increase in both supply and demand. C) a decrease in D) supply and an increase in demand. a decrease in supply and an increase in quantity demanded. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills Refer to Scenario 3.2 below to answer the questions that follow. SCENARIO 3.2: Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding. 39) Refer to Scenario 3.2. As a result of the flooding during the winter, you would expect that A) the price of increase, the supply of lettuce would increase, and the quantity demanded of lettuce would lettuce would decrease. B) the supply of decrease, the price of lettuce would increase, and the quantity demanded of lettuce would decrease. lettuce would C) the price of increase and both the quantity of lettuce supplied and the quantity of lettuce demanded would lettuce would increase. D) the supply of decrease, the price of lettuce would increase, and the demand for lettuce would decrease. lettuce would Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 40) Refer to 3.2. The floods that destroyed part of the lettuce crop would have caused the equilibrium price of spinach Scenario to ________ and the equilibrium quantity of spinach to ________. A) decrease; B) decrease decrease; C) increase increase; D) increase increase; decrease Answer: C Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 41) Refer to Scenario 3.2. The floods that destroyed part of the lettuce crop would have caused A) an increase in the demand for tomatoes. B) a decrease in C) the demand for tomatoes. an increase in the quantity demanded of tomatoes. D) a decrease in the quantity demanded of tomatoes. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 42) Refer to 3.2. If at the same time that part of the lettuce crop was destroyed, consumer income also decreased. Scenario Then, ceteris paribus, in the market for lettuce this would have caused A) both the B) equilibrium price and quantity to decrease. the equilibrium price to increase and the equilibrium quantity to decrease. C) the equilibrium price to decrease. The equilibrium quantity could have increased, decreased, or remained the same. D) the equilibrium price to either increase, decrease, or remain the same and the equilibrium quantity to decrease. Answer: D Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 43) Refer to 3.2. The government wants to protect consumers from rising food prices. Therefore, price restrictions are Scenario imposed on lettuce growers prohibiting them from raising the price of lettuce. This will cause A) an excess B) supply of lettuce. an excess C) demand for lettuce. an increase in the demand for lettuce. D) a decrease in the supply of lettuce. Answer: B Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking Refer to the information provided in Figure 3.10 below to answer the questions that follow. Figure 3.10 44) Refer to 3.10. In the Rollerblade market, which is not government controlled, you accurately predict that price Figure will A) increase, the B) quantity demanded will fall, and the quantity supplied will rise. increase, the C) quantity demanded will rise, and the quantity supplied will fall. decrease, the D) quantity demanded will fall, and the quantity supplied will fall. decrease, the quantity demanded will rise, and the quantity supplied will fall. Answer: A Diff: 3 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.12 below to answer the questions that follow. Figure 3.12 45) Refer to 3.12. The market is initially in equilibrium at Point A. If demand shifts from D1 to D2 and the price of Figure burritos remains constant at $3.00, there will be A) an excess B) supply of 150 million pounds of burritos. an excess C) demand of 150 million pounds of burritos. an excess D) supply of 50 million pounds of burritos. an excess demand of 100 million pounds of burritos. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 46) Refer to 3.12 The market is initially in equilibrium at Point B. If demand shifts from D2 to D1 and the price of Figure burritos remains constant at $4.00, there will be A) an excess B) supply of 200 million pounds of burritos. an excess C) demand of 200 million pounds of burritos. an excess D) supply of 100 million pounds of burritos. an excess demand of 100 million pounds of burritos. Answer: A Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 47) Refer to 3.12 The market is initially in equilibrium at Point A. If demand shifts from D1 to D2, the new Figure equilibrium price will be ________ and the new equilibrium quantity will be ________. A) $3.00; 250 B) $6.00; 250 C) $4.00; 350 D) $4.00; 150 Answer: C Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 48) Refer to 3.12. The market is initially in equilibrium at Point B. If demand shifts from D2 to D1, the new Figure equilibrium price will be ________ and the new equilibrium quantity will be ________. A) $4.00; 350 B) $3.00; 250 C) $3.00; 400 D) $4.00; 150 Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills Refer to the information provided in Figure 3.13 below to answer the questions that follow. Figure 3.13 49) Refer to 3.13. The market is initially in equilibrium at Point A. If supply shifts from S1 to S2 and the price of Figure cheeseburgers remains constant at $5.00, there will be A) an excess B) supply of 6 cheeseburgers. an excess C) demand of 6 cheeseburgers. an excess D) supply of 3 cheeseburgers. an excess demand of 4 cheeseburgers. Answer: B Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 50) Refer to 3.13. The market is initially in equilibrium at Point A. If supply shifts from S1 to S2, the new equilibrium Figure price will be ________ and the new equilibrium quantity will be ________. A) $5.00; 4 B) $5.00; 10 C) $7.00; 6 D) $7.00; 7 Answer: D Diff: 2 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 51) Refer to 3.13. The market is initially in equilibrium at Point B. If supply shifts from S2 to S1, the new equilibrium Figure price will be ________ and the new equilibrium quantity will be ________. A) $5.00; 4 B) $5.00; 10 C) $7.00; 6 D) $7.00; 7 Answer: B Diff: 1 Topic: Market Equilibrium Skill: Analytic AACSB: Analytic Skills 52) Related to s in Practice on p. 67: Bad weather that reduces the supply of oranges would most likely shift the supply the curve for oranges to the ________ and lead to a(n) ________ in the price of producing orange juice. Economic A) left; increase B) left; decrease C) right; increase D) right; decrease Answer: A Diff: 3 Topic: Market Equilibrium: Economics in Practice Skill: Conceptual AACSB: Reflective Thinking 53) Related to Economics in Practice on p. 67: The freezing weather in California decreased the supply of oranges. This the would increase the demand for apple juice, assuming apple juice is considered A) a substitute for orange juice. B) a complement to orange juice. C) a normal good. D) an inferior good. Answer: A Diff: 3 Topic: Market Equilibrium: Economics in Practice Skill: Conceptual AACSB: Reflective Thinking 54) Related to s in Practice on p. 69: One explanation for the increase in the price of the Baltimore newspaper is the the increase in the cost of newsprint. This would cause the ________ of Baltimore newspapers to ________. Economic A) supply; increase B) quantity C) supplied; increase supply; D) decrease quantity supplied; decrease Answer: C Diff: 3 Topic: Market Equilibrium: Economics in Practice Skill: Analytic AACSB: Analytic Skills 55) Related to Economics in Practice on p. 69: Assuming the demand for Baltimore newspapers ________ while the the supply of Baltimore newspapers ________, the equilibrium price will definitely increase. A) increases; B) increases decreases; C) increases increases; D) decreases decreases; decreases Answer: C Diff: 3 Topic: Market Equilibrium: Economics in Practice Skill: Conceptual AACSB: Reflective Thinking 2 Tr ue /F al 1) s e A in demand for a product will cause the price of the product to fall and supply of the product to decrease. decrease Answer: FALSE Diff: 1 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 2) A ous decrease in both the supply of and the demand for silk boxer shorts would cause a decrease in the simultane equilibrium quantity of silk boxer shorts. Answer: TRUE Diff: 3 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 3) If price is equilibrium, then quantity supplied will be greater than quantity demanded putting downward pressure above the on price. Answer: TRUE Diff: 1 Topic: Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking ...
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