Question 1

When deciding on which new products to develop,a firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it

Accepted Answer

A)   should wait until its competitors develop a similar product before deciding on devoting resources to its own product development.
B)   is not able to develop more than one new product at a time.
C)   must be certain that the product it chooses to develop will be successful or it will not be able to stay in business.
D)   faces a trade-off, because resources used to develop one product will not be available to develop another product.E) None of the above
F) A) and B)

Question 2

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Accepted Answer

A) True 
 B)False

Question 3

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Accepted Answer

A)   the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium.
B)   quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price.
C)   all consumers will be able to afford the product.
D)   quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.E) A) and B)
F) B) and C) D

Question 4

A movement along the demand curve for toothpaste would be caused by

Accepted Answer

A)   a change in the price of toothbrushes.
B)   a change in consumer income.
C)   a change in the price of toothpaste.
D)   a change in population.E) A) and B)
F) All of the above

Question 5

When the price of a good falls,consumers buy a larger quantity because of the ________ effect and the ________ effect.

Accepted Answer

A)   substitution; income
B)   normal; inferior
C)   substitute; complement;
D)   supply; demandE) B) and C)
F) A) and D) A

Question 6

Indicate whether each of the following situations would shift the supply curve to the left,to the right,or not at all.
a.An increase in the number of firms in the market
b.An increase in the current price of the product
c.A decrease in productivity
d.An increase in the expected future price of a product
e.A decrease in the price of an input

Accepted Answer

a.Shift to the right...

Question 7

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

Accepted Answer

A)   the supply curve shifted to the right resulting in an increase in the equilibrium price.
B)   the supply curve shifted to the left resulting in an increase in the equilibrium price.
C)   the demand curve shifted to the right resulting in an increase in the equilibrium price.
D)   the demand curve shifted to the left resulting in a decrease in the equilibrium price.E) A) and B)
F) A) and C) B

Question 8

If a demand curve shifts to the right,then

Accepted Answer

A)   demand has increased.
B)   quantity demanded has increased.
C)   demand has decreased.
D)   quantity demanded has decreased.E) None of the above
F) All of the above

Question 9

In June,buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June,holding everything else constant?

Accepted Answer

A)   The demand curve shifts to the right.
B)   The quantity demanded increases.
C)   The quantity demanded decreases
D)   The demand curve shifts to the left.E) All of the above
F) None of the above

Question 10

Figure 3-8 1 and S1 (point A)  If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change? A)  The equilibrium point will move from A to E. B)  The equilibrium point will move from A to B. C)  The equilibrium point will move from A to C. D)  The equilibrium will first move from A to B, then return to A." class="answers-bank-image d-inline" rel="preload" > 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A)  If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

Accepted Answer

A)   The equilibrium point will move from A to E.
B)   The equilibrium point will move from A to B.
C)   The equilibrium point will move from A to C.
D)   The equilibrium will first move from A to B, then return to A.E) C) and D)
F) None of the above

Question 11

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Accepted Answer

A)   a decrease in demand and an increase in supply
B)   an increase in supply
C)   an increase in supply and an increase in demand greater than the increase in supply
D)   a decrease in demand and a decrease in supplyE) A) and D)
F) B) and C)

Question 12

At a product's equilibrium price

Accepted Answer

A)   the product's demand curve is the same as the product's supply curve.
B)   the quantity of the product demanded is greater than the quantity of the product supplied.
C)   the quantity of the product demanded is less than the quantity of the product supplied.
D)   the product's demand curve crosses the product's supply curve.E) C) and D)
F) A) and B)

Question 13

Explain the difference between a normal good and an inferior good.

Accepted Answer

A normal good is something for which the...

Question 14

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in

Accepted Answer

A)   a decrease in the equilibrium quantity of lobster and no change in the equilibrium price.
B)   an increase in the equilibrium price of lobster and no change in the equilibrium quantity.
C)   an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
D)   a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.E) None of the above
F) B) and C)

Question 15

Figure 3-7 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Accepted Answer

A)   Panel (a) 
B)   Panel (b) 
C)   Panel (c) 
D)   Panel (d) E) A) and C)
F) None of the above

Question 16

Figure 3-7 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Accepted Answer

A)   Panel (a) 
B)   Panel (b) 
C)   Panel (c) 
D)   Panel (d) E) A) and D)
F) A) and B)

Question 17

If the price of grapefruit rises,the substitution effect due to the price change will cause

Accepted Answer

A)   a decrease in the demand for grapefruit.
B)   a decrease in the demand for oranges, a substitute for grapefruit.
C)   a decrease in the quantity demanded of grapefruit.
D)   a decrease in the quantity supplied of grapefruit.E) A) and B)
F) A) and D)

Question 18

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

Accepted Answer

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 milkE) A) and B)
F) A) and C)

Question 19

"Because apples and oranges are substitutes,an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?

Accepted Answer

A)   The statement will be true if consumer tastes for apples and oranges do not change.
B)   The statement is false because a change in the price of apples would not change the demand for apples.
C)   The statement is false because oranges are inferior goods; apples are normal goods.
D)   The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.E) A) and B)
F) A) and C)

Question 20

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Accepted Answer

A)   The supply of fertilizer increases.
B)   The supply of fertilizer decreases
C)   The demand for fertilizer increases.
D)   The demand for fertilizer decreases.E) A) and D)
F) A) and B)

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

When deciding on which new products to develop,a firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it

Correct Answer
verified

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Correct Answer
verified

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Correct Answer
verified
D

A movement along the demand curve for toothpaste would be caused by

Correct Answer
verified

When the price of a good falls,consumers buy a larger quantity because of the effect and the effect.

Correct Answer
verified
A

Correct Answer
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a.Shift to the right...
View Answer

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

Correct Answer
verified
B

If a demand curve shifts to the right,then

Correct Answer
verified

In June,buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June,holding everything else constant?

Correct Answer
verified

Correct Answer
verified

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Correct Answer
verified

At a product's equilibrium price

Correct Answer
verified

Explain the difference between a normal good and an inferior good.

Correct Answer
verified
A normal good is something for which the...
View Answer

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in

Correct Answer
verified

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Correct Answer
verified

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Correct Answer
verified

If the price of grapefruit rises,the substitution effect due to the price change will cause

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Correct Answer
verified

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

When deciding on which new products to develop,a firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it

Correct AnswerverifiedShow Answer

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left,the equilibrium quantity will decrease.

Correct AnswerverifiedShow Answer

If,for a product,the quantity supplied exceeds the quantity demanded,the market price will fall until

Correct AnswerverifiedD

A movement along the demand curve for toothpaste would be caused by

Correct AnswerverifiedShow Answer

When the price of a good falls,consumers buy a larger quantity because of the ________ effect and the ________ effect.

Correct AnswerverifiedA

Correct Answerverifieda.Shift to the right...View AnswerShow Answer

In 2004,hurricanes destroyed a large portion of Florida's orange and grapefruit crops.In the market for citrus fruit,

Correct AnswerverifiedB

If a demand curve shifts to the right,then

Correct AnswerverifiedShow Answer

In June,buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June,holding everything else constant?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Correct AnswerverifiedShow Answer

At a product's equilibrium price

Correct AnswerverifiedShow Answer

Explain the difference between a normal good and an inferior good.

Correct AnswerverifiedA normal good is something for which the...View AnswerShow Answer

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Correct AnswerverifiedShow Answer

If the price of grapefruit rises,the substitution effect due to the price change will cause

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tom Searchinger,a senior attorney at the Environmental Defense Fund,observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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D

Correct Answer
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When the price of a good falls,consumers buy a larger quantity because of the effect and the effect.

Correct Answer
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A

Correct Answer
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a.Shift to the right...
View Answer

Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A normal good is something for which the...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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