Question 1

An increase in the price of MP3 players will result in

Accepted Answer

A)  a smaller quantity of MP3 players supplied. 
B)  a larger quantity of MP3 players supplied. 
C)  a decrease in the demand for MP3 players. 
D)  an increase in the supply of MP3 players.

Question 2

In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?

Accepted Answer

The answer of In much of Europe, the legal age...

Question 3

"The price of digital cameras fell because of improvements in production technology. As a result, the demand for non-digital cameras decreased. This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell, the demand for non-digital cameras decreased even further." Evaluate this statement.

Accepted Answer

A)  The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell. 
B)  The statement is false. A decrease in the price of digital cameras would decrease the demand for non-digital cameras, but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease. 
C)  The statement is false because it confuses the law of demand with the law of supply. 
D)  The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.

Question 4

Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?

Accepted Answer

A)  The quantity of green tea demanded increases because of a change in tastes in favor of green tea. 
B)  The green tea demand curve shifts to the right because of a change in tastes in favor of green tea. 
C)  The green tea demand curve shifts to the left because this new information will increase the price of green tea. 
D)  The quantity of green tea demanded decreases because this new information will increase the price of green tea.

Question 5

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does this affect the digital photo printing market?

Accepted Answer

A)  The demand curve for digital photo printing services shifts to the right. 
B)  The demand curve for digital photo printing services shifts to the left. 
C)  The supply curve for digital photo printing services shifts to the right. 
D)  The supply curve for digital photo printing services shifts to the left.

Question 6

________ means the supply curve has shifted to the right, while ________ refers to a movement along a given supply curve in response to an increase in price.

Accepted Answer

A)  An increase in supply; a decrease in supply 
B)  A decrease in supply; an increase in supply 
C)  An increase in supply; an increase in quantity supplied 
D)  A decrease in supply; a decrease in quantity supplied

Question 7

Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?

Accepted Answer

A)  There is an increase in the supply of cable TV service. 
B)  There is a decrease in the demand for cable TV service. 
C)  There is a decrease in the quantity of cable TV service supplied. 
D)  There is a decrease in the supply of cable TV service.

Question 8

If the demand for a product decreases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Accepted Answer

A) True 
 B)False

Question 9

Figure 3-1 
-Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are

Accepted Answer

A)  substitutes in consumption. 
B)  both inferior goods. 
C)  complements in consumption. 
D)  both luxury goods.

Question 10

If consumers believe the price of LCD televisions will decrease in the future, this will cause the demand for LCD televisions to increase now.

Accepted Answer

A) True 
 B)False

Question 11

Figure 3-8 
-"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.

Question 12

If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.

Accepted Answer

A) True 
 B)False

Question 13

If a decrease in income leads to in a decrease in the demand for mac and cheese, then mac and cheese is

Accepted Answer

A)  a normal good. 
B)  a neutral good. 
C)  a complement. 
D)  a necessity.

Question 14

Let D = demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Accepted Answer

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

Question 15

Nearly a quarter of China's 1.3 billion people are under the age of 15. How will this affect high school enrollment over the next fifteen years? The labor market over the next fifteen years?

Accepted Answer

The answer of Nearly a quarter of China's 1.3 billion...

Question 16

Figure 3-1 
-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.

Question 17

If in the market for bananas the supply curve has shifted to the right, then

Accepted Answer

A)  the supply of bananas increased. 
B)  the quantity of bananas supplied has increased. 
C)  the supply of bananas has decreased. 
D)  the quantity of bananas supplied has decreased.

Question 18

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 of tote bags 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.

Question 19

Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?

Accepted Answer

A)  There is an increase in the supply of pool maintenance services. 
B)  There is a decrease in the demand for pool maintenance services. 
C)  There is a decrease in the quantity of pool maintenance services supplied. 
D)  There is a decrease in the supply of pool maintenance services.

Question 20

How does the decreasing use of DVD players affect the market for prerecorded DVDs?

Accepted Answer

A)  The demand curve for prerecorded DVDs shifts to the right. 
B)  The quantity of prerecorded DVDs demanded decreases. 
C)  The quantity of prerecorded DVDs demanded increases. 
D)  The demand curve for prerecorded DVDs shifts to the left.

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

An increase in the price of MP3 players will result in

In much of Europe, the legal age to obtain a driver's license is 18. If the legal driving age in the United States was changed to 18, how would this affect the market for new automobiles? The market for automobile insurance?

Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does this affect the digital photo printing market?

means the supply curve has shifted to the right, while refers to a movement along a given supply curve in response to an increase in price.

Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?

If the demand for a product decreases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Figure 3-1 -Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are

If consumers believe the price of LCD televisions will decrease in the future, this will cause the demand for LCD televisions to increase now.

If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.

If a decrease in income leads to in a decrease in the demand for mac and cheese, then mac and cheese is

Let D = demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

Nearly a quarter of China's 1.3 billion people are under the age of 15. How will this affect high school enrollment over the next fifteen years? The labor market over the next fifteen years?

Figure 3-1 -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?

If in the market for bananas the supply curve has shifted to the right, then

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:

How does the decreasing use of DVD players affect the market for prerecorded DVDs?