Question 1

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 2

A decrease in the demand for eggs due to changes in consumer tastes,accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu,will result in

Accepted Answer

A) a decrease in the equilibrium quantity of eggs and no change in the equilibrium price. 
B) a decrease in the equilibrium price of eggs and no change in the equilibrium quantity. 
C) a decrease in the equilibrium price of eggs;the equilibrium quantity may increase or decrease. 
D) a decrease in the equilibrium quantity of eggs;the equilibrium price may increase or decrease.

Question 3

Table 3-5
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price per } \
\text { Bushel }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (bushels) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (bushels) }
\end{array} \
\hline \$ 3 & 36,000 & 0 \
\hline 6 & 30,000 & 3,000 \
\hline 9 & 24,000 & 6,000 \
\hline 12 & 19,000 & 10,000 \
\hline 15 & 15,000 & 15,000 \
\hline 18 & 10,000 & 21,000 \
\hline 21 & 7,000 & 28,000 \
\hline 24 & 4,000 & 36,000 \
\hline
\end{array}$$
-Refer to Table 3-5.The table contains information about the corn market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of corn?
b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $9 per bushel?
e.If the market price is $9 per bushel,what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 24,000 bushels of corn?
g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $21 per bushel?
j.If the market price is $21 per bushel,what must happen to restore equilibrium in the market?

Accepted Answer

The answer of Table 3-5
 \[\begin{array} { | c |...

Question 4

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Accepted Answer

A) a decrease in the price of flour 
B) an increase in the price of flour 
C) an increase in the price of rye bread,a substitute for white bread 
D) an increase in the price of butter,a complement for white bread

Question 5

Figure 3-2 
-Refer to Figure 3-2.An increase in price of inputs would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) S1 to S2. 
D) S2 to S1.

Question 6

Use the following supply schedule for cherries to draw a graph of the supply curve.Be sure to label the supply curve and each axis,and show each point on the supply curve.
 $$\begin{array} { | c | c | } 
\hline \begin{array} { l } 
\text { Price (dollars } \
\text { per bushel) }
\end{array} & \begin{array} { l } 
\text { Quantity (thousands } \
\text { of bushels) }
\end{array} \
\hline 4 & 25 \
\hline 8 & 50 \
\hline 12 & 75 \
\hline 16 & 100 \
\hline 20 & 125 \
\hline
\end{array}$$

Accepted Answer

The answer of Use the following supply schedule for cherries...

Question 7

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 8

The Internet has created a new category in the book selling market,namely,the "barely used" book.How does the availability of barely used books affect the market for new books?

Accepted Answer

A) The demand curve for new books shifts to the right. 
B) The demand curve for new books shifts to the left. 
C) The supply curve for new books shifts to the right. 
D) The supply curve for new books shifts to the left.

Question 9

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

Accepted Answer

The answer of Explain how it would be possible for...

Question 10

Figure 3-2 
-Refer to Figure 3-2.A decrease in the number of firms in the market would be represented by a movement from

Accepted Answer

A) A to B. 
B) B to A. 
C) S1 to S2. 
D) S2 to S1.

Question 11

How does the increasing use of MP3 players affect the market for compact discs?

Accepted Answer

A) The demand curve for compact discs shifts to the right. 
B) The supply curve for compact discs shifts to the left. 
C) The supply curve for compact discs shifts to the right. 
D) The demand curve for compact discs shifts to the left.

Question 12

Assume that the hourly price for the services of personal trainers 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 personal trainers has increased. 
C) the demand for personal trainers has increased. 
D) personal trainers are deliberately charging high prices because they provide services for wealthy clients.

Question 13

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good)to increase?

Accepted Answer

A) an increase in consumer income 
B) a drought that sharply reduces barley output 
C) a decrease in consumer income 
D) unusually good weather that results in a bumper crop of barley

Question 14

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

Accepted Answer

A) There is no difference between the two terms;they both refer to a shift of the supply curve. 
B) There is no difference between the two terms;they both refer to a movement along a given supply curve. 
C) An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased. 
D) An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Question 15

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 16

Suppose that when the price of raspberries increases,Lonnie increases his purchases of papayas.To Lonnie

Accepted Answer

A) raspberries and papayas are complements. 
B) raspberries and papayas are inferior goods. 
C) raspberries and papayas are normal goods. 
D) raspberries and papayas are substitutes.

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