ECON-001 MIDTERM 2 PARTIAL

The height of a supply curve at a given quantity tells us

the lowest price sellers would accept for that unit, which reflects their opportunity cost

A supply curve depends on

supplier opportunity cost

Which of the following will decrease the demand for orange juice?

A study links orange juice consumption to tooth decay

Which of the following will decrease the demand for tomato soup?

Tomato soup consumption is linked to Parkinson’s disease

Which of the following will decrease the quantity of orange juice demanded in equilibrium>

All of the above will decrease the quantity of orange juice demanded in equilibrium

Which of the following will decrease the quantity of tomato soup demanded in equilibrium?

All of the above will decrease the quantity of tomato soups demanded in equilibrium

Which of the following will increase the demand for coffee?

None of the above

Which of the following will increases the demand for gasoline?

None of the above

Over the past year, avocado prices have risen several times, yet consumers are buying more avocados than ever. “The Law of Demand does not apply to avocados,” commentators say. Which of the following is the most likely explanation for what is being observed?

The demand for avocados has been increasing

Observers are baffled by the fact that although olive prices have fallen six times over the last three months, consumers are consuming fewer olives than they were at higher prices. “This is a violation of the Law of Demand,” observers proclaim. Which of the following is the most likely explanation for what is being observed?

The demand for olives has been falling

Which of the following would lead to a decrease in both the equilibrium price and quantity of an inferior good, such as instant noodles

an increase in consumer income

Which of the following would lead to an increase in both the equilibrium price and quantity of an inferior good such as macaroni and cheese?

a decrease in consumer income

A popular new diet makes oat mil all the rage. At the same time, a bumper oat harvest lowers the price of oats (an input to oat milk). What will happen in the market for oat milk? (DRAW THE CURVES)

Equilibrium quantity will increase but the effect on equilibrium price is uncertain

The “mining” of digital currencies (such as Bitcoin) uses vast amounts of electricity, and the amount of Bitcoin mining has increased due to concerns about the economy. At the same time, the price of wind turbines (which generate electricity) has fallen. What will happen in the market for electricity? (DRAW THE CURVES)

Equilibrium quantity will increase but the effect on equilibrium price is uncertain

What would happen in the market for coffee if both the price of coffee beans (an input) and the price of tea leaves fall? (Hint: tea is a substitute for coffee) (DRAW THE CURVES)

The equilibrium price would decrease, but the impact on quantity would be uncertain

What would happen in the market for pens if both the price of ink (an input) and the price of pencil lead fall? (Hint: lead pencils are substitutes) (DRAW THE CURVES)

The equilibrium price would decrease, but the impact on quantity would be uncertain

If the price of a concert ticket rises by $5 and the number of tickets sold falls by 2,000, we would conclude that

there is not enough information to determine whether demand is elastic or not

If prices rises y 10 cents and quantity demanded falls by 10,000 units, we would conclude that

there is not enough information to determine whetehr demand is elastic or not

New technology makes solar panels much cheaper to produce, and solar panel prices fall. Would we expect the number of solar panels purchased to increase by a lot or a little as a result?

The answer depends on whether demand and supply are elastic or inelastic

Following legalization, marijuana prices fall. Would we expect consumption of marijuana to increase by a lot or a little as a result?

The answer depends on whether demand and supply is elastic or inelastic