Economics mini exam Questions Chapter 3

Suppose that video games are a normal good. If the income of video game players increases, you predict that in the market for video games

both equilibrium price and quantity will increase.

If a firm expects that the price of its product will be higher in the future than it is today, then

The firm has an incentive to decrease supply now and increase supply in the future.

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

a normal good

Which of the following will hold TRUE if the market for cameras is in equilibrium at a price of $40?

The quantity of cameras produced will equal the quantity of cameras bought in the market.

$60; 450

If the market for tires is unregulated and is presently characterized by a surplus, you can accurately predict that price will

decrease, the quantity demanded will rise, and the quantity supplied will fall.

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

a decrease in the price of flour, an input to making bread

Consider the market for milk. Which of the following will definitely occur when there is an increase in demand and a decrease in supply?

an increase in equilibrium price

an increase in income, assuming macaroni and cheese is a normal good

A frozen food manufacturer can produce either pizzas or calzones. As the result of an increase in the price of calzones, the firm produces more calzones and fewer pizzas. An economist would explain this by saying

there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza.

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

a change in the price of toothpaste

If, in the market for oranges, the supply has increased, then

the supply curve for oranges has shifted to the right.

an increase in demand and an increase in quantity supplied.

decrease in the cost of producing hula hoops

Which of the following will definitely occur when there is a simultaneous increase in demand and an increase in supply?

an increase in equilibrium quantity

When the supply of Swiss cheese decreases while the demand for Swiss cheese increases, the equilibrium ________ of Swiss cheese will definitely ________, ceteris paribus.

price; increase

According to the law of supply, there is a

positive relationship between price and the quantity of a good supplied

D1 to D2.

shortage of 500 units.

$60; 450

Suppose bananas and apples are consumption substitutes. When the price of bananas rises, and a technological advance in apple production occurs at the same time:

the equilibrium quantity of apples rises and the equilibrium price of apples might rise or fall.

If the demand for jelly decreases, and the price of grapes (used to make jelly) rises:

the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls

If the market for tires is competitive and currently has a surplus, you can accurately predict that price will

decrease, the quantity demanded will rise, and the quantity supplied will fall.

The price of mozzarella cheese, which is used in making pizza, increases. In the market for pizza you would expect that

the supply of pizza would decrease and the price of pizza would increase.

an increase in demand and a decrease in supply

Suppose that the bakers of bread face an increase in the price of flour (an input). In the market for bread, this will cause the ________ and the equilibrium price to________

supply of bread to decrease; increase

A change in the quantity demanded of a product is the result of a change in:

the price of the product

Suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity increased, then the market experienced a(n):

increase in demand

Suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity increased, then the market experienced a(n):

increase in demand

$7

Decrease in prices of cars and increase in competition among oil-producing countries

The law of supply states that:

there is a positive relationship between price and quantity supplied, ceteris paribus

shortage of 8 t-shirts.

D2 to D0

A good for which demand decreases when income decreases is known as a(n) ________ good.

normal

Suppose that consumers expect the price of a product to decrease in the future. The result is that:

the current demand for the product decreases

The price of pineapples has risen. Which of the following is likely to happen?

The quantity of pineapples supplied will increase.

Suppose that the quantity of cars demanded exceeds the quantity of cars supplied. We would expect that

the price of cars will increase

If a technological advance makes it possible to produce computers at a lower cost:

the supply of computers increases.

point b to point c

The quantity demanded of a good is ________.

the amount of the good that buyers are willing to purchase at a given market price

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

a decrease in the price of cattle

Which of the following would cause both the equilibrium price and the equilibrium quantity to increase?

An increase in demand

Liz decreased her consumption of apples when the price of peanut butter increased. For Liz, peanut butter and apples are ____

complements in consumption

If the demand for coffee decreases as income decreases, coffee is a(n)

normal good

An increase in demand for laptop computers would likely be caused by

an increase in the price of a substitute good

supply curve S1

Which of the following is held constant along the demand curve?

income

The "law of demand" implies that

as prices fall, quantity demanded increases

a decrease in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper