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42 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What are the applications of supply and demand analysis?
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understanding changing world economic conditions and their effect onprices. b. evaluating governmentprice controls. c. determining how taxes affect consumers. |
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An industry supply curve reveals: |
how much producers are willing to sell for eachprice they receive in the market.
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Whenthe price is initially above the market clearing level we would expect:
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. quantity supplied to exceedquantity demanded. |
a. quantitydemanded to exceed quantity supplied. b.quantity supplied to exceed quantity demanded. c. price to rise in the future. d. greaterproduction to occur during next period. e. themarket will eventually reach equilibrium.
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Which of the following would tend to shift the market demand for newtext books to the right? |
an increase in students' incomes.
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a. afall in the price of paper used in the publishing of texts. b. a fall in the price ofequivalent used text books. c. an increase in theprice of books that are not texts. d. a fall in the price ofnew text books. e. an increase in students' incomes.
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Whenan industry's raw material costs decrease, other things remaining the same,
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the supply curve shifts to the right. |
a. the supply curve shiftsto the right. b. output increasesregardless of the market price and the supply curve shifts upward. c. output decreases andthe market price also decreases. d. output decreases butthe market price increases. |
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The price elasticity ofdemand for a demand curve that has a zero slope is: |
infinitelyelastic.
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Whenthe price of steak goes up, we expect the demand curve for its complement,potatoes, to:
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shiftinward.
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Thecross-price elasticity between a pair of complementary goods will be:
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negative.
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a. positive. b. negative. c. zero. d.positive and greater than one. e.close to but not equal to zero. |
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Plastic and steel aresubstitutes in body panels for automobiles. If the price of plastic increases, ceteris paribus, we would expect the following to occur in the market for steel: |
both market price and quantity of steel to rise.
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a. both market price andquantity of steel to rise. b. market price to rise and quantity tofall. c. market quantity to riseand the price to fall. d. market price to rise, but quantity mayrise or fall. e. marketquantity to rise, but the price may rise or fall. |
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If the price of tires increases, the following will occur in the marketfor automobiles: |
the price of autos will rise, but the quantity will fall. |
a. both the market priceand quantity of auto will decline. b. the price of autos willrise, but the quantity will fall. c. the price of autos willfall, but the quantity will rise. d. the price of autos willdecline, but the quantity may rise or fall. e. the priceof autos will rise, but the quantity may rise or fall. |
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When the price of electricity increased 30 percent, quantity demandedfell 10 percent. Therefore, price elasticity of demand at these prices is |
1/3
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Which of the following is an example of a negative network externality? a. bandwagon effect. b. pollution. c. snobeffect. d. acid rain. e. all ofthe above. |
snob effect. ??? Really?
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Which of the following istrue about markets? a. supplyand demand explains how noncompetitive markets work b. freemarkets have existed in most of the world for much of history c. supplyand demand allows us to find market equibrium price and quantity d. marketsare not possible for information e. all ofthe above are true |
supplyand demand allows us to find market equibrium price and quantity
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Which of the following islikely to face elastic demand? a. salt b. gasoline c. insulin d. airlinefares e. postage stamps |
airline fares
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A shortagewill result if there is |
a price ceiling that is less than marketequilibrium price
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Arightward shift of the demand curve for computer programmers will result in a
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movement along the supply curve for computer programmers and a shift inthe supply curve for computer programs. |
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As the price of oranges rises, what happens to quantity demanded? |
the quantity demanded for oranges decreases.
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Asthe price of oranges rises, the demand curve for grapefruit...
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the demand curve forgrapefruit shifts to the right. |
grapefruit is a substitute
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Asthe price of oranges rises, the supply curve for orange juice...
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the supply curve for orange juice shifts to theleft.
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Orange Juice cost more to produce
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Asthe price of automobiles rises, the demand curve for bicycles will...
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the demand curve for bicycles will shift to theright.
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substitute
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Ifthere is a surplus in the market for gasoline, what will happen to gasoline prices?
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Gasoline prices will fall.
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your dumb if you need a hint
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Ifthe market for bicycles is not in equilibrium, then what will happen to the price of bicycles?
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The price of bicycles will change, but notenough information given to determine the direction of the change.
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Suppose thatthe market for luxury automobiles is currently in equilibrium. What effectwould a sharp drop in consumers' income have in this market? |
Both the equilibrium price and the equilibriumquantity will fall.
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What will happen to equilibrium price and quantity?
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The increase in the popularity of golf. |
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Supposethe monthly demand for a can of 3 tennis balls at a nearby tennis club can beexpressed as Q = 150 – 30P. What is the price elasticity of demand at a price(P) of $3 per can?
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-1.5
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QD = 330 - 3 PDisney= 330 – 3(50) = 180 EP = (∂Q/∂PDisney) (PDisney/Q)= (-3)(50/180) = (-)0.83 |
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If thecross-price elasticity between home computers and video game units for TV ispositive, one can conclude that |
theseproducts are substitutes for one another
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Why isdemand for gasoline is more price elastic in the long run than in the short run? |
consumershave greater ability to change the car they drive than they do in the shortrun.
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Ifgovernment regulators set a price ceiling on a good, the size of the shortagewill be greatest when
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Demandand supply are both very elastic.
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elasticity of supply and demand (high or low)
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Supposethat the demand for lawn fertilizer can be expressed as QD = 5000 – 120P andthat the supply of lawn fertilizer can be expressed as QS = 1000 + 80P where Qis measured in tons per year and P is measured in dollars per ton. What is theeffect of a government-imposed price ceiling of $10 per ton of fertilizer?
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shortage of 2,000 tons. |
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Suppose that for ice creamsold on the boardwalk a 10% price increase causes the quantity demanded to fallby 5%. The price elasticity of demand is equal to |
-0.5
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Whichof the following statements is a normative statement? a. The minimum wage is $5.15 per hour. b. The real value of the minimum wage islower in 1999 than in 1970. c. The minimum wage is too low. d. Changes in minimum wage impactunemployment rate of teenagers.
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The minimum wage is too low.
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Which one of the following statements is the result of positiveanalysis? a. Families with high incomesshould donate a fraction of their income to families with lower incomes. b. Families with high incomesshould spend more time together. c. Families with high incomestend to purchase larger homes than families with lower incomes. d. Families with high incomesspend too much of their income on housing. |
Families with high incomes tend to purchase larger homes than families with lower incomes.
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Thedifference between the market for automobiles and the automobile industry isthat the market consists of all buyers and sellers while the industry consistsof
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onlythe sellers of automobiles.
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Indefining the geographic extent of the local market for home heating oil,economists need to consider all of the following...
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the transportation costs ofdelivering home heating oil. b.the proximity of one oil provider to another. c.the price being charged by different providers. |
Price has nothing to do with Geographic extent
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Martha'sdemand for spring water has a price elasticity of –3.0. A recent tax thatcaused the price of spring water to increase by 20% will cause Martha todecrease her quantity demanded for spring water by |
60%.
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3*20%
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. Above are four supply and demand graphsrepresenting a shift in the market for airline tickets. For each of the following sixsituations, identify ONE of the four graphs above as best describing theresulting shift in the airline market and state the cause for that curve shift (No explanation please). 1.Substantial rise in jet fuel prices: |
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,input price rises
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Large increase inthe price of long-term airport parking: what happens to curve? |
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price of complement rises |
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Terrorism threatsthat kept travelers from flying finally ease up: |
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, tastes & preferences increase |
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Big decline inteleconferencing price of virtual business meetings: |
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price of substitute falls |
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Strong economic recovery leads to lowunemployment and wage hikes:
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income rises (for luxury) |
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Boeing and Airbus cut prices for planes toreplace aging fleet of airline jets:
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input price falls |
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