Microeconmics:chapter 4 Extensions Of Demand And Supply Analysis

Front 1

1. Resources are scarce; therefore, we cannot have all we want at a (zero, positive) price and there
will be various ways in which people will ____________________ for resources.

Back 1

1. zero; compete

Front 2

2. If demand shifts to the left, given supply, then the equilibrium price will (rise, fall) and the
equilibrium quantity will ______________.

Back 2

2. fall; fall

Front 3

3. If supply shifts to the right, given demand, then the equilibrium price will ___________________
and the equilibrium quantity will _________________________.

Back 3

3. fall; rise

Front 4

4. If both demand and supply shift to the right, then the equilibrium price (will rise, will fall, is
indeterminate) and the equilibrium quantity (will rise, will fall, is indeterminate).

Back 4

4. is indeterminate; will rise

Front 5

5. If both demand and supply shift to the left, then the equilibrium price (will rise, will fall, is
indeterminate), and the equilibrium quantity (will rise, will fall, is indeterminate).

Back 5

5. is indeterminate; will fall

Front 6

6. If the demand for good A or resource A rises relative to its supply, A has become relatively
(less scarce, more scarce) and its relative price will (rise, fall); if the demand for good B or
resource B falls relative to its supply, then B has become relatively __________________________,
and its relative price will __________________.

Back 6

6. more scarce; rise; less scarce; fall

Front 7

7. If the published price of good A remains constant, but its quality falls, then its relative price has
actually (risen, fallen). If the published price of good A remains constant, but people have to wait in
line to get it, then the relative price of good A has actually _______________________, because
people have an opportunity cost for their ___________________________.

Back 7

7. risen; risen; time

Front 8

8. If the demand for a good rises relative to its supply, that good becomes (less scarce, more scarce)
and its relative price will (rise, fall); this leads to (a decrease, an increase) in the quantity of the
good supplied by producers of the item.

Back 8

8. more scarce; rise; an increase

Front 9

9. Price performs a(n) __________________________ function; inputs or outputs go to the
__________________________ bidders, if people are free to exchange voluntarily in markets.
If such economic freedoms do not exist, then other (price, nonprice) determinants will allocate
goods and services.

Back 9

9. rationing; highest; nonprice

Front 10

10. Price controls that put a price ceiling on goods and services create (surpluses, shortages); and price
floors create (surpluses, shortages).

Back 10

10. shortages; surpluses

Front 11

11. If governments place price (floors, ceilings) on goods, then black markets might emerge.

Back 11

11. ceilings

Front 12

12. Rent control is a form of price (floor, ceiling); rent control (increases, reduces) the future supply of
apartment construction, (increases, reduces) tenant mobility, (improves, causes a deterioration in)
the quality of the existing stock of apartments, and hurts _________________________.

Back 12

12. ceiling; reduces; reduces; causes a
deterioration in; landlords and low
income apartment hunters

Front 13

13. By prohibiting the sale and use of tobacco products, the government would cause the supply of
cigarettes to shift to the (left, right), make cigarettes (more, less) scarce, and cause their relative
price to (rise, fall).

Back 13

13. left; more; rise

Front 14

14. Import quotas, licensing arrangements, and outright bans on specific goods are forms of government
(price, quantity) restrictions.

Back 14

14. quantity

Front 15

15. An import quota tends to (lower, raise) the price to consumers.

Back 15

15. raise

Front 16

16. If governments put price floors on agricultural goods, a (shortage, surplus) will result.

Back 16

16. surplus

Front 17

T F 1. If supply shifts to the left, given demand, then the equilibrium price and the equilibrium
quantity will rise.

Back 17

1. F The equilibrium quantity falls.

Front 18

T F 2. If demand shifts to the left, given supply, then the equilibrium price and the equilibrium
quantity will fall.

Back 18

2. T

Front 19

T F 3. If both supply and demand shift to the right, then the equilibrium price and equilibrium
quantity are indeterminate.

Back 19

3. F Equilibrium quantity rises.

Front 20

T F 4. If the supply of good A increases relative to its demand, then good A is now more scarce,
and its relative price will rise.

Back 20

4. F Good A is now less scarce, and its relative price will fall.

Front 21

T F 5. If the published price is constant, but it takes consumers longer to wait in lines, the total
price has really risen.

Back 21

5. T

Front 22

T F 6. If markets are flexible and no market restrictions exist, then surpluses and shortages will not
occur, even in the short run.

Back 22

6. F No, surpluses and shortages can exist—in the short run.

Front 23

T F 7. Minimum wage laws are a form of price ceiling.

Back 23

7. F They are a price floor.

Front 24

T F 8. Rent controls help the poor who are looking for apartments, because rents are lower.

Back 24

8. F That group is hurt because they will be discriminated against and because the housing stock
diminishes.

Front 25

T F 9. Black markets, in effect, cause prices to rise for certain buyers.

Back 25

9. T

Front 26

T F 10. Agricultural surpluses arise when governments put price ceilings on such goods.

Back 26

10. F Price ceilings cause shortages.