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Exam 3: Markets

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Question 81

Multiple Choice

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Consider a market that is in equilibrium. If the market experiences both a decrease in demand and an increase in supply:

A) the equilibrium price and quantity will rise.
B) the equilibrium quantity will fall, but the change in the equilibrium price cannot be predicted.
C) the equilibrium price will fall, but the change in the equilibrium quantity cannot be predicted.
D) the equilibrium price and quantity will fall.

E) B) and C)
F) None of the above

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Question 82

Multiple Choice

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The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. What was the original equilibrium price and quantity for this good?

A) $5 and 30
B) $5 and 20
C) $10 and 20
D) $20 and 10

E) B) and C)
F) A) and B)

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Question 83

Multiple Choice

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If a producer incorrectly sets the price of its product too high:

The table shows individual demand schedules for a market. What is the equilibrium price in this market?

A demand schedule is a _____ that shows the quantities of a particular good or service that consumers are willing to purchase at various _____.

Consider a market that is in equilibrium. If the market experiences an increase in demand:

As part of recent cutbacks at his company, Paul just accepted a 10percent cut in pay. Now he brews coffee at home instead of stopping at Starbucks every day. Based on this behavior, what can we assume about these goods for Paul?

Suppose the price of house paint, a normal good, has increased. This change can be shown graphically as a:

The demand curve represents the relationship between _____, with everything else held constant.

If a producer incorrectly sets the price of its product too low:

The table shows individual demand schedules for a market. If the price of the good is $0.50, total demand by Betty and Barney will be:

The buyers and sellers who trade a particular good or service make up what we call a:

The table shows individual demand schedules for a market. At a price of $1.00, how much of the good will be demanded by Betty?

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. What is likely to happen to the market for ride-on lawn mowers as a result in the changing price of oil?

The law of supply states that, all else held equal, quantity supplied rises as:

Equilibrium exists at the point where:

A paper mill discovers a cheaper way to get power, and they adopt the new technology. Which of the following will likely happen in the market for paper?

Yang just got a big promotion at work, which includes a sizable pay increase. Yang's demand for ramen noodles, an inferior good, will likely _____ and his demand curve will _____.

A table that shows the quantities of a particular good or service that producers are willing to sell (supply) at various prices is known as a supply:

Junie is shopping for dinner. She notices that hamburgers are on sale, so she puts the hamburgers in her cart instead of the hot dogs she originally came to the store to buy. She then heads over to the bread aisle to pick up hamburger buns. The change in Junie's demand for hamburger buns is due to a change in: