ECON 1BB3 Chapter Notes - Chapter 4: Ceteris Paribus, Demand Curve, Market Price

59 views2 pages

ceriseelephant228

16 Mar 2013

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

For unlimited access to Textbook Notes, a Class+ subscription is required.

adrianagreen0110 and 39672 others unlocked

ECON 1BB3 Full Course Notes

Verified Note

11 documents

Document Summary

Law of demand: other things equal (ceteris paribus), the quantity demanded of a good falls as. Market demand: the sum of individual demands. Shifts in demand (change in demand are caused by a change in anything other than price. Movement along the demand curve (change in quantity demanded) is caused by a change in. If demand decreases, the curve shifts in price: a b: increase in quantity demanded, b a: decrease in quantity demanded. What will happen everyday low prices if their workers unionize. Price go up cause they want higher wages. Quantity supplied (q^s): the amount of a good that sellers are willing and able to sell. The variables that influence how much sellers want to sell are: 1. Price firm positive relationship between price and quantity (price and supply: 2. Technology almost always drive down cost, causing firms producing more: 4. Expectations of what"s going to happen to the price of the good: 5.

Related Questions

The market demand curve

a. slopes upward.

b. is found by vertically adding the individual demand curves.

c. represents the sum of the quantities demanded by all the buyers at each price of the good.

d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

only price is held constant.

all determinants of quantity demanded are held constant.

d. income and price are held constant.

When the price of a good or service changes,

	a.	there is a movement along a given demand curve.
	b.	the demand curve shifts in the opposite direction.
	c.	the supply curve shifts in the opposite direction.
	d.	the demand curve shifts in the same direction.

When quantity demanded decreases in response to a change in price,

A. the demand curve shifts to the right.
B. the demand curve shifts to the left.
C. there is a movement down along the demand curve.
D. there is a movement up along the demand curve.
E. the supply curve shifts to the right.

The price elasticity of demand is the measure of the responsiveness of the demand for a good to a percentage change in the price of that same good. When the demand for a good changes due to an increase or decrease in the price of the good, it can be said that the good has a price elastic demand. On the other hand, a good whose demand is not significantly affected by a change in the price levels is price inelastic. For example, luxury goods are usually price elastic because these are not something that most people really need. Thus, when the price of luxury goods increases, the demand for such goods falls. Goods that fall within the latter category are usually the basic necessities such as food and prescription medicine. Even when these types of goods become pricier, most people would find ways to afford them because they need those items to survive.

periwinkleraccoon781

QUESTION 1

The demand for oranges increases while the supply decreases. The equilibrium price of oranges ________, and the equilibrium quantity ________.

		falls; increases
		falls; perhaps changes but we can't say if it increases, decreases, or stays the same
		rises; decreases
		rises; perhaps changes but we can't say if it increases, decreases, or stays the same

1 points

QUESTION 2

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity is ________.

		rises; increases
		falls; decreases
		falls; does not change
		rises; does not change

1 points

QUESTION 3

Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the equilibrium quantity of cream cheese ________.

		does not change; does not change
		rises; increases
		falls; decreases
		rises; decreases

1 points

QUESTION 4

If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.

		rise; increase
		rise; decrease
		fall; increase
		fall; decrease

1 points

QUESTION 5

Which of the following shifts the supply curve for oranges?

		an increase in income for all orange consumers if oranges are a normal good
		disastrous weather that destroys about half of this year's orange crop
		an increase in the price of bananas, a substitute in consumption for oranges
		a newly discovered increase in the nutritional value of oranges

1 points

QUESTION 6

Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)

		normal goods in production.
		an exceptionally cold summer that killed much of the rutabaga crop.
		a fall in the price of fertilizer used to grow rutabagas.
		an increase in the price of a rutabaga

1 points

QUESTION 7

Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to

		an increase in the supply electric cars so that the supply curve shifts rightward.
		an increase in the supply of electric cars so that the supply curve shifts leftward.
		a decrease in the supply of electric cars so that the supply curve shifts rightward.
		a decrease in the supply of electric cars so that the supply curve shifts leftward.

1 points

QUESTION 8

Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then

		the demand for hot dogs will increase.
		the demand for hot dog buns will decrease.
		the quantity demanded of hotdogs will decrease.
		the demand for hot dog buns will increase.

1 points

QUESTION 9

Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________.

		upward; increases
		downward; decreases
		upward; decreases
		downward; increases

1 points

QUESTION 10

Water bottlers announce that next month the price of bottled water will rise by 25 percent. Which of the following occurs immediately?

		The quantity of bottled water demanded increases.
		The demand for bottled water increases.
		The quantity of bottled water demanded decreases.
		The demand for bottled water decreases.

1 points

QUESTION 11

If the price of carrots is below the equilibrium price, the

		quantity supplied of carrots exceeds the quantity demanded and a shortage exists.
		quantity demanded of carrots exceeds the quantity supplied and a shortage exists.
		quantity supplied of carrots exceeds the quantity demanded and a surplus exists.
		quantity demanded of carrots exceeds the quantity supplied and a surplus exists.

1 points

QUESTION 12

Which of the following is true regarding demand?
i. Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same.
ii. Demand refers to one quantity at one time.
iii. "Demand" and " quantity demanded" are the same thing.

		both i and ii
		i only.
		ii only.
		iii only.

1 points

QUESTION 13

Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?

		There is a shortage, so the price rises and quantity demanded decreases.
		There is a shortage, so the price rises and quantity demanded increases.
		There is a shortage, so the price falls and quantity demanded increases.
		There is a surplus, so the price falls and quantity demanded increases.

1 points

QUESTION 14

The number of corn producers increases, so the supply of corn ________ and the supply curve of corn ________.

		decreases; shifts leftward
		decrease; shifts rightward
		increases; shifts rightward
		increases; shifts leftward

1 points

QUESTION 15

Market equilibrium

i. can never occur because there are always people who want a good but cannot afford it.

ii. occurs at the intersection of the supply and demand curves.

iii. is the point where the price equals the quantity.

		iii only
		ii and iii
		ii only
		i only

1 points

QUESTION 16

Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?

		The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese.
		The supply of cheese decreases.
		The supply of cheese stays the same and there is no change in the quantity supplied of cheese.
		The supply of cheese increases.

1 points

QUESTION 17

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the

		demand for Dell computers decreases.
		demand for Apple computers increases.
		demand for Apple computers decreases.
		demand for Dell computers increases.

1 points

QUESTION 18

Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a

		surplus, so the price rises and quantity demanded increases.
		shortage, so the price rises and quantity demanded decreases.
		surplus, so the price falls and quantity demanded increases.
		shortage, so the price falls and quantity demanded increases.

1 points

QUESTION 19

Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?

		The supply increases so that the supply curve shifts rightward.
		The quantity supplied increases but there is no shift in the supply curve.
		The supply decreases so that the supply curve shifts leftward.
		The quantity supplied decreases but there is no shift in the supply curve.

1 points

QUESTION 20

In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?

		The store is trying to increase its customers' demand for the product.
		The law of demand is being used to increase the quantity demanded.
		The store manager must be trying to drive away customers by selling low quality products.
		The store is trying to increase its consumer's incomes by increasing their purchasing power.

1 points

QUESTION 21

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________.

		rises; increases
		rises; decreases
		falls; increases
		falls; decreases

1 points

QUESTION 22

If both the supply and demand curves shift simultaneously, we can always predict what will happen to

		either the price or the quantity, but not both.
		only the quantity.
		only the price.
		both the price and the quantity.

1 points

QUESTION 23

If income increases and the demand for bus rides decreases,

		bus rides are a substitute good.
		consumers are behaving irrationally.
		bus rides are an inferior good.
		bus rides are a normal good.

1 points

QUESTION 24

A surplus of cardboard boxes means that

		at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium..
		the current price of a cardboard box is less than the equilibrium price.
		at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.
		at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.

1 points

QUESTION 25

If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ________ and the equilibrium quantity ________.

		rises; increases
		rises; decreases
		falls; increases
		falls; decreases

1 points

turquoisedeer344

ECON 1BB3 Chapter Notes - Chapter 4: Ceteris Paribus, Demand Curve, Market Price

ECON 1BB3 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1BB3 Lecture Notes - Ceteris Paribus, Demand Curve

ECON 1BB3 Study Guide - Midterm Guide: Ceteris Paribus, Monopolistic Competition, Demand Curve

ECON 1BB3 Lecture Notes - Open Economy, Price Floor, Mastercard

Related Questions