ECO 1102 Study Guide - Economic Equilibrium, Ice Cream Cone, Frozen Yogurt

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11 Jul 2014

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ECO 1102 Full Course Notes

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Supply curve: same as demand curve but on the buyers side, expresses the relationship between price and quantity supplied. Law of supply : all other things equal, the quantity supplied of a good goes up as the price goes up: supply curve is upward sloping. Shifts in the supply curve: concept same as demand curve but from sellers pov. If change increases the quantity supplied for every price; increase in supply (curve shifts to the right) If change decreases the quantity supplied for every price; decrease in supply (curve shifts to the left: example price of ice cream cone vs. Equilibrium of supply and demand: where supply and demand meet (poi)

Related Questions

1.When the term "price" is used in the law of demand, price refers to Select one:

a. the price of the well relative to the price of another good.

b. the nominal price of the well relative to its nominal price in the previous year.

c. the absolute price of the good.

d. the dollar price of the good.

2.In economics, the meaning of demand refers to Select one:

a. the quantities of a good that people will sell at various prices.

b. the total satisfaction that consuming good provides people at different prices.

c. how badly someone wants a good.

d. the quantities of a good that people will buy at various prices.

3.Which of the following illustrates the law of demand?

Select one:

a. College enrollment increases when federal tuition grants are readily available to students.

b. More people watch college basketball in March than in November.

c. The number of long-distance calls in the United States is greater on Christmas than on Valentine's Day.

d. The prevailing wage rate in an industry determines how many people choose to work in the industry.

4.The absolute price of a good is its

Select one:

a. money price.

b. projected price.

c. relative price.

d. subjective price.

5.The only variable that can affect a movement along the demand curve is

Select one:

a. the number of buyers.

b. income levels.

c. the price of the good itself.

d. the number of substitutes.

6.The price of an MP3 music player increased from $50 to $70 while the price of a music download increased from $1 to $2. The relative price of an MP3 music player in terms of music downloads Select one:

a. increased from 0.04 to 0.05.

b. decreased, but we need more information to know by how much.

c. increased, but we need more information to know by how much.

d. decreased from 50 to 35.

7.The quantity supplied of a particular good is the amount of the good that

Select one:

a. households want firms to sell at each price during a particular time period.

b. firms will actually end up buying at a particular price during a given time period.

c. firms are willing to sell at each price during a particular time period.

d. households are willing to consume at each particular price.

8.An increase in price will lead to an increase in quantity supplied. This statement is

Select one:

a. the law of supply.

b. untrue always.

c. the law of demand.

d. a normative statement.

9.Regarding the law of supply, which of the following statements is correct?

Select one:

a. As demand falls, supply rises.

b. The ceteris paribus assumption does not apply.

c. As the price of a good or service rises, the quantity supplied will increase.

d. As the price of a good or service rises, the quantity supplied will decrease.

10.A given supply curve illustrates Select one:

a. the relationship between expected future prices and quantity supplied.

b. the effect of a change in resource costs on the quantity supplied.

c. the effect of a change in technology on the quantity supplied.

d. the relationship between price and quantity supplied.

11.If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)

Select one:

a. decrease in the supply of ice cream and a leftward shift of the supply curve.

b. increase in the supply of ice cream and a rightward shift of the supply curve.

c. increase in the quantity of ice cream supplied and a movement down along the supply curve.

d. decrease in the quantity of ice cream supplied and a movement up along the supply curve.

12. An improvement in technology in the production of computers would

Select one:

a. increase the demand for computers.

b. decrease the supply of computers.

c. decrease the demand for computers.

d. increase the supply of computers.

13.Which of the following is a non-price determinant of supply? Select one:

a. the number of consumers

b. technological advances in production

c. the price of related goods consumers may buy

d. consumers' incomes

14.Which of the following does NOT cause a rightward shift in the supply curve?

Select one:

a. a reduction in resource costs

b. an increase in technology

c. a reduction in the expected future price of the good

d. a reduction in the price of the good

15.Which of the following is a possible outcome of setting a legal maximum rental rate below the market-clearing rental rate?

Select one:

a. a decrease in the quantity of rental housing demanded

b. an increase in the quantity of rental housing supply

c. a black market in rental housing

d. a surplus of rental housing

plumgerbil49

1. According to the law of demand, an increase in the price of a good causes Select one:

a. a downward movement along the demand curve for that good.

b. a rightward shift of the demand curve for that good.

c. an upward movement along the demand curve for that good.

d. a leftward shift of the demand curve for that good.

2.The relative price of a textbook is

Select one:

a. the amount it cost to make the textbook.

b. the money price of the textbook divided by the money price of some other good.

c. what the author earned for writing the textbook.

d. the price of the textbook compared with what students think it should cost.

3.Which of the following best represents the law of demand?

Select one:

a. As the price of good increases, the quantity demanded of that good decreases.

b. As the demand for a good increase, the price of that good increases.

c. As the price of a good decrease, the demand curve for that good shifts to the right.

d. As the price of a good decrease, the demand for the good increases.

4. The absolute price of a good is its

Select one:

a. subjective price.

b. money price.

c. relative price.

d. projected price.

5. The fact that when the price of a good goes up, people buy less of it is known as the

Select one:

a. law of demand.

b. concept of market equilibrium.

c. need for inferior goods.

d. law of supply.

6.The price of a commodity in terms of another commodity is

Select one:

a. the law of demand.

b. the money price.

c. a substitute.

d. the relative price.

7.Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

Select one:

a. the law of supply.

b. the law of demand.

c. ceteris paribus.

d. equilibrium.

8.he direct relationship between changes in price and changes in quantity supplied is

Select one:

a. shown by a shift in the supply curve.

b. the law of relative production.

c. the law of supply.

d. a change in supply.

9. The law of supply states that other things being equal,

Select one:

a. supply creates its demand.

b. supply will increase if productivity increases.

c. supply will increase to meet demand if demand increases.

d. as price increases, quantity supplied increases.

10. a price increase will lead to an increase in quantity supplied. This statement is

Select one:

a. a normative statement.

b. untrue always.

c. the law of supply.

d. the law of demand.

11.All of the following will cause a shift in the supply of jeans EXCEPT

Select one:

a. an increase in the cost of producing jeans.

b. a per-unit government subsidy on the production of jeans.

c. a decrease in the number of jean manufacturers.

d. a decrease in the prices of jeans.

12.An increase in the price of steel to producers of refrigerators will cause

Select one:

a. the demand for refrigerators to decrease.

b. the supply curve for refrigerators to shift left.

c. the quantity demanded to feel to increase.

d. the quantity supplied of refrigerators to increase.

ivorysardine587

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

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ECO 1102 Study Guide - Economic Equilibrium, Ice Cream Cone, Frozen Yogurt

ECO 1102 Full Course Notes

Document Summary

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