ECON 1B03 Chapter Notes - Fall 2018 Chapter 3 - Ceteris paribus

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21 Sep 2018

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Quantity supplied, qs: quantity of goods and services firms (sellers, suppliers, producers) are willing and able to sell at any price, p. When price of good increases, ceteris paribus, selling that good becomes more profitable and firms will want to offer more for sale. Price and qs are positively related/directly proportional: as p increases, so does qs. Law of supply: other things being equal (ceteris paribus), quantity supplied of a good rises when price of good rises. If 2 goods are substitutes in production: an increase in price of one good will decrease supply of other (suvs and trucks) If 2 goods are complements in production: an increase in price of one good will increase supply of other (chicken breasts and chicken thighs) Technology: a technology that lowers production cost will increase supply. Expectations: if prices are expected to increase in future, firms will hold off producing today and supply today will decrease.

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

When demand for a good is very elastic, revenue ________ when the price falls.

(2)

An elasticity measure less than one means that demand is __________.

(3)

An elasticity measure greater than one means that demand is __________.

(4)

The Latin expression ceteris paribus means

	having made all other necessary changes.
	holding constant all other variables.
	assuming all households have similar incomes.
	given the level of income in the economy.

(5)

A variable measured in terms of money is called a ____________________.

	real variable
	nominal variable
	macroeconomic variable
	microeconomic variable

(6)

Which of the following is true about the importance of money in economics?

	Money is important in both macroeconomics and microeconomics.
	Money is important in macroeconomics but not microeconomics.
	Money is important in microeconomics but not macroeconomics.
	Money is not important in either microeconomics or macroeconomics.

(7)

What is the difference between normative and positive economics?

	Positive economics is descriptive and predictive; normative economics is prescriptive.
	Positive economics highlights the positive aspects of the economy; normative economics highlights the average features.
	Positive economics studies the actions of individuals; normative economics studies the actions of households.
	Positive economics is an applied social science; normative economics is a theoretical social science.

(8)

The slope of the demand curve is negative because

	the quantity of a good demanded decreases as income declines.
	the quantity of a good demanded increases as income declines.
	the quantity of a good demanded increases as the price declines.
	the quantity of a good demanded decreases as the price declines.

(9)

What is the result of an increase in the price of bread, a normal good?

	The demand curve shifts to the right.
	The demand curve shifts to the left.
	The quantity demanded increases.
	The quantity demanded decreases.

(10)

What is the effect on demand for bread when the price of bagels, a substitute for bread, rises?

	The demand curve for bread shifts to the right.
	The demand curve for bread shifts to the left.
	The quantity of bread demanded increases.
	The quantity of bread demanded decreases.

(11)

Which of the following would cause the supply curve for bread to shift inward?

	An increase in the price of bread
	An increase in the price of bagels
	A decrease in the price of bread
	An increase in the price of flour

(12)

An improvement in technology shifts the supply curve outward because

	at every price, firms find producing the good to be more profitable.
	the price of the good increases.
	at every price, firms find producing the good to be less profitable.
	the price of the good decreases.

(13)

Which of the following factors does not affect how much bread a baker is willing to produce?

	The price of bread
	The demand for bread
	The cost of inputs
	Technology

(14)

How do expectations of prices affect how much of a good producers are willing to sell?

	Expectations of prices affect only demand, not supply.
	Actual prices, not expectations of prices, affect supply.
	If producers expect prices to fall in the future, they supply less at every price.
	If producers expect prices to rise in the future, they supply less at every price.

(15)

When the price of a good is above equilibrium level,

	the quantity demanded exceeds the quantity supplied.
	the quantity supplied exceeds the quantity demanded.
	the supply curve shifts to the left.
	the supply curve shifts to the right.

(16)

At a price of P₀ in the diagram below, which of the following statements is true?

	Supply equals demand.
	There is excess demand.
	There is excess supply.
	There is scarcity.

(17)

If demand for bread increases at every price, the equilibrium price of bread will

	fall.
	rise.
	remain unchanged.
	depend on income.

(18)

If the demand for bread declines, then

	at the original equilibrium price, there is excess demand.
	at the original equilibrium price, there is excess supply.
	the supply curve shifts to the right.
	the supply curve shifts to the left.

(19)

Peanut butter and jelly are complementary goods. When the price of peanut butter rises, the demand for jelly ________ and the price of jelly ________.

	rises; falls
	rises; rises
	falls; rises
	falls; falls

(20)

The measure of elasticity that economists use is

	always a positive number.
	always a negative number.
	positive when demand is elastic and negative when demand is inelastic.
	negative when demand is elastic and positive when demand is inelastic.

(21)

Which of the following formulas is the correct expression for the slope of a line?

(22)

Graphically how would an increase in income affect the demand for hamburgers?

	The slope of the demand curve would increase.
	The slope of the demand curve would decrease.
	The demand curve would shift outward, parallel to the original demand curve.
	The demand curve would shift inward, parallel to the original demand curve.

(23)

Given the equation P = $6.00 ? $.40Q, where P is the price of the good and Q is the quantity of the good demanded, how many units will this consumer demand if the price is $3.60?

	1.44 units
	3 units
	3.6 units
	6 units

(24)

Which of the following is true about unit elasticity?

	Revenues remain unchanged when the price changes.
	Elasticity of demand increases as one moves down the demand curve.
	Elasticity of demand decreases as one moves down the demand curve.
	The elasticity of demand is greater than one at every point along the demand curve.

(25)

Which of the following could be a determinant of the quantity demanded of a good?

	The price of the good
	The price of related goods
	Income
	Expectations about the future price of the product
	All of the above

violethare488

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

ECON 1B03 Chapter Notes - Fall 2018 Chapter 3 - Ceteris paribus

ECON 1B03 Full Course Notes

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