ECON 201 MID TERM

Which of the following is most likely to be an inferior good?

Used clothing

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will

increase equilibrium price and quantity if the product is a normal good

Refer to the diagram. A government-set price floor is best illustrated by

Price C

The law of demand states that, other things equal

price and quantity demanded are inversely related

Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were artificially set at $6:

a shortage of 40 units would occur.

In relation to column (3), a change from column (4) to column (5) would most likely be caused by:

in improvement in production techonology

Over time, the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased. Based on this we can conclude that:

increases in the supply of computer memory have exceeded increases in demand.

The demand for commodity X is represented by the equation P = 100 – 2Q and supply by the equation P = 10 + 4Q.

Refer to the given information. The equilibrium price is:

$70

In this market, economists would call a government-set maximum price of $40 a:

Price ceiling

The demand for most products varies directly with changes in consumer incomes. Such products are known as:

normal goods

Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. An increase in the price of X can be expected to:

increase the demand for Z

If the price in this market was $4:

farmers would not be able to sell all their wheat

If products A and B are complements and the price of B decreases, the:

demand for A will increase and the quantity of B demanded will increase.

which shows demand and supply conditions in the competitive market for product X. Other things equal, a shift of the supply curve from S0 to S1 might be caused by a(n):

increase in the wage rates paid to laborers employed in the production of X.

Which of the following will cause the demand curve for product A to shift to the left?

An increase in money income if A is an inferior good

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will:

increase equilibrium price and decrease equilibrium quantity.

Assume product A is an input in the production of product B. In turn, product B is a complement to product C. We can expect a decrease in the price of A to:

increase the supply of B and increase the demand for C.

A government price support program to aid farmers is best illustrated by:

Price C

In relation to column (3), a change from column (5) to column (4) would indicate a(n):

A decrease in supply

In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:

the price of the product itself.

Ticket scalping refers to:

reselling a ticket at a price above its original purchase price.

Camille’s Creations and Julia’s Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can’t keep up with the quantity demanded at that price), then we would expect both Camille’s and Julia’s to:

raise their price and increase their quantity supplied.

A product market is in equilibrium:

where the demand and supply curves intersect.

If government set a minimum price of $50 in the market, a:

surplus of 21 units would occur.

A surplus of 160 units would be encountered if the price was:

$1.60

Blu-ray players and Blu-ray discs are:

complementary goods.

The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is:

price

Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75:

a larger quantity of C will be demanded.

Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the:

supply of salsa has increased.

Graphically, the market demand curve is:

the horizontal sum of individual demand curves.

If there is a surplus of a product, its price:

is above the equilibrium level.

which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

0F represents a price that would result in a shortage of AC.

An increase in product price will cause:

quantity demanded to decrease.

A decrease in demand is depicted by a:

shift from D2 to D1.

If Z is an inferior good, an increase in money income will shift the:

demand curve for Z to the left.

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes:

the substitution effect.

In this market, economists would call a government-set minimum price of $50 a:

Price floor

The rationing function of prices refers to the:

capacity of a competitive market to equalize quantity demanded and quantity supplied.

There will be a surplus of a product when:

consumers want to buy less than producers offer for sale.

The term "quantity demanded":

refers to the amount of a product that will be purchased at some specific price.

An improvement in production technology will:

shift the supply curve to the right.

One reason that the quantity demanded of a good increases when its price falls is that the:

lower price increases the real incomes of buyers, enabling them to buy more.

The supply curve shows the relationship between:

price and quantity supplied.

By an "increase in demand," economists mean that:

the quantity demanded at each price in a set of prices is greater.

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

inferior goods.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.

Refer to the given information. An increase in the prices of resources used to produce X will:

decrease S, increase P, and decrease Q.

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect:

the supply to increase as farmers plant more corn.

If two goods are complements:

a decrease in the price of one will increase the demand for the other.

A normal good is one:

for which the consumption varies directly with income.

In moving along a demand curve, which of the following is not held constant?

The price of the product for which the demand curve is relevant.