Question 1

In 1984, the National Minimum Drinking Age Act was passed, raising the legal age to consume alcoholic beverages in the United States to 21. In much of Europe, the legal age to consume alcohol is 18. If the legal drinking age in the United States was changed back to 18, how would this affect the market for alcoholic beverages? What would happen to the equilibrium price and quantity of alcoholic beverages?

Accepted Answer

The answer of In 1984, the National Minimum Drinking Age...

Question 2

Discuss the correct and incorrect economic analysis in the following statement.
"If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase. This will result in a price decrease, which will then cause the supply of pineapples to decrease."

Accepted Answer

The answer of Discuss the correct and incorrect economic analysis...

Question 3

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, then economists would describe this as

Accepted Answer

A)  an increase in demand. 
B)  an increase in quantity demanded. 
C)  a change in consumer income. 
D)  an increase in consumers' taste for coffee.

Question 4

Figure 3-5 
-Refer to Figure 3-5. At a price of $0,

Accepted Answer

A)  there is a surplus of 8 units. 
B)  there is a surplus of 0 units. 
C)  there is a shortage of 0 units. 
D)  there is a shortage of 8 units.

Question 5

Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

Accepted Answer

A)  substitutes. 
B)  both inferior goods. 
C)  complements. 
D)  both luxury goods.

Question 6

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Accepted Answer

A) True 
 B)False

Question 7

Figure 3-4 
-Refer to Figure 3-4. If the price is $15,

Accepted Answer

A)  there would be a surplus of 300 units. 
B)  there would be a shortage of 300 units. 
C)  there would be a surplus of 400 units. 
D)  there would be a shortage of 400 units.

Question 8

Market equilibrium occurs where supply equals demand.

Accepted Answer

A) True 
 B)False

Question 9

If the population increases and input prices increase, the equilibrium price of a product will definitely increase.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would cause an increase in the supply of cheese?

Accepted Answer

A)  a decrease in the price of wine (assuming that cheese and wine are complements) 
B)  an increase in the price of cheese 
C)  an increase the price of a product that producers sell instead of cheese 
D)  an increase in the number of firms that produce cheese

Question 11

Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges

Accepted Answer

A)  the supply curve shifted to the right resulting in a decrease in the equilibrium price. 
B)  the supply curve shifted to the right resulting in an increase in the equilibrium price. 
C)  the demand curve shifted to the left resulting in a decrease in the equilibrium price. 
D)  the demand curve shifted to the right resulting in an increase in the equilibrium price.

Question 12

If consumers believe the price of LCD televisions will decrease in the future, this will cause the demand for LCD televisions to increase now.

Accepted Answer

A) True 
 B)False

Question 13

Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges?

Accepted Answer

A)  The demand curve for laser printer ink cartridges shifts to the right. 
B)  The demand curve for laser printer ink cartridges shifts to the left. 
C)  The quantity of laser printer ink cartridges demanded increases. 
D)  The quantity of laser printer ink cartridges demanded decreases.

Question 14

In recent years, the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen, with the decrease in supply being larger than the decrease in demand. In this situation, the equilibrium price of orange juice will have ________ and the equilibrium quantity of orange juice will have ________ .

Accepted Answer

A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased

Question 15

Figure 3-4 
-Refer to Figure 3-4. At a price of $15, how many units will be sold?

Accepted Answer

A)  300 
B)  400 
C)  600 
D)  700

Question 16

Figure 3-4 
-Refer to Figure 3-4. At a price of $25, how many units will be sold?

Accepted Answer

A)  400 
B)  500 
C)  600 
D)  800

Question 17

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result

Accepted Answer

A)  both the equilibrium price and quantity of DVD players will decrease. 
B)  the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease. 
C)  the equilibrium price of DVD players may increase or decrease; the equilibrium quantity will decrease. 
D)  the equilibrium price of DVD players will increase; the equilibrium quantity may increase or decrease.

Question 18

Figure 3-2 
-Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

Accepted Answer

A)  A to B. 
B)  B to A. 
C)  S1 to S2. 
D)  S2 to S1.

Question 19

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

Accepted Answer

A)  a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price. 
B)  a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity. 
C)  a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease. 
D)  an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

Question 20

If the price of train tickets decreases, what will be the impact in the market for bus travel?

Accepted Answer

A)  The demand curve for bus travel shifts to the right. 
B)  The quantity of bus travel demanded increases. 
C)  The demand curve for bus travel shifts to the left. 
D)  The quantity of bus travel demanded decreases.

Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase. This will result in a price decrease, which will then cause the supply of pineapples to decrease."

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, then economists would describe this as

Figure 3-5 -Refer to Figure 3-5. At a price of $0,

Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

Figure 3-4 -Refer to Figure 3-4. If the price is $15,

Market equilibrium occurs where supply equals demand.

If the population increases and input prices increase, the equilibrium price of a product will definitely increase.

Which of the following would cause an increase in the supply of cheese?

Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges

If consumers believe the price of LCD televisions will decrease in the future, this will cause the demand for LCD televisions to increase now.

Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges?

Figure 3-4 -Refer to Figure 3-4. At a price of $15, how many units will be sold?

Figure 3-4 -Refer to Figure 3-4. At a price of $25, how many units will be sold?

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result

Figure 3-2 -Refer to Figure 3-2. An increase in the expected future price of the product would be represented by a movement from

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

If the price of train tickets decreases, what will be the impact in the market for bus travel?