Question 1

If the demand curve for gasoline is relatively steep,then

Accepted Answer

A relatively steep demand curve for gasoline indicates that the quantity demanded is not very sensitive to changes in price, meaning that even if the price of gasoline increases, drivers' decisions to buy gasoline will not be significantly affected. This is because a steep demand curve represents inelastic demand.

Question 2

Surveys show that a small increase in the price of organic potatoes will cause most people to switch to other alternatives such as packaged mashed potatoes.This finding suggests that the demand curve for organic potatoes is

Accepted Answer

The demand curve for organic potatoes is relatively flat, indicating that a small change in price leads to a large change in the quantity demanded. This elasticity suggests that consumers are willing to switch to substitutes easily if the price of organic potatoes increases.

Question 3

Which of the following would shift the supply curve for coffee to the right?

Accepted Answer

An innovation in agricultural techniques would decrease the cost of production for coffee growers, leading to an increase in supply and shifting the supply curve to the right.

Question 4

If the legal incidence of a tax is entirely on suppliers,then the tax will have no economic effect on demanders.

Accepted Answer

The legal incidence of a tax refers to who is legally obligated to pay the tax, but the economic incidence, or burden, of a tax can be shared between suppliers and demanders depending on the elasticities of supply and demand. Even if suppliers are legally responsible for the tax, prices for consumers can still increase, affecting demand.

Question 5

When a sales tax of 20¢ per soda is imposed on soda consumption,the supply curve for soda shifts down by precisely 20¢ per soda.

Accepted Answer

The imposition of a sales tax does not affect the supply curve for soda. It only affects the demand curve, which shifts downward. The price paid by consumers increases as a result of the tax, but the price received by producers (i.e. the supply curve) does not change.

Question 6

According to the law of demand,if other relevant factors remain unchanged,then a rise in the price of a commodity will cause

Accepted Answer

The law of demand states that at all other things being equal, the quantity demanded of a good decreases as the price of the good increases. Therefore, a rise in the price of a commodity will lead to a fall in the quantity demanded of the commodity.

Question 7

If a rise in supply and a rise in demand occur at the same time,then we know that the price must also rise.

Accepted Answer

When both supply and demand increase, the effect on price is uncertain without knowing the relative magnitude of the changes. Price could increase, decrease, or stay the same depending on which effect is stronger.

Question 8

Suppose the price of a DVD is $15 per unit.At that price,consumers wish to purchase 6,000 units weekly and producers wish to sell 4,000 units weekly.In this situation,

Accepted Answer

There is excess demand (a shortage) because consumers want to buy more units than producers are willing to sell at the current price. This typically leads to consumers bidding up the price.

Question 9

If a fall in supply and a rise in demand occur at the same time,then we know that the price must also rise.

Accepted Answer

A fall in supply and a rise in demand will lead to an increase in the equilibrium price. This is because there is now greater competition among buyers for a limited supply of goods, driving up the price.

Question 10

The observation that consumer purchases of walnuts decline as the price rises reflects:

Accepted Answer

The observation that consumer purchases of walnuts decline as the price rises reflects the law of demand, which states that as the price of a good or service increases, the quantity demanded will decrease.

Question 11

If the supply of hotel rooms falls and all other relevant factors remain unchanged,then,

Accepted Answer

If the supply of hotel rooms falls and all other relevant factors remain unchanged, then the quantity demanded of hotel rooms will fall, as there are fewer rooms available to meet the demand. This is likely to lead to an increase in prices for hotel rooms, which may further dampen demand.

Question 12

The term demand refers to

Accepted Answer

The answer of The term demand refers to
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Question 13

At the equilibrium point of a market,

Accepted Answer

At the equilibrium point of a market, the quantity supplied and the quantity demanded are equal. This means that neither demanders nor suppliers have any incentive to change their behavior, as both parties are able to trade at the prevailing market price. Therefore, choice C is the correct answer.

Question 14

Techniques for estimating demand curves using direct observations from the marketplace are part of a family of statistical techniques referred to as:

Accepted Answer

Econometrics is a family of statistical techniques that are used for estimating and testing economic relationships, such as demand curves, using data from the marketplace. Legal studies and policy analysis are not directly related to estimating demand curves, and economic expansion is a general concept that does not specifically relate to the statistical techniques for estimating demand curves.

Question 15

When the price of a barrel of crude oil rises,what will be the immediate effect on the market for home heating fuel produced from crude oil?

Accepted Answer

When the price of crude oil rises, it becomes more expensive to produce home heating fuel from crude oil. Therefore, the supply of home heating fuel will fall, causing an increase in the price of the fuel. This could also lead to a decrease in the quantity demanded of the fuel, but that is not the immediate effect.

Question 16

A fall in supply is illustrated by

Accepted Answer

A fall in supply is represented by a leftward shift of the supply curve, indicating that less of the good is supplied at each price.

Question 17

Which of the following would cause the demand curve for rice to shift to the left?

Accepted Answer

A report claiming that the starch in rice causes heart disease would decrease the demand for rice as consumers might seek healthier alternatives, leading to a leftward shift in the demand curve. Choices A and B affect supply, not demand, and choice D affects a substitute good, which could potentially increase the demand for rice instead.

Question 18

In a supply-demand diagram,the law of supply is illustrated by

Accepted Answer

The law of supply states that as the price of a good or service increases, the quantity supplied by producers will also increase. This is illustrated in a supply-demand diagram by drawing the supply curve so that it slopes upward from left to right. As the price increases, producers are willing and able to supply more of the good or service, resulting in an increase in quantity supplied. Conversely, as the price decreases, producers are willing and able to supply less of the good or service, resulting in a decrease in quantity supplied. The other answer choices (A, C, and D) are either incorrect or incomplete in their depiction of the law of supply.

Question 19

Consider a demand curve for reckless driving,for which the "price of reckless driving" is interpreted as the probability of having a fatal accident.When could safer cars lead to an increase in total number of driver fatalities?

Accepted Answer

If the demand curve is relatively flat, meaning that people are insensitive to changes in the price of reckless driving (probability of a fatal accident), then safer cars could lead to an increase in the total number of driver fatalities. This is because if people feel safer driving in newer, safer cars, they may engage in more reckless driving behavior, which increases the probability of a fatal accident. In contrast, if the demand curve is relatively steep, meaning people are very sensitive to changes in the probability of a fatal accident, then safer cars would lead to a decrease in driver fatalities.

Question 20

An excise tax of 20 cents on gasoline shifts demand down by exactly 20 cents.

Accepted Answer

The excise tax on gasoline would shift the supply curve upward, resulting in an increase in price and a decrease in quantity demanded. The amount of the shift would depend on the elasticity of demand, but it would generally be less than the amount of the tax.

Quiz 1: Supply,demand,and Equilibrium