Question 1

Economists normally
A)do not try to explain people's tastes, but they do try to explain what happens when tastes change.
B)believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
C)do not believe that people's tastes determine demand, so they ignore the subject of tastes.
D)incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Accepted Answer

Economists generally focus on explaining market outcomes and behavior, rather than individual tastes and preferences. However, they do recognize that changes in tastes can affect demand and prices, and therefore incorporate such changes into their models.

Question 2

A likely example of complementary goods for most people would be
A)canoes and paddles.
B)snow mobiles and sofas.
C)coffee and tea.
D)tennis balls and basketballs.

Accepted Answer

Canoes and paddles are often used together and are complementary goods. Snowmobiles and sofas are not complementary goods as they are not typically used together. Coffee and tea could be considered substitutes rather than complements, and tennis balls and basketballs are not typically used together.

Question 3

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see
A)no change in the demand for energy drinks.
B)a decrease in the demand for energy drinks.
C)an increase in the demand for energy drinks.
D)a decrease in the supply of energy drinks.

Accepted Answer

Since the evidence shows that energy drinks are linked to a higher risk of heart attacks, consumers are likely to become more hesitant in purchasing them. Therefore, we would expect a decrease in the demand for energy drinks.

Question 4

Which of the following might cause the demand curve for an inferior good to shift to the left?
A)a decrease in income
B)an increase in the price of a substitute
C)an increase in the price of a complement
D)None of the above is correct.

Accepted Answer

The answer of Which of the following might cause the...

Question 5

If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see
A)an increase in demand for brown rice and a decrease in demand for white rice.
B)a decrease in demand for brown rice and an increase in demand for white rice.
C)an increase in demand for both brown and white rice.
D)no change in demand for either type of rice because weight loss is not a determinant of demand.

Accepted Answer

If eating brown rice is found to cause weight loss while eating white rice causes weight gain, people are likely to switch to brown rice in order to lose weight. This increase in demand for brown rice will cause a decrease in demand for white rice.

Question 6

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would
A)decrease.
B)increase.
C)be unaffected.
D)There is insufficient information given to answer the question.

Accepted Answer

Since the price of bananas has increased, the cost of making pies filled with banana cream has increased. As a result, consumers may be less willing to pay the higher price for the banana cream pies and may instead choose to purchase pies with vanilla pudding. Therefore, the demand for vanilla pudding would decrease.

Question 7

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter
A)will increase but not until the end of the year.
B)increases today.
C)decreases as you look for a substitute good.
D)shifts left today.

Accepted Answer

The answer of You love peanut butter. You hear on...

Question 8

Today, people changed their expectations about the future. This change
A)can cause a movement along a demand curve.
B)can affect future demand but not today's demand.
C)can affect today's demand.
D)cannot affect either today's demand or future demand.

Accepted Answer

People's changed expectations about the future can affect their decisions about buying goods and services today, which can change today's demand.

Question 9

A likely example of complementary goods for most people would be
A)butter and margarine.
B)lawnmowers and automobiles.
C)chips and salsa.
D)cola and lemonade.

Accepted Answer

Chips and salsa are often consumed together as a snack or appetizer, making them complementary goods. The other options are not as commonly consumed together or do not have as direct of a relationship as chips and salsa.

Question 10

If toast and butter are complements, then which of the following would increase the demand for toast?
A)a decrease in the price of toast
B)a decrease in the price of butter
C)an increase in the price of butter
D)Both a and b are correct.

Accepted Answer

If butter becomes cheaper, people are more likely to buy it, and therefore are more likely to buy toast to go with it, increasing the demand for toast.

Question 11

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for
A)hair gel to increase.
B)razors to increase.
C)combs to increase.
D)shampoo to increase.

Accepted Answer

The announcement suggests that shaving one's head may have health benefits, which would likely encourage more men to shave their heads. As a result, the demand for razors would increase as more men would now purchase them to shave their heads. The other options (hair gel, combs, shampoo) are not necessarily related to shaving the head and would not be affected by this announcement.

Question 12

If Miguel expects to earn a higher income next month, he may choose to
A)save more now and spend less of his current income on goods and services.
B)save less now and spend more of his current income on goods and services.
C)decrease his current demand for goods and services.
D)move along his current demand curves for goods and services.

Accepted Answer

The answer of If Miguel expects to earn a higher...

Question 13

When it comes to people's tastes, economists generally believe that
A)tastes are based on forces that are well within the realm of economics.
B)tastes are based on historical and psychological forces that are beyond the realm of economics.
C)tastes can only be studied through well-constructed, real-life models.
D)because tastes do not directly affect demand, there is little need to explain people's tastes.

Accepted Answer

Economists generally believe that people's tastes are influenced by historical and psychological factors that go beyond traditional economic analysis, such as cultural values, personal experiences, and social norms. While economists may attempt to model and understand these influences, they recognize that tastes are ultimately shaped by a wide range of factors that are difficult to quantify or predict.

Question 14

When quantity demanded has increased at every price, it might be because
A)the number of buyers in the market has decreased.
B)income has increased, and the good is an inferior good.
C)the costs incurred by sellers producing the good have decreased.
D)the price of a complementary good has decreased.

Accepted Answer

When the price of a complementary good decreases, the demand for the other good will increase because it becomes more affordable for consumers to purchase both goods together. This shift in demand will be represented as an increase in quantity demanded at every price.

Question 15

Holding all other things constant, a higher price for ski lift tickets would
A)increase the number of skiers.
B)increase the price of skis.
C)decrease the number of skis sold.
D)decrease the demand for other winter recreational activities.

Accepted Answer

A higher price for ski lift tickets would likely decrease the number of skiers, as it would make skiing more expensive and less accessible to some individuals. It would not have any directly related effect on the price of skis or the demand for other winter recreational activities.

Question 16

You watch a lot of HGTV during your summer vacation, and you notice that most housing buyers list granite countertops in their "must have" lists when buying a new or existing house. You expect the demand for
A)granite countertops to shift to the left.
B)granite countertops to shift to the right.
C)substitute products such as marble countertops to shift to the right.
D)substitute products such as marble countertops to be unaffected by buyers' preferences for granite.

Accepted Answer

The demand for granite countertops will shift to the right because the buyers' preferences for this product have increased, leading to a higher quantity demanded at any given price level. This is because granite countertops are considered a luxury item and are seen as a desirable feature in homes, especially among homebuyers who prioritize aesthetics and are willing to pay a premium for high-end finishes. As a result of this shift in demand, the price of granite countertops may also rise as suppliers try to meet the increased demand.

Question 17

A very hot summer in Atlanta will cause
A)the demand curve for lemonade to shift to the left.
B)the demand for air conditioners to decrease.
C)the demand for jackets to decrease.
D)a movement downward and to the right along the demand curve for tank tops.

Accepted Answer

The answer of A very hot summer in Atlanta will...

Question 18

An increase in the number of college scholarships issued by private foundations would
A)increase the supply of education.
B)decrease the supply of education.
C)increase the demand for education.
D)decrease the demand for education.

Accepted Answer

An increase in the number of college scholarships issued by private foundations would increase the demand for education. This is because more people would have access to funding for education, making it more affordable and therefore increasing the interest in pursuing higher education.

Question 19

A higher price for batteries would result in a(n)
A)increase in the demand for flashlights.
B)decrease in the demand for flashlights.
C)increase in the demand for batteries.
D)decrease in the demand for batteries.

Accepted Answer

The answer of A higher price for batteries would result...

Question 20

Which of the following events could shift the demand curve for gasoline to the left?
A)The income of gasoline buyers rises, and gasoline is a normal good.
B)The income of gasoline buyers falls, and gasoline is an inferior good.
C)Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars.
D)The price of gasoline rises.

Accepted Answer

Public service announcements encouraging people to walk or ride bicycles instead of driving cars would likely reduce the demand for gasoline, as people are finding alternative modes of transportation. The other options would either increase demand (A and B) or have no effect on demand (D).

Quiz 4: The Market Forces of Supply and Demand

Economists normally

A likely example of complementary goods for most people would be

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

Which of the following might cause the demand curve for an inferior good to shift to the left?

If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

Today, people changed their expectations about the future. This change

A likely example of complementary goods for most people would be

If toast and butter are complements, then which of the following would increase the demand for toast?

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

If Miguel expects to earn a higher income next month, he may choose to

When it comes to people's tastes, economists generally believe that

When quantity demanded has increased at every price, it might be because

Holding all other things constant, a higher price for ski lift tickets would

You watch a lot of HGTV during your summer vacation, and you notice that most housing buyers list granite countertops in their "must have" lists when buying a new or existing house. You expect the demand for

A very hot summer in Atlanta will cause

An increase in the number of college scholarships issued by private foundations would

A higher price for batteries would result in a(n)

Which of the following events could shift the demand curve for gasoline to the left?