Question 1

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

Accepted Answer

Elvira's decrease in banana consumption in response to a price increase in peanut butter suggests that she views these goods as complements in consumption. This means she likely consumes them together, so when one becomes more expensive, she reduces her consumption of both.

Question 2

Which of the following products would be most likely to see a rise in demand due a drop in incomes?

Accepted Answer

Instant ramen noodles are a cheaper alternative for meals and are often consumed by those on a tight budget. A drop in income would make people more price-sensitive and thus more likely to turn to cheaper options such as instant ramen noodles. Lobster dinners, new cars, and hotel rooms are all luxury or non-essential items that are less likely to see a rise in demand during an economic downturn.

Question 3

Figure 3.1  Alt text for Figure 3.1: In figure 3.1, graph of the effect of an increase in population on the demand curve.
Long description for Figure 3.1: The x-axis is labelled, Quantity, and y-axis is labelled, Price.Curve Demand, D1, is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 follows the same slope as curve D1, but is plotted to the right.2 points, A and B, are plotted in the middle of curve D1.A right pointing arrow indicates the change from curve D1 to curve D2.
-Refer to Figure 3.1.A case in which consumers no longer cared for a product would be represented by a movement from

Accepted Answer

The answer of Figure 3.1  Alt text for Figure...

Question 4

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital)cameras?

Accepted Answer

The lower prices for digital cameras have made them more affordable and therefore more popular among consumers, leading to a decrease in demand for traditional cameras. As a result, the demand curve for traditional cameras shifts to the left.

Question 5

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Accepted Answer

As more people buy digital cameras due to technological advancements and lower prices, they are likely to print more digital photos, increasing the demand for digital photo printing paper. This scenario causes the demand curve for digital photo printing paper to shift to the right.

Question 6

Suppose that when the price of hamburgers decreases, the Li family increases their purchases of ketchup.To the Li family

Accepted Answer

Complementary goods are those that are usually consumed together, such as hamburgers and ketchup. When the price of hamburgers decreases, the demand for ketchup increases, which indicates that hamburgers and ketchup are complements.

Question 7

As incomes in Alberta fall people are drinking less craft beer and more beer produced by international brewers. Thus, an economist would consider beer produced by international brewers to be a(n)

Accepted Answer

When a decrease in income leads to an increase in demand for a good, it is called an inferior good. As the incomes of people in Alberta fall, they are switching from craft beer to international brewery-produced beer, indicating that craft beer is a normal good and international brewery-produced beer is an inferior good in this context.

Question 8

Buyers rush to purchase stocks in Ontario vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the Ontario wine market as a result of this announcement?

Accepted Answer

The rush to purchase stocks in Ontario vineyards implies that buyers are anticipating higher prices in the future due to the expected decline in grape harvest. This anticipation of higher prices would result in an increase in demand for Ontario wine, shifting the demand curve to the right.

Question 9

Whether a good is normal or inferior depends on

Accepted Answer

Normal and inferior goods are categorized based on people's income levels and their attitudes towards these goods as their income changes, not directly on the product's price, taxes, or quality.

Question 10

Figure 3.1  Alt text for Figure 3.1: In figure 3.1, graph of the effect of an increase in population on the demand curve.
Long description for Figure 3.1: The x-axis is labelled, Quantity, and y-axis is labelled, Price.Curve Demand, D1, is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 follows the same slope as curve D1, but is plotted to the right.2 points, A and B, are plotted in the middle of curve D1.A right pointing arrow indicates the change from curve D1 to curve D2.
-Refer to Figure 3.1.If the product represented is an inferior good, an increase in income would be represented by a movement from

Accepted Answer

The answer of Figure 3.1  Alt text for Figure...

Question 11

If the price of automobiles was to increase, then

Accepted Answer

The answer of If the price of automobiles was to...

Question 12

The Internet has created a new category in the book selling market, namely, the "barely used" book.How does the availability of barely used books affect the market for new books?

Accepted Answer

The availability of barely used books provides consumers with an alternative to purchasing new books, which reduces the demand for new books. As a result, the demand curve for new books shifts to the left.

Question 13

Figure 3.1  Alt text for Figure 3.1: In figure 3.1, graph of the effect of an increase in population on the demand curve.
Long description for Figure 3.1: The x-axis is labelled, Quantity, and y-axis is labelled, Price.Curve Demand, D1, is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 follows the same slope as curve D1, but is plotted to the right.2 points, A and B, are plotted in the middle of curve D1.A right pointing arrow indicates the change from curve D1 to curve D2.
-Refer to Figure 3.1.A decrease in the price of the product would be represented by a movement from

Accepted Answer

The answer of Figure 3.1  Alt text for Figure...

Question 14

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

Accepted Answer

When studies show a link between a product (in this case calcium) and a reduction in a health issue (in this case osteoporosis), the demand for that product increases as consumers become more aware of the benefits. This means that the demand curve shifts to the right, resulting in a higher equilibrium quantity and price.

Question 15

In January, buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January, holding all else constant?

Accepted Answer

If buyers expect the price of gold to rise in February, they will likely increase their demand for gold in January, shifting the demand curve to the right. This is because they want to purchase gold before the price increases. Therefore, the quantity demanded will increase, and the price may also increase if the supply does not keep up with the increased demand.

Question 16

How does the increasing use of MP3 players affect the market for compact discs?

Accepted Answer

The increasing use of MP3 players indicates a shift in consumer preferences towards digital music which means the demand for compact discs is likely to decrease, leading to a leftward shift in the demand curve for compact discs.

Question 17

In June, buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June, holding everything else constant?

Accepted Answer

If buyers of titanium expect the price to fall in July, they will most likely delay their purchases and reduce their demand for titanium in June, which will shift the demand curve to the left. This means that the quantity demanded will decrease.

Question 18

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

Accepted Answer

When the price of raspberries increases, Lonnie is substituting raspberries with papayas as they serve a similar purpose. Therefore, raspberries and papayas are substitutes.

Question 19

Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous U.S.farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?

Accepted Answer

When farmers produce more corn and wheat, they require more fertilizer to support their crops, leading to an increase in demand for fertilizer. This is because fertilizers are essential nutrients for the growth and development of crops. Therefore, the generous U.S. farm subsidies lead to an increase in demand for fertilizers.

Question 20

Figure 3.1  Alt text for Figure 3.1: In figure 3.1, graph of the effect of an increase in population on the demand curve.
Long description for Figure 3.1: The x-axis is labelled, Quantity, and y-axis is labelled, Price.Curve Demand, D1, is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 follows the same slope as curve D1, but is plotted to the right.2 points, A and B, are plotted in the middle of curve D1.A right pointing arrow indicates the change from curve D1 to curve D2.
-Refer to Figure 3.1. An increase in population would be represented by a movement from

Accepted Answer

An increase in population typically leads to an increase in demand for goods and services, which is represented by a rightward shift of the demand curve from D₁ to D₂.

Quiz 3: Where Prices Come From: The Interaction of Supply and Demand

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

Which of the following products would be most likely to see a rise in demand due a drop in incomes?

Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital) cameras?

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Suppose that when the price of hamburgers decreases, the Li family increases their purchases of ketchup.To the Li family

As incomes in Alberta fall people are drinking less craft beer and more beer produced by international brewers. Thus, an economist would consider beer produced by international brewers to be a(n)

Buyers rush to purchase stocks in Ontario vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the Ontario wine market as a result of this announcement?

Whether a good is normal or inferior depends on

If the price of automobiles was to increase, then

The Internet has created a new category in the book selling market, namely, the "barely used" book.How does the availability of barely used books affect the market for new books?

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

In January, buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January, holding all else constant?

How does the increasing use of MP3 players affect the market for compact discs?

In June, buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June, holding everything else constant?

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous U.S.farm subsidies have encouraged farmers to produce more corn and more wheat.How does this affect the market for fertilizer?