Question 1

A decrease in the supply of chocolate chips would usually result in a

Accepted Answer

A decrease in supply leads to a shift of the supply curve to the left. This causes an increase in equilibrium price and a decrease in equilibrium quantity.

Question 2

Attempts are being made to develop a biodegradable plastic using agricultural produce such as potatoes.If these attempts are successful,what will happen to the equilibrium price and quantity of potatoes?

Accepted Answer

The answer of Attempts are being made to develop a...

Question 3

A decrease in supply will cause a(n)

Accepted Answer

The answer of A decrease in supply will cause a(n)
...

Question 4

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

Accepted Answer

A decrease in the price of materials used to make CDs would lower the cost of production for suppliers, allowing them to produce more at each price level. This would shift the supply curve to the right.

Question 5

An increase in supply will cause equilibrium price to _____ and equilibrium quantity to _____.

Accepted Answer

An increase in supply shifts the supply curve to the right, creating a surplus of goods. To clear the surplus, producers will lower the price to encourage consumers to buy more. As a result, the equilibrium price will decrease, and the equilibrium quantity will increase.

Question 6

What is the effect of a decrease in the price of potato chips on the market for pretzels?

Accepted Answer

The answer of What is the effect of a decrease...

Question 7

A new hormone will increase the amount of milk each cow produces.If this hormone is adopted by many dairies,what will be the effect on the milk market?

Accepted Answer

The new hormone will increase the supply of milk as each cow produces more, leading to an increase in supply. This will cause the equilibrium price to decrease and the equilibrium quantity to increase. Choice C correctly predicts this outcome.

Question 8

Exhibit 4-2
 
-In Exhibit 4-2,which of the following could not cause the shift from D to D'?

Accepted Answer

Option C, a decrease in the price of the good in question, would cause a movement along the demand curve (from D to D') rather than a shift in the demand curve. Therefore, a decrease in the price of the good cannot cause the shift from D to D'. The other options could lead to a shift in the demand curve. A decrease in the price of a complement (option A) would increase the demand for the good, leading to a rightward shift in the demand curve. An increase in the price of a substitute (option B) would make the good relatively cheaper, leading to an increase in demand and a rightward shift in the demand curve. An increase in the number of consumers (option D) would increase demand and shift the demand curve to the right. A decrease in income if the good in question is an inferior good (option E) would increase demand for the good, causing a rightward shift in the demand curve.

Question 9

Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?

Accepted Answer

The answer of Which of the following would cause both...

Question 10

Exhibit 4-2
 
-Refer to Exhibit 4-2.Which of the following would cause a shift of demand from D' to D?

Accepted Answer

A decline in consumers' incomes if it is a normal good would cause a shift of demand from D' to D. This is because a decrease in income would lead to a decrease in the quantity demanded of normal goods, shifting the demand curve to the left.

Question 11

For a given supply curve,an increase in demand will typically

Accepted Answer

When demand increases, the equilibrium point moves up along the supply curve, resulting in both an increase in price and quantity. Therefore, the correct choice is E, increase both quantity and price.

Question 12

An increase in supply will cause a(n)

Accepted Answer

An increase in supply will cause a decrease in price, which in turn will cause an increase in quantity demanded. This is due to the price elasticity of demand, which measures the change in quantity demanded in response to a change in price. As price decreases, quantity demanded typically increases because consumers are willing and able to purchase more goods at a lower price. However, an increase in supply will not cause an increase in demand, as the two are independent variables. Similarly, it will not cause a decrease in equilibrium quantity demanded or an increase in equilibrium price, as these are determined by the intersection of supply and demand curves.

Question 13

A rightward shift of a supply curve

Accepted Answer

The answer of A rightward shift of a supply curve
...

Question 14

If the tea harvest is bad in a particular year,what will happen in the market for coffee?

Accepted Answer

The answer of If the tea harvest is bad in...

Question 15

If the tea harvest is bad in a particular year,the supply of tea will

Accepted Answer

If the tea harvest is bad, the supply of tea will decrease. The decrease in supply will lead to an increase in price. As the price of tea increases, the quantity demanded of tea will decrease, while the quantity demanded of coffee will increase as consumers look for substitutes. Therefore, option C is the best choice.

Question 16

Exhibit 4-2
 
-Refer to Exhibit 4-2.A shift from demand curve D to D' illustrates a(n)

Accepted Answer

The shift from demand curve D to D' indicates an increase in the quantity demanded at every given price level, which means there has been an increase in demand.

Question 17

What is the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles?

Accepted Answer

A reduction in the price of steel, which is an input in automobile production, will lower the cost of production for automobile manufacturers. This will lead to an increase in the supply of automobiles, as manufacturers will be incentivized to produce more at a lower cost. The increase in supply will cause the equilibrium price of automobiles to fall, while the equilibrium quantity of automobiles will rise. Therefore, the correct choice is D.

Question 18

The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100,000 packs per day.Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000?

Accepted Answer

The answer of The market for chewing gum is competitive...

Question 19

The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs.Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?

Accepted Answer