Demand and Supply
Supply Decreases, Supply shifts to
Left
Which of the following is the correct way to describe equilibrium in a market?
A) At equilibrium, demand equals supply.
B) At equilibrium, quantity demanded equals quantity supplied.
C) At equilibrium, market forces no longer apply.
B
A ________ curve shows the marginal benefit of consuming one more unit of a good or service.
Demand
In a competitive market, the demand curve shows the ________ received by consumers and the supply curve shows the ________.
A) utility; average cost.
B) marginal benefit; marginal cost
C) economic surplus; opportunity cost
D) net benefit; net cost
B
If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, then economists would describe this as
A) a decrease in demand.
B) a decrease in quantity demanded.
C) a change in consumer income.
D) a decrease in consumers' taste for chocolate.
B
See the Graph 1 on the slides
Paul goes to Dick's Sporting Goods to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is
75
To affect the market outcome a price floor must be set__
Above the equilibrium price.
If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
An inferior good
During the Covid-19 pandemic, the demand for used cars increased while the supply of used cars decreased by a larger amount than the increase in demand. The result was equilibrium price ________ and equilibrium quantity ________.
increasing; decreasing
Which of the following is evidence of a surplus of bananas?
A) Firms raise the price of bananas.
B) The price of bananas is lowered in order to increase sales.
C) The equilibrium price of bananas rises due to an increase in demand.
D) The quantity of bananas demanded is greater than the quantity supplied.
B
Suppose a binding price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?
A) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
B) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result.
C) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result.
D) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.
A
Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?
A) an increase in the price of olive oil presses
B) a decrease in the cost of transporting olive oil to markets
C) an increase in the price of land used to plant olive trees
D) research finds that consumption of olive oil reduces the risk of heart disease
D
When Demand Increases, Supply Decreases, Price will__ and Quantity will__
Price will go up and Quantity Depends
See the graph 2 on the slides
See the graph 3 on the slides
If a firm has an incentive to increase supply now and decrease supply in the future, then the firm expects that the
A) price of its product will be lower in the future than it is today.
B) price of its product will be higher in the future than it is today.
C) price of inputs will be lower in the future than they are today.
D) demand for the product will be lower in the future than it is today.
A
When Demand decreases a little, Supply increases a lot, Price will__ and Quantity will__
Price decreases, Quantity Increases
The table lists the marginal cost of making blue jeans. Note that the cost included in the first pair include making the pattern, buying material, and hiring a seamstress. Each additional pair of blue jeans is the marginal cost to make one additional pair. If the market price of blue jeans is $125, Marginal Cost 1st pair, $50 2nd pair $65 3rd pair $80 4th pair $95. Producer Surplus is:
$210
See the graph 4 on the slides