(1) If a demand curve shifts to the left, then: a) price would go up and quantit
ID: 1241177 • Letter: #
Question
(1) If a demand curve shifts to the left, then:a) price would go up and quantity would go down
b) price would go down and quantity would go up
c) a lower price and quantity would result
d) a higher price and quantity would result
(2) Demand and supply curves are drawn assuming ceteris paribus.This means that:
a) economists ignore all assumptions
b) economists don't watch for the fallacy of false cause
c) changes will be proportional
d) all other things besides price and quantity are unchanged
(3) If steak and potatoes are complements, when the price of steakgoes up, the demand curve for potatoes:
a) shifts to the right
b) shifts to the left
c) stays the same
d) shifts to the right and then moves back
(4) Given that chicken and beef are substitute goods, if the priceof chicken decreases substantially, there would be:
a) an increase in the demand for beef
b) a decrease in the demand for beef
c) a decrease in the quantity for beef demanded
d) no change in the demand for beef
(5) Every day for the past two years you've had ham and cheese on awhole wheat bagel for lunch at Bungalow Bob's Bagel Boutique.However, the price of whole wheat bagels has risen by 10 cents sotoday you decide to have ham and cheese on rye bagel. In this case,whole wheat and rye bagels are best considered:
a) superior goods
b) normal goods
c) substitute goods
d) complementary goods
(6) For most goods, purchases tend to rise with increases inbuyers' incomes and to fall with decreases in buyers' incomes. Suchgoods are known as:
a) inferior goods
b) direct goods
c) normal goods
d) luxury goods
(7) Economists know that a particular good can be classified as aninferior good if a(n)______ increase in buyers' income causesa(n)_____
a) increase; increase in demand
b) increase; increase in quantity demanded
c) increase; decrease in demand
d) decrease; decrease in demand
(8) An increase in the demand for medical services caused by anincrease in the number of people 65 is most likely attributable towhich demand shifter?
a) income
b) consumer preferences
c) prices of other goods
d) demographic characteristics
(9) Which of the following would shift the demand curve for newtextbooks to the right?
a) a decrease in the price of paper
b) a fall in the price of used textbooks
c) an increase in college enrollments
d) a fall in the price of new textbooks
(10) How a supply curve is sloped and located depends on:
a) technology
b) resources prices
c) the number of producers or sellers
d) all of the above
(11) A decrease in supply means:
a) a shift to the left of the entire supply curve
b) moving downward (to the left) along the supply curve with lowerprices
c) less will be demanded at every price
d) more will be supplied at every price
Explanation / Answer
1. c. When the demand curve shifts to the left,less is demanded at every price. Assuming an ordinary supplycurve (i.e. upward sloping to the right, the new equilibrium pointwill be further down (to the left) on the supply curve; i.e. at alower quantity and lower price. Therefore, price and quantitydecrease. 2. d. ceteris paribus means "all other things beingequal". Therefore, you treat everything not being graphed(price/quantity) as being unchanged. 3. b. This means that, if goods A and B arecomplements, an increase in the price of A will result in aleftward movement along the demand curve of A and a leftward shiftof the demand curve of B; less of each good would be demanded. Adecrease in the price of A will result in a rightward movementalong the demand curve of A and a shift rightward of the demandcurve of B; more of each good would be demanded. Here, withsteak more expensive, less is demanded; you move left along thedemand curve. Since the price of potatoes is not directlyaffected, but the demand is, this means that the entire demandcurve has shifted to the left. 4. b. Substitute goods can be used or consumed in place ofone another (along the same indifference curve). If the priceof chicken decreases, then demand for chicken would increase. The demand for beef would decrease. 5. c. They are substitute goods. You don't eat bothwheat and rye, and the increase in the price of one leads to adecrease in demand for that and an increase in the demand for theother. 6. c. This is the definition of a normal good. Normal goods are goods for which demandincreases when income increases and falls when income decreases butthe price remains constant (i.e. a positive income elasticity ofdemand) 7. c. This is the definition of an inferior good- a good that decreases in demand when consumer incomerises. 8. d. People over 65 are more likely to need medicalservices. Therefore the demand increases not because ofincome levels or alternative goods, or even the choice to electmedical services. 9. c. A shift in the demand curve to the right wouldincrease the quantity demanded for all price points. The onlyone that applies here would be an increase in collegeenrollments. The changing price of textbooks would simplyresult in a shift along the demand curve, and a change in the priceof paper would shift the SUPPLY curve to the right. 10. d. Technology and resource prices can affectthe marginal cost (i.e. where the supply curve is located.)Assuming the supply curve is comprised of the aggregate of allproducers, adding new producers can shift it to the right aswell. Similarly, the slope can depend on the elasticity ofthings - if producing more requires upgrades to technology solelyto increase output, then the slope will be steeper. Likewise,shortages of raw materials can cause increases in price at asteeper rate. With enough barriers to entry, increases inprice wouldn't result in new entrants. 11. a. or possibly c. This is a little vague -I'm assuming the price and quantity were at equilibriumlevels. If the quantity supplied decreases below that, thenit would be due to either a shift leftward of the supply curve orthe demand curve. A shift left in the supply curve means lessis produced at every price point. Likewise, a shift left inthe demand curve means less is demanded at each price point. In either case, the equilibrium supply will be lower. Whichcurve shifts will depend on the equilibrium price - if it's higherthan before, the supply curve shifted to the left. If it'slower, the demand curve shifted to the left.
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