In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?
if supply and demand both decline
if supply and demand both rise
if supply declines and demand rises
if supply rises and demand declines
Rent controls can result in?
deteriorating or abandoned buildings
strong incentives to oust protected tenants
payments to motivate tenants to move out
benefits to rich people who get a windfall from low rents
all of the answers are correct
Refer to exhibit 4-2. Which of the following would cause a shift of demand from D' to D?
an increase in the price of a substitute good
an increase in the number of consumers
a decrease in the price of a complementary good
a decline in consumers' incomes if it is a normal good
an increase in consumers' incomes if it is a normal good
consider exhibit 4-3. Which of the following statements is most likely correct regarding the market for corn?
in 2008 the quantity purchased exceeded the quantity sold
in 2008 the corn market was not in equilibrium
the weather for corn production was probably better in 2010 than in 2009
between 2010 and 2011 both the supply and demand for corn must have increased
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?
an increase in the price of other kinds of candy
an increase in the price of the ingredients used to make chewing gum
an agreement by workers in the chewing gum industry to work for lower wages
a decrease in the number of young people in the population
If the market for beef cattle was initially in equilibrium, an increase in the price of the feed grains used to fatten cattle would cause
the demand for beef cattle to increase, driving the price of beef upward
the supply of beef cattle to decline, driving the price of beef upward in the long run
the supply of beef to increase, placing downward pressure on the price of beef in the long run
both supply and demand to fall, leaving the price of beef virtually unchanged
Two events occur simultaneously in the market for automobiles; 1.an improvement in assembly line technology and 2. the economy enters a recession (which decreases consumers' income). An economist would predict with certainty that
equilibrium quantity will rise
equilibrium quantity will fall
equilibrium price will rise
equilibrium price will fall
refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than baby formula will cause which of the following to happen?
movement from d to c on supply curve S2
supply shift from S2 to S1
movement from a to b on supply curve S1
supply shift from S1 to S2
movement from c to d on the supply curve S2
If demand increases and supply decreases, quantity will?
always increase
always decrease
increase only if supply decreases more than demand increases
increase only if supply decreases less than demand increases
Suppose the current equilibrium price of pizza is $5. If the government decides the price of pizza cannot rise above $4, the results of this policy would be?
shortage
surplus
that the market would remain in equilibrium but with a larger quantity bought and sold than $5
at the $4 price, the quantity sold would be greater than the quantity bought
a shift of demand to the right
If demand decreases and supply increases, price will?
increase only if supply increases more than demand decreases
increase only if supply increases less than demand decreases
If both demand and supply increase, price will?
increase only if supply increases more than demand does
increase only if demand increases more than supply does
Exhibit 4-5 depicts the milk market. The horizontal line, P, represents a price ceiling imposed by the government. Which of the following is true?
the quantity supplied at the price ceiling will equal the quantity sold
at the ceiling, there is a surplus
in equilibrium, the quantity demanded is 800 gallons
the quantity demanded at the price ceiling will equal the quantity supplied
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?
price will increase and quantity will decrease
price will increase and quantity increase
price will decrease and quantity will increase
price will decrease and quantity decrease
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?
If both supply and demand increase, then the change in equilibrium quantity is indeterminate.
If supply increases and demand decreases, then equilibrium price will fall.
If the demand for bicycles increases,
the quantity demanded decreases
equilibrium price increases and equilibrium quantity decreases
equilibrium price decreases and equilibrium quantity increases
quantity supplied increases
quantity supplied decreases
Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price. Which of the following will happen?
quantity demanded will decrease
a surplus will develop
a shortage will develop
the quantity sold will rise
In the market for chewing gum, the current price is 50 cents a pack and 100,000 packs are sold. Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90,000 packs?
Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen. Which of the following best explains this situation?
the supply of DVDs must have increased more than the demand for DVDs increased
the demand curve for DVDs slopes upward, so an increase in demand leads to a lower price
the supply of DVDs must have decreased
there has been a shortage of DVDs
when the price falls, the quantity supplied increases
many people argue against increasing the minimum wage because they believe the result would be increased unemployment. Which of the following best summarizes this argument? A high minimum wage would?
increase the supply of labor while decreasing the demand for labor
decrease the supply of labor while increasing the demand for labor
increase the quantity supplied of labor while decreasing the quantity demanded of labor
decrease the quantity supplied of labor while increasing the quantity demanded of labor
A surplus occurs whenever
a current price is greater than equilibrium price
quantity supplied exceeds quantity demanded at the equilibrium price
quantity demanded is greater than quantity supplied
the problem of scarcity of a good is solved
Which of thee following is correct when a price is set below a market's equilibrium price?
quantity demanded exceeds quantity supplied at the set price
quantity demanded is less than quantity supplied at the set price
quantity demanded is equal to quantity supplied at the set price
at the set price there is a surplus
Refer to exhibit 4-13. An increase in the price of baby formula will cause which of the following to occur?
a movement from a to b on supply curve S1
a movement from d to c on supply curve S2
Suppose demand decreases and supply decreases. which of the following will happen?
equilibrium price will increase
equilibrium price will decrease
equilibrium quantity will increase
equilibrium quantity will decrease
If there is a shortage in the market for jeans,
producers' inventories will increase
the price should begin to rise
the demand curve will shift to restore equilibrium in the market
the supply curve will shift to restore equilibrium in the market
producers' expect government to impose a price ceiling
If demand increases and supply decreases,
equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged
equilibrium price will fall; equilibrium quantity will either rise or fall
equilibrium quantity will rise; equilibrium price will either rise or fall
equilibrium price and quantity will both rise
Tickets to the Michigan-Notre Dame football game are usually sold out in advance of game day. This suggests that
the price of the tickets must be very high or else people would not consider them valuable
the price is set below the equilibrium level
the football stadium is relatively small
everyone who attends the game will enjoy it
the price is determined primarily by the fixed supply of tickets
In exhibit 4-4, suppose a price floor is established at $20.00. What is the result?
there is no change from the situation that exists at the equilibrium price
a surplus of 20 units
a shortage of 20 units
a surplus of 10 units
a shortage of 10 units
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