ECON312 week 2 homework latest 2018 september

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1. The price of cotton clothing falls. As a result,

A. the demand for cotton clothing decreases.

B. both the demand for cotton clothing increases and the quantity demand of cotton clothing increases.

C. the quantity demanded of cotton clothing increases.

D. the quantity demanded of cotton clothing decreases.

E. the demand for cotton clothing increases.

Answer: the quantity demanded of cotton clothing increases.

2. If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?

A. The quantity of wheat supplied increased and the supply of corn decreased.

B. The supply of wheat increased and the supply of corn decreased.

C. The quantity of wheat supplied increased and quantity of corn supplied decreased.

D. The supply of wheat decreased and the supply of corn decreased.

E. The supply of wheat increased and the quantity of corn supplied decreased

Answer: The quantity of wheat supplied increased and the supply of corn decreased.

3. If both producers and consumers believe that a product’s price will rise in the future, then at the present, demand ________ and supply ________.

A. increases; increases

B. increases; decreases

C. decreases; decreases

D. does not change; does not change

E. decreases; increases

Answer: increases; decreases

4. You are just about to finish college and are about to start a high paying job. Because of this new job, what is the most likely outcome in the market for cars?

A. Your demand for cars will decrease.

B. The market supply of cars will increase.

C. Your demand for cars will increase.

D. The demand and the supply for cars will decrease.

E. The market supply of cars will decrease.

Answer: Your demand for cars will decrease.

5. Many Americans are selling their used cars and buying new fuel-efficient hybrids. Other things remaining the same, in the market for used cars, ______ and in the market for hybrids ______.

A. demand? decreases, supply? increases, and the price? falls; supply increases and the price falls

B. demand decreases and the price? rises; supply increases and the price falls

C. supply increases and the price? falls; demand increases and the price rises

D. both demand and supply decrease and the price might? rise, fall, or not? change; demand increases and the price rises

Answer:supply increases and the price? falls; demand increases and the price rises

6. If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are

A. substitutes.

B. normal goods.

C. inelastic goods.

D. complements.

E. inferior goods.

Answer:D. complements.

7. Which figure above shows the effect if research is published claiming that eating pizza is healthy?

A. Figure B

B. Both Figure A and Figure D

C. Figure C

D. Figure A

E. Figure D

Answer: Figure A

8. If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.

A. rise; increase

B. fall; increase

C. not change; increase

D. rise; decrease

E. fall; decrease

Answer: rise; increase

9. Which of the following describes the law of demand? When other things remain the same, as

A. the quantity demanded of bread increases, the price of bread falls.

B. more people decide to eat pizza, the demand for pizza increases.

C. your income increases, you’ll buy more hamburgers.

D. the price of peanut butter increases, the quantity demanded of jelly decreases.

E. the price of gas falls, the quantity demanded of gas increases.

Answer: the price of gas falls, the quantity demanded of gas increases.

10. In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

A. The demand curve would shift rightward.

B. The demand curve would not shift but the price of dining out would fall.

C. The demand curve would shift leftward.

D. The demand curve would not shift but the price of dining out would rise.

E. The effect on the demand curve is unknown.

Answer:The demand curve would shift leftward.

11. Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ so that the price of a computer chip ________.

A. decreases; rises

B. decreases; does not change

C. increases; falls

D. decreases; falls

E. increases; rises

Answer: decreases; falls

12. If income increases and the demand for bus rides decreases,

A. consumers are behaving irrationally.

B. bus rides are an inferior good.

C. bus rides must be a complement good with some other good.

D. bus rides are a substitute good.

E. bus rides are a normal good.

Answer: bus rides are an inferior good.

13. Which figure above shows the effect of a technological advance in the production of pizza?

A. Figure D

B. Both Figure A and Figure D

C. Figure B

D. Figure C

E. Figure A

Answer: Figure D

14. Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to

A. an increase in the supply of electric cars so that the supply curve shifts leftward.

B. a decrease in the supply of electric cars so that the supply curve shifts rightward.

C. an increase in the supply electric cars so that the supply curve shifts rightward.

D. no change in the supply of electric cars, only a change in the quantity supplied of electric cars.

E. a decrease in the supply of electric cars so that the supply curve shifts leftward.

Answer: an increase in the supply electric cars so that the supply curve shifts rightward.

15. If good weather conditions result in a larger than normal crop of peaches, then the

A. price of peaches falls, and the equilibrium quantity of peaches decreases.

B. equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.

C. equilibrium price of peaches rises, and the equilibrium quantity of peaches increases.

D. demand curve for peaches shifts leftward.

E. increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases.

Answer: equilibrium price of peaches falls, and the equilibrium quantity of peaches increases

16. People eat at restaurants less often when their incomes fall because of a recession. Eating at restaurants must be

A. a complement to other goods.

B. an inelastic good.

C. an inferior good.

D. a normal good.

E. a substitute for other goods.

Answer: a normal good.

17. Which of the following increases the supply of a product?

A)A drop in the price of the product.

B)A smaller number of sellers producing the product.

C)An increase in foreign imports of the product.

D)Higher taxes imposed upon producers of the product

Answer: An increase in foreign imports of the product.

18. If a 30 percent price increase generates a 20 percent decrease in quantity demanded, then demand is

A. perfectly inelastic.

B. inelastic.

C. perfectly elastic.

D. unit elastic.

E. elastic.

Answer:inelastic.

19. Suppose the San Francisco 49ers lower ticket prices by 15 percent and as a result the quantity of tickets demanded increases by 10 percent. This set of results shows that San Francisco 49ers tickets have

A. an elastic demand.

B. a unit elastic demand.

C. an inelastic supply.

D. an elastic supply.

E. an inelastic demand.

Answer: E. an inelastic demand.

20. In the above figure, the movement from point a to point b reflects

A. a decrease in the cost of the tomato sauce used to produce pizza.

B. a decrease in income if pizza is a normal good.

C. an increase in the number of producers of pizza.

D. an increase in the supply of pizza.

E. an increase in the price of pizza.

Answer: a decrease in the cost of the tomato sauce used to produce pizza.

21. If the automobile workers’ union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of automobiles?

A. The quantity supplied decreases.

B. The supply and quantity supplied decreases.

C. The quantity supplied increases.

D. The supply decreases.

E. The supply increases.

Answer: The supply decreases.

22. In the above figure, the shift in the demand curve from D to D1 can be the result of

A. a decrease in income if pizza is a normal good.

B. an increase in the price of a sub sandwich, a substitute for pizza.

C. an increase in the price of soda, a complement to pizza.

D. an increase in the price of pizza.

E. a change in quantity demanded.

Answer: an increase in the price of a sub sandwich, a substitute for pizza.

23. Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will

A. increase because Exxon and Shell gas are substitutes.

B. decrease because Exxon and Shell gas are substitutes.

C. not change Exxon and Shell are different brands of gasoline.

D. increase because Exxon and Shell gas are complements.

E. decrease because Exxon and Shell gas are complements.

Answer: decrease because Exxon and Shell gas are substitutes.

24. Pizza is a normal good. Which figure above shows the effect of a decrease in consumers’ incomes?

A. Figure D

B. Figure C

C. Both Figure B and Figure C

D. Figure A

E. Figure B

Answer: Figure B

25. Suppose improvements in technology cause the supply of natural gas to increase and at the same time the demand for natural gas increases. What are we sure of?

A. Equilibrium price decreases.

B. Both equilibrium price and quantity increase.

C. Equilibrium price increases.

D. Equilibrium quantity decreases.

Answer: Equilibrium quantity increases.

26. Consider the market for cellular phones. Which of the following shifts the demand curve rightward?

A. a decrease in the price of cellular phones

B. an increase in the supply of cellular phones

C. an increase in the price of regular phone service, a substitute for cellular phones

D. a decrease in the number of cellular phone buyers

E. an increase in the price of cellular phones

Answer: an increase in the price of regular phone service, a substitute for cellular phones.

27. The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $2.20, then

A. There is neither a surplus nor a shortage, but the market is NOT in equilibrium.

B. the gasoline market in Tulsa is in equilibrium.

C. Without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa.

D. there is a shortage of gasoline in Tulsa.

E. there is a surplus of gasoline in Tulsa.

Answer: there is a shortage of gasoline in Tulsa.

28. If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is

A. elastic.

B. perfectly elastic.

C. perfectly inelastic.

D. inelastic.

E. unit elastic.

Answer: inelastic.

29. The law of supply reflects the fact that

A. suppliers have an incentive to use their resources in the way that brings the biggest return.

B. the demand curve is downward sloping.

C. higher prices are more attractive to consumers because they signal a higher quality product.

D. people buy more of a good when its price falls.

E. businesses can sell more goods at lower prices.

Answer: the demand curve is downward sloping.

30. In the above figure, an increase in cost of the cheese used to produce pizza

A. has no effect.

B. results in a movement from point a to point b.

C. shifts the supply curve from S to S2.

D. shifts the supply curve from S to S1.

E. results in a movement from point b to point a.

Answer: shifts the supply curve from S to S1.

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