978-0134078816 Chapter 3 Part 7

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27) Refer to Table 3.2. In this market there will be an excess demand of 1,000 cheeseburgers at a price of

A) $5.

B) $6.

C) $8.

D) $9.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

28) Refer to Table 3.2. In this market there will be an excess supply of 1,000 cheeseburgers at a price of

A) $5.

B) $6.

C) $7.

D) $9.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

29) Refer to Table 3.2. If the price per cheeseburger is $8, the price will

A) remain constant because the market is in equilibrium.

B) decrease because there is an excess demand in the market.

C) increase because there is an excess supply in the market.

D) decrease because there is an excess supply in the market.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

30) When there is an excess supply of a product in an unregulated market, the tendency is for

A) price to rise.

B) price to decrease.

C) quantity supplied to increase.

D) quantity demanded to decrease.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

Refer to the information provided in Figure 3.14 below to answer the question(s) that follow.

Figure 3.14

31) Refer to Figure 3.14. The market for sunglasses is in equilibrium at a price of ________ and a quantity

of ________ sunglasses.

A) $30; 300

B) $30; 600

C) $60; 450

D) $90; 300

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

32) Refer to Figure 3.14. At a price of $30, there is an excess

A) demand of 450 sunglasses.

B) demand of 750 sunglasses.

C) demand of 300 sunglasses.

D) supply of 300 sunglasses.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

33) Refer to Figure 3.14. If this market is unregulated and the price is currently $90, you would expect that

the price of sunglasses would

A) remain at $90, because firms would not want to reduce the price.

B) fall to $30, so firms could sell their excess supply.

C) fall to $60, where quantity demanded equals quantity supplied.

D) fall, but the new price is indeterminate from the information provided.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

34) Refer to Figure 3.14. At a price of $90, there is an excess

A) demand of 150 sunglasses.

B) supply of 450 sunglasses.

C) demand of 600 sunglasses.

D) supply of 600 sunglasses.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

35) Refer to Figure 3.14. The market for sunglasses ________ at a price of $60 and a quantity of 450

sunglasses.

A) has a surplus

B) has a shortage

C) is in equilibrium

D) cannot remain in business

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

36) Refer to Figure 3.14. At a quantity demanded of 750, there is an excess

A) demand of 450 sunglasses if the price is $60.

B) demand of 450 sunglasses if the price is $30.

C) demand of 300 sunglasses if the price is $60.

D) supply of 300 sunglasses if the price is $30.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

37) Refer to Figure 3.14. If this market is unregulated and the price is currently $30, you would expect that

the price of sunglasses would

A) remain at $30, because firms would not want to increase the price.

B) rise to $90, so the firm could meet its excess demand.

C) rise to $60, where quantity demanded equals quantity supplied.

D) rise, but the new price is indeterminate from the information provided.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

38) Refer to Figure 3.14. At a price of $60, there is an excess

A) demand of 150 sunglasses.

B) supply of 300 sunglasses.

C) demand of 300 sunglasses.

D) supply of zero sunglasses.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-4

39) When there is a shortage of a product in an unregulated market, there is a tendency for

A) price to rise.

B) price to fall.

C) quantity demanded to increase.

D) quantity supplied to decrease.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

40) If the market for tires is unregulated and is presently characterized by excess supply, you can

accurately predict that price will

A) increase, the quantity demanded will fall, and the quantity supplied will rise.

B) increase, the quantity demanded will rise, and the quantity supplied will fall.

C) decrease, the quantity demanded will rise, and the quantity supplied will fall.

D) decrease, the quantity demanded will fall, and the quantity supplied will rise.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

41) DVDs and DVD players are complements. An increase in the price of DVD players would cause

which of the following in the market for DVDs?

A) The equilibrium price and quantity of DVDs would increase.

B) The equilibrium price and quantity of DVDs would decrease.

C) The equilibrium price of DVDs would increase, and the equilibrium quantity would decrease.

D) The equilibrium price of DVDs would decrease, and the equilibrium quantity would increase.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

42) Suppose that video game discs are a normal good. If the income of video game players increases, you

predict that in the market for video games,

A) both equilibrium price and quantity will fall.

B) both equilibrium price and quantity will increase.

C) equilibrium price will increase, and quantity will decrease.

D) equilibrium price will fall, but quantity will increase.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

Refer to the information provided in Figure 3.15 below to answer the question(s) that follow.

Figure 3.15

43) Refer to Figure 3.15. The current price of a bag of pretzels is $1.10. You accurately predict that in this

market,

A) price tends to remain constant, and quantity supplied increases.

B) price, quantity demanded, and quantity supplied decrease.

C) price and quantity demanded increase, and quantity supplied decreases.

D) price and quantity supplied decrease, and quantity demanded increases.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

44) Refer to Figure 3.15. The current quantity of bags of pretzels supplied is 100. You accurately predict

that in this market

A) price tends to remain constant and quantity supplied increases.

B) price, quantity demanded, and quantity supplied decrease.

C) price and quantity supplied decrease and quantity demanded increases.

D) price and quantity demanded increase and quantity supplied decreases.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

45) When Hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter

of the sugar cane crop was destroyed. Ceteris paribus,

A) the supply of sugar decreased, and the price of sugar increased.

B) the supply of sugar decreased, and the price of sugar decreased.

C) the demand for sugar increased, and the price of sugar increased.

D) the demand for sugar decreased, and the price of sugar decreased.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

46) The price of mozzarella cheese, which is used in making pizza, increases. In the market for pizza you

would expect that

A) the demand for pizza would increase and the price of pizza would increase.

B) the demand for pizza would decrease and the price of pizza would fall.

C) the supply of pizza would decrease and the price of pizza would increase.

D) the supply of pizza would increase and the price of pizza would decrease.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

47) If improvements in technology have reduced the cost of producing personal computers, you

accurately predict that in the market for personal computers, there will be a(n)

A) increase in the quantity supplied of personal computers, a reduction in the price, and an increase in

the quantity demanded.

B) increase in the supply of personal computers, a decrease in the price, and an increase in the quantity

demanded.

C) increase in the supply of personal computers, a reduction in the price, and an increase in the demand.

D) decrease in the supply of personal computers, an increase in the price, and a decrease in the demand.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

48) Which of the following will definitely occur when there is a simultaneous decrease in demand and a

decrease in supply?

A) an increase in equilibrium price

B) a decrease in equilibrium price

C) an increase in equilibrium quantity

D) a decrease in equilibrium quantity

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

49) A movement along the demand curve to the left may be caused by a

A) rise in income.

B) decrease in supply.

C) fall in the number of substitute goods.

D) fall in the price of inputs.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

50) Which of the following will definitely occur when there is an increase in the supply of and decrease in

demand for MP3 players?

A) an increase in equilibrium price

B) a decrease in equilibrium price

C) an increase in equilibrium quantity

D) a decrease in equilibrium quantity

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

51) Which of the following will definitely occur when there is an increase in demand for and a decrease in

supply of milk?

A) an increase in equilibrium price

B) a decrease in equilibrium price

C) an increase in equilibrium quantity

D) a decrease in equilibrium quantity

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

52) An insect that is resistant to currently used pesticides has infested the cotton crop, and this year’s crop

is only half of what was produced last year. You accurately predict that this

A) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the

demand for cotton will fall.

B) will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the

quantity demanded of cotton will decrease.

C) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the

quantity demanded of cotton will decrease.

D) will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the

demand for cotton will fall.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

53) Papayas and grapefruit are substitute goods. A drought in California destroyed a good portion of the

grapefruit crop. Ceteris paribus,

A) the price of both papayas and grapefruit will increase.

B) the price of both papayas and grapefruit will fall.

C) the price of grapefruit will increase, and the price of papayas will fall.

D) the price of grapefruit will fall, and the price of papayas will increase.

Topic: Market Equilibrium

Skill: Conceptual

AACSB: Reflective Thinking

Learning Outcome: Micro-4

Refer to the information provided in Figure 3.16 below to answer the question(s) that follow.

Figure 3.16

54) Refer to Figure 3.16. When the economy moves from Point A to Point B, there has been

A) an increase in demand and an increase in supply.

B) an increase in demand and an increase in quantity supplied.

C) an increase in quantity demanded and an increase in quantity supplied.

D) an increase in quantity demanded and an increase in supply.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-2

55) Refer to Figure 3.16. When the economy moves from Point A to Point C, there has been

A) a decrease in supply and a decrease in quantity demanded.

B) a decrease in quantity supplied and a decrease in demand.

C) a decrease in supply and an increase in quantity demanded.

D) an increase in supply and a decrease in quantity demanded.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-2

56) Refer to Figure 3.16. When the economy moves from Point A to Point E, there has been

A) an increase in demand and an increase in supply.

B) a decrease in demand and a decrease in supply.

C) an increase in demand and a decrease in supply.

D) an increase in quantity demanded and an increase in quantity supplied.

Topic: Market Equilibrium

Skill: Analytical

AACSB: Analytical Thinking

Learning Outcome: Micro-2