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Exam 4: The Market Forces of Supply and Demand

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Question 91

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If the demand for a good falls when income falls, then the good is called an inferior good.

A) True
B) False

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Question 92

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Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

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B) False

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Question 93

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Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?

Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, the equilibrium price rises, but the effect on the equilibrium quantity is ambiguous.

Local cable television companies frequently are monopolists.

If something happens to alter the quantity demanded at any given price, then

An increase in the price of a substitute good will shift the demand curve for a good to the right.

Figure 4-11 ​ ​ -Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if a news report stated that the price of this good was expected to increase next week.

Two goods are substitutes when a decrease in the price of one good

Table 4-9 The following table shows the supply and demand schedules in a market. $\begin{array} { | l | l | l | } \hline \text { Price (\$) } & \begin{array} { l } \text { Quantity } \\\text { Demanded } \\\text { (units) }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Supplied } \\\text { (units) }\end{array} \\\hline 0 & 50 & 0 \\\hline 2 & 40 & 15 \\\hline 4 & 30 & 30 \\\hline 6 & 20 & 45 \\\hline 8 & 10 & 60 \\\hline 10 & 0 & 75 \\\hline\end{array}$ -Refer to Table 4-9. What is the equilibrium quantity in this market?

If the producers of canned green beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current production into storage and supply less in the market today.

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Supply and demand together determine the price and quantity of a good sold in a market.

The market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all the other factors that affect how much consumers want to buy are held constant.

Table 4-5 -Refer to Table 4-5. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: ​ ​ $\begin{array} { | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per case) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Cases of water) }\end{array} \\\hline 0.00 & 350 \\\hline 2.00 & 300 \\\hline 4.00 & 250 \\\hline 6.00 & 200 \\\hline\end{array}$ The equilibrium price and quantity are

It is not possible for demand and supply to shift at the same time.

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Figure 4-10 -Refer to Figure 4-10. Which of the following movements would illustrate the effect of an improved oven that allows bakers to produce scones in less time on the market for scones?