ECON 2305

Which of the following will shift the demand curve for a good?

A.) a decrease in the price of the good
B.) a change in the technology used to produce the good
C.) a decrease in the price of a complementary good
D.) an increase in the price of the good

When the price of a normal good falls consumers buy a larger quantity because of the blank effect and the blank effect
A.) substitue; complement
B.) substitution; income
C.) supply; demand
D.) normal; inferior

In an increase in income leads to decrease in the demand for popcorn, then popcorn is
A.) a normal good
B.) a necessity
C.) a neutral good
D.) an inferior good

If the product represented is an inferior good, an increase in income would be
A.) A to B
B.) B to A
C.) D1 to D2
D.) D2 to D1

Elvira decreases her consumption of bananas when the price of peanut butter increases. For Elvira peanut butter and bananas are
A.) complements
B.) both luxury goods
C.) substitues
D.) both inferior goods

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?
A.) an increase in demand for cattle
B.) a decrease in the price of cattle
C.) an increase in the price of sheep feed
D.) an increase in the price of sheep

Which of the following would shift the supply curve for MP3 players to the right?
A.) an increase in consumer income (assuming that all MP3 players are normal goods)
B.) an increase in the price of a substitute product
C.) a decrease in the price of an input used to produce MP3 players
D.) a decrease in the number of firms that produce MP3 players

In February market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February holding everything else constant?
A.) the quantity of titanium demanded and the quantity of titanium supplied both increase
B.) the demand curve shifts to the left
C.) the supply curve shifts to the left
D.) the supply curve shifts to the right

The price is $10
A.) there would be a surplus of 600 units
B.) there would be a surplus of 200 units
C.) there would be a shortage of 200 units
D.) there would be a shortage of 600 units

Let D=demand, S=supply, P=equilibrium price, and Q=equilibrium quantity. What happens in the market for walnuts if the CDC announces that consuming a half cup of walnuts each week helps to lower levels of bad cholesterol?
A.) D increases, S no change, P and Q increase
B.) D no change, S increases, P decreases, Q decreases
C.) D and S increase, P and Q decrease
D.) S increases, D no change, P decreases, Q increases

The cost of producing cigarettes in the US has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?
A.) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
B.) Both the supply and demand curves have shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.
C.) Both the supply and demand curves have shifted to the left. As a result there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.
D.) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
A.) a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease
B.) a decrease in the equilibrium quantity of lobster and no change in the equilibrium price
C.) an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease
D.) an increase in the equilibrium price of lobster and no change in the equilibrium quantity

Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?
A.) Panel a
B.) Panel B
C.) Panel C
D.) Panel D

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result
A.) The equilibrium price of MP3 players will increase; the equilibrium quantity will decrease
B.) The equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease
C.) The equilibrium price of MP3 players will decrease; the equilibrium quantity will increase
D.) Both the equilibrium price and quantity of MP3 players will decrease

The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges a substitute for apples, decreases and the wages of apple workers increase how will the equilibrium point change?
A.) The equilibrium point will move from A to C
B.) The equilibrium will first move from A to B then return to A
C.) The equilibrium point will move from point A to E
D.) The equilibrium point will move from A to B

If the percentage increase in price is 15% and the value of the price elasticity of demand is -3 then quantity demanded
A.) will decrease by 45%
B.) will increase by 5%
C.) will decrease by 5%
D.) will increase by 45%

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?
A.) It is perfectly elastic
B.) It is perfectly inelastic
C.) It is elastic
D.) The price elasticity coefficient is 0

Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true?
A.) It is perfectly elastic at very high prices and perfectly inelastic at very low prices
B.) It is inelastic at high prices and elastic at low prices
C.) It is elastic at the highest prices and inelastic at the lowest prices
D.) It is unit elastic throughout the demand curve

Which of the following statements about the price elasticity of demand is correct?
A.) The absolute value of the elasticity of demand ranges from zero to one
B.) Demand is more elastic in the long run than it is in the short run
C.) Demand is more elastic the smaller the percentage of the consumer budget the item takes up
D.) The elasticity of demand for a good, in general, is equal to the elasticity of demand for a specific brand of the good

The larger the share of a good in a consumer budget holding everything else constant the
A.) more price inelastic is a consumers demand
B.) more unit elastic is a consumers demand
C.) more price elastic is a consumers demand
D.) more vertical is a consumers demand curve

If an income leads to an increase in the demand for peanut butter then peanut butter is
A.) neutral good
B.) a complement
C.) a normal good
D.) a necessity