question
According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?
answer
a drop in the price of hot dogs
question
According to the law of supply, as the price of a good falls,
answer
sellers will produce less of the good.
question
A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?
answer
The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase.
question
A movement along a demand curve
answer
is the result of a change in the price of the good.
question
"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise." These statements
answer
contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.
question
Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will
answer
decrease the supply of soybeans.
question
Consumer surplus is the area on the graph
answer
below the demand curve and above the market price.
question
If an increase in the price of peaches reduces the demand for cream, this indicates that peaches and cream are
answer
complements.
question
If cable TV service and satellite TV service are substitutes,
answer
a decrease in the price of cable will decrease the demand for satellite TV.
question
If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that
answer
Harry reaped $10,000 of consumer surplus from the transaction.
question
If the supply of a good increased, what would be the effect on the equilibrium price and quantity?
answer
Price would decrease and quantity would increase.
question
Producers are willing to offer greater quantities for sale at higher prices because
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they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses
question
The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
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even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use.
question
The Invisible Hand Principle suggests that
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market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society.
question
The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is
answer
lower than the equilibrium price.
question
When the market for a good is in equilibrium,
answer
all units valued more highly than the opportunity cost of production will be supplied.
question
Which of the following would most likely increase the demand for peanut butter?
answer
a decrease in the price of jelly, a good that is often used with peanut butter
question
Which of the following would most likely shift the supply curve to the left for Wii video games?
answer
an increase in the price of electronic components used to produce the Wii games
question
Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?
answer
an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven
question
Which of the following would lead to an increase in the demand for rental apartments in your area?
answer
a sharp increase in the number of out-of-town students attending the local college
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