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Econ 202 – 3rd Quiz KEY
Which of the following correctly describes the adjustments that eliminate a shortage?
As the price rises, the quantity demanded decreases while the quantity supplied increases.
The difference between the maximum amount that a consumer is willing to pay for a product and the price that is
paid for the product describes:
consumer surplus.
On the New York Stock Exchange, the current price per share for stock of the Boston Celtics, a NBA basketball
team, is $8.25. At that price the total quantity of shares demanded is 2,500, while the total quantity supplied for trade
is 2,000. It follows that
there is a shortage of shares and upward pressure on price.
This year the demand for new homes increases while at the same time the supply also increases. As a result of these
changes in the market for new homes you can conclude that:
the equilibrium number of new homes will increase.
Health studies claim that consuming a glass of wine with afternoon or evening meals significantly reduces the risk
of heart disease. If people believe this information, what is likely to occur to the short-run equilibrium in the wine
market?
Equilibrium price and quantity will both rise due to an increase in the demand for wine.
If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a ________ decrease in
quantity demanded.
30%; 15%
A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity
of demand (calculated using the initial value formula) is:
4.
On this graph, area ACD is:
total surplus.
If a product has only a few acceptable substitutes, demand for the product is most likely to be:
inelastic.
If the price of beef doubled and the price of poultry stayed the same, people would most likely buy
more poultry and less beef
A response to a price change would be described as a:
One can say with certainty that equilibrium price declines when supply
increases and demand decreases.
Assume that land suitable for growing corn is also suitable for growing soybeans. A decrease in the price of corn
will therefore:
reduce the opportunity cost of growing soybeans.
If the demand curve is a vertical line, it means that:
regardless of price, the quantity demanded is a constant amount.
The price elasticity of demand for a good is relatively elastic if:
all of the above
An important determinant of the amount of grains harvested next year by Ethiopian farmers is the amount of seeds
planted this year. Given that Western nations have guaranteed to donate five hundred tons of grain next year, this
year the Ethiopian farmers will:
plant less seeds as the price of grain will be lower with the food aid.
If the supply of bottled water decreases, the equilibrium price ________________________ and the equilibrium
quantity __________________.
increases; decreases
A decrease in supply would result from:
an increase in the prices of input resources.
The table shows the demand and supply schedules for jeans:
At $70 a pair, there is a surplus of jeans and the price will fall.