ECON312N Week 2 Homework (September 2019)

<span itemprop="name">ECON312N Week 2 Homework (September 2019)</span>

ECON312N Principles of Economics

Week 2 Homework

Question 1

Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to

an increase in the supply of electric cars so that the supply curve shifts leftward.

a decrease in the supply of electric cars so that the supply curve shifts leftward.

a decrease in the supply of electric cars so that the supply curve shifts rightward.

no change in the supply of electric cars, only a change in the quantity supplied of electric cars.

an increase in the supply electric cars so that the supply curve shifts rightward.

Question 2

Suppose the San Francisco 49ers lower ticket prices by 15 percent and as a result the quantity of tickets demanded increases by 10 percent. This set of results shows that San Francisco 49ers tickets have

an inelastic demand.

a unit elastic demand.

an inelastic supply.

an elastic supply.

an elastic demand.

Question 3

In the above figure, an increase in cost of the cheese used to produce pizza

has no effect.

results in a movement from point b to point a.

shifts the supply curve from S to S2.

shifts the supply curve from S to S1.

results in a movement from point a to point b.

Question 4

Suppose improvements in technology cause the supply of natural gas to increase and at the same time the demand for natural gas increases. What are we sure of?

Equilibrium price decreases.

Both equilibrium price and quantity increase.

Equilibrium quantity decreases.

Equilibrium price increases.

Equilibrium quantity increases.

Question 5

If income increases and the demand for bus rides decreases,

consumers are behaving irrationally.

bus rides are an inferior good.

bus rides are a substitute good.

bus rides must be a complement good with some other good.

bus rides are a normal good.

Question 6

If both producers and consumers believe that a product’s price will rise in the future, then at the present, demand ________ and supply ________.

decreases; increases

decreases; decreases

increases; increases

increases; decreases

does not change; does not change

Question 7

Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will

increase because Exxon and Shell gas are complements.

not change Exxon and Shell are different brands of gasoline.

increase because Exxon and Shell gas are substitutes.

decrease because Exxon and Shell gas are complements.

decrease because Exxon and Shell gas are substitutes.

Question 8

If the automobile workers’ union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of automobiles?

The supply increases.

The quantity supplied decreases.

The quantity supplied increases.

The supply and quantity supplied decreases.

The supply decreases.

Question 9

In the above figure, the movement from point a to point b reflects

an increase in the price of pizza.

a decrease in income if pizza is a normal good.

an increase in the supply of pizza.

a decrease in the cost of the tomato sauce used to produce pizza.

an increase in the number of producers of pizza.

Question 10

If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?

The supply of wheat increased and the supply of corn decreased.

The supply of wheat decreased and the supply of corn decreased.

The quantity of wheat supplied increased and quantity of corn supplied decreased.

The quantity of wheat supplied increased and the supply of corn decreased.

The supply of wheat increased and the quantity of corn supplied decreased

Question 11

Which of the following increases the supply of a product?

lower prices for the resources used to produce the product

a higher price for the product

a decrease in productivity

some producers going bankrupt and leaving the industry

an increase in the expected future price of the product

Question 12

People eat at restaurants less often when their incomes fall because of a recession. Eating at restaurants must be

a substitute for other goods.

a complement to other goods.

an inelastic good.

an inferior good.

a normal good.

Question 13

Which figure above shows the effect of a technological advance in the production of pizza?

Figure A

Figure C

Figure D

Figure B

Both Figure A and Figure D

Question 14

Pizza is a normal good. Which figure above shows the effect of a decrease in consumers’ incomes?

Figure C

Figure A

Both Figure B and Figure C

Figure B

Figure D

Question 15

If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are

normal goods.

substitutes.

complements.

inelastic goods.

inferior goods.

Question 16

In the above figure, the shift in the demand curve from D to D1 can be the result of

an increase in the price of soda, a complement to pizza.

an increase in the price of pizza.

a change in quantity demanded.

an increase in the price of a sub sandwich, a substitute for pizza.

a decrease in income if pizza is a normal good.

Question 17

Which figure above shows the effect if research is published claiming that eating pizza is healthy?

Figure B

Figure C

Both Figure A and Figure D

Figure A

Figure D

Question 18

If good weather conditions result in a larger than normal crop of peaches, then the

equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.

increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases.

demand curve for peaches shifts leftward.

equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases.

equilibrium price of peaches rises, and the equilibrium quantity of peaches increases.

Question 19

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ so that the price of a computer chip ________.

increases; rises

decreases; rises

decreases; falls

decreases; does not change

increases; falls

Question 20

Many Americans are selling their used cars and buying new fuel-efficient hybrids. Other things remaining the same, in the market for used cars, ______ and in the market for hybrids ______.

demand decreases and the price? rises; supply increases and the price falls

supply increases and the price? falls; demand increases and the price rises

both demand and supply decrease and the price might? rise, fall, or not? change; demand increases and the price rises

demand? decreases, supply? increases, and the price? falls; supply increases and the price falls

Question 21

If a 30 percent price increase generates a 20 percent decrease in quantity demanded, then demand is

elastic.

perfectly elastic.

unit elastic.

inelastic.

perfectly inelastic.

Question 22

If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is

perfectly elastic.

elastic.

inelastic.

unit elastic.

perfectly inelastic.

Question 23

Consider the market for smart phones. Which of the following shifts the demand curve rightward?

a decrease in the number of smart phone buyers

a decrease in the price of smart phones

an increase in the supply of smart phones

an increase in the price of land-line phone service, a substitute for smart phones

an increase in the price of smart phones

Question 24

The law of supply reflects the fact that

suppliers have an incentive to use their resources in the way that brings the biggest return.

the demand curve is downward sloping.

businesses can sell more goods at lower prices.

higher prices are more attractive to consumers because they signal a higher quality product.

people buy more of a good when its price falls.

Question 25

You are just about to finish college and are about to start a high paying job. Because of this new job, what is the most likely outcome in the market for cars?

The market supply of cars will decrease.

Your demand for cars will increase.

The demand and the supply for cars will decrease.

The market supply of cars will increase.

Your demand for cars will decrease.

Question 26

Which of the following describes the law of demand? When other things remain the same, as

the quantity demanded of bread increases, the price of bread falls.

the price of gas falls, the quantity demanded of gas increases.

your income increases, you’ll buy more hamburgers.

more people decide to eat pizza, the demand for pizza increases.

the price of peanut butter increases, the quantity demanded of jelly decreases.

Question 27

In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

The effect on the demand curve is unknown.

The demand curve would shift rightward.

The demand curve would not shift but the price of dining out would fall.

The demand curve would not shift but the price of dining out would rise.

The demand curve would shift leftward.

Question 28

If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.

fall; increase

fall; decrease

rise; increase

rise; decrease

not change; increase

Question 29

The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $2.20, then

the gasoline market in Tulsa is in equilibrium.

there is a shortage of gasoline in Tulsa.

Without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa.

there is a surplus of gasoline in Tulsa.

There is neither a surplus nor a shortage, but the market is NOT in equilibrium.

Question 30

The price of cotton clothing falls. As a result,

the quantity demanded of cotton clothing increases.

both the demand for cotton clothing increases and the quantity demand of cotton clothing increases.

the demand for cotton clothing increases.

the quantity demanded of cotton clothing decreases.

the demand for cotton clothing decreases.