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ECON 2020 Lecture 2: Econ 2020 Exam 1 Lecture 2 & 3

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cyanraven427
14 Sep 2018
School
Auburn University
Department
Economics
Course
ECON 2020
Professor
Macy Finck

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Document Summary

To use economic principles to create models to enable us to analyze and predict behavior. Economic principles- statements about economic behavior of the economy that enable prediction of the probable effects of certain actions. Model- a simplified representation of how something works. Market- any institution that brings together producers and consumers of a particular good or service. In product markets, households demand good and services which are supplied by firms in exchange for money. In resource markets, firms demand resources which are supplied by households in exchange for money. Demand schedule- a table that shows how much of a good or service consumers will want to buy at various prices. Law of demand- the price of a good and the quantity demanded are inversely related. Demand curve- a graphical representation of the quantities of a good or service that consumers are willing and able to purchase at all possible.

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Related Questions

Who bears the primary costs of a rent control program?

A. landlords
B. renters that get rent-controlled apartments
C. taxpayers
D.

the wealthy

Assume the demand for sushi is Qd = 180 - 3P, where Qd is quantity demanded and P = price in dollars. The supply of sushi is Qs = 80 + 5P, where Qs is quantity supplied (and P is, again, price in dollars). A price of $20 would result in:

A. Excess supply of 60
B. Excess supply of 120
C. Excess supply of 140
D. Excess demand of 140

US agricultural price supports are politically popular because

A. They have no adverse impacts
B. The US would have food shortages without them
C. The benefits accrue to a large number of voters and the costs are paid by a small number of voters
D.

The costs are spread out among millions of people

Assume the demand for sushi is Qd = 180 - 3P, where Qd is quantity demanded and P = price in dollars. The supply of sushi is Qs = 80 + 5P, where Qs is quantity supplied (and P is, again, price in dollars). What would be the equilibrium price?

A. $15.50
B. $12.50
C. $10
D.

$15

Price floors and ceiling prices:

A. cause the supply and demand curves to shift until equilibrium is established.
B. both cause surpluses.
C. interfere with the rationing function of prices.
D.

A change in the price of a good leads to a change in ________, which leads to a ___________

A. quantity supplied; shift of the supply curve
B. supply; shift of the supply curve
C. quantity supplied; movement along the supply curve
D.

When the supply of a product increases, this implies that

A. the price of the product first declined
B. more will be purchased at the same price
C. producers will be willing to accept a lower price for each unit sold
D. demand for the good must have increased
E.

producers will offer less for sale at each possible price

If there is a excess demand for product X:

A. fewer resources will be allocated to the production of this good.
B. the price of the product will rise.
C. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.
D.

the price of the product will decline.

Which of the following will occur when there is a simultaneous decrease in demand and a decrease in supply?

A. B and D both necessarily occur
B. An increase in equilibrium quantity
C. A and C both necessarily occur
D. An increase in price
E. A and D both necessarily occur
F. A decrease in price
G.

A decrease in equilibrium quantity

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

A. Both price and quantity should decrease.
B. Price should increase and quantity decrease.
C. Both price and quantity should increase.
D. Price should decrease and quantity increase.
E.

Nothing.

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?

A. conversion of some apartment complexes to condos
B. a shortage
C. an increase in the number of new apartment complexes being built
D. lower maintenance of existing apartments
E. long waiting lists for apartment seekers

supply; movement along the supply curve

both cause shortages.
The primary difference between a change in supply and a change in the quantity supplied is:
Choose one answer.
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.

Question 2
What is the difference between a shortage and scarcity?
Choose one answer.
a. Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level.
b. Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages.
c. A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case.
d. There is no distinction between the two. They are the same thing.

Question 3
A decrease in supply means:
Choose one answer.
a. a shift to the left of the entire supply curve.
b. moving downward (to the left) along the supply curve with lower prices.
c. less will be demanded at every price.
d. more will be supplied at every price.

Question 4
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
Choose one answer.
a. an increase; an increase
b. an increase; a decrease
c. a decrease; an increase
d. a decrease; a decrease

Question 5
After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a( n ):
Choose one answer.
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.

Question 6
There is equilibrium in the market when:
Choose one answer.
a. there is no shortage.
b. there is no surplus.
c. price is established where the supply curve and the demand curve intersect.
d. all of the above are true.

Question 7
Which would not cause the supply curve to shift?
Choose one answer.
a. a change in technology
b. a change in factor costs
c. a change in the price of the good
d. a change in the prices of related goods

Question 8
Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:
Choose one answer.
a. an increase in the demand for potatoes.
b. an increase in the quantity of potatoes demanded.
c. a decrease in the demand for potatoes.
d. no change in the demand for potatoes.

Question 9
Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?
Choose one answer.
a. The equilibrium price and quantity rise.
b. The equilibrium price rises and the equilibrium quantity falls.
c. The equilibrium price and quantity fall.
d. The equilibrium price falls and the equilibrium quantity rises.

Question 10



A temporary price of $2 in this market would result in:
Choose one answer.
a. a surplus of 8,000 bushels.
b. a shortage of 8,000 bushels.
c. a shortage of 10,000 bushels.
d. a surplus of 10,000 bushels.

Question 11
The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?
Choose one answer.
a. The equilibrium price falls, and the equilibrium quantity rises.
b. The equilibrium price rises, and the equilibrium quantity falls.
c. The equilibrium price and quantity rise.
d. The equilibrium price and quantity fall.

Question 12
A market surplus occurs if the:
Choose one answer.
a. price is below the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the actual price.
d. equilibrium price is below the actual price.

1. A change in quantity supplied:

A. refers to a shift in the supply curve.

B. results from a change in a determinant of supply.

C. refers to a movement along a given supply curve.

D. is caused by a change in the number of sellers in the industry.

 

2. Which one of the following would most likely cause the supply curve for microwaves to shift to the right:

A. a decrease in the price of microwaves.

B. an increase in the wage rate earned by workers who produce microwaves.

C. a decrease in consumer preferences for microwaves.

D. an increase in the number of firms that produce microwaves

 

3. If the actual price sellers are pricing their goods at is currently above the equilibrium price. There is a ____________. Therefore, we would expect sellers to ____________ the price until the market reaches equilibrium.

A.

surplus; raise
B.

surplus; lower
C.

shortage; raise
 

D. shortage; lower

4. Suppose the demand and the supply of wine both increase. The net effect of these changes in demand and supply will be

A

an increase in equilibrium quantity, but a decrease in equilibrium price.
B

an increase in equilibrium price and quantity.
C.

an increase in equilibrium price, but the change in equilibrium quantity is indeterminate.
D.

an increase in equilibrium quantity, but the change in equilibrium price is indeterminate.