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ECON 1000 Study Guide - Ceteris Paribus, Economic Equilibrium, European Route E20

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skyswan675
18 Jun 2014
School
York University
Department
Economics
Course
ECON 1000
Professor
Sandra Withworth

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ECON 1000 Full Course Notes
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ECON 1000 Full Course Notes
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Document Summary

Use the figure below to answer the following questions. Original equilibrium at 1: refer to figure 3. 5. 2, which represents the market for beans. If the price of peas, a substitute for beans rises, what is the new beans equilibrium, ceteris paribus: 8, 3, 9, 5, 6, refer to figure 3. 5. 2, which represents the market for beer. If the price of pizza, a complement of beer rises, what is the new beer equilibrium, ceteris paribus: 8, 3, 9, 5, 6. The supply curve is p = 300 + 20q: the demand curve is p = 700 - 20q equilibrium quantity is ________ and the equilibrium price is ________, 10; 500, 500; 10, 0. 10; 20, 20; 0. 10, 400; 40. S: this question deals with demand and supply and refers you to the table below, given the table, graph the demand and supply curves for flashlights. Make certain to label equilibrium price and equilibrium quantity.

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Related Questions

Lise the information below to answer the following questions. Fact 3.5.1 The market for coffee is initially in equilibrium. Pepsi is a substitute for coffee; cream is a complement of coffee. Consider the market for coffee. Assume that all ceteris paribus assumptions continue to hold except for the event listed. 14) Refer to Fact 3.5.1. The price of cream falls. Simultaneously, there is an increase in the wages of farm workers who harvest coffee beans. The equilibrium quantity of coffee A) increases or decreases depending on the slope of the supply and demand curves. B) remains the same. C) increases, decreases, or remains the same depending on the relative shifts of the supply and demand curves. D) decreases. E) increases.

1 an imperfect market, individual firms

A.are always able to set the price of their product.
B.are able to influence the price of their product.
C.have no influence over the price of their product.

D.take the market price as given.

1 Which of the following is NOT characteristic of a market economy?

Significant government intervention
Little or no government intervention
Buyers and sellers motivated by self-interest
Prices determined by demand and supply

2 In a competitive market, the price of the product is

independently set by each competing seller.
set by the market leader and then copied by other sellers.
jointly set after a meeting of all sellers in the market.
set by market supply and demand.

3 Which of the following firms participates in a competitive market?

A new car manufacturer, such as Ford, Honda, Toyota, or GMC
A software producer, such as Microsoft
A corn farmer
A local electric utility company

4 In an imperfect market, individual firms

are always able to set the price of their product.
are able to influence the price of their product.
have no influence over the price of their product.
take the market price as given.

5 Which of the following firms operates as a monopoly?

A car manufacturer
A local water utility
A corn farmer
A fish vendor at a neighborhood market

6 According to the law of demand, what is the relationship between price and quantity demanded?

Direct
No relationship
Inverse

7 Refer to the following graph. The demand curve slopes downward because
Click to view graphic. (Links to an external site.)

prices and quantity demanded move in opposite directions.
prices and quantity demanded move in the same direction.
prices and quantity demanded have no relationship.
prices and quantity demanded remain unchanged.

8 A change in which of the following will cause a change in the quantity demanded of coffee?

Consumer income
The price of green tea, a substitute for coffee
The number of coffee consumers
The price of coffee

9 Suppose that burgers and fries are complements in consumption. If the price of fries increases

overall demand for burgers will increase.
overall demand for burgers will decrease.
quantity demanded for burgers will increase.
quantity demanded for burgers will decrease.

10 Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then

both the equilibrium price and the quantity of Pepsi demanded will decrease.
both the equilibrium price and the quantity of Pepsi demanded will increase.
the equilibrium price of Pepsi will increase and the quantity demanded of Pepsi will decrease.
the equilibrium price of Pepsi will decrease and the quantity demanded of Pepsi will increase.

11 According to the law of supply, what is the relationship between price and quantity supplied?

Direct
No relationship
Inverse
It depends on the change in price

12 Refer to the graph below. The supply curve is _______________ driven by the law of supply.
Click to view graphic. (Links to an external site.)

Downward sloping
Upward sloping
Perfectly vertical
Perfectly horizontal

13 A change in which of the following will cause a change in the quantity supplied of coffee?

The technology or the production process of making coffee
Anticipation of a change in the price of coffee
The wages of coffee bean pickers
The price of coffee

14 Which of the following will cause a rightward shift in the supply curve for tobacco?

A fall in the number of tobacco farmers in the market
An increase in taxes on tobacco
Removal of government subsidies to tobacco farmers
An improvement in the technology used in the production of tobacco

15 Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?

Overall supply will increase
Overall supply will decrease
Quantity supplied will increase
Quantity supplied will decrease

16 Refer to the following image. When a market is in equilibrium, which of the following is true?
Click to view graphic. (Links to an external site.)

Quantity supplied exceeds quantity demanded
Quantity supplied is less than quantity demanded
Quantity supplied is equal to quantity demanded
There is no relationship between quantity supplied and quantity demanded

17 Refer to the following figure. At a price of $15, this market is experiencing a(n)
Click to view graphic. (Links to an external site.)

equilibrium.
shortage.
surplus.
none of the above are true.

18 Refer to the following figure. At a price of $5, this market is experiencing
Click to view graphic. (Links to an external site.)

equilibrium.
a shortage.
a surplus.
None of the above are true.

19 Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the

equilibrium quantity and equilibrium price of pasta salad will increase.
equilibrium quantity of pasta salad will decrease and the equilibrium price of pasta salad may either increase or decrease.
equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.
equilibrium quantity and equilibrium price of pasta salad will both decrease.

20. What must happen to the market price in order for a shortage to be eliminated?

Price must fall.
Price must rise.
Price must stay the same.
Price may rise or fall depending on the size of the shortage.

The market for coffee is initially in equilibrium with supply and demand curves of the usual shape. Pepsi is a substitute for coffee; cream is a complement for coffee. The following questions concern the market for coffee.
Assume that all ceteris paribus assumptions continue to hold except for the event(s) listed. Answer each question without considering the others.
 
1. Coffee is a normal good. A decrease in income will: 
 
(i) increase the price of coffee and increase the quantity demanded of coffee.
(ii) increase the price of coffee and increase the quantity supplied of coffee.
(iii) decrease the price of coffee and decrease the quantity demanded of coffee.
(iv) decrease the price of coffee and decrease the quantity supplied of coffee.
(v) cause none of the above.
 
2. An increase in the price of Pepsi will: 
 
(i) increase the price of coffee and increase the quantity demanded of coffee.
(ii) increase the price of coffee and increase the quantity supplied of coffee.
(iii) decrease the price of coffee and decrease the quantity demanded of coffee.
(iv) decrease the price of coffee and decrease the quantity supplied of coffee.
(v) cause none of the above.
 
3. A technological improvement lowers the cost of producing coffee. At the same time, preferences for coffee decrease. The equilibrium quantity of coffee will: 
 
(i) rise.
(ii) fall.
(iii) remain the same.
(iv) rise or fall depending on whether the price of coffee falls or rises.
(v) rise or fall depending on the relative shifts of demand and supply curves.