Spring ‘13 - Quiz 3
Key
Assume that coffee and tea are substitutes. When the price of coffee increases
the demand for tea increases.
If the government imposes a maximum price on rental apartments that is below the equilibrium price, we can expect
to see all of the following EXCEPT:
new apartment units being built.
A ban on imports will ________ the price domestic consumers pay for the good, and ________ the amount of the
good consumed by domestic consumers.
increase; decrease
Suppose that in 2007, 4 million plasma TVs were purchased at $2,200 each, while in 2008, 3 million plasma TVs
were purchased at $1,750 each. What might have caused this change?
The price of LCD TVs (a substitute for plasma TVs) fell.
If producers have an expectation of higher future prices, the supply of the good that is currently available
will decrease.
Suppose that a new study is released stating that consumption of orange juice (a substitute for apple juice) reduces
the risk of cancer, and a major freeze destroys half of the country's apple crop. What happens to the price and
quantity of apple juice?
The price of apple juice might rise or fall and the quantity of apple juice falls.
The demand for oil in the U.S. is increasing at a time when production from U.S. oil fields has slowed. In the U.S.
crude oil market, ceteris paribus, this would definitely cause equilibrium
price to increase.
A good for which demand decreases when income decreases is known as a(n) ________ good.
normal
Suppose that the government sets a maximum price for milk at $5 a gallon and the equilibrium price of a gallon is
$3. How much quantity traded will this maximum price lead to?
at the equilibrium quantity.
Suppose that the government sets a minimum price for soybeans at $5 and the equilibrium price of a pound is $3.
This leads to a quantity traded:
below the equilibrium quantity.
At the minimum wage (above equilibrium wage)
some of the individuals who end up working are paid more than if they were paid the equilibrium wage.
If your city imposes a tax of $100 per apartment, new monthly rent consumers pay is:
$560.
If your city imposes a tax of $100 per apartment:
consumers pay $60 and landlords pay $40 tax per apartment.
The price of oranges has risen dramatically. Which of the following is likely to happen?
The quantity of oranges supplied will increase.
Suppose that a technological advancement substantially reduces the cost of laser eye surgery. This would cause the
equilibrium
quantity of laser eye surgery to increase.
Australian rice farmers are experimenting with different rice varieties and growing techniques that require less
water. If these techniques are successful and increase the size of the rice harvest, the equilibrium price of rice will
________ and the equilibrium quantity of rice will ________, ceteris paribus.
decrease; increase
The government sometimes creates an excess demand for a product by setting a maximum price at which the
product may be sold to consumers. This is sometimes called a
price ceiling.
A change in quantity supplied of a product is the result of a change in
the price of the product.
The number of persons who want to work at the minimum wage is ________.
N2