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Exam 3: Supply and Demand

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Question 81

Multiple Choice

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You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:

A) the substitution effect of a price change.
B) the income effect of a price change.
C) a decrease in the buyer's reservation price.
D) an increase in the buyer's reservation price.

E) All of the above
F) C) and D)

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Question 82

Multiple Choice

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If price is above the equilibrium price, then there will be:

A) both excess supply and excess demand.
B) neither excess supply nor excess demand.
C) excess supply.
D) excess demand.

E) A) and C)
F) B) and C)

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Question 83

Multiple Choice

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Shelly purchases a leather purse for $400. One can infer that:

In a free market, if the price of a good is above the equilibrium price, then;

If fast food is an inferior good then:

Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to news that next year's coffee harvest will be extremely good due to favorable weather conditions, you should expect:

Assume the demand for coffee increases and the supply of coffee decreases. Which of the following outcomes is certain to occur?

Refer to the accompanying figure. Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed by a storm in Brazil, you should expect:

Suppose a new study highlights the health benefits of eating bacon. At the same time, suppose the cost of producing bacon falls. Given these changes, you should expect to see:

As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:

Efficiency is an important social goal because:

All else equal, a decrease in the demand for oranges will lead to a(n) ________ in equilibrium price and a(n) ________ in equilibrium quantity.

Refer to the given table. Relative to column C, column D represents: $\begin{array} { | r | r | r | } \hline \text { Price Per Unit } & \text { Columu A Units Per Year } & \text { Colum B Units Per Year } \\\hline \$ 20 & 50 & 40 \\\hline \$ 30 & 60 & 50 \\\hline \$ 40 & 70 & 60 \\\hline \$ 50 & 80 & 70 \\\hline \$ 60 & 90 & 80 \\\hline\end{array}$  

When the supply curve shifts to the left and there is no change in demand:

If the local slaughterhouse gives off an unpleasant stench, then the equilibrium quantity of meat will be ________ the quantity that maximizes total economic surplus.

When the demand curve shifts to the right and supply doesn't change:

Suppose that when the price of broccoli is $4 per pound, buyers wish to buy 500 pounds per day and sellers wish to sell 800 pounds per day. In this case:

Suppose that when the price of oranges is $3 per pound, the quantity demanded is 4.7 tons per day and the quantity supplied is 3.9 tons. In this case:

You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:

Which of the following is NOT a characteristic of a market in equilibrium?