ECON312N Week 2 Homework Latest 2019 September

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.