Q&A Hero

Q: Table 4-3The Waco Kid's Cowboy HatsMarginal Cost (dollars)1st hat$242nd hat303rd hat384th hat46Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $35, The Waco Kid will produceA) 1 hat.B) 2 hats.C) 3 hats.D) 4 hats.

Q: Table 4-3The Waco Kid's Cowboy HatsMarginal Cost (dollars)1st hat$242nd hat303rd hat384th hat46Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats increases from $38 to $46A) consumers will buy no cowboy hats.B) the marginal cost of producing the third cowboy hat will increase to $46.C) producer surplus will rise from $22 to $46.D) there will be a surplus of cowboy hats.

Q: Table 4-3The Waco Kid's Cowboy HatsMarginal Cost (dollars)1st hat$242nd hat303rd hat384th hat46Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40A) The Waco Kid will produce four hats.B) producer surplus from the first hat is $40.C) producer surplus will equal $28.D) there will be a surplus; as a result, the price will fall to $24.

Q: Marginal cost is A) the total cost of producing one unit of a good or service. B) the average cost of producing a good or service. C) the difference between the lowest price a firm would have been willing to accept and the price it actually receives. D) the additional cost to a firm of producing one more unit of a good or service.

Q: Table 4-2ConsumerWillingness to PayAnya$24Basil20Celeste15Dralon12Esther7Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket falls from $25 to $10A) only three tickets will be sold.B) consumer surplus decreases from $24 to $12.C) consumer surplus increases from $0 to $31.D) everyone will buy a ticket.

Q: Table 4-2ConsumerWillingness to PayAnya$24Basil20Celeste15Dralon12Esther7Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket rises from $10 to $19A) only three tickets will be sold.B) consumer surplus decreases from $31 to $6.C) consumer surplus increases from $44 to $71.D) no one will buy a ticket.

Q: Table 4-2ConsumerWillingness to PayAnya$24Basil20Celeste15Dralon12Esther7Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket is $25A) everyone will buy a ticket.B) consumer surplus will be maximized.C) Anya's consumer surplus is $1.D) no one will buy a ticket.

Q: Table 4-2ConsumerWillingness to PayAnya$24Basil20Celeste15Dralon12Esther7Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $10A) everyone will buy a ticket except for Esther.B) only Anya and Basil will buy tickets.C) Celeste's consumer surplus is $25.D) the total consumer surplus from the purchase of tickets will be $61.

Q: Table 4-2ConsumerWillingness to PayAnya$24Basil20Celeste15Dralon12Esther7Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $18A) Anya and Basil will each buy two tickets.B) Basil will receive $2 of consumer surplus from buying one ticket.C) Anya and Basil receive a total of $26 of consumer surplus from buying one ticket each. No one else will buy a ticket.D) Celeste, Dralon, and Esther will receive a total of $34 of consumer surplus since they will buy no tickets.

Q: Table 4-1ConsumerWillingness to PayTom$40Dick30Harriet25Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of the shirts falls from $28 to $20A) consumer surplus increases from $14 to $35.B) Tom will buy two shirts; Dick and Harriet will each buy one shirt.C) consumer surplus will increase from $70 to $95.D) Harriet will receive more consumer surplus than Tom or Dick.

Q: Table 4-1ConsumerWillingness to PayTom$40Dick30Harriet25Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollarsA) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts.B) Tom will receive $12 of consumer surplus from buying one shirt.C) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts.D) Harriet will receive $25 of consumer surplus since she will buy no shirts.

Q: Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices. A) demand B) supply C) production possibilities D) marginal cost

Q: Which of the following statements best describes the concept of consumer surplus? A) "Safeway was having a sale on Dreyer's ice cream so I bought 3 quarts." B) "I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket." C) "I paid $130 for a printer last week. This week the same store is selling the same printer for $110." D) "I sold my Blu-ray copy of Ben-Hur for $18 at a garage sale even though I was willing to sell it for $10."

Q: Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service. A) total B) unintended C) additional D) surplus

Q: Consumers are willing to purchase a product up to the point where A) the marginal benefit of consuming the product is equal to the marginal cost of consuming it. B) the consumer surplus is equal to the producer surplus. C) the marginal benefit of consuming the product equals the area below the supply curve and above the market price. D) the marginal benefit of consuming a product is equal to its price.

Q: Willingness to pay measures A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. C) the maximum price that a buyer is willing to pay for a good. D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

Q: Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone? A) $0 B) $150 C) $225 D) $300

Q: Lucinda buys a new GPS system for $250. She receives consumer surplus of $75 from the purchase. How much does Lucinda value her GPS system? A) $75 B) $175 C) $250 D) $325

Q: Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is A) $150. B) $75. C) $37.50. D) $0.

Q: Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is A) $325. B) $200. C) $125. D) $75.

Q: In a city with rent-controlled apartments, all of the following are true except A) apartments usually rent for rates lower than the market rate. B) apartments are often in shorter supply than they would be without rent control. C) it usually takes more time to find an apartment than it would without rent control. D) landlords have an incentive to rent more apartments than they would without rent control.

Q: In New York City, about 1 million apartments are subject to rent control by the local government. Rent control A) puts a legal limit on the rent that landlords can charge for an apartment. B) is a price floor which sets a minimum rent for apartments. C) only applies to those apartments which are owned and rented out by the local government. D) is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

Q: The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called A) producer surplus. B) the substitution effect. C) the income effect. D) consumer surplus.

Q: The Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books? A) The demand curve for new books shifts to the right. B) The demand curve for new books shifts to the left. C) The supply curve for new books shifts to the right. D) The supply curve for new books shifts to the left.

Q: Figure 3-1 Refer to Figure 3-1. If the product represented is a normal good, a decrease in income would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. An increase in the expected future price of the product would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. A decrease in the price of a complementary good would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: Figure 3-1 Refer to Figure 3-1. An increase in population would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

Q: If an increase in income leads to a decrease in the demand for popcorn, then popcorn is A) an inferior good. B) a neutral good. C) a necessity. D) a normal good.

Q: If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is A) a neutral good. B) a normal good. C) a necessity. D) a complement.

Q: The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power. A) ceteris paribus B) population C) substitution D) income

Q: If the price of orchids falls, the substitution effect due to the price change will cause A) an increase in the demand for orchids. B) an increase in the demand for roses, a substitute for orchids. C) an increase in the quantity demanded of orchids. D) an increase in the quantity supplied of orchids.

Q: If the price of grapefruit rises, the substitution effect due to the price change will cause A) a decrease in the demand for grapefruit. B) a decrease in the demand for oranges, a substitute for grapefruit. C) a decrease in the quantity demanded of grapefruit. D) a decrease in the quantity supplied of grapefruit.

Q: When the price of a good falls, consumers buy a larger quantity because of the ________ effect and the ________ effect. A) substitution; income B) normal; inferior C) substitute; complement; D) supply; demand

Q: A movement along the demand curve for toothpaste would be caused by A) a change in the price of toothbrushes. B) a change in consumer income. C) a change in the price of toothpaste. D) a change in population.

Q: Which of the following willshift the demand curve for a good? A) a change in the technology used to produce the good B) an increase in the price of the good C) a decrease in the price of a complementary good D) a decrease in the price of the good

Q: The income effect of a price change refers to the impact of a change in A) income on the price of a good. B) demand when income changes. C) the quantity demanded when income changes. D) the price of a good on a consumer's purchasing power.

Q: Table 3-1Loose Leaf Tea Price per lb. (dollars)Sunil's Quantity Demanded (lbs)Mia's Quantity Demanded (lbs)Rest of Market Quantity Demanded (lbs)Market Quantity Demanded (lbs)$840306724059351412564315890Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded wouldA) decrease by 32 lbs.B) increase by 64 lbs.C) increase by 32 lbs.D) decrease by 64 lbs.

Q: Table 3-1Loose Leaf Tea Price per lb. (dollars)Sunil's Quantity Demanded (lbs)Mia's Quantity Demanded (lbs)Rest of Market Quantity Demanded (lbs)Market Quantity Demanded (lbs)$840306724059351412564315890Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would beA) 51 lbs.B) 63 lbs.C) 76 lbsD) 146 lbs.

Q: A change in all of the following variables will change the market demand for a product except A) the price of the product. B) population and demographics. C) income. D) tastes.

Q: Holding everything else constant, an increase in the price of MP3 players will result in A) a decrease in the quantity of MP3 players supplied. B) a decrease in the demand for MP3 players. C) an increase in the supply of MP3 players. D) a decrease in the quantity of MP3 players demanded.

Q: If a demand curve shifts to the left, then A) demand has increased. B) quantity demanded has increased. C) demand has decreased. D) quantity demanded has decreased.

Q: If a demand curve shifts to the right, then A) demand has increased. B) quantity demanded has increased. C) demand has decreased. D) quantity demanded has decreased.

Q: The law of demand implies, holding everything else constant, that A) as the price of bagels increases, the quantity of bagels demanded will decrease. B) as the price of bagels increases, the demand for bagels will decrease. C) as the price of bagels increases, the quantity of bagels demanded will increase. D) as the price of bagels increases, the demand for bagels will increase.

Q: By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good. A) quantity; price; quantity B) price; quantity; quantity C) price; quantity; price D) quantity; price; price

Q: If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as A) a decrease in demand. B) a decrease in quantity demanded. C) a change in consumer income. D) a decrease in consumers' taste for chocolate.

Q: The demand by all the consumers of a given good or service is the ________ for the good or service. A) market demand B) quantity demanded C) law of demand D) scheduled demand

Q: What is the difference between an "increase in demand" and an "increase in quantity demanded"? A) There is no difference between the two terms; they both refer to a shift of the demand curve. B) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. C) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. D) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

Q: If the Apple iPhone and the Samsung Galaxy are considered substitutes, then, other things equal, an increase in the price of the iPhone will A) decrease the demand for the iPhone. B) increase the demand for the Galaxy. C) increase the quantity demanded for the Galaxy. D) increase the quantity demanded for the iPhone.

Q: The market for smart phones has grown rapidly over the past few years, due in part to the overwhelming success of the Apple iPhone. Following the successful launch of the iPhone in 2007, companies such as Samsung, HTC, and LG have all introduced products to compete with the iPhone. The smart phones introduced to compete with the iPhone would be considered A) complements to the iPhone. B) substitutes for the iPhone. C) inferior goods compared to the iPhone. D) normal goods compared to the iPhone.

Q: In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good. a. The population increases and the price of inputs increase. b. The price of a complement increases and technology advances. c. The number of firms in the market increases and income increases. d. Price is expected to increase in the future. e. Consumer preference increases and the price of a substitute in production decreases.

Q: In 1984, the National Minimum Drinking Age Act was passed, raising the legal age to consume alcoholic beverages in the United States to 21. In much of Europe, the legal age to consume alcohol is 18. If the legal drinking age in the United States was changed back to 18, how would this affect the market for alcoholic beverages? What would happen to the equilibrium price and quantity of alcoholic beverages?

Q: Cigars are becoming increasingly popular in the United States, and a growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S. market. How has this affected the equilibrium price and quantity of cigars?

Q: If a union successfully negotiates for higher wages and benefits for steel workers, what impact would this have on the supply and demand in the market for steel, assuming no other changes take place in this market?

Q: Discuss the correct and incorrect economic analysis in the following statement. "The United Auto Workers Union has successfully negotiated a 9 percent increase in wages for its workers. This increase in the wage rate causes an increase in demand for automobiles, since many consumers now have greater incomes, and also a decrease in the supply of automobiles because the cost of production has increased. These effects cancel each other out resulting in no change in equilibrium price and quantity in the automobile market."

Q: Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

Q: Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase. This will result in a price decrease, which will then cause the supply of pineapples to decrease."

Q: If the demand for a product increases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Q: If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Q: As the number of firms in a market increases, the supply curve will shift to the right and the equilibrium quantity will rise.

Q: If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

Q: If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

Q: If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Q: As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Q: If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Q: Article Summary A growing number of U.S. citizens are going to other countries for elective surgery procedures. Improved quality and significant cost savings abroad have attracted an increasing number of what are being referred to as American medical tourists, especially those who either do not have insurance or whose insurance does not cover the desired procedure. As few as five years ago, Americans tended to travel to countries such as Thailand or Mexico for the procedures, but many are now choosing to go to Europe, where governments and hospitals are now publicizing these services. Many of the procedures being done overseas are joint replacement, and partly in response to the number of patients going abroad for these procedures, programs are being developed to reduce the cost of these surgeries in the United States. Source: Elizabeth Rosenthal, "The Growing Popularity of Having Surgery Overseas," New York Times, August 6, 2013. Refer to the Article Summary. If more European governments and hospitals begin to offer and publicize their services to American medical tourists and, due to the growing number of aging baby boomers, more Americans desire joint-replacement surgery , what will happen in the market for joint-replacement surgery as a result of these two factors? A) Demand will increase, but these two factors will not shift the supply curve. B) Supply will increase, but these two factors will not shift the demand curve. C) Demand and supply will both increase. D) Demand will increase and supply will decrease.

Q: Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)? A) The supply of corn would decrease and the equilibrium price of corn would increase. B) The demand for corn would increase and the equilibrium price of corn would increase. C) The demand for corn would decrease because consumers could afford to buy less wheat and corn. D) The demand for corn would increase and the equilibrium price of corn would decrease.

Q: A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in A) a decrease in the equilibrium quantity of incandescent light bulbs and no change in the equilibrium price. B) a decrease in the equilibrium price of incandescent light bulbs and no change in the equilibrium quantity. C) a decrease in the equilibrium price of incandescent light bulbs; the equilibrium quantity may increase or decrease. D) a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium price may increase or decrease.

Q: Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would A) increase demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine. B) increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine. C) increase demand and increase supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine. D) increase demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.

Q: Suppose favorable weather resulted in a bumper crop of oranges in Florida. In the market for oranges A) the supply curve shifted to the right resulting in a decrease in the equilibrium price. B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.

Q: Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles? A) D increases, S no change, P and Q increase B) S increases, D no change, P decreases, Q increases C) D and S increase, P and Q decrease D) D no change, S increases, P decreases, Q decreases

Q: All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a A) shift the supply curve for iPhones to the right. B) shift the supply curve for iPhones to the left. C) shift the demand curve for iPhones to the right. D) shift the demand curve for iPhones to the left.

Q: The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen. In the market for beef, this would be represented by the equilibrium price ________ and the equilibrium quantity ________. A) increasing; increasing or decreasing B) increasing or decreasing; decreasing C) decreasing; increasing or decreasing D) increasing or decreasing; increasing

Q: "Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement? A) The statement will be true if consumer tastes for chips and salsa do not change. B) The statement is false because a change in the price of chips would not change the demand for chips. C) The statement is false because salsa is an inferior good; chips are normal goods. D) The statement is false because one cannot assume that chips and salsa are complements for all consumers.

Q: "Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement? A) The statement will be true if consumer tastes for apples and oranges do not change. B) The statement is false because a change in the price of apples would not change the demand for apples. C) The statement is false because oranges are inferior goods; apples are normal goods. D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

Q: Blu-ray players were introduced to the market in 2006, and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction. How did this change in technology affect the market for Blu-ray players? A) The new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players. B) The new technology caused an increase in the supply of Blu-ray players and an increase in price of Blu-ray players. C) The new technology caused an decrease in the demand for Blu-ray players. D) The new technology caused an increase in the quantity of Blu-ray players supplied.