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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.

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Figure 3-7 Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d) -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?


A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

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Figure 3-7 Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d) -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?


A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

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From a supply perspective,what impact would an increase in the price of motorcycles have on the market for motorcycles?

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An increase in the price of mo...

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Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions) ?


A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players.
D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

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What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?


A) Demand will decrease, but this will not shift the supply curve.
B) Supply will decrease, but this will not shift the demand curve.
C) Demand and supply will both decrease.
D) Demand will decrease and supply will increase.

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George Gnat subscribes to a monthly pest control service for his home.Last week,the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips.How is the market for pest control services affected by this?


A) There is an increase in the supply of pest control services.
B) There is a decrease in the demand for pest control services.
C) There is a decrease in the quantity of pest control services supplied.
D) There is a decrease in the supply of pest control services.

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Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would


A) increase demand and increase supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of red wine.
B) increase demand and decrease supply resulting in a decrease in both the equilibrium quantity and the equilibrium price of red wine.
C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine.
D) increase demand and decrease supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of red wine.

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An increase in quantity supplied is represented by a rightward shift of the supply curve.

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If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

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Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result ________."


A) the price of flat-screen televisions decreased and the demand for flat-screen televisions increased
B) the equilibrium quantity of flat-screen televisions decreased
C) the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased
D) the price of flat-screen televisions decreased. The lower price caused the supply of flat-screen televisions to decrease

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Technological advances have resulted in lower prices for digital cameras.What is the impact of this on the market for traditional (non-digital) cameras?


A) The demand curve for traditional cameras shifts to the right.
B) The supply curve for traditional cameras shifts to the right.
C) The demand curve for traditional cameras shifts to the left.
D) The supply curve for traditional cameras shifts to the left.

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Figure 3-3 Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market? A) Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans. B) Graph A represents the market for an original Picasso painting and Graph B represents the market for designer jeans. C) Graph A represents both the market for an original Picasso painting and designer jeans. D) Graph B represents both the market for an original Picasso painting and designer jeans. -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?


A) Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans.
B) Graph A represents the market for an original Picasso painting and Graph B represents the market for designer jeans.
C) Graph A represents both the market for an original Picasso painting and designer jeans.
D) Graph B represents both the market for an original Picasso painting and designer jeans.

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Explain the difference between a normal good and an inferior good.

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A normal good is something for which the...

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If the price of prime rib falls,the income effect due to the price change will cause


A) an increase in the demand for prime rib.
B) an increase in the demand for flank steak, a substitute for prime rib.
C) an increase in the quantity of prime rib demanded.
D) an increase in the quantity of prime rib supplied.

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Table 3-3  Rest of  Kona Coffee  Luke’s  Ravi’s  Market  Market  Tea  Quantity  Quantity  Quantity  Quantity  Price per lb.  Demanded  Demanded  Demanded  Demanded  (dollars)   (lbs.)   (lbs.)   (lbs.)   (lbs.)  $10302389332614768518128542218110\begin{array}{|c|c|c|c|c|}\hline&&&\text { Rest of }\\\text { Kona Coffee } &\text { Luke's } &\text { Ravi's }&\text { Market }&\text { Market }\\\text { Tea } & \text { Quantity } & \text { Quantity }& \text { Quantity }& \text { Quantity }\\\text { Price per lb. }&\text { Demanded } &\text { Demanded } &\text { Demanded } &\text { Demanded } \\ \text { (dollars) } & \text { (lbs.) } & \text { (lbs.) } & \text { (lbs.) }& \text { (lbs.) } \\\hline \$ 10 & 3 & 0 & 23 & \\\hline 8 & 9 & 3 & 32 & \\\hline 6 & 14 & 7 & 68 & \\\hline 5 & 18 & 12 & 85 & \\\hline 4 & 22 & 18 & 110 & \\\hline\end{array} -Refer to Table 3-3.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market.If the price of Kona coffee falls from $6 to $4,the market quantity demanded would


A) decrease by 89 lbs.
B) increase by 26 lbs.
C) increase by 61 lbs.
D) increase by 110 lbs.

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Which of the following statements is true?


A) An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

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A shortage occurs when the market price is lower than the equilibrium price.

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What is the difference between a demand schedule and a demand curve?

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A demand schedule is a table that shows ...

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Figure 3-2 Figure 3-2 -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from A) A to B. B) B to A. C) S₁ to S₂. D) S₂ to S₁. -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from


A) A to B.
B) B to A.
C) S₁ to S₂.
D) S₂ to S₁.

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