Homework 2

1). In the above figure, a change in quantity demanded with unchanged demand is represented by
a movement from
A) point a to point d.
B) point a to point b.
C) point a to point c.
D) None of the above represent a change in the quantity demanded with an unchanged
demand.
E) All of the above represent a change in the quantity demanded with an unchanged demand

2) A decrease in the price of apples will cause

A) a reduction in the demand for apples
B) an increase in the supply of apples
C) an increase in the demand for oranges, if oranges are a complement for apples
D) all of the above
E) none of the above

3). When there is surplus for a product in a market, then

A) the price will tend to fall.
B) price must be above equilibrium.
C) the price will tend to rise.
D) Both A and B are correct
E) none of the above

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4). The observation that the demand curve for grape jelly shifted rightward every time the price
of peanut butter fell means that grape jelly and peanut butter are
A) complements.
B) substitutes.
C) inferior goods.
D) normal goods.

5). Suppose the supply of widgets increases. The result will be

A) a decrease in the equilibrium price of widgets and an increase in their equilibrium
quantity
B) a rise in the equilibrium price and quantity of widgets
C) a rise in the demand for widgets
D) a decrease in the demand for widgets
E) none of the above

6). Shoes and socks are complements. If the price of socks goes up
A) the demand for socks will fall
B) the demand for shoes will fall
C) the demand for shoes will rise
D) both (a) and (c) are correct
E) none of the above.

7). A recent freezing weather kills much of this year’s crop of peanuts. What impact will this
freeze have on the equilibrium quantity and price of peanuts?
A) increase, decrease
B) decrease, increase
C) increase, increase
D) decrease, decrease
E) increase, uncertain

Price ($ per pound) Quantity supplied (pounds) Quantity demanded (pounds)

3 1 7
4 2 5
5 4 4
6 5 2
7 6 1
8). The above table shows the demand schedule and supply schedule for chocolate chip cookies.
However, an increase in consumer income results in an increase in the demand for chocolate
cookies by an amount of 3 pounds at every price. What are the new equilibrium quantity and
equilibrium price?
A) 5 pounds, $4.00 per pound
B) 5 pounds, $6.00 per pound
C) 5 pounds, $5.00 per pound
D) 4 pounds, $5.00 per pound

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9). The Department of Transportation is proposing new side impact regulations for cars. These
regulations will (i) make cars more expensive to produce, and (ii) increase the safety of cars,
something that is valuable to potential car buyers. The effect of these new regulations will be to:
A) Decrease the demand for and supply of cars
B) Increase the demand for and supply of cars
C) Increase the demand for cars and decrease the supply of cars
D) Increase the supply of cars and decrease the demand for cars
E) None of the above

10). A decrease in the price of a game of bowling shifts the

A) demand curve for bowling balls leftward.
B) demand curve for bowling balls rightward.
C) supply curve of bowling balls leftward.
D) supply curve of bowling balls rightward.