HW3 Students
FIGURE 1
1. REFER TO FIGURE 1 If price in this market is currently $14, then there would be a(n)
a. shortage of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price.
b. surplus of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.
c. shortage of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price
d. surplus of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.
2. If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
3. What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
d. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.
4. Assume that the market supply of laptops increases while at the same time the market demand for laptops increases. If the equilibrium price of laptops decreases, which of the following must be true?
a. The equilibrium quantity of laptops has decreased
b. The effect of increased supply was greater than the effect of increased demand.
c. Both a and b are true
d. None of the above
Suppose the table
1. REFER TO FIGURE 1 If price in this market is currently $14, then there would be a(n)
a. shortage of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price.
b. surplus of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.
c. shortage of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price
d. surplus of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.
2. If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
3. What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
d. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.
4. Assume that the market supply of laptops increases while at the same time the market demand for laptops increases. If the equilibrium price of laptops decreases, which of the following must be true?
a. The equilibrium quantity of laptops has decreased
b. The effect of increased supply was greater than the effect of increased demand.
c. Both a and b are true
d. None of the above
Suppose the table