Microeconomics Chapter 3: Supply

Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan. As the price of data plans falls, the demand for smartphones will:

• decrease because smartphones and data plans are substitutes

• increase because smartphones and data plans are complements

• decrease because smartphones and data plans are complements

• increase because smartphones and data plans are substitutes

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which would occur today based upon the expected storm?

• a decrease in peoples' willingness to pay for bottled water

• a decrease in demand for batteries

• an increase in people's willingness to pay for electric generators

• a shift to the left of the demand curve for snow tires

Suppose it is widely believed that the price of flat-screen, high-definition televisions will be lower next year. What will happen as a result of such beliefs?

• The demand for flat-screen TVs will increase now

• The demand for flat-screen TVs will decrease next year

• The demand for flat-screen TVs will decrease now

• The demand for flat-screen TVs will not change now

The supply curve illustrates:

• the relationship between the cost of production and price

• the relationship between the quantity supplied and the price of a good

• the total cost of producing a good

• the willingness to produce a good if the technology to produce it becomes available

• $40 lower

• $40 higher

• approximently the same

• $80 higher

What does the law of supply state?

• There is a positive relationship between price and quantity supplied

• There is a negative relationship between price and quantity supplied

• When prices rise, suppliers sell more

• When prices rise, buyers buy less of the product

(Table: Willingness to Sell) Refer to the table. Which country is earning the most producer surplus at a market price of $35 per barrel of oil?

• Country X

• Country Y

• Country Z

• Country A

(Figure: Producer Surplus) In the diagram, if the market price of coffee is $4, how much producer surplus do suppliers earn?

• $15

• $45

• $20

• $22.50

In the oil market, an increase in the wage of oil workers will shift the:

• supply curve of oil to the right

• supply curve of oil to the left

• demand curve for oil to the left

• demand curve for oil to the right

Which of the following factors causes a decrease in supply?

• a decrease in demand

• a decrease in the price of the product

• an increase in the price of the product

• new taxes on output