Economics Review Quest 2

A supply curve reveals:

• the quantity of output consumers are willing to purchase at each possible market price.

• the difference between quantity demanded and quantity supplied at each price.

• the maximum level of output an industry can produce, regardless of price.

• the quantity of output that producers are willing to produce and sell at each possible market price.

Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect:

• the price of steel to fall.

• the demand curve for steel shifts to the right.

• the demand curve for plastic to shift to the left.

• nothing to happen to steel because it is only a substitute for plastic.

• the demand curve for steel to shift to the left.

Which of the following would shift the demand curve for new textbooks to the right?

• A fall in the price of paper used in publishing texts

• A fall in the price of equivalent used textbooks

• An increase in the number of students attending college

• A fall in the price of new textbooks.

When an industry's raw material costs increase, other things remaining the same,

• the supply curve shifts to the left.

• the supply curve shifts to the right.

• output increases regardless of the market price and the supply curve shifts upward.

• output decreases and the market price also decreases.

Sugar can be refined from sugar beets. When the price of those beets falls,

• the demand curve for sugar would shift right.

• the demand curve for sugar would shift left.

• the supply curve for sugar would shift right.

• the supply curve for sugar would shift left.

Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes:

• shifts to the left.

• shifts to the right.

• remains constant.

• shifts to the right initially and then returns to its original position.

Which of the following will NOT cause a shift in the supply of gasoline?

• An increase in the wage rate of refinery workers

• A decrease in the price of gasoline

• An improvement in oil refining technology

• A decrease in the price of crude oil

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

• good A is used to produce good B.

• good B is used to produce good A.

• goods A and B are substitutes.

• goods A and B are complements.

• none of the above

Suppose biochemists discover an enzyme that can double the amount of ethanol that may be derived from a given amount of biomass. Based on this technological development, we expect the:

• supply curve for ethanol to shift leftward.

• supply curve for ethanol to shift rightward.

• demand curve for ethanol to shift leftward.

• demand curve for ethanol to shift rightward.

The quantity demanded for most goods tends to increase as income rises. However, the quantity of bananas demanded in the U.S. tends to decrease as income rises. Under this condition, we expect that an increase in consumer income shifts the demand curve for bananas:

• rightward

• no shift.

• leftward.

• upward.