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ECN 211: Macroeconomic Principles (2016 Spring) 2016Spring-T-ECN211-27694   Assignments  Review Test Submission: Homework 3
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Review Test Submission: Homework 3
Content
User	Rajan Joshi
Course	ECN 211: Macroeconomic Principles (2016 Spring)
Test	Homework 3
Started	2/5/16 3:41 PM
Submitted	2/11/16 4:14 PM
Due Date	2/17/16 5:00 PM
Status	Completed
Attempt Score	40 out of 60 points
Time Elapsed	144 hours, 33 minutes
Instructions
You are allowed 3 attempts to do the homework. Blackboard will count only your last score.
You can use the "Save" button inside the homework to save your answers, exit, then reenter the homework and continue from where you left off.
Please click the "Save and Submit" button at the end of the homework to submit your answers. You should see a confirmation and feedback.
Question 1
0 out of 2 points
Incorrect
A student was asked to draw a demand and supply graph to illustrate the effect on the personal computer market of a fall in the price of computer hard drives, ceteris paribus.

She drew the following graph and explained it as follows:



"Hard drives are an input to personal computers, so a fall in the price of hard drives will cause the supply curve for personal computers to shift to the right (from S1 to S2). Because this shift in the supply curve results in a lower price (S2), consumers will want to buy more personal computers and the demand curve will shift to the right (from D1 to D2).

We know that more personal computers will be sold, but we can't be sure whether the price of personal computers will rise or fall. That depends on whether the supply curve or the demand curve has shifted farther to the right. I assume that the effect on supply is greater than the effect on demand, so I show the final equilibrium price (P3) as being lower than the initial equilibrium price (P1)."

Where is the flaw in the student's argument?

Selected Answer:
Supply will shift inward.
Answers:
Supply will shift inward.
Demand will shift inward.
Demand will not shift.
What do mean flaw, her argument is perfectly correct!
Response Feedback:
Remember that when a shift in demand or in a supply curve causes a change in price, that change in price does not cause a further shift in demand or supply (a change in price will cause a change in quantity demanded or supplied). Thus, the shift from D1 to D2 will not occur and the student's analysis is incorrect.

Question 2
2 out of 2 points
Correct
Richard Posner is a federal court judge who also writes on economics topics. A newspaper reporter summarized Posner's view on the effect of online bookstores and e-books on the demand for books:

"Posner's [argument] is that the disappearance of bookstores is to be celebrated and not mourned, partly because e-books and online stores reduce the cost of books and thus drive up demand for them".

Source: Christopher She, "Judge Posner Hails the Demise of Bookstores", Wall Street Journal, January 13, 2011.

Do you agree with Posner's statement, as given by the reporter?

Selected Answer:
No, the accurate phrasing would be that "a reduced price drives up quantity demanded".
Answers:
Yes, it is acceptable for non-economists to use economic terms causally and imprecisely.
Yes, a bigger demand results when a product's costs declines.
No, the accurate phrasing would be that "a reduced price drives up quantity demanded".
No, because the demand for a product can be impacted only by changes in tastes, preferences, and the number of buyers.
Response Feedback:
Excellent!

Question 3
2 out of 2 points
Correct
Each firm in an industry will always supply the same quantity at each price.

Selected Answer:
False
Answers:
True
False
Question 4
2 out of 2 points
Correct
Below are the supply and demand functions for two markets. One of the markets is for BMW automobiles, and the other is for an HIV-fighting drug, without which HIV patients will die.



The HIV-fighitng drug is depicted in Figure 2.

Selected Answer:
True
Answers:
True
False
Question 5
2 out of 2 points
Correct
Assume Leo buys coffee beans in a competitive market. It follows that

Selected Answer:
None of the above is correct.
Answers:
Leo has a limited number of sellers from which to buy coffee beans.
Leo will negotiate with sellers whenever he buys coffee beans.
Leo can influence the price of coffee beans if he buys a large quantity of them.
None of the above is correct.
Question 6
2 out of 2 points
Correct
The difference between a change in supply and a change in quantity supplied is that the latter is

Selected Answer:
displayed graphically as a movement along a supply curve while the former is shown as a shift in the supply curve.
Answers:
displayed graphically as a movement along a supply curve while the former is shown as a shift in the supply curve.
caused by a variety of variables other than the product's price while the former is produced by a change in the product's own price.
determined by the willingness of producers to sell while the former is set by the ability of firms to produce.
conditional upon a change in the former, but not vice-versa.
Question 7
2 out of 2 points
Correct
Suppose that the two curves represent the Demand curves for ribeye steaks.



Indicate which of the following would cause a movement from from point A to point C:

1. A fall in the price of A1 steak sauce.

2. A rise in vegetarianism.

3. The expectation of a higher future price for ribeye steak.

4. A fall in the number of buyers.

Selected Answer:
Answers 2 and 4 are correct.
Answers:
Only answer 1 is correct.
Answers 2 and 3 are correct.
Answers 2 and 4 are correct.
Only answer 2 is correct.
Question 8
0 out of 2 points
Incorrect
If the price of a good increases, the increase in the quantity of the good supplied is likely to be larger the longer the time period under consideration.

Selected Answer:
False
Answers:
True
False
Response Feedback:
The increase in supply is likely to be greater the larger the time period being considered. Over time, new firms can enter the market and existing firms can expand the capacity of their plants.

Question 9
0 out of 2 points
Incorrect
Suppose that the table below shows the quantity supplied of UGG boots at five different prices in 2012 and in 2013.



Which of the following variables would cause the quantity supplied of UGG boots to change as indicated in the table from 2012 to 2013?

1. A decrease in the demand for UGG boots.

2. An increase in the price of a substitute in production.

3. A decrease in the number of sellers.

4. A decrease in the price of UGG boots.


Selected Answer:
Only answer 3 is correct.
Answers:
Answers 2 and 3 are correct.
Only answer 3 is correct.
Only answer 2 is correct.
All of the answers are correct.
Response Feedback:
The table illustrates a decrease in Supply (for any given price, the quantity supplied in 2013 is lower than the quantity supplied in 2012).

The decrease in supply could result from any number of factors, including an increase in the price of a substitute in production or a decrease in the number of sellers. A decrease in the demand for UGG boots would not cause a decrease in Supply (although it could cause a decrease in equilibrium quantity).

A decrease in the price of UGG boots would not decrease Supply. A decrease in the price of UGG boots would decrease the quantity supplied.

Question 10
0 out of 2 points
Incorrect
Suppose Abby, Brandi, Carrie, and DeeDee are the only four buyers in the market. If the price is $8, then the market quantity demanded is


Selected Answer:
6 units.
Answers:
4 units.
6 units.
24 units.
32 units.
Question 11
0 out of 2 points
Incorrect
Suppose that the two curves represent the Demand curves for ribeye steaks.



The movement from from point A to point B on D1 is caused by.

Selected Answer:
A decrease in the price of steaks.
Answers:
An increase in the price of steaks.
An increase in buyer incomes.
A decrease in buyer incomes.
A decrease in the price of steaks.
Question 12
2 out of 2 points
Correct
Identify whether each of the following statements is true or false.

1. If the demand and supply for a good both increase, the equilibrium quantity of the product must also increase.

2. If the demand and supply for a product both increase, the equilibrium price of the product must also increase.

3. If the demand for a product decreases and the supply of the product increases, the equilibrium price of the product may increase, decrease, or remain unchanged, depending on whether the demand or supply has shifted more.

Selected Answer:
1 is True.
2 is False.
3 is False.
Answers:
1 is True.
2 is False.
3 is False.
1 is False.
2 is False.
3 is False.
1 is True.
2 is True.
3 is True.
1 is True.
2 is False.
3 is True.
Question 13
2 out of 2 points
Correct
Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

Selected Answer:
The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
Answers:
The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
Question 14
2 out of 2 points
Correct
You observe that when the price of houses decreases, the demand for household appliances increases.

Houses and household appliances are considered to be _________ goods.

Selected Answer:
complementary.
Answers:
inferior.
unrelated.
complementary.
substitute.
Question 15
2 out of 2 points
Correct
Proposals have been made to increase government regulation of childcare businesses by, for instance, setting education requirements for childcare workers. Suppose that these regulations increase the quality of childcare and cause the demand for childcare services to increase. At the same time, assume that complying with the new government regulations increases the costs of childcare businesses.

The figure below depicts the above developments correctly (S1 to S2 and D1 to D2).



Selected Answer:
False
Answers:
True
False
Response Feedback:
Good job, this a hard one!

Question 16
2 out of 2 points
Correct
If a market is in equilibrium, it is necessarily true that all potential buyers and sellers are satisfied with the market price.

Selected Answer:
False
Answers:
True
False
Response Feedback:
Fantastic!

Question 17
2 out of 2 points
Correct
A university's football stadium is always sold out, and students who wait in line for hours may be turned away. This indicates

Selected Answer:
the ticket price is below the equilibrium price.
Answers:
the ticket price is above the equilibrium price.
the ticket price is below the equilibrium price.
the ticket price is at the equilibrium price.
nothing about the equilibrium price.
Question 18
0 out of 2 points
Incorrect
Jiffy peanut butter and Smucker's Strawberry jam are considered to be complementary goods. This means that an increase in the price of Jiffy peanut butter will decrease the demand for Smucker's Strawberry jam.

Selected Answer:
False
Answers:
True
False
Question 19
2 out of 2 points
Correct
Peanut butter is considered a normal good. A decrease in consumer income will affect the demand for peanut butter as suggested by shifting the demand curve from D1 to D2.



Selected Answer:
False
Answers:
True
False
Question 20
0 out of 2 points
Incorrect
The table shows the quantity demanded of UGG boots at five different prices in 2012 and 2013:



Which of the following variables could cause the demand for boots to change as indicated from 2012 to 2013?

1. The expectation that UGG boots will fall in price.

2. A decrease in the price of UGG boots.

3. A decrease in the price of a complementary good.

4. An increase in the number of buyers.

Selected Answer:
Answers 1 and 4 are correct.
Answers:
Answers 2 and 3 are correct.
Answers 3 and 4 are correct.
Answers 1 and 4 are correct.
Answers 1 and 2 are correct.
Response Feedback:
The table illustrates an increase in demand (for any given price, the quantity demanded in 2013 is greater than the quantity demanded in 2012).

The increase in demand could result from any number of factors, including an expectation that the boots would increase in price in the future, an increase in the number of buyers, and a decrease in the price of a complementary good (these are good such that when their price changes, the demand for the good under analysis reacts in the opposite way: an increase in the price of a complementary good will decrease the demand for the good under analysis and vice-versa).

A decrease in the price of UGG boots would not increase Demand. A decrease in the price of UGG boots would, as suggested by the Law of Demand, increase the quantity demanded.

Question 21
2 out of 2 points
Correct
When tablet computers based on the Android operating system were first introduced, there were relatively few "apps" available for them. Now, there are many more apps available for Android-based tablets.

With respect to the demand for the iPad 2s, the increase in the availability of "apps" for Android-based tablets would be expected to

Selected Answer:
reduce the demand for iPad 2s because enhancements (in the form of additional "apps") to Android-based tablets increase the latter's relative appeal.
Answers:
have an indeterminate effect because many things other than the availability of "apps" for Android-based tablets are simultaneously changing.
increase the demand for Apple iPad 2s because Android-based tablets will now be more expensive to operate.
have no impact because these tablets use different operating systems.
reduce the demand for iPad 2s because enhancements (in the form of additional "apps") to Android-based tablets increase the latter's relative appeal.
Question 22
2 out of 2 points
Correct
If a seller in a competitive market chooses to charge more than the going price, then

Selected Answer:
buyers will make purchases from other sellers.
Answers:
the owners of the raw materials used in production would raise the prices for the raw materials.
buyers will make purchases from other sellers.
other sellers would also raise their prices.
the sellers’ profits must increase.
Question 23
0 out of 2 points
Incorrect
Whose demand does not obey the law of demand?


Selected Answer:
Brandi’s
Answers:
Abby’s
Brandi’s
Carrie’s
DeeDee’s
Question 24
2 out of 2 points
Correct
State whether each of the following events will result in a movement along the demand curve for McDonald's Big Mac hamburgers or whether it will cause the curve to shift.

A. The price of Burger King's Whopper hamburger declines. This will cause:

1. demand for McDonald's Big Mac hamburgers to decrease.

2. demand for McDonald's Big Mac hamburger to increase.

3. a movement along the demand curve for McDonald's Big Mac hamburgers.

B. McDonald's distributes $1.00 off coupons. This will cause:

4. demand for MdDonald's Big Mac hamburgers to shift to the right.

5. demand for MdDonald's Big Mac hamburgers to shift to the left.

6. a movement along the demand curve for MdDonald's Big Mac hamburgers.

C. KFC increases the price of a bucket of fried chicken. This will:

7. shift the demand for McDonald's Big Mac hamburgers to the left.

8. shift the demand for McDonald's Big Mac hamburgers to the right.

9. cause a movement along the demand curve for McDonald's Big Mac hamburgers.

Selected Answer:
Answers 1, 6, and 8 are correct.
Answers:
Answers 3, 4, and 7 are correct.
Answers 1, 5, and 9 are correct.
Answers 1, 6, and 8 are correct.
Answers 2, 7, and 8 are correct.
Question 25
2 out of 2 points
Correct
If the market price Pmkt is equal to the price P0, then quantity supplied is ______ quantity demanded and the market ________.



Selected Answer:
equal to; is in equilibrium.
Answers:
more than; has a surplus.
equal to; is in equilibrium.
less than; has a shortage.
less than; is in equilibrium.
Question 26
2 out of 2 points
Correct
What do economists mean when they use the Latin expression ceteris paribus?

Selected Answer:
All else equal.
Answers:
The whole is just the sum of its parts.
Prior to an event.
All else equal.
The things speaks for itself.
Question 27
0 out of 2 points
Incorrect
Below are four supply curve diagrams, each of which represents a change in supply or a change in quantity supplied.



Match the each scenario with the appropriate diagram.

A. To take advantage of high prices for snow shovels during a snowy winter, Alexander Shovels, Inc., decides to increase output.

B. The success of Apple iPads leads more firms to begin producing tablet computers.

C. In the six month following the Japanese earthquake and tsunami in 2011, production of automobiles in Japan declined by 20 percent.

Selected Answer:
scenario A: diagram 3.
scenario B: diagram 3.
scenario C: diagram 1.
Answers:
scenario A: diagram 3.
scenario B: diagram 3.
scenario C: diagram 1.
scenario A: diagram 4.
scenario B: diagram 1.
scenario C: diagram 1.
scenario A: diagram 1.
scenario B: diagram 2.
scenario C: diagram 3.
scenario A: diagram 4.
scenario B: diagram 3.
scenario C: diagram 1.
Response Feedback:
Does this cause a change in supply or a change in the quantity supplied? In which direction?

Question 28
0 out of 2 points
Incorrect
"In class we discussed that for consumers as a group, Quiznos sandwiches are normal goods and Subway sandwiches are inferior goods. But I like the taste of Subway Sandwiches better than I like the taste of Quizno sandwiches, so for me Quiznos sandwiches are inferior goods and Subway sandwiches are normal goods."

This student's reasoning is:

Selected Answer:
right on the money because product quality is ultimately a matter of personal tastes.
Answers:
probably accurate because the majority of taste tests confirm her classification.
confused because the classification of a good as normal or inferior depends on market demand, not individual demand.
confused because the classification of a good as normal or inferior depends on the response of Demand to a change in income.
right on the money because product quality is ultimately a matter of personal tastes.
Response Feedback:
While product quality may be a matter of personal tastes, a good's classification as normal or inferior has nothing directly to do with its quality. A good's classification as normal or inferior is related to how changes in income affect the good's Demand.

Question 29
2 out of 2 points
Correct
When economists speak of a surplus, they mean a situation in which

Selected Answer:
all of the options are correct.
Answers:
the market price is above the equilibrium price.
the quantity supplied exceeds quantity demanded.
firms have unused goods piling up.
all of the options are correct.
Question 30
2 out of 2 points
Correct
From the list below, select the variable that will cause the demand curve to shift.

Selected Answer:
Consumer income.
Answers:
A change in the price of the good.
Consumer income.
The number of firms in the market.
The cost of raw materials.
Thursday, February 11, 2016 4:14:56 PM MST
 OK