4-21 Demand for SnootDrainers rises. As a result, in equilibrium,...
A. Incorrect. It is true that price will rise. However, that price increase does not affect demand further (price changes never do).
B. Incorrect. Price will rise. There is no effect on supply or further effect on demand.
C. Correct. Price and quantity will both rise as the new equilibrium is achieved.
D. Incorrect. It is true price will rise, but supply and demand are not affected further.
E. Come on! It's the buyers who yell BINGO.
4-22 .The supply of zixitols has fallen. Other things remaining the same, what will happen?
A. Incorrect. Supply changes will change equilibrium price and quantity.
B. Incorrect. Supply changes will change equilibrium price and quantity.
C. Incorrect. The quantity sold will fall, but the price will not.
D. Incorrect. The quantity sold will rise and the price will fall only if supply rose.
E. Correct. The quantity sold will fall, but the price will rise.
4-23 In light of the factors you know to be determinants of a product's price, which would you expect to observe?
A. Incorrect. A net migration of people from L.A. to Phoenix means demand to rent trucks in L.A. will be higher than the demand to rent them in Phoenix, so the price will be higher in L.A.
B. Incorrect. The price of ticket is based on how popular it is and how few theaters it is playing in.
C. Incorrect. Airfares have more to do with which days the travel is on, and how great demand is on those days.
D. Incorrect. Airplane tickets from Phoenix to Los Angeles are cheaper than tickets from Phoenix to Burbank (due to fewer flights into the smaller Burbank airport).
E. Correct; demand and supply, not just production costs, determine price.
4-24 Which result (ceteris paribus, and in equilibrium) is most likely in the wine market if the cost of growing grapes falls while the incomes of consumers fall (assume wine is a normal good)?
A. Incorrect. Demand is falling while supply is rising. Both will put downward pressure on price.
B. Correct. Demand is falling while supply is rising. Both will put downward pressure on price.
C. Incorrect. Demand is falling while supply is rising. Both will exert opposite influences on quantity, so we can't be sure.
D. Incorrect. Demand is falling while supply is rising. Both will exert opposite influences on quantity, so we can't be sure.
E. Incorrect. Demand is falling while supply is rising. Both will put downward pressure on price, but exert opposite influences on quantity, so we can't be sure.
4-25 If the price of BMW's rises, what will happen to the demand for BMW's?
A. Incorrect. Price will not affect demand for BMW's, unless the higher price causes people's perception of the cars to change somehow.
B. Incorrect. Price will not affect demand for BMW's.
C. Correct. A change in price affects quantity demanded, not demand.
D. Incorrect. Price will not affect demand for BMW's.
E. Incorrect. Price will not affect demand for BMW's.
4-26 If the supply of poit were to increase, we predict:
A. Incorrect. An increase in price will not occur.
C. Incorrect. An increase in price will not occur.
D. Incorrect. A decrease in quantity purchased of poit will not occur.
E. Incorrect. If supply increases, both price and quantity will change.
4-27 The demand of dernsquirters has fallen. Other things remaining the same, what will happen?
A. Incorrect. If demand changes, both price and quantity will be affected.
B. Incorrect. If demand changes, both price and quantity will be affected.
D. Incorrect. The quantity sold will rise, but the price will not fall.
E. Incorrect. The quantity sold will not fall, but the price will rise
4-28 The price of yertsquealers has remained about the same over time, yet the quantity sold each year has fallen dramatically. What is the best explanation for this?
A. Incorrect. A fall in demand would cause both price and quantity to fall.
B. Incorrect. A fall in supply would increase price and raise quantity.
C. Incorrect. A rise in demand together with a fall in supply would raise price.
D. Incorrect. A fall in demand together with an increase in supply would lower price.
E. Correct. A fall in demand together with an decrease in supply would lower quantity. The effects on price might cancel one another out.
4-29 The price of creeplons has remained about the same over time, yet the quantity sold each year has risen dramatically. What is the best explanation for this?
A. Incorrect. A rise in demand would cause both price and quantity to increase.
B. Incorrect. A rise in supply would decrease price and raise quantity.
C. Incorrect. A rise in demand together with a fall in supply would raise price.
D. Correct. A rise in demand together with an increase in supply would raise quantity. The effects on price might cancel each other out.
E. Incorrect. A fall in demand together with an decrease in supply would lower quantity sold.
4-30 The price of glipsticks has fallen dramatically over time, yet the quantity sold each year has remained about the same. What is the best explanation for this?
A. Incorrect. A fall in demand would lower price and quantity.
B. Incorrect. A fall in supply would raise price and lower quantity.
C. Incorrect. An increase in supply would lower price and raise quantity.
D. Correct. A fall in demand and an increase in supply would both decrease price, while the effects on quantity will cancel each other out.
E. Incorrect.A fall in demand together with an decrease in supply would lower quantity, and the effect on price is ambiguous.