4-41 A new law makes it illegal to make a new car with a gas tank that carries more than five gallons of gasoline. Which of the following will occur?
A. Correct. When a good is no longer available, demand for substitutes increase.
B. Incorrect. Reducing the features or desirability of a good will reduce demand.
C. Incorrect. Reducing the features or desirability of a good (gasoline cars) will increase demand for its substitutes (electric cars).
D. Incorrect. Gas cans may be a complement to the new cars, so their demand will go up (you could also think of them as a substitute for buying an older car with a bigger gas tank).
E. Incorrect. The supply of gasoline will be unaffected by anything having to do with its demand (at least in the short run).
4-42 A new kind of packaged cookie is introduced and becomes very popular in grocery stores. As a result,
A. Incorrect. If a new good becomes available, demand for substitutes will fall.
B. Correct. The demand for complements will increase, increasing their price.
C. Incorrect. If a new good becomes available, demand for substitutes will fall.
D. Incorrect. If a new good becomes available, demand for substitutes will fall.
4-43 A few years ago, the world's biggest plant making computer RAM (memory) chips burned down. Which of the following would you not have expected to happen?
A. Incorrect. This happened because of the reduced supply and the increased demand caused by fears of expected higher future prices.
B. Incorrect. This happened because of the reduced supply and the increased demand caused by fears of expected higher future prices.
C. Incorrect. The higher memory prices caused demand for substitutes to increase.
D. Incorrect. The higher memory prices caused demand for complements to decrease.
E. Correct. The higher memory prices caused demand for complements to decrease, not increase.
4-44 A few years ago, the world's biggest computer RAM (memory) chip factory burned down. Which of the following would you not have expected to happen?
A. Incorrect. Higher expected future prices will cause demand to increase.
B. Incorrect. The supply of modules made using the chips did fall as the costs rose.
C. Incorrect. This happened because of the reduced supply (caused by higher costs) and the increased demand caused by fears of expected higher future prices.
D. Incorrect. The higher memory prices caused demand for substitutes to increase.
E. Correct. The higher memory prices caused demand for substitutes to increase, but this would affect their quantity supplied, not supply.
4-45 Which of the following would increase the price of greaselocks while reducing the quantity purchased?
A. Incorrect. This would cause an increase in demand, which would (by itself) raise the quantity purchased.
B. Correct. Higher costs would reduce supply.
C. Incorrect. This would cause an increase in demand, which would raise the quantity purchased.
D. Incorrect. This would cause an decrease in demand, which would lower the price.
E. Incorrect. This would cause an increase in demand, which would raise the quantity purchased.
4-46 Over time, the price of zallooms rises. What else will accompany this change?
A. Incorrect. Changes in price can change quantity demanded but cannot cause changes in demand.
B. Incorrect. Changes in price can change quantity demanded but cannot cause changes in demand.
C. Incorrect. Changes in price can change quantity supplied but cannot cause changes in supply.
D. Correct. When the price of a good rises, demand for its substitutes will rise.
E. Incorrect. When the price of a good rises, demand for its complements will fall.
4-47 Which of the following would decrease the price of greaselocks while reducing the quantity purchased?
A. Incorrect. This would cause an increase in demand, which would (by itself) raise the quantity purchased and the price.
B. Incorrect. Higher costs would reduce supply, which would increase price.
C. Incorrect. This would cause an increase in demand, which would raise the quantity purchased and the price.
D. Correct. This would lower demand.
E. Incorrect. This would cause an increase in demand, which would raise the quantity purchased and the price.
4-48 Which of the following would decrease the price of greaselocks while increasing the quantity sold?
A. Incorrect. This would cause an increase in demand, which would (by itself) raise the price.
B. Incorrect. Higher costs would reduce supply, which would increase price.
C. Correct. This would increase supply.
D. Incorrect. This would cause a decrease in demand, which would lower the quantity sold.
E. Incorrect. This would cause an increase in demand, which would raise the price.
4-49 Which of the following would increase the price of greaselocks while increasing the quantity purchased?
A. Correct. This would raise demand.
B. Incorrect. Higher costs would reduce supply, which would reduce quantity sold.
C. Incorrect. This would cause a decrease in demand, which would lower the quantity sold.
D. Incorrect. This would cause a decrease in demand, which would lower the quantity sold.
E. Incorrect. This would cause a decrease in demand, which would lower the quantity sold.
4-50 You notice that the price of wunkerdons has fallen while the quantity sold has gone up. Which of the following fits this observation?
A. Incorrect. This would cause an increase in demand, which would raise the price.
B. Incorrect. This would cause a decrease in demand, which would lower the quantity sold.
C. Incorrect. This would cause an increase in demand, which would raise the price.
D. Incorrect. Higher costs would reduce supply, which would reduce quantity sold.
E. Correct. Lower costs would increase supply, which would increase quantity sold and lower the price.