ECON 2000 (D089 PRINCIPLES OF ECONOMICS) REVIEW 2025

ECON 2000 (D089 PRINCIPLES OF ECONOMICS) REVIEW 2025 b. Leo cannot influence the price of coffee beans even if he buys a large quantity of them. - Ans ♣1. Assume Leo buys coffee beans in a competitive market. It follows that a. Leo will negotiate with sellers whenever he buys coffee beans. b. Leo cannot influence the price of coffee beans even if he buys a large quantity of them. c. Leo has a limited number of sellers from which to buy coffee beans. d. None of the above is correct c. wheat - Ans ♣2. An example of a perfectly competitive market would be the market for a. garbage collection. b. pizza. c. wheat. d. tennis racquets. a. increase in the price of pretzels - Ans ♣3. Refer to Figure 4-7. The movement from Da to Db in the market for potato chips could be caused by a(n) a. increase in the price of a pretzels. b. decrease in the price of potato chips. c. announcement by the FDA that potato chips cause cancer. d. decrease in income, assuming that potato chips are a normal good. a. complements - Ans ♣4. Most studies indicate that alcohol and marijuana tend to be a. complements. b. substitutes. c. unrelated because one good is legal while the other one is illegal. d. inferior goods. c. encourage marijuana use, but the evidence does not support this argument. - Ans ♣5. Opponents of alcohol taxes often argue that liquor and marijuana are substitutes so that high liquor prices a. discourage marijuana use, and the evidence supports this argument. b. discourage marijuana use, but the evidence does not support this argument. c. encourage marijuana use, but the evidence does not support this argument. d. encourage marijuana use, and the evidence supports this argument. a. normal goods to decrease - Ans ♣6. If Max experiences a decrease in his income, then we would expect Max's demand for a. normal goods to decrease. b. inferior goods to decrease. c. each good he purchases to remain unchanged. d. luxury goods to increase. a. fewer study guides being sold - Ans ♣7. If textbooks and study guides are complements, then an increase in the price of textbooks will result in a. fewer study guides being sold. b. more textbooks being sold. c. no difference in the quantity sold of either good. d. more study guides being sold. c. the number of sellers of ceiling fans increases - Ans ♣8. Which of the following events could cause an increase in the supply of ceiling fans? a. There is an increase in the price of the motor that powers ceiling fans. b. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. c. The number of sellers of ceiling fans increases. d. All of the above are correct. b. shortage of 400 units - Ans ♣9. Refer to Figure 4-18. At a price of $15, there would be a a. surplus of 400 units. b. shortage of 400 units. c. shortage of 600 units. d. shortage of 200 units. b. below the equilibrium price, and quantity demanded is greater than quantity supplied. - Ans ♣10. If a shortage exists in a market, then we know that the actual price is a. above the equilibrium price, and quantity supplied is greater than quantity demanded. b. below the equilibrium price, and quantity demanded is greater than quantity supplied. c. above the equilibrium price, and quantity demanded is greater than quantity supplied. d. below the equilibrium price, and quantity supplied is greater than quantity demanded. a. fall now - Ans ♣11. Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to a. fall now. b. increase now to meet as much demand as possible. c. fall in six months but not now. d. increase in six months when the price goes up c. point C to point D - Ans ♣12. Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel? a. Point A to Point B b. Point A to Point D c. Point C to Point D d. Point C to Point B d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. - Ans ♣13. Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. c. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. - Ans ♣14. What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. d. The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.