Indicate the answer choice that best completes the
statement or answers the question.
1. The market for diamond rings is closely linked to the
market for high-quality diamonds. If a large quantity
of high-quality diamonds enters the market, then the
a. supply curve for diamond rings 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.
b. supply curve for diamond rings 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.
c. demand curve for diamond rings 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.
d. demand curve for diamond rings 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.
2. Equilibrium quantity must decrease when demand
a. increases and supply does not change, when
demand does not change and supply
decreases, and when both demand and supply
decrease.
b. increases and supply does not change, when
demand does not change and supply increases,
and when both demand and supply decrease.
c. decreases and supply does not change, when
demand does not change and supply increases,
and when both demand and supply decrease.
d. decreases and supply does not change, when
demand does not change and supply
decreases, and when both demand and supply
decrease.
Table 4-13
The demand schedule below pertains to sandwiches
demanded per week.
Price
Harry’s
Quantity
Demanded
Darby’s
Quantity
Demanded
Jake’s
Quantity
Demanded
$3343
$512x
3. Refer to Table 4-13. Suppose Harry, Darby, and
Jake are the only demanders of sandwiches. Also
suppose the following:
•x = 2.
•The current price of a sandwich is $3.00.
•The market quantity supplied of sandwiches is 5.
•The slope of the supply curve is 1.
Then there is currently a
a. shortage of 5 sandwiches, and the equilibrium
price of a sandwich is between $3.00 and
$5.00.
b. shortage of 5 sandwiches, and the equilibrium
price of a sandwich is $5.00.
c. surplus of 5 sandwiches, and the equilibrium
price of a sandwich is between $3.00 and
$5.00.
d. surplus of 5 sandwiches, and the equilibrium
price of a sandwich is $5.00.
4. What would happen to the equilibrium price and
quantityoflattésifcoffeeshopsbeganusinga
machine that reduced the amount of labor necessary
to produce steamed milk, which is used to make
lattés,andscientistsdiscoveredthatlattéscause
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.