What happens to the equilibrium price and quantity of automobile tires if rubber prices increase and the price of automobiles falls?

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Terms in this set (19)

Demand curves slope ________ because as the price increases and other things remain the
same, the quantity demanded _____

downward; decreases

To find the market demand curve for in-line skates, we must

sum horizontally the individual demand curves of all the buyers.

If the demand for used cars decreases after the price of a new car falls, used cars and new
cars are

substitute goods.

Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then

the demand for hot dog buns will increase.

A student at New York University used to take the Redhound bus when she visited her grandmother in Boston. After graduating, although the bus fare and the plane fare were the same as they were when she was a student, with a well-paid job on Wall Street she now takes the plane to Boston to visit her grandmother. For this student, travel by Redhound bus is

an inferior good.

Suppose that tattoos gained immense popularity with retired people as well as college students. This gain in popularity best reflects which of the following influences on buying plans?

preferences

Advances in productivity increase supply because they might

decrease the cost of production.

Which of the following increases the supply of gasoline?

a decrease in the price of a resource used to produce gasoline, such as crude oil

"Other things remaining the same, if the price of a good rises, the quantity supplied of that good increases." This sentence describes a

movement along a supply curve.

Suppose the price of leather used to produce shoes increases. The higher price of leather ________ the supply of shoes, and the supply curve of shoes ________.

decreases; shifts leftward

Market equilibrium occurs when

the quantity demanded equals the quantity supplied.

When there is a shortage of parking spaces at your college, the

quantity of parking spaces demanded is greater than the quantity of parking spaces supplied

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.

falls; increases

What happens to the equilibrium price and quantity of automobile tires if rubber prices increase and the price of automobiles falls?

The equilibrium price rises, but the change in equilibrium quantity is unknown

Millions of people from Mexico have migrated to the United States. This has reduced the supply of labor in Mexico and increased the supply of labor in the United States. Assume that the demand for labor in Mexico and the United States is unchanged. Then wages in the United States ________ and wages in Mexico ________.

fall; rise

During 2008 the supply of gasoline decreased while at the same time the demand for gasoline increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, then the equilibrium price of gasoline ________ and the equilibrium quantity ________.

increased; increased

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Price will rise, and the effect on quantity is ambiguous.

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise
and lattés are a normal good?

Both the equilibrium price and quantity would increase.

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

Quantity will fall, and the effect on price is ambiguous.

Recommended textbook solutions

What happens to the equilibrium price and quantity of automobile tires if rubber prices increase and the price of automobiles falls?

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Principles of Macroeconomics

4th EditionN. Gregory Mankiw

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Macroeconomics

7th EditionN. Gregory Mankiw

213 solutions

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Principles of Macroeconomics

5th EditionBen Bernanke, Robert Frank

446 solutions

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Verified questions

ECONOMICS

The Tax Reform Act of 1986 eliminated the deductibility of interest payments on consumer debt (mostly credit cards and auto loans) but maintained the deductibility of interest payments on mortgages and home equity loans. What do you think happened to the relative amounts of borrowing through consumer debt and home equity debt?

Verified answer

ECONOMICS

Here are data on two firms: $$ \begin{matrix} \text{ } & \text{Equity (\$ million)} & \text{Debt (\$ million)} & \text{ROC (\\%)} & \text{Cost of capital (\\%)}\\ \text{Acme} & \text{100} & \text{50} & \text{17} & \text{9}\\ \text{Apex} & \text{450} & \text{150} & \text{15} & \text{10}\\ \end{matrix} $$ a. Which firm has the higher economic value added? b. Which has higher economic value added per dollar of invested capital?

Verified answer

ECONOMICS

You should plan ahead for the inevitable ups and downs that the economy faces. What steps can you take to ensure that you are not overly affected by the downturns of the business cycle? If you were to design a personal savings program that allowed you to both buy some of the things you want now and save for the future, what would that program look like?

Verified answer

QUESTION

Provide an example of a resource from each of the four categories of resources.

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What happens to equilibrium price and quantity when price increases?

If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services.

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises quizlet?

market. What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? Quantity will fall, and the effect on price is ambiguous. 3 units.

What is the relationship between equilibrium price and equilibrium quantity?

The equilibrium price is the only price where the plans of consumers and the plans of producers agree—that is, where the amount consumers want to buy of the product, quantity demanded, is equal to the amount producers want to sell, quantity supplied. This common quantity is called the equilibrium quantity.

What happens to equilibrium price and equilibrium quantity when there is a shift in the supply curve?

Upward shifts in the supply and demand curves affect the equilibrium price and quantity. If the supply curve shifts upward, meaning supply decreases but demand holds steady, the equilibrium price increases but the quantity falls. For example, if gasoline supplies fall, pump prices are likely to rise.