Question 1

When an increase in the price of wheat,an important ingredient in the production of bread,happens at the same time as an increase in the number of people consuming bread:

Accepted Answer

When the price of wheat, an important ingredient in the production of bread, increases, the cost of producing bread increases. Therefore, the supply of bread will decrease as the cost of producing it has increased. At the same time, if the number of people consuming bread increases, the demand for bread will increase. Since demand has increased and supply has decreased, the market price of bread will increase (equilibrium price will increase), but the equilibrium quantity may decrease, increase, or stay the same depending on the extent of the shifts in supply and demand. Therefore, choice D is the best answer.

Question 2

An increase in the price of sugar (an ingredient for soft drinks)and an increased concern about tooth decay caused by the consumption of soft drinks will have which result in in the soft drink market?

Accepted Answer

The increase in the price of sugar will increase the cost of production for soft drinks, leading to a decrease in the supply of soft drinks. This will cause the equilibrium quantity to decrease. At the same time, the increased concern about tooth decay may decrease the demand for soft drinks, causing the demand curve to shift to the left. However, the effect on equilibrium price is ambiguous as it will depend on the relative magnitude of the shifts in supply and demand curves. Therefore, equilibrium price may decrease, increase, or stay the same.

Question 3

Rice and potatoes are substitutes in consumption.If the price of rice rises and there is a bumper crop of potatoes,in the market for potatoes one would expect the equilibrium price to _____ and the equilibrium quantity to _____.

Accepted Answer

If the price of rice rises, some consumers may switch to buying cheaper potatoes, increasing the demand for potatoes and pushing up the equilibrium quantity. However, the bumper crop of potatoes will increase the supply of potatoes, which will put downward pressure on the equilibrium price. Therefore, it is possible that the equilibrium price will fall or stay the same, but we can be certain that the equilibrium quantity will rise due to the increase in supply. Hence, option A is the correct answer.

Question 4

A beneficial technological change is developed in the production of cranberries.At the same time,scientists discover that cranberries have significant health benefits.This will result in:

Accepted Answer

The technological change in production will increase the supply of cranberries, leading to a decrease in the equilibrium price. However, the discovery of health benefits will increase the demand for cranberries, leading to an increase in the equilibrium quantity. The net effect on the equilibrium price is uncertain, but the equilibrium quantity will increase. Therefore, option B is the best choice.

Question 5

Gasoline,a derivative of oil,is a large part of transportation costs for many producers.If the price of oil increases at the same time that incomes fall for many consumers,one would expect the equilibrium price of many normal goods to _____,while their equilibrium quantities would _____.

Accepted Answer

When the price of oil increases, the cost of production for many goods rises, potentially increasing prices. However, if consumer incomes fall, demand for normal goods decreases, which can lower prices. The net effect on price is uncertain, but the quantity is likely to decrease due to reduced demand.

Quiz 3: Supply and Demand

When an increase in the price of wheat,an important ingredient in the production of bread,happens at the same time as an increase in the number of people consuming bread:

An increase in the price of sugar (an ingredient for soft drinks) and an increased concern about tooth decay caused by the consumption of soft drinks will have which result in in the soft drink market?

Rice and potatoes are substitutes in consumption.If the price of rice rises and there is a bumper crop of potatoes,in the market for potatoes one would expect the equilibrium price to _ and the equilibrium quantity to _.

A beneficial technological change is developed in the production of cranberries.At the same time,scientists discover that cranberries have significant health benefits.This will result in:

Gasoline,a derivative of oil,is a large part of transportation costs for many producers.If the price of oil increases at the same time that incomes fall for many consumers,one would expect the equilibrium price of many normal goods to _,while their equilibrium quantities would _.