Question 1

If provinces decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

Accepted Answer

If provinces cover part of the price of voluntary laser eye surgery, this will make it more affordable for consumers and increase demand. If more doctors enter the field, this will increase the supply of laser eye surgery services. As a result, both demand and supply will increase in the market for laser eye surgery. Therefore, the best choice is C.

Question 2

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Accepted Answer

When both demand and supply increase, the effect on the equilibrium price is uncertain without knowing the relative magnitudes of the changes in demand and supply. The price may increase, decrease, or remain unchanged depending on which change is greater.

Question 3

A decrease in the equilibrium price for a product will result

Accepted Answer

A decrease in equilibrium price occurs when supply increases and/or demand decreases. This is represented by a rightward shift in the supply curve or a leftward shift in the demand curve. Choice A is incorrect because in this scenario, the market would experience a shortage, causing prices to increase. Choice B is incorrect because a decrease in both supply and demand would lead to an ambiguous effect on the equilibrium price. Choice D is incorrect because a decrease in the number of firms producing the product would decrease supply, leading to an increase in prices, not a decrease.

Question 4

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

When the number of firms in a market decreases, the overall supply in the market decreases as well because there are fewer producers contributing to the supply. This shift in the supply curve to the left leads to a decrease in the quantity supplied at each price level. As a result, the equilibrium price in the market will increase to balance the reduced supply with the demand from consumers.

Question 5

What would happen in the market for laser eye surgery if provincial health plans started to cover a portion of the price of voluntary procedures?

Accepted Answer

If provincial health plans started to cover a portion of the price of laser eye surgery, the cost to consumers would decrease, making the procedure more affordable. This would likely increase demand for the procedure, but it would not necessarily affect the supply of laser eye surgery. The amount of supply available will depend on the number of providers offering the procedure and their willingness to offer it at the reduced price. Therefore, option A is the correct answer.

Question 6

Photovoltaic cells (solar panels)have been in use since the 1970s. Recently, new technology has been developed which some think will allow regular windows to be replaced with solar panels. If this technology works as these people expect what will happen in the market for solar energy?

Accepted Answer

The new technology would increase the supply of solar energy as regular windows would now be able to produce it. With an increase in supply, the price would fall due to an increase in competition. Therefore, the answer is A.

Question 7

The demand for lobster is higher at Christmas than in February.If the equilibrium price of lobster is lower at Christmas than in February, then

Accepted Answer

Since the demand for lobster is higher at Christmas than in February, we can infer that the demand curve for lobster shifts to the right during Christmas time. If the equilibrium price of lobster is lower at Christmas than in February, it means that the supply curve for lobster must have shifted to the right even more than the demand curve during Christmas time. Thus, there is a greater supply of lobster during Christmas than in February, which implies that the supply of lobster is lower in February than at Christmas.

Question 8

Figure 3.14 Alt text for Figure 3.14: In figure 3.14, a graph plotting intersecting demand and supply curves represents the change in equilibrium point in the apple market with the decrease in the price of a substitute fruit, orange and the increase in the wages of apple workers. Long description for Figure 3.14: The x-axis is labelled, Quantity and the y-axis is labelled, Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 is parallel with curve D1, but is plotted to the left.Curve S1 is a straight line which slopes up from the bottom right corner to the top left corner.Curve S2 is parallel to curve S1, but is plotted to the left.The 4 curves intersect at 4 points; A, B, on the right side of the lines, and C and D, on the left sides of the lines. -Refer to Figure 3.14.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁and S₁ (point

Accepted Answer

The graph does not indicate any initial competitive equilibrium point at any of the points A, B, C, or D.

Question 9

All else equal, a successful marketing campaign for energy drinks would cause the equilibrium price of energy drinks to ________ and the equilibrium quantity of energy drinks to ________.

Accepted Answer

A successful marketing campaign would increase demand for energy drinks, shifting the demand curve to the right. This would cause the equilibrium price to increase and the equilibrium quantity to increase as well.

Question 10

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

Accepted Answer

An increase in supply (which is the only factor mentioned in option B) would cause a decrease in the equilibrium price and an increase in the equilibrium quantity, as long as there is no corresponding decrease in demand.

Question 11

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

Accepted Answer

The answer of Explain how it would be possible for...

Question 12

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

Accepted Answer

When both the demand and supply curves shift to the left, there is a decrease in both the quantity demanded and the quantity supplied, leading to a decrease in the equilibrium quantity.

Question 13

Hurricane Juan hit Halifax in 2003.The storm did over $300 million in damage.In the effort to repair the damage done by the storm, the prices of basic building materials and contractors increased dramatically.Many residents complained of profiteering and price gouging by contractors and home improvement stores.Which of the following offers the best explanation of the price increases people were seeing?

Accepted Answer

The hurricane caused widespread damage, leading to a significant increase in the demand for building materials for repairs and reconstruction, which in turn drove up prices.

Question 14

All else equal, an increase in the number of firms producing energy drinks will

Accepted Answer

The answer of All else equal, an increase in the...

Question 15

Select the phrase that correctly completes the following statement."A positive change in technology caused an increase in the supply of flat-screen televisions.As a result, ________."

Accepted Answer

An increase in supply, caused by a positive change in technology, would lead to a decrease in the price of flat-screen televisions and an increase in the quantity demanded due to the law of supply and demand. Therefore, only option C correctly completes the statement. Option A incorrectly suggests a decrease in demand for flat-screen televisions, and option B incorrectly suggests a decrease in the equilibrium quantity. Option D suggests a decrease in supply, which is not consistent with the initial statement.

Question 16

Figure 3.14 Alt text for Figure 3.14: In figure 3.14, a graph plotting intersecting demand and supply curves represents the change in equilibrium point in the apple market with the decrease in the price of a substitute fruit, orange and the increase in the wages of apple workers. Long description for Figure 3.14: The x-axis is labelled, Quantity and the y-axis is labelled, Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 is parallel with curve D1, but is plotted to the left.Curve S1 is a straight line which slopes up from the bottom right corner to the top left corner.Curve S2 is parallel to curve S1, but is plotted to the left.The 4 curves intersect at 4 points; A, B, on the right side of the lines, and C and D, on the left sides of the lines. -Refer to Figure 3.14.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point

Accepted Answer

A decrease in the wages of apple workers would likely reduce the cost of producing apples, potentially increasing the supply of apples. An increase in the price of oranges, a substitute for apples, could increase the demand for apples as consumers switch from oranges to apples. Both of these changes would cause the equilibrium to shift in a manner consistent with moving to a new point like point A, assuming point A represents an increase in both the equilibrium quantity and price of apples.

Question 17

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

While consumer preference increasing would tend to push the price up due to higher demand, the increase in the number of firms producing mouthwash would likely increase supply, potentially offsetting the demand increase and making the net effect on price uncertain without more information.

Question 18

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
...

Question 19

"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?

Accepted Answer

The statement is incorrect because a change in the price of apples affects the quantity demanded, not the demand itself. The demand curve shifts due to factors other than the price of the good in question, such as changes in consumer income, preferences, or the prices of related goods.

Question 20

Discuss the correct and incorrect economic analysis in the following statements.
"Unifor (the union that represents Canadian auto workers, among other industries)has successfully negotiated a 9 percent increase in wages for its workers.This increase in the wage rate causes an increase in demand for automobiles, since many consumers now have greater incomes, and also causes a decrease in supply of automobiles because the cost of production has increased.These effects cancel each other out resulting in no change in the equilibrium price and quantity in the automobile market."

Accepted Answer

The answer of Discuss the correct and incorrect economic analysis...

Quiz 3: Where Prices Come From: The Interaction of Supply and Demand