Question 1

Suppose consumer incomes increase, and we are looking at a market for a normal good. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Accepted Answer

The answer of Suppose consumer incomes increase, and we are...

Question 2

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Accepted Answer

An increase in both supply and demand can lead to various outcomes for the equilibrium price depending on the magnitude of the shifts. If the increase in supply is larger than the increase in demand, the equilibrium price could actually decrease. If the increase in demand is larger, the price could increase. If they increase by the same amount, the price might stay the same but the quantity sold will increase.

Question 3

Suppose supply and demand are represented by the following equations: Q_D = 25 - 0.4P Q_S = 7 + 0.2P If supply changes so that Q_S = 13 + 0.2P calculate the change in equilibrium price that results.

Accepted Answer

The answer of Suppose supply and demand are represented by...

Question 4

As a result of an increase in supply, ceteris paribus, the equilibrium price decreases and the equilibrium quantity increases.

Accepted Answer

According to the law of supply, an increase in supply will lead to a decrease in equilibrium price and an increase in equilibrium quantity. Ceteris paribus means that we are assuming all other factors remain constant. Therefore, the answer is true.

Question 5

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $30, what are the quantity demanded and the quantity supplied?

Accepted Answer

The answer of Suppose demand and supply in a market...

Question 6

Which of the following would be a likely cause for the increases in gasoline prices in the late-2000s?

Accepted Answer

Reductions in U.S. refinery capacity would likely cause an increase in gasoline prices as there would be a limited supply of gasoline to meet the demand. This was a contributing factor to the increases in gasoline prices in the late-2000s.

Question 7

Draw a supply and demand diagram. Label the equilibrium price and equilibrium quantity as well as the axes and curves.

Accepted Answer

The answer of Draw a supply and demand diagram. Label...

Question 8

When supply shifts right and demand shifts left at the same time, the equilibrium market price drops.

Accepted Answer

When supply increases (shifts right), it means more of the good is available, which tends to lower the price. When demand decreases (shifts left), it means there is less desire for the good, which also tends to lower the price. Together, these shifts lead to a decrease in the equilibrium market price.

Question 9

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

Accepted Answer

The answer of Draw a supply and demand diagram with...

Question 10

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in

Accepted Answer

Focusing on new technologies for conservation and new sources of energy would likely lead to an increase in the supply of gasoline (as new sources could include more efficient ways to produce gasoline or alternatives that reduce reliance on it) and a decrease in the demand for gasoline (as conservation efforts and alternative energy sources reduce the need for gasoline).

Question 11

As a result of an increase in both supply and demand, the equilibrium price decreases while the equilibrium quantity increases.

Accepted Answer

When both supply and demand increase, the equilibrium quantity will increase, but the effect on equilibrium price is indeterminate without knowing the relative magnitudes of the shifts in supply and demand. If the increase in supply is larger than the increase in demand, the price could decrease, but if the increase in demand is larger, the price could increase.

Question 12

The high price of gasoline in the late-2000s was likely the result of

Accepted Answer

The high price of gasoline in the late-2000s was a result of a decrease in the supply of gasoline due to decreased production by oil-producing countries and increased demand for gasoline due to rapid economic growth in China and India.

Question 13

It is impossible to use a supply and demand model to analyze the changes in gasoline prices during the mid-2000s.

Accepted Answer

The changes in gasoline prices during the mid-2000s can be analyzed using a supply and demand model. It is a basic economic principle that changes in supply and demand affect prices. In the mid-2000s, factors such as disruptions in supply due to hurricanes and increased demand due to economic growth in developing countries led to fluctuations in gasoline prices. Therefore, a supply and demand model can be used to analyze these changes.

Question 14

Suppose more firms enter the computer market. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Accepted Answer

The answer of Suppose more firms enter the computer market....

Question 15

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $14, what are the quantity demanded and the quantity supplied?

Accepted Answer

The answer of Suppose demand and supply in a market...

Question 16

Shifts in the supply of and the demand for oil were the causes of the increased gasoline prices in the 2000s.

Accepted Answer

Shifts in supply and demand can cause changes in the price of oil, which in turn affects the price of gasoline. This was observed in the 2000s, as global demand for oil increased while supply was limited, leading to higher prices for both oil and gasoline.

Question 17

Suppose a war in the Middle East destroys many oil fields. This will cause a(n)

Accepted Answer

The destruction of oil fields in the Middle East would cause a decrease in the supply of oil, which would lead to an increase in oil prices. As oil is a vital resource for many industries and transportation systems, an increase in oil prices would have a ripple effect throughout the economy, affecting the cost of goods and services and potentially causing inflation. A redistribution of income or an increase in the quantity of oil traded would not be the most likely outcome of such a conflict.

Question 18

With a single supply and demand diagram, illustrate a shortage and a surplus. Carefully label the diagram.

Accepted Answer

The answer of With a single supply and demand diagram,...

Question 19

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P Calculate the equilibrium price and quantity.

Accepted Answer

The answer of Suppose demand and supply in a market...

Question 20

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Accepted Answer

The answer of Why is the word equilibrium used to...

Quiz 3: The Supply and Demand Model

Suppose consumer incomes increase, and we are looking at a market for a normal good. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Suppose supply and demand are represented by the following equations: QD = 25 - 0.4P QS = 7 + 0.2P If supply changes so that QS = 13 + 0.2P calculate the change in equilibrium price that results.

As a result of an increase in supply, ceteris paribus, the equilibrium price decreases and the equilibrium quantity increases.

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P If the prevailing market price is $30, what are the quantity demanded and the quantity supplied?

Which of the following would be a likely cause for the increases in gasoline prices in the late-2000s?

Draw a supply and demand diagram. Label the equilibrium price and equilibrium quantity as well as the axes and curves.

When supply shifts right and demand shifts left at the same time, the equilibrium market price drops.

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in

As a result of an increase in both supply and demand, the equilibrium price decreases while the equilibrium quantity increases.

The high price of gasoline in the late-2000s was likely the result of

It is impossible to use a supply and demand model to analyze the changes in gasoline prices during the mid-2000s.

Suppose more firms enter the computer market. What will happen to demand, quantity demanded, supply, and quantity supplied as a result of this market change?

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P If the prevailing market price is $14, what are the quantity demanded and the quantity supplied?

Shifts in the supply of and the demand for oil were the causes of the increased gasoline prices in the 2000s.

Suppose a war in the Middle East destroys many oil fields. This will cause a(n)

With a single supply and demand diagram, illustrate a shortage and a surplus. Carefully label the diagram.

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P Calculate the equilibrium price and quantity.

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Suppose supply and demand are represented by the following equations: Q_D = 25 - 0.4P Q_S = 7 + 0.2P If supply changes so that Q_S = 13 + 0.2P calculate the change in equilibrium price that results.

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $30, what are the quantity demanded and the quantity supplied?

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $14, what are the quantity demanded and the quantity supplied?

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P Calculate the equilibrium price and quantity.