Question 1

A leftward shift in the supply curve indicates

Accepted Answer

A leftward shift in the supply curve means that the quantity supplied decreases at every price level. This could be due to factors such as an increase in production costs, a decrease in the availability of resources, or government regulations limiting production.

Question 2

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $168 per tonne and Q = 290 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The decrease in quantity from 350 million tonnes to 290 million tonnes indicates that there has been a decrease in the supply of barley. This is supported by the increase in price from $150 per tonne to $168 per tonne, as a decrease in supply would result in a higher equilibrium price. Therefore, option D is the best possible explanation for this change in market equilibrium.

Question 3

Suppose we observe that movie theatre prices are less during the daytime than in the evening.If the supply of movies does not change between daytime and evening,then the most likely explanation for this difference in price is

Accepted Answer

The evening demand curve is to the right of the daytime demand curve, indicating higher demand for movies in the evening, which explains the higher prices compared to daytime when demand is lower.

Question 4

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $150 per tonne and Q = 410 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The answer of Consider the global market for barley,an agricultural...

Question 5

If a demand curve and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P,respectively,then the equilibrium quantity and price (Q,P)would be

Accepted Answer

At equilibrium, Qd = Qs. So, 100 - 5P = 90 + 5P. Solving for P gives P = 1. Substituting P = 1 into either equation gives Q = 95.

Question 6

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $159 per tonne and Q = 372 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The increase in both price and quantity suggests that there has been an increase in demand for barley. If there had been an increase in supply, it would have led to a decrease in price and an increase in quantity. If there had been a simultaneous decrease in demand and increase in supply, it would have led to a decrease in price and an ambiguous effect on quantity. Finally, if there had been a decrease in supply, it would have led to an increase in price and a decrease in quantity.

Question 7

Consider the global market for some mineral,X.In January,2014,the equilibrium price and quantity were P = $27 per unit and Q = 140 million units.In January,2016,the equilibrium price and quantity were P = $45 per unit and Q = 175 million units.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The increase in both price and quantity suggests that there has been an increase in demand for mineral X. This can be seen as a shift of the demand curve to the right, causing the equilibrium price and quantity to increase.

Question 8

Consider the global market for some mineral,X.In January,2014,the equilibrium price and quantity were P = $27 per unit and Q = 140 million units.In January,2016,the equilibrium price and quantity were P = $27 per unit and Q = 175 million units.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The answer of Consider the global market for some mineral,X.In...

Question 9

Suppose that supply for some good increases and that simultaneously the demand for the same good decreases.The result would be

Accepted Answer

When supply increases, it puts downward pressure on price (P), and when demand decreases, it also puts downward pressure on price. Therefore, price will definitely decrease. However, the change in quantity (Q) is indeterminate because the increase in supply suggests an increase in quantity, while the decrease in demand suggests a decrease in quantity. The net effect on quantity depends on the relative magnitudes of the shifts in supply and demand.

Question 10

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $142 per tonne and Q = 335 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The decrease in quantity demanded from 350 million tonnes to 335 million tonnes along with the decrease in price from $150 per tonne to $142 per tonne indicates a decrease in demand for barley. This could be due to several factors such as consumers switching to substitute goods or a decrease in the demand for products that use barley as an input.

Question 11

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $140 per tonne and Q = 325 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The decrease in equilibrium quantity and price suggest a decrease in demand for barley. This could be due to a decrease in consumer preferences for barley products, a decrease in the population of livestock that consume barley, or a decrease in the use of barley in other industries.

Question 12

A fall in the price of potatoes,which are used in the production of french fries,will

Accepted Answer

A fall in the price of potatoes, which are used in the production of french fries, will result in lower production costs for french fries. This will encourage firms to increase their production of french fries, leading to an increase in the supply of french fries. Therefore, the supply curve of french fries will shift to the right.

Question 13

An increase in the number of firms wanting to provide accounting services will cause a ________ for accounting services.

Accepted Answer

An increase in the number of firms wanting to provide accounting services will lead to an increase in the supply of accounting services. This means that there will be a rightward shift in the supply curve, as the quantity supplied of accounting services will increase at each given price level.

Question 14

Given a positively sloped supply curve,when market demand increases

Accepted Answer

When the market demand increases, the demand curve shifts to the right, causing an increase in both equilibrium price and quantity. Since the supply curve is positively sloped, the increase in quantity will have a relatively smaller effect on the price compared to the quantity, resulting in a higher equilibrium price and larger quantity. Therefore, the new equilibrium will have a higher price and a larger quantity, which is represented by choice D.

Question 15

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $168 per tonne and Q = 350 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The equilibrium quantity remained the same, but the price increased. This suggests that both demand and supply factors were at play: demand for barley increased, pushing the price up, and supply decreased, which also tends to increase price. The net effect on quantity was neutral, indicating that the shifts in demand and supply were such that they offset each other in terms of quantity but resulted in a higher equilibrium price.

Question 16

In which statement is the term ʺsupplyʺ used correctly? (1)An increase in the price of copper will lead to an increase in the quantity supplied of copper.(2)An increase in the price of copper will lead to an increase in the supply of copper.

Accepted Answer

The term "supply" refers to the total amount of a product or service that is available to consumers, whereas "quantity supplied" refers to the amount of a good or service that producers are willing and able to sell at a specific price. The first statement correctly uses "quantity supplied" to describe the change in the amount of copper available at a new price, without implying a shift in the supply curve itself. The second statement incorrectly suggests that a change in price directly affects the supply, which is a broader concept usually influenced by factors other than price, such as technology or production costs.

Question 17

In which statement is the term ʺsupplyʺ used correctly? (1)An increase in the price of leather will cause a decrease in the supply of leather.(2)An increase in the price of leather will cause a decrease in the supply of leather boots.

Accepted Answer

The answer of In which statement is the term ʺsupplyʺ...

Question 18

In which statement is the term ʺsupplyʺ used correctly? (1)An increase in the number of suppliers of copper will lead to an increase in the supply of copper.(2)An increase in the number of suppliers of copper will likely lead to a decrease in the quantity supplied of copper.

Accepted Answer

The term "supply" refers to the total amount of a good or service that producers are willing and able to offer for sale at a given price over a given time period. The first statement correctly states that an increase in the number of suppliers (producers) of copper will lead to an increase in the supply (total amount offered for sale) of copper. The second statement is incorrect because an increase in the number of suppliers should lead to an increase, not a decrease, in the quantity supplied (amount produced and sold by each producer).

Question 19

The supply for some good or service will decrease if

Accepted Answer

If the prices of inputs increase, it becomes more expensive for producers to make the good or service, leading to a decrease in the supply.

Question 20

Consider the global market for some mineral,X.In January,2014,the equilibrium price and quantity were P = $27 per unit and Q = 140 million units.In January,2016,the equilibrium price and quantity were P = $35 per unit and Q = 110 million units.Which of the following is the best possible explanation for this change in market equilibrium?

Accepted Answer

The increase in price and decrease in quantity suggest a decrease in supply.

Quiz 3: Demand, supply, and Price

A leftward shift in the supply curve indicates

Suppose we observe that movie theatre prices are less during the daytime than in the evening.If the supply of movies does not change between daytime and evening,then the most likely explanation for this difference in price is

If a demand curve and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P,respectively,then the equilibrium quantity and price (Q,P) would be

Suppose that supply for some good increases and that simultaneously the demand for the same good decreases.The result would be

A fall in the price of potatoes,which are used in the production of french fries,will

An increase in the number of firms wanting to provide accounting services will cause a ________ for accounting services.

Given a positively sloped supply curve,when market demand increases

In which statement is the term ʺsupplyʺ used correctly? (1) An increase in the price of copper will lead to an increase in the quantity supplied of copper.(2) An increase in the price of copper will lead to an increase in the supply of copper.

In which statement is the term ʺsupplyʺ used correctly? (1) An increase in the price of leather will cause a decrease in the supply of leather.(2) An increase in the price of leather will cause a decrease in the supply of leather boots.

In which statement is the term ʺsupplyʺ used correctly? (1) An increase in the number of suppliers of copper will lead to an increase in the supply of copper.(2) An increase in the number of suppliers of copper will likely lead to a decrease in the quantity supplied of copper.

The supply for some good or service will decrease if