Question 1

The above figure shows the market for pizza. The market is in equilibrium when people's incomes decrease. If pizza is a normal good, then which point represents the most likely new price and quantity?

Accepted Answer

The answer of  The above figure shows the market...

Question 2

-Pizza is a normal good. Which figure above shows the effect of a decrease in consumers' incomes?

Accepted Answer

The answer of 
-Pizza is a normal good. Which figure...

Question 3

If the price of tangerines increases, the price of oranges also rises because

Accepted Answer

Tangerines and oranges are typically seen as substitutes for each other, so if the price of tangerines increases, consumers are likely to switch to buying more oranges instead. This increased demand for oranges will lead to a rise in the price of oranges as well.

Question 4

The above figure shows the market for pizza. The market is in equilibrium when the cheese used to produce pizza falls in price. What point represents the most likely new price and quantity?

Accepted Answer

The answer of  The above figure shows the market...

Question 5

If an early frost destroys most of the apple crop, the equilibrium price of an apple ________ and the equilibrium quantity ________.

Accepted Answer

An early frost destroying most of the apple crop would decrease the supply of apples. According to the law of supply and demand, a decrease in supply, with demand remaining constant, leads to a higher equilibrium price and a lower equilibrium quantity.

Question 6

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 ________.

Accepted Answer

When supply increases but demand remains constant, the equilibrium price falls due to the surplus of goods, and the equilibrium quantity increases as more of the product is available at a lower price.

Question 7

When laptops were first produced, the price was very high. As time passed, the price of personal laptops fell because

Accepted Answer

Technological advances in the production of laptops led to economies of scale and more efficient manufacturing processes, which lowered the cost of producing laptops. As a result, the price of personal laptops decreased over time.

Question 8

-Which figure above shows the effect if research is published claiming that eating pizza is healthy?

Accepted Answer

The answer of 
-Which figure above shows the effect if...

Question 9

Suppose the price of bread rises. This rise could be the result of

Accepted Answer

If the price of bread rises, it indicates a decrease in the supply of bread, as there is not enough supply to meet the demand at the previous price. An increase in supply would result in a decrease in price, so answer A is incorrect. A decrease in demand would also result in a decrease in price, so answer B is also incorrect. Both answers A and C cannot be correct, and answer E is incorrect altogether.

Question 10

Because of a sharp increase in the price of petrol, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of petrol leads to a

Accepted Answer

The high price of petrol means that consumers are less willing to buy SUVs, meaning that the demand for SUVs will shift leftward. However, there is no reason to believe that the supply of SUVs will be affected, so the supply curve should not shift. Therefore, the correct answer is a leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs, which is option D.

Question 11

Which figure above shows the effect of a decrease in the number of pizza sellers?

Accepted Answer

The answer of  Which figure above shows the effect...

Question 12

-A construction boom occurs and many of the new buildings need plywood for their framing. Which of the figures above best illustrates this change?

Accepted Answer

The answer of 
-A construction boom occurs and many of...

Question 13

-New technology for producing plywood is developed. Which of the figures above best illustrates this change?

Accepted Answer

The answer of 
-New technology for producing plywood is developed....

Question 14

Suppose the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

Accepted Answer

An increase in demand (more home buyers moving into the area) would cause both equilibrium price and quantity to increase. None of the other options directly impact demand or supply in the housing market.

Question 15

If good weather conditions result in a larger than normal crop of peaches, then the

Accepted Answer

When good weather conditions result in a larger than normal crop of peaches, the supply of peaches increases. According to the law of supply, an increase in supply results in a decrease in equilibrium price and an increase in equilibrium quantity. Therefore, the equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. Option E is the only one that reflects this scenario.

Question 16

-The number of logging firms increases. Which of the figures above best illustrates this change?

Accepted Answer

The answer of 
-The number of logging firms increases. Which...

Question 17

Bagels and cream cheese are complementary goods. Suppose that the price of flour, which is used to produce bagels, increases. The equilibrium price of CREAM CHEESE ________, and the equilibrium quantity of CREAM CHEESE ________.

Accepted Answer

When the price of flour increases, the cost of producing bagels goes up, leading to a decrease in the supply of bagels. Since bagels and cream cheese are complementary goods, the demand for cream cheese will decrease as well, leading to a lower equilibrium price and quantity for cream cheese.

Question 18

For consumers, corn chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of corn chips?

Accepted Answer

When the price of salsa (a complement to corn chips) rises, demand for corn chips decreases because consumers are less likely to buy salsa, thereby reducing their demand for corn chips. This leads to a decrease in the equilibrium price and quantity of corn chips.

Question 19

Suppose the equilibrium price of movie tickets is $10. If the supply curve for movies shifts ________, the equilibrium price will ________.

Accepted Answer

When the supply curve shifts rightward, it indicates an increase in supply. This typically leads to a decrease in the equilibrium price, as more supply tends to lower prices to clear the market.

Question 20

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________, and the equilibrium quantity ________.

Accepted Answer

When the price of flour (an input in bagel production) increases, the cost of producing bagels also increases. This typically leads to a decrease in supply, causing the equilibrium price of bagels to rise and the equilibrium quantity to decrease.

Quiz 4: Demand and Supply